Instruction No. 07/2018 of June 19: Exchange Rate Policy - Creation of an Independent Exchange Control Function in Banking Financial Institutions

INSTRUCTION NO. 07/2018 of June 19
SUBJECT: EXCHANGE RATE POLICY

• Creation of an Independent Exchange Control Function in Banking Financial Institutions

Given the need to ensure strict compliance with exchange legislation and regulations in the processing of operations by Banking Financial Institutions, as well as rigor in the recording of exchange operations and their reporting to the National Bank of Angola (BNA).

In the exercise of the competence conferred upon me by the combined provisions of Law No. 5/97, of July 27 - Exchange Law, Law No. 16/10, of July 15 - Law of the National Bank of Angola, and Law 12/2015, of June 17 - Law of the Bases of Financial Institutions.

I DETERMINE:

1. Creation of the Exchange Control Function

1.1. Banking Financial Institutions must establish and maintain an independent exchange control function, which reports directly to an Administrator.

1.2. To guarantee the adequacy and independence of the exchange control function, Banking Financial Institutions must:

i. Establish the function through a formal process and equip it with sufficient autonomy and responsibility;
ii. Appoint a person responsible for this function and confer upon them the necessary powers to perform their duties independently;

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iii. Equip it with adequate material and human resources to effectively perform their responsibilities, namely that they possess the necessary levels of competence, knowledge, and experience to execute the responsibilities assigned to them;
iv. Ensure that the structure of the exchange control function is adequate to the size and complexity of the Banking Financial Institution;
v. Ensure that the method for determining the remuneration of persons performing the exchange control function is not susceptible to compromising their objectivity.

1.3. The mission of the exchange control function is to ensure:

i. Strict compliance with current exchange legislation and regulations, also considering the global objective of exchange control in the economic context;
ii. Rigor in the recording and reporting of exchange operations to the BNA;
iii. Fair, ethical, professional, and transparent conduct in relations between the Banking Financial Institution, its clients, and other market participants;
iv. Effective and efficient communication with the BNA on exchange matters, through the function's responsible person.

1.4. The responsibilities of the exchange control function include, but are not limited to, ensuring:

i. Monitoring all regulations published by the BNA regarding exchange operations;
ii. The existence of adequate systems and controls for compliance with legislation and regulations, and their update when necessary;
iii. Determining the training needs of bank staff in exchange matters;
iv. The correct opening and movement of bank accounts held by non-residents for exchange purposes;

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v. Compliance with exchange legislation and regulations for operations not subject to licensing, that is, in cases where approval has been delegated to Banking Financial Institutions;
vi. The legitimacy and correct constitution of all processes for requesting licensing or registration of operations and their timely submission to the BNA;
vii. The correct and timely execution of exchange operations as well as their accounting recording and in reporting systems to the BNA;
viii. The timely and correct reporting of all information to be sent to the BNA;
ix. The representation of the Banking Financial Institution before the BNA for all exchange matters, through the person responsible for the exchange control function.

1.5. The exchange control function must also verify the framing of exchange operations within the corporate client's business, considering their nature, size, and financial situation among other factors, and in the case of individual clients, the framing of their circumstances and financial capacity, within the framework of the transaction monitoring process provided for in Law No. 34/11, of December 12, Law on the Combating of Money Laundering and Financing of Terrorism and related regulation, involving the Compliance function whenever an operation shows signs of money laundering or financing of terrorism.

1.6. The functions performed by the exchange control function described in the previous point do not relieve the Compliance function of the duty to identify and verify the identity of clients and to exercise diligence, including enhanced diligence when necessary, regarding clients and their operations.

2. Sanctions

2.1. Violations of the provisions in this Instruction are punishable under the terms of Law No. 5/97, of June 27 - Exchange Law, and Law No. 12/15, of June 17, Law of the Bases of Financial Institutions, namely:

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a) Non-compliance with the provisions in points 1.1 and 1.2 of this Instruction is punishable by temporary or permanent suspension of the authorization to exercise exchange trading; b) Non-compliance with the provisions in points 1.4 and 1.5 of this Instruction is punishable by:

i. The sanction referred to in item a) of point 2.1 of this Instruction;
and/or
ii. Temporary suspension of participation in foreign currency auctions promoted by the BNA; and/or
iii. Monetary fines proportional to the severity of the irregularities; and/or
iv. Other sanctions that the BNA may adopt under the aforementioned Laws.

2.2. The sanctions provided for in item b) of the previous point may be applied cumulatively.

3. Transitional Provisions

Banking Financial Institutions must comply with the provisions of this Instruction within 60 days from the date of its publication.

4. Entry into Force

This Instruction enters into force on the date of its publication.

PUBLISH.
Luanda, June 19, 2018.

THE GOVERNOR

JOSÉ DE LIMA MASSANO