INSTRUCTION No. 15 (Modification No. 2) - Standards on Combating Money Laundering and Terrorist Financing

INSTRUCTION No. 15 (Modification No. 2)

Concerning: Standards on combating money laundering and terrorist financing

The Central Bank of Congo, acting in accordance with Articles 6 and 31 of Law No. 005/2002 of May 7, 2002, relating to its constitution, organization, and functioning; Article 75 of Law No. 003/2002 of February 2, 2002, relating to the activity and supervision of credit institutions; and Law No. 04/016 of July 19, 2004, on combating money laundering and terrorist financing,

adopts the following standards:

TITLE I: SCOPE OF APPLICATION

Article 1 The following are subject to this instruction:

• credit institutions;
• financial messengers;
• exchange offices;
• microfinance institutions.

The term "subject persons" refers in the remainder of this instruction to the four categories mentioned above.

Article 2 For the purposes of applying this instruction, the following acts committed intentionally constitute money laundering:

1. The conversion, transfer, or manipulation of assets with the aim of concealing or disguising the illicit origin of said assets or helping any person involved in the commission of the principal offense to escape the legal consequences of their acts;
2. The concealment or disguise of the nature, origin, location, disposition, movement, or true ownership of assets;
3. The acquisition, holding, or use of assets by a person who knows, suspects, or should have known that said assets constitute the proceeds of an offense.

Under the meaning of the aforementioned Law, the offense of terrorist financing is the act of providing, collecting, assembling, or managing, by any means, directly or indirectly, funds, securities, or assets with the intention that they be used, or knowing that they will be used, in whole or in part, to commit an act of terrorism, regardless of whether such an act occurs.

Article 3 The subject persons referred to in Article 1 of this instruction must fully contribute to the application of Law No. 04/016 of July 19, 2004, by implementing the necessary means to prevent acts of money laundering and terrorist financing.

TITLE II: DUE DILIGENCE AND SUPERVISION OBLIGATIONS

Article 4 The due diligence provisions regarding transparency in financial operations impose on subject persons the obligation to:

• ensure the identity and address of the client at the time of establishing the relationship by presenting any probative document. They ensure under the same conditions the identity of their occasional client who requests them to perform operations whose nature and amount are fixed by Law No. 04/016 of July 19, 2004;
• monitor their operations.

By the end of this instruction, "occasional client" means any person who does not have an account in a credit institution and for whom, consequently, the identification formalities and, if applicable, capacity to act have not previously been fulfilled.

II.1. CLIENT IDENTIFICATION

Article 5 Subject persons must ensure the identity and address of their clients as well as, where applicable, their beneficial owners in the following situations:

• before establishing a contractual relationship, taking into account, for occasional clients, the provisions of Article 9 of Law No. 04/016 of July 19, 2004;
• as soon as possible for existing clients, and at the latest:
  • when a significant transaction takes place;
  • when standards regarding client identification documents change substantially;
  • when a significant modification occurs in the way the account operates;
  • when the subject person realizes they do not have information on an existing client;
• when they have doubts regarding the truthfulness or relevance of previously obtained data.

Article 6 The verification of the identity of a natural person is carried out by checking a national identity card or any original official document serving as such, which is valid and contains a photograph, a copy of which is taken.

The verification of their professional and residential address is carried out by checking any document capable of proving it. If it is a natural person engaged in commerce, the latter is additionally required to provide any document attesting to their registration in the commercial register.

Article 7 The identification of a legal entity or a legal structure without legal personality is carried out based on the original or a certified true copy of any act or extract from an official register confirming its name, legal form, registered office, as well as the powers of persons acting on its behalf.

Subject persons must ensure under the same conditions set out in the second paragraph of the previous article the true identity and address of persons authorized to act on their behalf.

Subject persons must possess the necessary information to understand the ownership and control structure of these legal entities and structures without legal personality and to determine the natural persons who ultimately own or control them.

Article 8 In execution of their client identification obligations, subject persons must take all appropriate measures to prohibit the opening of anonymous accounts or accounts under false names or pseudonyms.

Article 9 In application of Article 10 of Law No. 04/016 of July 19, 2004, if the client does not appear to be acting for their own account, the subject person must inquire, by all means, about the identity of the person on whose behalf they are acting. After verification, if doubt persists regarding the identity of the beneficial owner, they must terminate the banking relationship and, where applicable, proceed, under the conditions provided for in Article 20 of Law No. 04/016 of July 19, 2004, to file a suspicious transaction report.

Article 10 When a subject person offers the possibility of opening an account or performing any other operation remotely, they must put in place adapted measures to guarantee client identification.

These measures may notably include the authentication of presented identification documents, the request for additional documents, the possibility of independent verification of the client's situation by a third party of confirmed reputation, the requirement of an initial payment through an account opened in the client's name with a bank subject to international standards on combating money laundering and terrorist financing, or the sending of a letter with acknowledgment of receipt to the client's address.

By international standards, one must understand the recommendations of the Financial Action Task Force (FATF).

Article 11 Subject persons may rely on third parties to ensure the identification of some of their clients. In all cases, they retain responsibility for the identification of their clientele. Subject persons must:

• immediately obtain from third parties the information necessary for the identification of each client, beneficial owner, and the object and nature of each business relationship;
• ensure that the third party can provide, upon request and in the shortest possible time, copies of identification data and other relevant documents related to the due diligence duty towards the client;
• ensure that the third party is subject to regulation and supervision in combating money laundering and terrorist financing at least equivalent to that of the subject person and that it effectively applies it.

II.2. SPECIAL SUPERVISION OF OPERATIONS

Article 12 Subject persons must exercise constant vigilance regarding all their operations and clients. The duty of constant vigilance includes the duty to verify and update information related to client identification.

Subject persons must in particular ensure that the operations and assets entrusted to them by persons with whom they maintain a business relationship are related to their economic activities and patrimony. To this end, they must permanently have a good understanding of the normal and reasonable activities expected on the accounts of their different types of clients in order to identify atypical transactions. To this effect, they must have systems in place that, for all accounts, detect atypical transactions by using, for example, limits per class or category of account or by identifying repetitive operations even of small amounts. The monitoring device must be adapted to the level of risk incurred.

Article 13 Subject persons must define clear policies and procedures for the acceptance of new clients, including the description of different types of clients likely to represent a risk higher than average for them.

These different types of clients must be distinguished taking into account the nature and importance of the money laundering and terrorist financing risk incurred. Factors such as client history, countries of origin or residence, origin of their funds, links between accounts, types of transactions they perform on their bank accounts, or their professional activities can be used for this purpose.

The admission of any new client requires approval from the hierarchical superior of the client relationship manager.

Article 14 Subject persons must specify in writing to their employees the appropriate criteria allowing them to determine operations requiring particular attention, the diligence to be carried out regarding these operations, as well as the procedure required for the transmission, within regulated deadlines, of written reports to the head of prevention of money laundering and terrorist financing. In case of urgency, an oral declaration may precede the transmission of the aforementioned written report.

The policies and procedures in force in an establishment must effectively protect its employees against any threat or sanction resulting from the written or oral transmission of information indicating suspicions of money laundering and terrorist financing.

The examination of operations notably includes the examination of their economic justification and apparent legitimacy.

Subject persons must also specify in writing to their staff in charge of supervision the procedure required for the transmission, within regulated deadlines, of written reports to the head of prevention of money laundering and terrorist financing.

Article 15 The monitoring system must:

• cover all client accounts and their operations;
• be based on precise and relevant criteria, set by each subject person taking into account in particular the characteristics of the services and products offered and those of the clientele to which it addresses. These criteria must also be sufficiently discriminating to effectively detect atypical operations;
• produce written reports describing the detected atypical operations and the criteria on the basis of which they are, after analysis, considered atypical; these reports being transmitted to the head of prevention of money laundering and terrorist financing;
• allow for rapid identification and declaration of these operations within the establishment and, in case of suspicions, allow for the filing of a suspicious transaction report with the National Financial Intelligence Unit before the completion of the operation.

Under the meaning of this article, an atypical operation notably constitutes a transfer or fund transfer received for the benefit of a client for which the exact and useful information regarding the ordering party is missing.

Article 16

When subject persons cannot fulfill their due diligence duty towards a counterparty, they cannot establish or maintain a business relationship with the latter. In this case, they assess, with regard to the provisions of Article 20 of Law No. 04/016 of July 19, 2004, whether it is appropriate to inform the National Financial Intelligence Unit.

Article 17 Subject persons pay particular attention to financial operations carried out for the account of their natural or legal client persons, notably by notaries, lawyers, accountants, and companies that perform as a habitual profession the intermediation, advice, and assistance in matters of wealth management.

Article 18 Subject persons must exercise enhanced vigilance regarding operations executed by persons whose mail is domiciled with a third party, in a post office box, at the counters of a credit institution, or who change address frequently.

Article 19 Subject persons must be equipped with adequate risk management systems to determine if a potential client, a client, or a beneficial owner is a politically exposed person (PEP).

They must inquire to identify the origin of the patrimony and the origin of the funds of clients and beneficial owners as well as politically exposed persons.

They must apply enhanced due diligence measures towards politically exposed persons, particularly those holding prominent public functions at the national level.

By politically exposed person (PEP), one must understand a person who exercises or has exercised public functions, for example as Head of State or Government, high-ranking politician, manager of a public enterprise, or leader of a political party. Business relationships with members of the family of a PEP or persons closely associated with them present, in terms of reputation, risks similar to those linked to PEPs themselves.

Article 20 Subject persons must be equipped with risk management systems allowing the identification of all operations carried out by their group with a client. When required, subject persons must also be able to freeze all assets held by the same person in their books.

Article 21 Prior to any operation with a correspondent bank located abroad, a subject person must take adequate measures to gather sufficient information on this correspondent bank to well understand the nature of its activities and to evaluate, based on publicly available information, the reputation of the institution and the quality of its supervision, including verifying if the institution concerned has been the subject of an investigation or intervention by the supervisory authority relating to money laundering and terrorist financing.

It must, in addition, evaluate the controls put in place by the correspondent bank regarding the fight against money laundering and terrorist financing and specify in writing the respective responsibilities of each institution.

Authorization from the General Management is necessary before establishing new correspondent banking relationships.

Establishments must not establish or maintain correspondent banking relationships with so-called fictitious banks that are constituted and approved in countries and territories where they have no physical presence, without belonging to a financial group subject to effective consolidated supervision in matters of money laundering and terrorist financing.

Article 22 Subject persons must obtain and retain information regarding the ordering party of an electronic transfer and verify the accuracy of this information. They must include all this information in the message or payment form accompanying an electronic transfer.

Article 23 Subject persons put in place policies and procedures at the parent company level guaranteeing that their subsidiaries and branches effectively protect themselves against the risks of operations used for money laundering and terrorist financing. These policies and procedures are adapted to take into account the specificities inherent to each entity (country of establishment, nature of activities performed...). They include provisions allowing communication to the headquarters of the information necessary for the effective prevention of money laundering and terrorist financing throughout the group.

Subject persons having subsidiaries or branches installed in offshore zones or in countries not having regulation on the prevention of money laundering and terrorist financing at least equivalent to that applicable in the Democratic Republic of Congo or whose regulation is not effectively implemented, must ensure that these entities are equipped with a due diligence device at least as strict as that provided for by this instruction.

Branches and subsidiaries established abroad communicate to their registered office the provisions of the host country that oppose the implementation of all or part of the recommendations formulated by the headquarters. The latter informs the National Financial Intelligence Unit as well as the competent supervisory authority.

TITLE III: DOCUMENTATION RETENTION AND UPDATING

Article 24 Subject persons are required to retain for 10 years the proofs relating to:

• client identification, from the date of closure of their accounts;
• the identification of persons referred to in Articles 6, 7, 9, and 11 above;
• operations carried out with their clients, from the date of their execution.

Article 25 The organization of document retention must notably allow for the reconstruction of individual transactions (amount and nature of the operation) and to communicate, within the required deadlines, the information requested by any authority authorized by law, namely the National Financial Intelligence Unit, the Central Bank of Congo, and officials in charge of detecting and repressing money laundering and related offenses, acting within the framework of a judicial mandate and judicial authorities.

Article 26 Subject persons must ensure the regular updating of information related to their clients.

TITLE IV: INTERNAL CONTROL PROVISIONS AND OBLIGATION TO REPORT SUSPICIONS

Article 27 Subject persons must equip themselves with an internal control system by setting up an appropriate organization and formalizing internal procedures capable of allowing the detection of money laundering indicators and the subsequent declaration of suspicion.

Article 28 Subject persons are required to:

• adopt internal written rules describing the diligence to be carried out for the application of the aforementioned legal texts as well as the provisions of this instruction and giving indications on the sums and nature of operations that must be subject to particular vigilance, taking into account in particular the activity exercised by the subject person. The rules relating to the diligence to be carried out can be adapted to the nature of the counterparties of the subject person;
• put in place a monitoring system allowing verification of compliance with the internal procedures provided above;
• retain information, declarations, and documents relating to operations referred to in Articles 11 and 20 of Law No. 04/016 of July 19, 2004, according to modalities specific to preserving confidentiality and facilitating communication in the best possible time to the service mentioned in Article 17 of the same law or the competent supervisory authority, upon its request.

Article 29 The conditions for opening new accounts and significant fund movements must be subject to centralized controls to ensure that all information regarding the clients concerned is available and that these movements do not involve operations of an unusual or suspicious nature.

Article 30 For the application of Article 11 of Law No. 04/016 of July 19, 2004, subject persons must carry out a particular examination of any operation that meets the characteristics defined by said article, notably operations that:

• do not seem to have an economic justification or apparent lawful object;
• involve amounts out of proportion with those usually carried out by the client;
• present themselves under unusual conditions of complexity.

At the end of this examination, a confidential report is established stating among other things the information collected below:

o the origin and destination of the sums as well as the object of the transaction; o the identity of the ordering party and the beneficiary or beneficiaries; o the characteristics of the operation with regard to the criteria stated in the first paragraph of this article; o where applicable, the modalities and conditions of account operation (date, origin of the account, agents, accounts with no movements).

This report can only be communicated, by any written means or by telephone to be confirmed in writing in the shortest possible time, to the National Financial Intelligence Unit and to the competent supervisory authority, upon its request.

Article 31 The internal rules provided for in Article 28 of this instruction must specify the procedure to follow in the event that a sum or operation appears likely to be subject to a declaration of suspicion in accordance with Article 20 of Law No. 04/016 of July 19, 2004.

15 This procedure must in particular provide for the arrangements for:

• transmission to the person designated for this purpose of the characteristics of the operation already executed or to be executed, in the latter case, the execution deadline must be indicated;
• recording and conservation of documents relating to operations that have given rise to declaration under the conditions defined by Articles 20 and 21 of Law No. 04/016 of July 19, 2004.

Article 32 The effectiveness of the anti-money laundering and counter-terrorist financing prevention mechanism must be regularly evaluated, with regard in particular to the evolution of the establishment's activities and the trends observed in the matter of anti-money laundering and counter-terrorist financing.

A report must be made at least annually to the Board of Directors on the results of the anti-money laundering and counter-terrorist financing prevention mechanism.

All components of this mechanism must also be subject to regular independent audits (including the work of the person or persons responsible for anti-money laundering and counter-terrorist financing prevention).

TITLE V: ON THE DESIGNATION AND ROLE OF THE PREVENTION RESPONSIBLE.

Article 33 Supervised entities are required to designate one or more persons responsible for anti-money laundering and counter-terrorist financing prevention within their organization or within their group.

When a supervised entity has subsidiaries or branches, it designates a responsible person for combating money laundering and terrorist financing who is competent for the entire group.

16 On the contrary, when the size of a supervised entity does not justify entrusting the responsibility for the anti-money laundering and counter-terrorist financing prevention mechanism to a specifically designated person, management ensures, under the control of the Board of Directors, the coordination of all mechanisms contributing to the exercise of this mission.

These persons are responsible for ensuring the coherence and effectiveness of the anti-money laundering and counter-terrorist financing prevention mechanism. They are in particular responsible for:

• establishing the applicable policies and procedures and internal controls to be conducted;
• specific monitoring of operations considered as atypical;
• centralizing information to identify and prevent the realization of operations related to money laundering and terrorist financing;
• regularly informing hierarchy about the most risky clients;
• ensuring that all concerned agents have the required knowledge to exercise appropriate vigilance and, where applicable, report suspicious transactions.
• relations between the supervised entity, the supervisory authority, and the National Financial Intelligence Unit.

Article 34 The person or persons responsible for anti-money laundering and counter-terrorist financing prevention are designated by the management body of each institution, taking into account criteria such as honorability, professional experience, and moral integrity. The competent supervisory authority and the National Financial Intelligence Unit are informed of their appointment.

The persons responsible for combating money laundering and terrorist financing must be invested with the adequate hierarchical level and have the resources and independence necessary for the exercise of the missions assigned to them.

17 To this end, all their duties as well as those of their collaborators must be precisely formalized and prevent any conflict of interest. They must have access to all information they deem necessary for the exercise of their missions.

TITLE VI: ON THE AWARENESS AND TRAINING OF STAFF

Article 35 Supervised entities must ensure that their staff, directly or indirectly concerned by the implementation of the provisions of this instruction, benefit from appropriate training.

The content and periodicity of these trainings must be adapted to the nature of the risks incurred by the supervised entity as well as to the sensitivity of the functions occupied by different newly hired employees, those recruited for a fixed term, as well as those in contact with the clientele.

Article 36 Regular training, awareness, and information of staff aim in particular to:

• acquire knowledge and develop the critical spirit necessary to detect atypical operations;
• master the procedures necessary to react effectively to such operations.

18 TITLE VII: ON SANCTIONS

Article 37 Without prejudice to the sanctions provided for by Title IV of Law No. 04/016 of July 19, 2004, the Central Bank may, in case of non-compliance with the provisions of this instruction by supervised entities, pronounce one of the disciplinary sanctions provided for by Article 77 of Law No. 003/2002 of February 2, 2002, relating to the activity and control of Credit Institutions and in application of its Tariffs and Conditions.

In addition, the Central Bank of the Congo may, either instead of, or in addition to these sanctions: 1°) impose an administrative sanction that cannot be less than 5,000 and more than 100,000 US dollars;

2°) proceed to the publication of the sanction imposed.

Article 38 In case of recidivism, the disciplinary sanction hierarchically superior to the one previously pronounced will be applied.

On the other hand, regarding administrative sanctions, double the amounts provided for in the previous article will be applied.

TITLE VIII: FINAL PROVISIONS

Article 39 Supervised entities must, within a period of six months from the publication of this instruction, update the files relating to the identification of their clients.

19 Article 40 This instruction enters into force on the date of its signature and repeals all prior provisions contrary to it.

Done in Kinshasa, on DEC. 15, 2006 J-C. MASANGU MULONGO