Instruction No. 2025-01 on the Anti-Money Laundering and Counter-Terrorist Financing Framework

BANQUE CENTRALE DE DJIBOUTI

INSTRUCTION NO. 2025-01
ON THE ANTI-MONEY LAUNDERING AND COUNTER-TERRORIST FINANCING FRAMEWORK

The Governor of the Central Bank of Djibouti,

Having regard to Law No. 118/AN/11/6th L amending the statutes of the Central Bank of Djibouti;

Having regard to Law No. 119/AN/11/6th L on the establishment and supervision of credit institutions and financial auxiliaries;

Having regard to Law No. 116/AN/11/6th L on the establishment of Islamic banks in Djibouti;

Having regard to Law No. 179/AN/07/5th L regulating microfinance activities in the Territory of the Republic of Djibouti;

Having regard to Law No. 118/AN/15/5th L creating a national payment system, its regulation and supervision;

Having regard to Law No. 103/AN/24/9th L on the prevention and fight against corruption and similar offenses;

Having regard to Law No. 104/AN/24/9th L amending Law No. 110/AN/11/6th L on the fight against terrorist financing;

Having regard to Law No. 105/AN/24/9th L amending Law No. 111/AN/11/6th L on the fight against terrorism and other serious offenses;

Having regard to Law No. 178/AN/25/9th L amending Law No. 106/AN/24/9th L on the fight against money laundering, terrorist financing, and the proliferation of weapons of mass destruction;

Having regard to Decree No. 2023-247/PRE appointing the Governor of the Central Bank of Djibouti;

Having regard to Decree No. 2024-052/PR/MJAPM on the attribution, organization, and functioning of the National Financial Intelligence Agency;

Having regard to Decree No. 2024-053/PR/MJAPM on the implementation regime of targeted financial sanctions related to terrorist financing and the proliferation of weapons of mass destruction;

Having regard to Order No. 2024-113/PR/2024 establishing the Technical Committee for the Implementation and Management of Targeted Financial Sanctions related to Terrorism and the Proliferation of Weapons of Mass Destruction;

Having regard to Instruction No. 2019-05 of the Central Bank of Djibouti on corporate governance of credit institutions;

Having regard to Instruction No. 15/BCD/04 of the Central Bank of Djibouti on the residence criterion;

Having regard to Instruction No. 2017-01 of the Central Bank of Djibouti on the conditions and procedures for the exercise of activities by electronic money issuers;

Having regard to Instruction No. 2023-01 of the Central Bank of Djibouti on the anti-money laundering and counter-terrorist financing framework;

Having regard to Circular No. 2012-02 setting out the procedures for applying for approval as a credit institution.

Decrees:

PRELIMINARY CHAPTER:

Article 1: Definitions

The terms referenced in this instruction, as well as the abbreviations used, are defined as follows:

Agent: a natural or legal person mandated by a regulated institution to provide a service on its behalf, such as a payment service;

ANRF (National Financial Intelligence Agency): the authority defined in Article 3-2-1-1 of Law No. 178 and created by Decree No. 2024-052/PR/MJDH on the attribution, organization, and functioning of the National Financial Intelligence Agency. Its role is, in particular, to receive declarations from all professions subject to AML/CFT obligations, including the institutions subject to this instruction;

Fake Bank: a bank licensed in a country where it has no physical presence and is not affiliated with a regulated financial group subject to consolidated and effective supervision;

Beneficial Owner: the expression "beneficial owner" refers to the natural person(s) who ultimately own or control a client and/or the natural person on whose behalf a transaction is being executed. It also includes persons who ultimately exercise effective control over a legal person or legal arrangement;

AML/CFT Risk Map: a document formalizing, for each regulated institution, the identification of money laundering and terrorist financing (ML/TF) risks to which it is exposed, based on various criteria: its type of clientele, its activities, the countries with which its clientele or the institution itself conducts transactions, and its distribution channels (branches, remote relationships);

Occasional Clientele/Occasional Clients: a natural or legal person conducting a single transaction or several transactions within a given period, but without a habitual nature;

The terms "occasional clientele" and "occasional clients" are opposed to those of "regular clientele" and "regular clients";

The holder of an account opened in a bank must be considered a regular client, even if they make few transactions on their account;

Pass-through Account: a correspondent account used directly by third parties to conduct transactions for their own account;

Distributor: a natural or legal person authorized to provide electronic money distribution services on behalf of an electronic money issuer;

Screening: the process of identifying certain categories of persons, such as those subject to sanctions or Politically Exposed Persons (PEPs), or certain types of transactions that the regulated institution considers more exposed to ML/TF risk;

Funds: The term "funds" refers to all types of assets, whether tangible or intangible, corporeal or incorporeal, movable or immovable, regardless of their mode of acquisition, as well as legal instruments or documents in any form, including electronic or digital, attesting to the ownership of these assets or rights related thereto;

Funds and Other Assets: The expression "funds and other assets" refers to any property, including, in a non-limitative manner, financial assets, economic resources (including oil and other natural resources), property of any nature, tangible or intangible, movable or immovable, regardless of their mode of acquisition, as well as legal instruments or documents in any form, including electronic or digital, attesting to the ownership of these funds and other assets or rights related thereto, including, in a non-limitative manner, bank credits, traveler's checks, bank checks, money orders, shares, securities, bonds, bills of exchange or letters of credit, and any potential interest, dividends, and other revenues or values derived from or generated by such funds and other assets, and all other assets that could be used to obtain funds, assets, or services;

FATF (Financial Action Task Force): an intergovernmental body whose objective is to combat money laundering and terrorist financing. It has issued 40 recommendations and regularly publishes typology reports on the fight against money laundering and terrorist financing (AML/CFT);

Wealth: The set of movable and immovable property, rights, and claims belonging to the declarant and related persons, as well as the debts and financial commitments contracted by them;

PEP (Politically Exposed Person): a natural person exercising or having exercised prominent political functions, as defined in points 11, 12, and 13 of Article 1-2-2 of Law No. 178/AN/25/9th L amending Law No. 106/AN/24/9th L;

Resolutions of the United Nations Security Council: in the field of AML/CFT, decisions taken, in application of the Charter of the United Nations, by the United Nations Security Council or an ad hoc sanctions committee, consisting in the adoption of sanctions against countries or persons, natural or legal, generally taking the form of lists;

Sub-distributor: a natural or legal person who has received a mandate from one or more distributors to provide electronic money distribution services on behalf of an electronic money issuer;

CHAPTER II: SCOPE AND OBJECT OF THE INSTRUCTION

Article 2: Scope of the instruction

This instruction applies to:

a) financial institutions, as defined in Article 1.1 of Law No. 119/AN/11/6th L, constituted of:
a-1) credit institutions, including, in accordance with Article 9.1 of the aforementioned law: i) conventional and Islamic banks; ii) finance companies; iii) specialized financial institutions (SFIs), a-2) financial auxiliaries, defined in Article 10 of said law, a-3) microfinance institutions (MFIs), defined in paragraph 3 of Article 1 of Law No. 179/AN/07/5th L,

b) the Post Office for its manual exchange and funds transmission activities, in application of Article 2.2 of Law No. 119/AN/11/6th L,

c) payment service providers, referred to in Article 1.y).iii of Law No. 118/AN/15/7th L, as well as electronic money institutions, defined in the preliminary chapter of Instruction No. 2017-01, other than credit institutions.

The institutions mentioned in the preceding paragraph are hereinafter referred to as "regulated institutions."

The application of the provisions of this instruction must take into account the category of regulated institution to which each belongs.

The provisions of this instruction apply to the headquarters and branches of regulated institutions, as well as to their processing centers.

Regulated institutions ensure that their agents, distributors, and sub-distributors apply the provisions of this instruction concerning them. They bear responsibility for any violation of these provisions by their agents, distributors, and sub-distributors.

The Central Bank of Djibouti (BCD) may specify, by instruction, circular, or circular letter, the procedures for implementing the provisions of this instruction for one or more categories of regulated institutions.

Article 3: Object of the instruction

This instruction aims to specify:

• on the one hand, the conditions for applying to regulated institutions the aforementioned laws and decrees governing obligations in the field of anti-money laundering and counter-terrorist financing (AML/CFT) in the Republic of Djibouti,

• on the other hand, the role of the BCD in monitoring compliance by regulated institutions with their obligations in the field of AML/CFT.

CHAPTER III: PROVISIONS RELATING TO THE ANTI-MONEY LAUNDERING AND COUNTER-TERRORIST FINANCING FRAMEWORK OF REGULATED INSTITUTIONS

Article 4: Scope of the anti-money laundering and counter-terrorist financing framework

Regulated institutions must put in place a framework for preventing ML/TF risks, also known as the "AML/CFT framework."

This framework includes in particular:

a) an ML/TF risk map, b) an organizational structure, c) procedures, d) the implementation of means for identifying and knowing the clientele and beneficial owners, e) a staff awareness and training program, f) applications, g) internal control measures.

Article 5: Obligation to formalize the content and functioning of the anti-money laundering and counter-terrorist financing framework

Regulated institutions must document in writing the content and functioning of their AML/CFT framework. This must be fully compliant with the legislative and regulatory provisions relating to AML/CFT in the Republic of Djibouti.

The document mentioned in the preceding paragraph must be validated annually by the board of directors of regulated institutions having such a body, or, in the absence thereof, by an equivalent body or the heads of the regulated institutions. It must be transmitted to the Central Bank after the aforementioned validation.

Article 6: Identification and management of money laundering and terrorist financing risks

Regulated institutions must put in place a process for identifying, assessing, monitoring, managing, and mitigating the ML/TF risks to which they are exposed. To this end, they take into account in particular their activities, the type of products they offer, the characteristics of their clientele, the distribution channels of their products, the type of financial institutions with which they have relationships, and the countries with which they conduct transactions.

They formalize this analysis through an ML/TF risk map, in which each of their activities and each of their products is assessed, with each risk evaluated at a minimum of 3 levels (low risk, medium risk, high risk), taking into account the observed gross risk.

This assessment must then take into account the risk mitigation measures taken into consideration of the gross risk level, before concluding with a final global assessment synthesizing the entire process in the form of a residual risk rating.

Article 7: Taking into account money laundering and terrorist financing risk in the event of launching a new activity, product, or service

Before launching any new activity or new product or service, regulated institutions conduct a thorough analysis of the ML/TF risks that these may generate and plan mitigation measures to reduce them to a minimum.

This analysis must be documented in writing and include a justification for launching the activity, product, or service, with regard to the identified ML/TF risks and the measures envisaged to control them. When the new activity, product, or service involves the use of new technologies, a specific risk analysis of the associated risks is carried out, including, where appropriate, appropriate risk management and mitigation measures for these technologies.

The compliance committee or risk management committee, referred to in Article 34 of Instruction No. 2019-05, for regulated institutions that have established one, is consulted based on the analysis mentioned in the preceding paragraph.

Article 8: Establishment of an internal structure responsible for anti-money laundering and counter-terrorist financing

Regulated institutions must put in place a dedicated structure for AML/CFT, tasked with ensuring the implementation of the AML/CFT framework and monitoring its effectiveness.

This structure must be linked to a high hierarchical level. It may be part of a larger unit but must be positioned outside those responsible for internal control.

In credit institutions, this structure must be linked to the compliance function, defined in paragraph 2 of Article 24 of Instruction No. 2019-05.

This structure must be adapted to the organization, nature, and volume of the regulated institution's activities.

The designation of the head of the structure must be formalized, and a job description must be established.

The head of the structure must possess the necessary skills to implement the AML/CFT framework.

They present to the heads of their establishment all significant elements regarding this framework, so that they understand its general functioning.

In small regulated institutions, other than credit institutions, the person acting as head may exercise the functions assigned to this structure.

Article 9: Designation of an "ANRF Correspondent"

Regulated institutions designate a "correspondent," who is preferably the head of the dedicated AML/CFT structure mentioned in the 4th paragraph of Article 8.

The "ANRF Correspondent" represents their establishment before the ANRF, being authorized to transmit declarations to it. They ensure relations between their establishment and the ANRF, ensuring the centralization of information exchanges between these two institutions.

Regulated institutions may designate a substitute ANRF correspondent to ensure the continuity of the function in case of absence or prolonged unavailability of the main correspondent.

In small regulated institutions, other than credit institutions, the person acting as head may exercise the function of ANRF correspondent. Regulated institutions communicate the names of their ANRF correspondents to the ANRF within 15 days of their designation, preferably using the "form for the designation of a correspondent," available on the ANRF website. They also inform the BCD of this nomination.

Any modification of the names of the ANRF correspondents must be brought to the attention of the ANRF and the BCD without delay.

Article 10: Procedures in the field of anti-money laundering and counter-terrorist financing

Regulated institutions develop detailed procedures describing their AML/CFT framework and formalizing all the processes constituting it.

These procedures must be perfectly known to the relevant members of the regulated institution's staff, being easily accessible to them.

They are updated as frequently as necessary and, at the very least, in the event of changes to the legislative or regulatory corpus in the field of AML/CFT.

Article 11: Provisions relating to due diligence obligations

Regulated institutions must put in place processes for identifying and updating their knowledge of their clientele as well as a system of permanent vigilance over their operations, in accordance with the provisions of Title II of Law No. 178 amending Law No. 106/AN/24/9th L.

Article 12: Identification and examination of suspicious transactions

Regulated institutions must put in place measures for detecting and processing suspicious transactions, as well as measures aimed at reducing their ML/TF risk.

They must be able to make the declarations to the ANRF provided for by legislation.

Article 13: Recruitment, training, and awareness of staff

Prior to recruiting their employees, regulated institutions must conduct a profile analysis, which includes at least the examination of their curriculum vitae and criminal records, and an assessment of their experience with regard to the functions they intend to assign them.

Regulated institutions ensure that the relevant members of their staff, including newly recruited personnel, are informed of the legislative and regulatory provisions relating to AML/CFT in force and their modifications.

Regulated institutions must put in place an information and training policy on AML/CFT for all their collaborators, and in particular for those in contact with the clientele, as well as for those processing their transactions.

Regulated institutions develop a training plan covering in particular the presentation of the procedures mentioned in Article 10 of this instruction. They regularly raise awareness among their staff regarding typologies constituting ML/TF cases.

Regulated institutions must be able to attest to the completion of the information and training actions undertaken.

Article 14: Applications used

Regulated institutions list all applications and means implemented to record client identification elements, as well as the characteristics of their transactions, and to reconcile the information collected on them with the nature and frequency of their transactions.

They must be able to explain the functioning of these applications, including when the processing resulting from them is outsourced or carried out by their belonging group, notably for the identification of persons subject to the freezing of their assets or sanctions and Politically Exposed Persons (PEPs).

Regulated institutions conducting funds transmission activities on behalf of an international network must be able to explain the processing carried out by the latter in terms of AML/CFT and provide the contact details of the services of said network ensuring them.

Article 15: Internal control measures

Regulated institutions implement internal control measures, of a permanent and periodic nature, designed to ensure the existence and effectiveness of all components of their AML/CFT framework and its compliance with legislative and regulatory requirements in the field of AML/CFT.

CHAPTER III: PROVISIONS RELATING TO IDENTIFICATION OBLIGATIONS

Article 16: Identification of clients, natural persons

Regulated institutions take all necessary measures to ensure the identity of their clients, natural persons, and their eventual beneficial owners, before establishing any business relationship with them.

Identity verification is carried out by presenting any official identity document, currently valid, bearing a photograph, issued by authorized Djiboutian authorities or by a recognized foreign authority.

For each client and beneficial owner, the following elements must be recorded in paper or electronic format:

a) names and first names, b) date of birth, c) place of birth, d) the identity document number, its issue date, its expiration date, the authority that issued it, and the name of the issuing country, if foreign. A copy of the identity document is retained, e) address, f) profession for regular clients, g) registration deed with the commercial and companies register for natural persons engaged in commerce.

Article 17: Identification of clients, legal persons

Regulated institutions take all necessary measures to ensure the identity of their clients, legal persons, as well as, where applicable, their beneficial owners, regular or occasional, before establishing a business relationship with them.

For each client and beneficial owner, the following elements must be recorded in paper or electronic format, considering the nature and control structure of the legal person wishing to establish a business relationship:

a) the name of the person, b) a description of its type of activities, c) the address of its registered office and main places of activity, d) its tax identification number, e) its patent number, f) the company statutes, g) its organizational chart, h) the identity of the natural person(s) holding at least 5% of the capital of the legal person.

In addition to the above information, regulated institutions request, depending on the legal status of the legal persons:

a) the deed of incorporation of the company; b) the names of the directors and persons mandated to manage banking services; c) the deed appointing the