Instruction No. 35/2008 on the Fight Against Money Laundering Within the Actors Authorized in the UMOA Regional Financial Market

WEST AFRICAN MONETARY UNION crepmf
REGIONAL COUNCIL FOR PUBLIC SAVINGS AND FINANCIAL MARKETS

INSTRUCTION NO. 35 / 2008

ON THE FIGHT AGAINST MONEY LAUNDERING WITHIN AUTHORIZED ACTORS OF THE UMOA REGIONAL FINANCIAL MARKET

The Regional Council for Public Savings and Financial Markets,

Having regard to the Convention establishing the Regional Council for Public Savings and Financial Markets (hereinafter the "Regional Council");

Having regard to the Annex to the Convention on the Composition, Organization, Operation and Powers of the Regional Council;

Having regard to the General Regulation relating to the Organization, Operation and Control of the UMOA regional financial market;

Having regard to Directive No. 07/2002/CM/UEMOA of September 19, 2002 on the fight against money laundering in the Member States of the West African Economic and Monetary Union (UEMOA);

Having regard to the Uniform Law on the fight against money laundering in the Member States of the West African Economic and Monetary Union (UEMOA), adopted on March 20, 2003 by the Union Council of Ministers, (hereinafter the "Uniform Law");

Having regard to the deliberations of the Regional Council at its ordinary session on May 8, 2008;

Considering the role that authorized actors of the UMOA financial market must play in the effective functioning of the money laundering fight mechanism in the Union;

Considering that the use of authorized actors of the regional financial market for money laundering is likely to compromise the stability and reliability of the financial system in general;

Considering that the implementation by authorized actors of the regional financial market of internal control procedures and training programs in this area are complementary measures without which the other measures contained in the Uniform Law would lose their effectiveness;

H E R E B Y O R D E R S

Instruction No. 35 / 2008

TITLE I: GENERAL PROVISIONS

Article 1: Purpose

This Instruction aims to specify the implementation modalities of the Uniform Law, particularly the provisions of Article 13 of said law, by the authorized actors of the regional financial market defined in Article 3 below.

Article 2: Definition

Under the provisions of Articles 2 and 3 of the Uniform Law, money laundering is defined as the offense constituted by one or more intentional acts, namely:

• the conversion, transfer or manipulation of assets, the perpetrator knowing that they originate from a crime, a misdemeanor or participation in such crime or misdemeanor, with the aim of concealing or disguising the illicit origin of said assets or helping any person involved in the commission of such crime or misdemeanor to escape the judicial consequences of their acts;

• the concealment or disguise of the nature, origin, location, disposition, movement or real ownership of assets or rights the perpetrator knows originate from a crime or a misdemeanor, as defined by the national legislations of the member states of UEMOA or participation in such crime or misdemeanor;

• the acquisition, holding or use of assets the perpetrator knows, at the time of receipt of said assets, originate from a crime, a misdemeanor or participation in such crime or misdemeanor.

Article 3: Scope of Application

This Instruction applies to the following regional financial market actors:

• The Regional Securities Exchange (BRVM);
• The Central Depository/Settlement Bank (DC/BR);
• Management and Intermediation Companies (SGI);
• Wealth Management Companies (SGP);
• Collective Investment Schemes in Securities (OPCVM),
• OPCVM Management Companies;
• Account Keeping and Conservator Banks (BTCC);
• Business Brokers;
• Sales Agents;
• any other natural or legal person authorized by the Regional Council.

Instruction No. 35 / 2008

TITLE II: PROVISIONS RELATING TO THE DUE DILIGENCE OBLIGATIONS OF ACTORS IN THE REGIONAL FINANCIAL MARKET

CHAPTER I: GENERAL DUE DILIGENCE OBLIGATIONS

Article 4: Client Identification

The regional financial market actors referred to in Article 3 above are required, before establishing a contractual relationship or assisting their client in the preparation or execution of a transaction, to ensure the identity of their counterparty. To this end, they proceed with the identification of their clients, in accordance with the provisions of Chapter 2 of Title II of the Uniform Law as well as those of the Annex to said Law, relating to the modalities for the identification of individual clients by authorized financial market organisms in the case of remote financial operations.

Client identification must be based, on the one hand, on precise ethical rules and, on the other hand, on a clearly defined customer knowledge policy, in order to prevent regional financial market actors from maintaining relationships with persons whose identity is doubtful or whose transactions are out of proportion to the activity.

To effectively protect themselves against reputation and counterparty risks, the regional financial market actors covered by this Instruction must define the types of clients they cannot accept, in light of the perceptions of the above paragraphs, and refrain from entering into any relationship before having satisfactorily established their identity, address, and the type of operations authorized with said clients.

Customer knowledge procedures must apply not only to new relationships but also to existing clients, particularly those on whom doubts weigh regarding the reliability of previously collected information.

Article 5: Retention of Documents and Records

Pursuant to the provisions of Article 11 of the Uniform Law, regional financial market actors must retain, for ten years from the closing of their accounts or the cessation of their relationship, documents relating to the identity of their regular or occasional clients.

They also retain documents relating to operations carried out by them for ten years from the end of the fiscal year during which they were carried out.

Instruction No. 35 / 2008

Article 6: Detection of Suspicious Operations

In the context of applying the provisions of Article 26 of the Uniform Law, the internal anti-money laundering program must, at all times, allow for the provision of precise information, particularly on:

• the amounts of operations carried out by the clientele and their frequency;
• the nature of the operations (cash deposits, transfers, etc.);
• the existence of an economic justification for the operations;
• the consistency of the economic justification of the operations;
• the currencies processed during the operations;
• the identity of the real ordering party;
• the origin of the operations (geographic origin, identity of financial organisms acting as intermediaries, accounts used);
• the identity of the real beneficiary;
• the destination of the operations (geographic destination, identity of financial organisms acting as intermediaries, accounts used).

CHAPTER II: SPECIFIC ENHANCED DUE DILIGENCE OBLIGATIONS

Article 7: Monitoring of Atypical Operations

Regional financial market actors must provide a transaction analysis and client profile monitoring device, allowing to trace and follow in particular atypical financial movements and operations.

This concerns in particular the following operations:

• transactions abnormal in themselves and/or transactions abnormal relative to a client (case for example of dormant securities accounts suddenly becoming active, checks with multiple endorsements, transfer of funds or securities to numbered accounts, purchase or sale of large quantities of securities);
• operations with an amount significantly higher than the client's usual transactions;
• stock orders and market operations aiming at or involving transactions on securities at prices shifted relative to market prices;
• operations consisting of multiple round trips on the stock market without apparent concern for profitability, followed by a request for withdrawal of funds or securities to another financial organism located notably abroad;
• transactions involving persons located in countries, territories and/or jurisdictions declared by the Financial Action Task Force (FATF)

as non-cooperative and persons subject to asset freeze measures for their alleged links with an organized criminal entity.

Article 8: Obligations Relating to Occasional Financial Operations

Internal anti-money laundering programs must specify the checks and steps to be carried out for the identification of occasional operations. To this end, regional financial market actors must ensure, in accordance with the provisions of Articles 7 and 8 of the Uniform Law, the identity of any occasional client who requests to carry out an operation involving an amount equal to or greater than five million (5,000,000) FCFA or whose FCFA equivalent equals or exceeds this amount.

The obligations referred to in Article 7 of the Uniform Law apply to occasional clients who request, within a time frame, the execution of several operations between which a link seems to exist and whose amount is less than five million (5,000,000) FCFA.

Article 9: Electronic Operations

Regional financial market actors who allow the execution of transactions via the internet or any other electronic means must have an adapted surveillance system for these transactions. They are, furthermore, required to centralize and analyze unusual transactions via the internet or any other electronic medium.

Article 10: Enhanced Vigilance Towards Non-Cooperative Countries and Territories as Well as Persons Subject to Asset Freeze Measures

The regional financial market actors referred to in Article 3 above are required to pay particular attention to operations carried out with countries, territories and/or jurisdictions declared by the FATF as non-cooperative and by persons subject to asset freeze measures for their alleged links with an organized criminal entity. In this regard, the list of these countries/territories and jurisdictions as well as that of persons subject to asset freeze measures must be regularly updated and communicated to the personnel placed at the forefront of the fight against money laundering within the regional financial market actor.

Instruction No. 35 / 2008

TITLE III: PARTICULAR OBLIGATIONS

CHAPTER I: OBLIGATIONS RELATING TO SUSPICIOUS TRANSACTION REPORTING

Article 11: Obligation to Report Suspicious Transactions

The regional financial market actors referred to in Article 3 above must submit reports of suspicious operations, in accordance with the provisions of Chapter 2 of Title III of the Uniform Law.

Under the provisions of Article 26 of said Uniform Law, they must report to the National Financial Information Processing Cell (CENTIF), created in application of said Law, operations involving sums that could fit into a money laundering process, particularly:

• sums handed over by the clientele that could originate from drug trafficking or organized criminal activities;
• operations involving sums that could originate from drug trafficking or organized criminal activities;
• any operation where the identity of the ordering party or beneficiaries remains doubtful, notwithstanding the execution of diligence in accordance with the provisions of Articles 7 to 9 of the Uniform Law;
• operations carried out by regional financial market actors or financial organisms for their own account or on behalf of third parties with natural or legal persons, including their subsidiaries or establishments, acting in the form or on behalf of trust funds or any other asset management instrument, where the identity of the settlors or beneficiaries is not known.

Article 12: Obligation Connected to the Suspicious Transaction Reporting Obligation

Pursuant to the provisions of Article 10 of the Uniform Law, any payment of sums for the settlement of stock operations, any cash payment or payment by bearer title of a sum of money, carried out under normal conditions, whose unit or total amount is equal to or greater than fifty million (50,000,000) FCFA as well as any operation involving sums whose unit or total amount is greater than ten million (10,000,000) FCFA carried out under unusual conditions of complexity and not appearing to have a lawful justification or object, must be recorded in a confidential register and subject to particular examination by regional financial market actors. In this case, the latter inquire with clients about the origin and destination of these sums as well as the object of the transaction and the identity of the persons benefiting from it.

Instruction No. 35 / 2008

CHAPTER II: OTHER PROFESSIONAL OBLIGATIONS

Article 13: Implementation of Anti-Money Laundering Mechanisms

Regional financial market actors are required to set up a specific structure for the fight against money laundering. The anti-money laundering device must be explicitly entrusted to the Internal Auditor. It is responsible for implementing a surveillance system and controlling the proper functioning of the procedures put in place, to satisfy all provisions of the regulation relating to the fight against money laundering.

To this end, the executive body must make adequate and sufficient means (human and material) available to the Internal Auditor and guarantee them operational independence, for the execution of their mission.

The Internal Auditor will notably have the following responsibilities:

• the centralization of suspicions emanating from personnel;
• the internal processing of suspicion files;
• the drafting of suspicious transaction reports and their transmission to the CENTIF;
• responding to regular or ad hoc inquiries by monetary and supervisory authorities or the CENTIF.

Article 14: Training and Awareness of Personnel

Regional financial market actors must implement a specific information and training policy for all personnel (including, if necessary, temporary and interim staff) involved in operations likely to be used in a money laundering circuit, particularly client managers, traders, portfolio or OPCVM managers, as well as all categories of personnel in contact with the clientele.

With regard to information, regional financial market actors must notably inform their concerned agents about the provisions of the legislation and regulation in force.

Regarding training, persons directly involved in the fight against money laundering must, on the one hand, have up-to-date procedure manuals and, on the other hand, based on a training plan, be regularly trained in the mastery of these manuals and sensitized to the different typologies constituting cases of money laundering.

Article 15: Internal Device for the Fight Against Money Laundering

The regional financial market actors referred to in Article 3 above are required to set up an internal device defining internal procedures and rules for the prevention and detection of money laundering.

This internal device must comply with the legislative and regulatory provisions in force in the member states of UEMOA regarding the fight against

money laundering, without prejudice to internal rules applicable to a financial organism due to its membership in a group.

The internal anti-money laundering device must be recorded in writing and validated by the Board of Directors of the regional financial market actor and transmitted to the Regional Council before its implementation.

Article 16: Control of the Internal Anti-Money Laundering Device

The internal anti-money laundering device must be submitted to the Statutory Auditors of the market actor. The Statutory Auditors must establish a detailed report on it in their report on the control of accounts for each fiscal year.

Article 17: Information Obligations

Regional financial market actors are required, upon transmission of the annual internal control report, to send to the CREPMF a report on the implementation of the entire money laundering fight mechanism in force in the member states of UEMOA. This report must notably:

• describe the organization and means implemented by the regional financial market actor in terms of prevention and fight against money laundering;
• relate the training and information actions carried out during the past year;
• inventory the controls performed to ensure the proper implementation and respect of client identification procedures, data retention, detection and reporting of suspicious transactions;
• highlight the results of investigations, particularly the weaknesses identified in procedures and their respect, as well as in statistics relating to the implementation of the suspicious transaction reporting device;
• report, if applicable, the nature of information transmitted to third-party institutions, including those outside the country of establishment;
• draw up a map of the most common suspicious activities, indicating if necessary the nature and form of mutations observed, in the field of money laundering;
• present the perspectives and action program for the upcoming period.

Regional financial market actors must be able to produce all necessary information for the assessment of the quality of their money laundering prevention device. In this regard, written procedures and internal documentation must be available in French.

Instruction No. 35 / 2008

TITLE IV: MISCELLANEOUS AND FINAL PROVISIONS

Article 18: Entry into Force

This Instruction, which will enter into force as of the date of its signature, repeals all prior contrary provisions and will be published wherever necessary.

Done in Abidjan, on November 23, 2009

The President

(Signature)
Léné SEBGO