Law No. 14/2023 of 28 August - Establishes the Legal Regime and Measures for the Prevention and Combating of Money Laundering, Terrorist Financing and Proliferation Financing

SUMMARY
SUPPLEMENT
Assembly of the Republic:
Law No. 14/2023:
Law that establishes the Legal Regime and Measures for the Prevention and Combating of Money Laundering and Terrorist Financing and repeals Law No. 11/2022 of 7 July.
Monday, 28 August 2023 I SERIES — Number 166
ASSEMBLY OF THE REPUBLIC
Law No. 14/2023 of 28 August
Given the need to review Law No. 11/2022 of 7 July, the Law on the Prevention and Combating of Money Laundering and Terrorist Financing, in order to align it with international legal instruments admitted into the domestic legal order, under the provisions of paragraph 1 of Article 178 of the Constitution, the Assembly of the Republic determines:

CHAPTER I
General Provisions

Article 1
(Object)
This Law establishes the legal regime and measures for the prevention and combating of the use of the financial system and non-financial entities for the purposes of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction.

Article 2
(Scope)

1. This Law applies to natural and legal persons, including those without legal personality, non-profit organizations, financial institutions and non-financial entities with headquarters on national territory, as well as their branches, agencies, subsidiaries or any other forms of representation, and to other institutions likely to be used for the commission of acts of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction.
2. This Law also applies to branches, agencies, subsidiaries or any other form of representation on national territory of financial institutions and non-financial entities established abroad, as well as to representations of national entities located abroad.

Article 3
(Definitions)
The meaning of the terms used in this Law is contained in the glossary attached, which forms an integral part thereof.

Article 4
(Financial institutions)
For the purposes of this Law, financial institutions are:
a) credit institutions, namely:
i. banks;
ii. credit cooperatives;
iii. micro-banks, in the various types admitted by applicable legislation;
iv. other companies qualified as credit institutions by Government Decree.
b) financial companies:
i. payment service providers, in the categories of electronic money institutions, fund transfer institutions, payment aggregators and other categories established by the Bank of Mozambique;
ii. brokerage financial companies;
iii. brokerage companies;
iv. investment fund management companies;
v. wealth management companies;
vi. venture capital companies;
vii. group purchasing administration companies;
viii. companies issuing or managing bank cards;
ix. leasing companies;
x. factoring companies;
xi. investment companies;
xii. mutual guarantee companies;
xiii. exchange houses;
xiv. discount houses;
xv. companies that, corresponding to their definition, are so qualified by Government Decree.
c) other microfinance operators defined by law; d) virtual asset service providers; e) entities authorized to conduct life insurance business and its mediation, pension fund management companies and other investment entities related thereto; f) issuers, operators and other market participants in the securities market; g) any other persons or entities that carry out other activities or transactions and that are subsequently classified as such by specific legislation.

Article 5
(Non-financial entities)

1. For the purposes of this Law, the following are designated as non-financial entities:
   a) casinos and entities operating social and entertainment games; b) natural and legal persons carrying out real estate mediation and real estate purchase and resale activities, as well as construction entities that carry out direct sales of real estate; c) agents, intermediaries or dealers in gems and precious metals; d) vehicle sellers and resellers; e) postal companies, to the extent that they carry out financial activities; f) travel and tourism agencies, hotels and similar establishments, when authorized to conduct partial foreign exchange trading by the Bank of Mozambique.
2. Lawyers and all those who exercise functions of legal representation and assistance, notaries, conservators, accountants and independent auditors are also considered non-financial entities when involved in transactions on behalf of their clients or in other circumstances, regarding the following activities:
   a) purchase and sale of real estate; b) management of client funds, securities or other assets; c) management of savings bank accounts or securities accounts; d) organization of contributions intended for the creation, operation or management of companies; e) creation, operation or management of legal persons or entities without legal personality and the purchase and sale of commercial entities.
3. Non-financial entities also include providers of services to trusts and companies, not covered by the preceding paragraphs, that provide the following services on a commercial basis:
   a) formation, registration and management of legal persons; b) acting as or arranging for another person to act as director or secretary of a company, partner in a partnership or similar position in relation to other legal persons; c) provision of office, address or facilities for a company, partnership or any person or legal instrument; d) acting as or arranging for another person to act as a shareholder on behalf of another; e) carrying out import and export activities for goods.

CHAPTER II
Criminal Activities

Article 6
(Money laundering)

1. The crime of money laundering is committed by anyone who, in any form of participation, knowing that the funds, assets, rights or values are derived from the commission of the crimes set forth in Article 7 of this Law:
   a) converts, transfers, assists or facilitates any operation of conversion or transfer of assets or products, obtained by oneself or by a third party, directly or indirectly, with the aim of disguising their illicit origin or of avoiding that the perpetrator or participant in the offense be criminally prosecuted or subjected to criminal action; b) conceals or disguises the true nature, origin, location, disposition, movement or ownership of assets or rights relating to such assets; c) acquires, possesses or uses, knowing at the time of acquisition, or at the initial moment of detention or use, that such assets are derived from the commission in any form of participation of the offenses set forth in Article 7 of this Law.
2. The commission of the crime by the forms set forth in letters a) and b) of paragraph 1 of this article is punishable by 12 to 16 years of imprisonment.
3. The commission of the crime by the form set forth in letter c) of paragraph 1 is punishable by 2 to 8 years of imprisonment.
4. The commission of the crime by the form set forth in letter c) of paragraph 1 of this article is punishable by 2 to 8 years of imprisonment.
5. The knowledge, intent or purposes required as constitutive elements of the crime may be inferred from factual and objective circumstances.
6. The agent who instigates, incites, advises, or in any way commits the main typical actions described in paragraph 1 of this article is punished as follows:
   a) in letters a) and b) of paragraph 1 of this article with a penalty of 12 to 16 years of imprisonment; b) in letter c) of paragraph 1 of this article with a penalty of 2 to 8 years of imprisonment.
7. For the commission of the crime of money laundering, the liability of Legal Persons and equivalent entities is determined in accordance with the provisions of the Penal Code, and they are subject to the penalty of dissolution and a fine of 2 to 10 million Meticais.
8. Punishment for the crime of money laundering applies even if:
   a) the unlawful act relating to the preceding crime was committed abroad; b) the location of the commission of the act or the identity of its perpetrators is unknown; c) there is no conviction for the commission of the preceding crime.
9. Attempt is punishable under the terms of the Penal Code.

Article 7
(Predicate offenses)
The following are considered predicate offenses to money laundering:
a) criminal association; b) terrorism; c) terrorist financing; d) financing of the proliferation of weapons of mass destruction; e) homicide or qualified bodily harm; f) kidnapping and unlawful detention; g) human trafficking; h) sexual exploitation; i) illicit trafficking in narcotic drugs and psychotropic substances; j) illicit trafficking in arms; k) illicit trafficking in stolen goods; l) environmental crimes; m) corruption, embezzlement, bribery, trafficking in influence and economic participation in business; n) usury; o) forgery and fraud; p) tax evasion and tax fraud; q) smuggling and contraband of goods; r) counterfeiting and piracy of products; s) abusive use of insider information and market manipulation; t) robbery and theft; u) extortion; v) illegal maritime and lake fishing; w) any other crime punishable by a penalty exceeding six months of imprisonment, under applicable legislation.

Article 8
(Terrorist financing)

1. The crime of terrorist financing is committed by anyone who, by any means, directly or indirectly and intentionally, collects or provides funds, assets, rights or any other advantage, with the intention that they be used or knowing that they will be used, in whole or in part:
   a) to carry out a terrorist act; b) by a terrorist or a terrorist organization.
2. The terms set forth in letters a) and b) of Article 7 of this Law are defined in the Legal Regime for the Prevention, Repression and Combating of Terrorism and Proliferation of Weapons of Mass Destruction.
3. The commission of the crime by the form set forth in paragraph 1 of this article is punishable by 20 to 24 years of imprisonment.
4. The crime of terrorist financing is considered consummated, regardless of the commission of any terrorist act referred to in paragraph 1 of this article or of funds, assets, rights or advantages having been effectively used to commit such act.
5. Punishment for the crime of terrorist financing applies even if:
   a) the terrorist act was planned in a foreign jurisdiction; b) the terrorist act is intended to be executed in a foreign jurisdiction; c) the terrorist act is intended to finance terrorists or terrorist organizations in a foreign jurisdiction.
6. Attempt is punishable under the terms of the Penal Code.
7. Complicity is punishable under the terms of the Penal Code.

Article 9
(Financing of the proliferation of weapons of mass destruction)

1. Whoever by any means, directly or indirectly, provides, collects, gathers or holds, manages funds or assets of any type, as well as products or rights capable of being converted into funds, with the intention that they be used or having knowledge that they may be used, in whole or in part, for the financing of the proliferation of weapons of mass destruction, is punished under the same terms as terrorist financing.
2. The commission of the crime by the form set forth in paragraph 1 of this article is punishable by 20 to 24 years of imprisonment.
3. For an act to constitute the offense set forth in paragraph 2 of this article, it is not necessary that the funds originate from third parties, nor that they have been delivered to the intended recipients, nor that they have been effectively used to commit the acts provided for therein.
4. The following also constitute the crime of financing the proliferation of weapons of mass destruction:
   a) deliberately collecting and making available funds by national or foreign citizens who are on Mozambican territory with the intention or knowledge that the funds are used to finance the travel of individuals to a third State other than their state of residence or nationality, with the objective of perpetrating, planning, preparing or participating in acts of proliferation; b) knowingly financing acts of proliferation of weapons of mass destruction, planning or inciting their commission; c) participating as an accomplice, organizing or ordering another person to carry out proliferation financing, or contributing to the commission of typical acts of proliferation of weapons of mass destruction.
5. Attempt is punishable under the terms of the Penal Code.
6. Complicity is punishable under the terms of the Penal Code.

Article 10
(Financial sanctions for acts of financing the proliferation of weapons of mass destruction) Financial institutions and non-financial entities and any other natural and legal persons must apply to acts of financing the proliferation of weapons of mass destruction the financial sanctions imposed by the Committees of the United Nations Security Council.

CHAPTER III
Duties of Financial Institutions and Non-Financial Entities

SECTION I
General Duties

Article 11
(Duties)
Financial institutions and designated non-financial entities are obliged, in the exercise of their activity, to comply with the following duties regarding their past, present and potential clients, both natural and legal persons:
a) risk assessment; b) identification, verification, updating and due diligence; c) refusal; d) abstention; e) retention of documents for the period provided for in the regulation of this Law; f) reporting of suspicious transactions; g) examination; h) cooperation; i) training; j) control.

Article 12
(Duty of risk assessment)

1. Financial institutions and non-financial entities must adopt appropriate measures to identify, assess, understand and mitigate the risks of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction to which they are exposed at the client, transaction and institutional levels, taking into account the following factors:
   a) nature, size and complexity of the activity carried out; b) countries or geographical areas in which they carry out activity, directly or through third parties, belonging or not to the same group; c) business areas developed, as well as products, services and operations made available; d) nature and history of the client, including the activity carried out by them; e) geographical location of the client of the financial institution or who has domiciled or in some way carries out their activity; f) distribution channels of the products and services made available, as well as the communication means used in contact with clients.
2. Financial institutions and non-financial entities must assess the risk of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction associated with the specific operational reality, namely through the determination:
   a) the degree of probability and impact of each of the identified risks, taking into account all relevant variables in the context of the operational reality, including the purpose of the business relationship, the level of client deposits or the volume of operations carried out and the regularity or duration of the business relationship; b) the overall risk and, if applicable, their respective business areas, to be measured based on the weighting of each identified and assessed risk.
3. Financial institutions and non-financial entities must also:
   a) define and implement control means and procedures, including information systems, that prove adequate to mitigate the specific identified and assessed risks; b) implement especially reinforced procedures when there is an increased risk of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction; c) review and update, with adequate periodicity, the identified risks, the risk management practices referred to in the preceding paragraphs, so that they adequately reflect any changes recorded in the specific operational reality and risks associated with it.
4. The risk assessment must be drafted in a document, together with all supporting information and made available to the supervisory authorities and the GIFiM.
5. The documents or records drawn up in accordance with the provisions of paragraph 4 of this article must be retained for a period of 10 years and made available to the supervisory authorities and the Financial Information Office of Mozambique, abbreviated as GIFiM.
6. If the specific risks inherent to a given sector of activity subject to the application of this Law are clearly identified and understood, the supervisory authorities may:
   a) waive the carrying out of individual and documented risk assessments or allow them to be carried out in simplified terms, to be defined by the respective authority; b) establish procedures alternative to the carrying out of individual or simplified risk assessments; c) waive the carrying out of individual and documented risk assessments or allow them to be carried out in simplified terms, to be defined by the respective authority; d) establish procedures alternative to the carrying out of individual or simplified risk assessments.

Article 13
(Responsibility of the governing body)

1. The governing body of the obligated entities is responsible for the approval and application of policies, procedures and controls regarding the prevention of money laundering and terrorist financing.
2. For the purposes of the provisions of paragraph 1 of this article, the governing body is especially responsible for:
   a) approving the policies, procedures and controls referred to in Article 12 of this Law, as well as updating them; b) having adequate knowledge of the money laundering and terrorist financing risks to which the obligated entity is exposed at all times, as well as of the processes used to identify, assess, monitor and control these risks; c) ensuring that the organizational structure of the obligated entity allows, at all times, the adequate execution of the policies, procedures and controls referred to in Article 13 of this Law, preventing conflicts of interest and, whenever necessary, promoting the separation of functions within the organization; d) monitoring and evaluating, periodically, the effectiveness of the policies and procedures, ensuring the execution of adequate measures to correct deficiencies detected therein.

Article 14
(Risk management in the use of new technologies)

1. Financial institutions and non-financial entities must identify and assess the risks of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction that may arise as a result of, namely:
   a) offering of products and services or operations likely to favor anonymity; b) development of new products, services, distribution mechanisms, payment methods and new business practices; c) use of new or developing technologies, both for new products and services and for existing products and services.
2. Financial institutions and non-financial entities must also:
   a) assess the risk before the launch or use of such products and services, practices and technologies; b) take appropriate measures to manage and mitigate the risks of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction; c) implement policies or measures that prove necessary to prevent the abusive use of new technologies in schemes for money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction.

Article 15
(Duties to identify, verify and conduct due diligence)

1. Financial institutions and non-financial entities must identify their clients and their respective representatives and verify their identity, by means of a valid supporting document, and proceed to trace the beneficial owner, where applicable, whenever:
   a) they establish a business relationship; b) they carry out occasional transactions:
   i. of an amount equal to or greater than 900,000 Meticais and, if the total amount is not known at the start of the operation, the financial institution must proceed with identification as soon as it becomes aware of that amount and verify whether the threshold has been reached;
   ii. in cases of domestic or international fund transfers.
   c) there are suspicions that the operations, regardless of their value, are related to the crime of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction; d) there are doubts regarding the veracity or adequacy of the client's identification data.
2. Financial institutions and non-financial entities must also:
   a) collect information from senior management members; b) collect information on the object and nature of the business relationship; c) maintain continuous vigilance over the business relationship and carefully examine operations carried out during that relationship, verifying that they are consistent with the institution's knowledge of the client, their business and their risk profile, including, if necessary, the origin of the funds; d) establish policies and procedures aimed at addressing specific risks related to the business or occasional transactions without the client's physical presence; e) refuse the start of the business relationship, as well as the carrying out of any transactions that do not meet the requirements set forth in the preceding letters and in paragraph 1 of this article, according to objective criteria; f) adopt appropriate measures to understand the ownership and control structure of the client, when it is a legal person or a collective interest center without legal personality; g) keep updated the information elements obtained during the business relationship; h) refrain from maintaining anonymous, numbered or identification elements that are manifestly fictitious accounts; i) obtain information on the names of relevant persons and management positions of legal persons and other collective interest centers without legal personality; j) carry out a follow-up