Regulation (NAP) on the Identification and Classification of Financial Institutions' Clients ('Know Your Customer')

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 1/11
PSBS	04/05/2015	13/04/2015	10/2015

Subject: Rule on the Identification and Classification of Financial Institutions' Clients “Know Your Customer”

The use of financial institutions in money laundering, commonly known as "Money Laundering", seriously compromises their reputation and stability, as well as the reliability of the Financial System and public confidence in it.

Considering it imperative to adopt measures that do not facilitate money launderers taking advantage of capital movement liberalization and the free provision of financial services;

Considering the express provisions in the United Nations Convention (Vienna Convention), dated December 19, 1988;

Considering the Declaration of Principles adopted in Basel in December 1988 by Banking Supervisory Authorities, a text that constitutes an important step towards preventing the use of the Financial System for Money Laundering and Terrorism Financing;

Considering the Recommendations of the Financial Action Task Force on Money Laundering, established in July 1989;

Considering that it is necessary to ensure that Financial Institutions require the identification of clients who establish commercial relations with them or carry out transactions exceeding a certain amount, in order to prevent money launderers from benefiting from anonymity to conduct their criminal activities; that such provisions should also be extended, as far as possible, to any beneficial owners;

Taking into account that the Central Bank, responsible for the functioning of the Financial System, under Article 8 of Law 8/82 of August 3, Organic Law of the Central Bank, published in the Official Gazette, has the duty to create instruments to concretize this task;

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 2/11
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In these terms, the Central Bank determines:

Article 1.
Scope

1. The Board of Directors of financial institutions must adopt mechanisms that enable them to know the users who utilize their services, which includes:
   a) Client acceptance criteria; b) Definition of client types representing high risk; c) Action rules for different client types.

2. In adopting these mechanisms, financial institutions must consider the client's background, public position, accounts related to their professional activity, among other elements.

3. Financial institutions must delegate authority to their employees to ensure that the policy established by the Board of Directors is implemented and leads to effective and adequate client knowledge.

4. Financial Institutions must establish appropriate procedures, in accordance with the policy defined by the Board of Directors and client risk assessment, to ensure ethical and professional standards that prevent involvement, even accidental, in Money Laundering and Terrorism Financing activities.

5. The procedures provided for in the preceding paragraph must establish an internal control and communication system, as well as authorized personnel to process communications regarding operations or clients, define the documents seized and their respective period.

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 3/11
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6. For the purpose of the preceding paragraph, Financial Institutions must appoint a compliance officer in relation to the Prevention and Combat of Money Laundering and Terrorism Financing with competence, authority, and independence to implement the institution's compliance program in relation to the Prevention and Combat of Money Laundering and Terrorism Financing, with the following duties:

   a) Prepare the compliance program in relation to ML/TF; b) Receive and verify suspicious transaction reports from staff; c) Forward the suspicious transaction report to the competent authority; d) Ensure the implementation of the compliance program in relation to ML/TF; e) Coordinate staff training on prevention and combat measures for Money Laundering and Terrorism Financing, detection methods, and reporting obligations; and f) Collaborate with competent/supervisory authorities and serve as a contact point for all staff regarding matters related to Money Laundering and Terrorism Financing.

7. Banks must incorporate client knowledge policy principles into their risk management and internal control systems, especially regarding:
   a) Client acceptance, b) Client identification; c) Monitoring of high-risk accounts.

Article 2.
Client Acceptance Policy

1. Financial Institutions must not establish a business relationship before identifying all parties to the relationship and verifying the nature of the business they intend to conduct.

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 4/11
PSBS	04/05/2015	13/04/2015	10/2015

2. For the purpose of the preceding paragraph, financial institutions must obtain sufficient information before establishing the business relationship by completing the “Know Your Customer” form according to Annexes I and II of this PAR, with respective supporting documents.

3. Financial Institutions must, after establishing the business relationship and confirming normal operations, examine any operation incompatible with the client's expected profile to determine if there is suspicion of Money Laundering or Terrorism Financing.

4. Financial Institutions must develop policies and procedures to identify client types presenting a higher risk of Money Laundering and Terrorism Financing activities.

5. Strengthen due diligence when opening accounts or conducting transactions with higher-risk clients and adopt adequate policies and procedures to handle specific risks associated with commercial relations and non-face-to-face transactions.

6. Comply with internal rules defining the required category for approving operations with these clients.

Article 3.
Risk Clients

1. To determine client risk or type, financial institutions must consider the following elements:

   a) Client origin (nationality, residence, etc.), location where established, location of counterparties doing business with the client, and connections to tax havens, especially non-cooperative countries. b) Client's background or current position, such as links to Politically Exposed Persons, major business owners, individuals with large assets but unclear source of funds; c) Nature of client activity, which may be particularly prone to Money Laundering and Terrorism Financing, such as casinos, lotteries, or exchange houses, which handle large amounts of cash; d) Legal entities with complex shareholder structures without justified reason.

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 5/11
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2. After accepting any client, if their activity does not correspond to the information or classification the financial institution had regarding them, they must be reclassified.

Article 4.
Client Identification

1. Banks must:

   a) Require complete client identification, differentiated information depending on whether it is an individual or legal entity; b) Always verify provided information through original documents, or secure sources; c) Identify owners or controllers, and the persons on whose behalf operations are conducted;

2. Banks must maintain regular diligence and scrutiny of transactions and accounts to ensure they coincide with the information possessed about the client, their activity, and the source of funds.

3. Complete client identification includes name, address, date of birth, nationality, occupation, other activities and income, and other information required in the mandatory fields of the Know Your Customer form according to Annex I and II of this PAR.

4. If the client refuses to cooperate for any reason, this behavior must be considered an indicator of suspicion.

Article 5.
Politically Exposed Persons

1. When opening accounts for clients with a position of visibility, regardless of normal measures adopted in the Know Your Customer analysis, financial institutions must also adopt the following measures:

   a) Collect adequate information from new clients and verify publicly available information, lists, or credible databases to determine if the client is a Politically Exposed Person,

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 6/11
PSBS	04/05/2015	13/04/2015	10/2015

b) Determine the source of funds and ensure they are not from corrupt or criminal sources before accepting the Politically Exposed Person as a client; c) Strengthen account opening process control through approval by the Compliance Officer and senior management of the banking institution; d) Perform continuous monitoring of accounts and transactions of Politically Exposed Persons and additional controls. e) Accounts of any of the aforementioned classes and non-resident persons holding a public position abroad must be considered high risk.

2. For clarification of the concept of Politically Exposed Person, reference shall be made to the definition provided in Article 4 of Law No. 8/2013, Law on the Prevention and Combat of Money Laundering and Terrorism Financing.

Article 6.
Correspondent Banking

1. Financial Institutions must manage their correspondent banking transactions proactively through a risk-based procedure.

2. For the purpose of the preceding paragraph, financial institutions must:

   a) Collect sufficient information about the correspondent bank from publicly available information, b) Ensure that their correspondent banks are regulated for money laundering control and have effective client acceptance policies and Know Your Customer systems; c) Not establish or continue correspondent banking relationships with banks located in jurisdictions identified as high risk due to inefficient and weak Know Your Customer system standards or having been considered non-cooperative jurisdictions in the fight against money laundering;

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 7/11
PSBS	04/05/2015	13/04/2015	10/2015

Article 7.
Information Update

When a client requests an alteration of a correspondence address, the address change must apply to all of the client's accounts, unless otherwise instructed by the client.

Article 8.
Transfer

Each transfer or payment document must include the name and account number of the orderer. In electronic transfers abroad, the bank must include the name and account number of the client executing the operation.

Article 9.
Retention of Identification Documents

1. Financial institutions must establish procedures for retaining essential information to prove the client's identity, their activity, sources of information, document retention period, type of client, and expected degree of account activity.

2. The information must be maintained in a readily available and retrievable manner. Periodic review of documents is advisable to ensure the existence of updated and adequate information, as prescribed in internal procedures, and necessary measures must be adopted if this does not occur.

Article 10.
Document Retention

Financial Institutions must ensure the retention of elements related to transactions, supporting documents, and records, consisting of original documents or copies with identical probative force, for a period of at least five years from the date of transaction execution.

Article 11.
Fixation of Levels

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 8/11
PSBS	04/05/2015	13/04/2015	10/2015

Financial institutions are obliged to perform client identification whenever there is suspicion of money laundering, even if the transaction amount is below 245,000,000.00 (Two Hundred and Forty-Five Million Dobras).

Article 12.
Account Supervision

1. Financial institutions must continuously monitor client accounts to ensure there is no suspicious activity.

2. Rules must be established to detect contrary or unusual activities in client accounts and, if necessary, report them to the Financial Intelligence Unit.

Article 13.
High-Risk Clients

1. Financial institutions must establish procedures to define which clients require greater care regarding money laundering activities, considering the type of activity, client's location, types of services requested by the client, and client type.

2. Relevant operations with high-risk clients must be approved by the senior management of the financial institution.

Article 14.
Suspicious Transaction Reporting

1. Financial institutions must report to the Financial Intelligence Unit any fact or transaction considered suspicious in terms of money laundering.

2. Financial institutions must maintain a list of clients whose account opening requests have been refused.

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 9/11
PSBS	04/05/2015	13/04/2015	10/2015

Article 15.
Sanction Regime

Violation of the provisions provided for in this PAR by financial institutions subjects them to the sanctions provided for in the PAR on Supervisory Action and Application of Penalties.

Article 16.
Transitional Measures

1. Financial institutions must review the history of current clients within 6 (six) months to ensure they are in compliance with this PAR and duly identified, including regarding the degree of risk.

2. For new clients, the application of this PAR is immediate.

Article 17.
Restrictions

1. Banks are prohibited from transacting with unknown clients.

2. Banks must cease operations with any client who refuses to cooperate by providing information.

Article 18.
Revocation

PAR 06/2007 of August 13, 2007 is hereby revoked.

Article 19.
Entry into Force

This PAR enters into force according to legal terms.

Central Bank of São Tomé and Príncipe, in São Tomé, April 13, 2015.

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 10/11
PSBS	04/05/2015	13/04/2015	10/2015

Annex I

Know Your Customer (KYC) Form for Individuals

Name: ___________________________________________________________________________ Surname: __________________________________________________________________________ Father's Name: ______________________________________________________________________ Mother's Name: _____________________________________________________________________ Gender: Male ________ Female _________ Place and Date of Birth: _________________________________________________________ Nationality: _____________________________________________________________________ Civil Registry Number and Place: ______________________________________________________ Identity Card or Passport Number: _________________________________________ Resident: ________ Non-Resident: _________ Residential Address: _______________________________________________________________ Phone: _________________________________________________________________________ Detailed Profession: ________________________________________________________________ Professional Address: ______________________________________________________________ Previous Profession for Retirees: __________________________________________________ Financial Status: __________________________________________________________________ Source of Funds: ________________________________________________________________ Other Income Sources: ________________________________________________________ Purpose of Business Relationship: _____________________________________________________ Nature of Business Relationship: ______________________________________________________ Marital Status: ______________________________________________________________________ Full Name of Spouse: __________________________________________________________ Spouse's Profession: _______________________________________________________________ Beneficial Owner: ______________________________________________________________________________

If the Beneficial Owner is different from the Account Holder Reason: ___________________________________________________________________________ Name: ____________________________________________________________________________ Address: _________________________________________________________________________ Profession: _________________________________________________________________________ Financial Status: __________________________________________________________________

Date: _____________________________________________________________________________

Signature Specimen: ____________________________________________________________

Vistos	Revocation Data:

Banco Central de S. T. P.	N A P <br> PERMANENT APPLICATION RULES	CÓDIGO <br> SB 03
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE	DOC NO.	PAGE <br> 11/11
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Annex II

Know Your Customer (KYC) Form for Legal Entities

Name: ___________________________________________________________________________ Place and Date of Registration: ____________________________________________________________ Nationality: _____________________________________________________________________ Address: _________________________________________________________________________ Phone: _________________________________________________________________________ Detailed Activity: _______________________________________________________________

Names of main majority partners/shareholders & percentage of quotas or shares:

---

Names of authorized signatories: ____________________________________________________ __________________________________________________________________________________

Names of legal representatives: ______________________________________________________ Manager/Director Name: __________________________________________________________ Financial Status (sales, profit ...): _________________________________________________________________________ Source of Funds: ________________________________________________________________ Expected Annual Income: _________________________________________________________________________ Purpose of Business Relationship: _____________________________________________________ Nature of Relationship: ________________________________________________________________________________ Beneficial Owner: _______________________________________________________________________________

If the Beneficial Owner is different from the legal entity owner Reason: ___________________________________________________________________________ Name: ____________________________________________________________________________ Address: _________________________________________________________________________ Occupation: _________________________________________________________________________ Financial Status: __________________________________________________________________

Date: _____________________________________________________________________________

Signature Specimen: ____________________________________________________________

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