OBLIGATIONS OF FINANCIAL INSTITUTIONS IN CAMEROON AND CEMAC – ANTI MONEY LAUNDERING AND TERRORISM FINANCING IN CAMEROON AND CEMAC
Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) constitutes the regulatory framework applicable in Cameroon for the purpose of preventing criminals from disguising the proceeds of criminal activity as legitimate funds and forestalling the financial support of terrorist organizations. In accordance with Law No. 01 /CEMAC/UMAC/CM of 11th April 2016, the two main concepts of this aspect are as follows:
- Money Laundering: Money laundering is the process by which funds derived from illegal activities such as drug trafficking, corruption, or organized crime are converted into ostensibly legitimate assets. The process typically proceeds through three distinct stages: placement, layering, and integration.
- Terrorist Financing: The raising, movement, and utilization of funds for the purpose of providing financial resources to terrorists or terrorist organizations.
How Anti Money Laundering and Counter Terrorism Financing Works in Cameroon
- Customer Due Diligence (CDD)/KYC: Financial and regulated institutions are required to verify the identity of their customers, assess the associated risk levels, and ascertain the source of funds prior to the provision of any services.
- Transaction Monitoring: Advanced software systems and trained analysts monitor financial transactions for unusual patterns and large-sum transfers in order to detect and flag potential criminal activity.
- Reporting Obligations: COBAC Regulation R-2023/01 demands that reporting entities shall have internal policies and procedures, put together by management and approved by the board of directors, to manage and mitigate the risks of money laundering and terrorist financing in their business.
- Record Keeping: Obliged entities must retain all customer and transactional records for a minimum of 10 years.
Regulatory and Enforcement Bodies in Cameroon
- ANIF (National Financial Investigation Agency): The National Agency for Financial Investigation (ANIF) serves as Cameroon's Financial Intelligence Unit (FIU) and is vested with the responsibility of receiving, investigating, and analysing Suspicious Transaction Reports (STRs). Further details regarding its operational mandates may be accessed on the ANIF website.
- COBAC (Banking Commission of Central Africa): The regional body responsible for the regulation and supervision of credit institutions, with a mandate to enforce compliance with regional Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) directives. Further information regarding its prudential requirements may be found on the COBAC Portal.
OBLIGATIONS OF FINANCIAL INSTITUTIONS IN CAMEROON
- Staff Training and Information
Financial institutions shall provide regular training and information to their staff regarding compliance with the obligations set forth in Chapters II and III of Title II of the regulations. This training aims to ensure the proper use of systems for detecting acts that may be part of an underlying money laundering process.
- Implementation of AML/CFT Prevention Programs
Financial institutions must develop and implement programs to prevent money laundering and terrorist financing. These programs include, in particular:
- The centralization of information on the identity of clients, originators, beneficial owners, beneficiaries and holders of power of attorney, agents, and on suspicious transactions;
- The appointment of a compliance officer at the level of headquarters, each branch, and each agency or local office;
- Ongoing training for staff to help them detect transactions and activities that may be related to money laundering and terrorist financing;
- An internal control system to verify the compliance, observance, and effectiveness of the measures adopted for the application of this Regulation;
- The processing of suspicious transactions.
Where necessary, the supervisory authorities may, within their respective areas of competence, specify the content and implementation procedures of anti-money laundering and counter-terrorist financing programs. They will, where appropriate, conduct on-site investigations to verify the proper implementation of these programs.
- Procedures and Internal Control
For the purposes of Articles 25 and 27 of the regulation, financial institutions shall:
1) Develop a classification of the money laundering and terrorist financing risks presented by their activities, according to the degree of exposure to these risks, assessed in particular based on the nature of the products or services offered, the terms of the proposed transactions, the distribution channels used, and the characteristics of the clients;
2) Establish a profile of the business relationship with the client, enabling the detection of anomalies in this relationship with regard to money laundering or terrorist financing risks;
3) Define the procedures to be applied for risk control, the implementation of customer due diligence measures, the retention of documents, the detection of unusual or suspicious transactions, and compliance with the obligation to report suspicious transactions to the ANIF;
4) Implement periodic and ongoing control procedures for money laundering and terrorist financing risks;
Insurance intermediaries subject to due diligence and suspicious transaction reporting obligations, and other persons subject to these obligations under Articles 6 and 7 of the regulation, shall implement the procedures and measures provided for in the first paragraph of this Article only if they are compatible with their status, missions, and level of activity, and under conditions defined by an order of the Minister of Finance.
Subject persons other than financial institutions shall implement the procedures and internal control measures for combating money laundering and terrorist financing defined by their supervisory authorities.
- Client Identification
Financial institutions are required to identify their clients and, where applicable, to verify the identity and authority of persons acting on their behalf, using independent and authenticated documents, sources, data, or information, when:
- Opening accounts, providing advice, particularly regarding securities, bonds, or other financial instruments;
- The allocation of a safe deposit box;
- The establishment of business relationships;
- The execution of occasional transactions when the client wishes to carry out:
a) A transaction of an amount equal to or greater than five million (5,000,000) CFA francs, whether a single transaction or several transactions that appear to be linked. Identification is also required even if the amount of the transaction is below the established threshold in case of doubt regarding the legality of the origin of the funds.
b) A transfer of funds at the national or international level;
The same applies in case of suspicions regarding the veracity or relevance of the client's identification data previously obtained, suspicion of money laundering, or financing of terrorism or proliferation.
Identification is also required in the case of multiple cash transactions, whether in national currency or foreign currency, when they exceed the total authorized amount and are carried out by and on behalf of the same person within a single day, or with unusual frequency. These transactions are then considered to be single.
- Identification of a Natural Person
The identification of a natural person is carried out by presenting a valid original official document bearing a photograph, of which a photocopy is made.
- Identification of a Legal Entity
The identification of a legal entity is carried out by producing its articles of association and any document establishing that it was legally constituted and that it has a real existence at the time of identification. A photocopy is made.
When identity verification cannot take place in the presence of the natural person or the representative of the legal entity, the financial institution implements additional due diligence measures in accordance with the provisions of Article 43 of the regulation.
Financial institutions implement mechanisms to understand the intended nature of the business relationship. They must also understand the nature of the activities of legal entities (and legal structures) as well as their ownership and control structure.
- Identification of Occasional Clients
The persons referred to in Articles 6 and 7 of the regulations shall, under the same conditions stipulated in Articles 30 and 31, verify the identity of their occasional clients and, where applicable, the beneficial owner of the transaction, before carrying out the transaction or assisting in its preparation or execution, when:
1) The amount of the transaction or related transactions exceeds ten million (10,000,000) FCFA, for persons other than currency exchange offices or the legal representatives and directors responsible for gaming operators;
2) The amount of the transaction or related transactions exceeds five million (5,000,000) FCFA, for currency exchange offices;
3) The amount of the transaction(s) exceeds one million CFA francs for the legal representatives and directors responsible for gaming operators;
4) The lawful origin of the funds is uncertain.
In all cases, identification is required if there are repeated separate transactions for an individual amount below the established thresholds.
- Identification of the Beneficial Owner
If it is uncertain whether the client is acting on their own behalf, the financial institution shall inquire by any means into the identity of the true originator.
After verification, if doubt persists regarding the identity of the beneficial owner, the transaction must be terminated, without prejudice, where applicable, to the obligation to report suspicions, as referred to in Article 83, to the National Financial Investigation Agency established in Article 65, under the conditions set forth in Article 83 of the regulations.
If the client is a lawyer, notary, accountant, or securities broker, acting as a financial intermediary, they may not invoke professional secrecy to refuse to disclose the identity of the beneficial owner.
- Re-identification of the client
When financial institutions have good reason to believe that the identity of their client and the previously obtained identification details are no longer accurate or relevant, they shall proceed with the re-identification of the client.
- Special Monitoring of Certain Transactions
The following shall be subject to special review by financial institutions:
1) Any payment in cash or by bearer instrument of a sum of money, made under normal conditions, the unit or total amount of which is equal to or greater than fifty million (50,000,000) CFA francs;
2) Any transaction involving a sum equal to or greater than ten million (10,000,000) CFA francs, carried out under unusually complex or unjustified conditions, or which appears to lack economic justification or a lawful purpose.
In the cases referred to in the preceding paragraph, institutions are required to inquire from the client, and/or by any other means, about the origin and destination of the funds as well as the purpose of the transaction and the identity of the economic actors in the transaction, in accordance with the provisions of Articles 30 to 33 of this Regulation.
The financial institution shall prepare a confidential written report containing all relevant information on the details of the transaction, the identity of the originator, and, where applicable, the economic actors involved. This report shall be kept in accordance with the provisions of Article 38 of the regulations.
Particular vigilance must be exercised with regard to transactions originating from financial institutions that are not subject to sufficient obligations regarding customer identification or transaction monitoring.
The financial institution must ensure that its obligations are applied by its branches or subsidiaries headquartered abroad, unless local legislation prohibits it, in which case it shall inform the ANIF.
- Verification of Electronic Transfers
Financial institutions whose activities include electronic transfers are required to obtain and verify the full name, account number, and address or, if no address is available, the national identification number or place and date of birth of the originator and the beneficiary of the transfer, including, if necessary, the name of the originator's financial institution.
This information must be included in the message or payment form that accompanies the transfer. If no account number exists, a unique reference number must accompany the transfer.
These provisions do not apply to transfers executed following transactions made using a credit or debit card if the credit or debit card number accompanies the transfer, nor to transfers between financial institutions when both the originator and the beneficiary are financial institutions acting on their own behalf.
- Measures to be taken in the event of incomplete information on the originator
If financial institutions receive electronic transfers that do not contain complete information on the originator, they shall take steps to obtain the missing information from the originating institution or the beneficiary in order to complete and verify it. If they do not obtain this information, they shall refrain from executing the transfer.
- Retention of documents by financial institutions
Without prejudice to provisions prescribing more stringent obligations, financial institutions shall retain, for a period of ten (10) years from the closure of their accounts or the termination of their relationship with their regular or occasional clients, all documents relating to their identity. They shall also retain all documents relating to the transactions they have carried out and the report referred to in Article 35 of the regulation for ten (10) years after the transaction has been completed.
- Disclosure of Documents and Records
The documents and records relating to the identification obligations stipulated in Articles 30 to 33 of the regulation, and whose retention is mentioned in Article 38 of same law, shall be disclosed, upon request, by the persons referred to in Articles 6 and 7 of the regulations, to the judicial authorities, to State agents responsible for detecting and prosecuting money laundering offenses acting within the framework of judicial proceedings, to the supervisory authorities, and to the ANIF (National Financial Intelligence Unit).
This obligation aims to enable the reconstruction of all transactions carried out by a natural or legal person that are linked to a transaction that has been the subject of a suspicious transaction report as referred to in Article 83 of this Regulation or whose characteristics have been recorded in the confidential register provided for in Article 46.
- Risk Management Related to New Technologies
Financial institutions must identify and assess the risks of money laundering or terrorist financing that may result from:
1) The development of new products and new business practices, including new distribution mechanisms,
2) The use of new or developing technologies in connection with new or existing products.
The risk assessment referred to in paragraph 1 above should take place before the launch of new products or new business practices or before the use of new or developing technologies. Financial institutions should take appropriate measures to manage and mitigate these risks.
- Cross-Border Correspondent Banking Relationships
Financial institutions are required, with regard to cross-border correspondent banking relationships and other similar relationships, in addition to normal customer due diligence measures:
1) To identify and verify the identity of client institutions with which they maintain correspondent banking relationships;
2) To gather information on the nature of the client institution's activities;
3) To assess the reputation of the client institution and the level of supervision to which it is subject, based on publicly available information;
4) To obtain authorization from senior management before entering into a relationship with the correspondent bank;
5) To assess the controls implemented by the client institution to combat money laundering and terrorist financing.
- Specific Obligations of Insurance Companies
Insurance companies, agents, and brokers engaged in life insurance activities are required to identify their clients and verify their identity in accordance with the provisions of Article 31 of the regulations whenever the amount of premiums payable during a year exceeds Five Million (5,000,000) FCFA, or, if the payment is made in the form of a single premium, exceeds Ten Million (10,000,000) FCFA, in retirement insurance contracts concluded within the framework of the insured's employment or professional activity, when said contracts include a cancellation clause and can be used as collateral for a loan.
- Additional due diligence measures
The persons referred to in Article 6 of the regulation shall apply additional due diligence measures with regard to their clients, in addition to the measures provided for in Articles 24 and 25, where:
1) The client or their legal representative is not physically present for the purposes of identification;
2) The client is a person residing in another Member State or a third country and is exposed to particular risks due to the political, judicial, or administrative functions they perform or have performed on behalf of another State, or those performed or have performed by direct members of their family or persons known to be closely associated with them;
3) The product or transaction facilitates the anonymity of that person;
4) The transaction is a transaction carried out on its own account or on behalf of a third party with natural or legal persons, including their subsidiaries or establishments, domiciled, registered, or established in a State or territory whose legislative deficiencies or practices hinder the fight against money laundering and terrorist financing.
An act of the competent authority of the Member State specifies the categories of persons referred to in the second paragraph of subparagraph 1 above, the list of products and transactions referred to in the third paragraph of that subparagraph, as well as the additional due diligence measures.