PERFORMANCE OF DUE DILIGENCE OBLIGATIONS BY THIRD PARTIES – 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.
PERFORMANCE OF DUE DILIGENCE BY THIRD PARTIES UNDER ANTI MONEY LAUNDERING AND TERRORISM FINANCING IN CAMEROON
- Use of Third Parties to Implement Due Diligence Obligations
Financial institutions may use third parties to perform the due diligence obligations set out in Articles 23, 24 and 25 of the Regulation, without prejudice to their ultimate responsibility for compliance with those obligations.
- Conditions for the Implementation of Due Diligence Obligations by Third Parties
For financial institutions, the obligations set forth in paragraph 1 of Article 23 and in Article 24 of the Regulation may be implemented by a third party under the following conditions:
1) The third party is a financial institution or one of the persons referred to in Article 6, located or having its registered office, or a person belonging to an equivalent category under foreign law and located in another Member State or in a third country imposing equivalent obligations regarding the fight against money laundering and terrorist financing, as listed in paragraph 2 of Article 52 of the Regulation;
2) The obligated party has access to the information collected by the third party, under the conditions set forth by the Ministerial Committee Decision on a proposal from the BEAC in conjunction with COBAC.
Financial institutions may disclose information collected for the implementation of Article 23(1) and Article 24 of the regulation to another financial institution located or having its registered office in a Member State.
They may also disclose this information to an institution offering financial activities equivalent to those carried out by the financial institutions, under the following conditions:
1) The third-party recipient is located in a third country imposing equivalent obligations regarding the fight against money laundering and terrorist financing, as listed in Article 52(2) of the regulation;
2) The processing of personal data by the third-party recipient ensures a sufficient level of protection for the privacy and fundamental rights and freedoms of individuals, in accordance with applicable regulations.
c. Obligation Regarding the Transmission of Information
For the purposes of Article 62 of the regulation, the third party, which applies the due diligence obligations set out in Articles 23 and 24 of same regulation, shall promptly provide the financial institutions with information relating to the identity of the client and, where applicable, the beneficial owner, as well as information relating to the purpose and nature of the business relationship.
The third party shall provide them, upon first request, with copies of the identification documents of the client and, where applicable, the beneficial owner, as well as any other relevant document to ensure these due diligence procedures.
An agreement may be signed between the third party and the financial institutions to specify the procedures for transmitting the information thus collected and for monitoring the due diligence carried out.