The Parliament of Rwanda recently passed two key laws to counter money laundering, the financing of terrorism and the proliferation of weapons of mass destruction (“WMDs”), in an effort to strengthen and increase confidence in its financial system.
Law No. 74/2019 of 29 January 2020 establishing the Financial Intelligence Centre (“Law No. 74/2019”), which came into effect on 17 February 2020, launches a Financial Intelligence Centre (“FIC”) and determines its mission, responsibilities, powers, organisation and functioning. It repeals all prior legal provisions inconsistent with it.
Rather than functioning as a centre attached to the National Bank of Rwanda, the FIC has been established as an independent body under the supervision of the Ministry of Finance. The FIC is to conduct financial intelligence in order to counter money laundering, the financing of terrorism, the financing of WMDs and related crimes. It aims to achieve this by collaborating with security, judicial and administrative organs at national, regional and international levels.
Responsibilities of the FIC include:
- analysing received suspicious transaction reports and disseminating the results to relevant authorities;
- issuing regulations and directives to be implemented by reporting persons; and
- providing feedback to reporting persons with regard to suspicious transactions reports, current technics, methods, trends in money laundering, the financing of terrorism and the financing of proliferation of WMDs.
The FIC has the power to, inter alia:
- monitor financial transactions that have been reported as suspicious;
- access financial, administrative and law enforcement information;
- access electronic data and other information banked in the servers of reporting persons and other organs for the purpose of financial intelligence;
- freeze and seize suspicious property or funds; and
- provide or exchange information with a financial intelligence authority from another country.
The FIC is also empowered to issue regulations determining administrative misconduct and related sanctions for reporting persons under its supervision.
On 24 February 2020, Law No. 75/2019 of 29 January 2020 on Prevention and Punishment of Money Laundering, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction (“Law No. 75/2019”), came into effect. It repeals Law No. 69/2018 of 31 August 2018 on Prevention and Punishment of Money Laundering and Terrorism Financing and all prior legal provisions contrary to it.
Law No. 75/2019 establishes a Coordination Council to prevent and counter money laundering, financing of terrorism and financing of proliferation of WMDs and introduces severe penalties for non-compliance with it, including imprisonment of up to 25 years and fines of up to 20 times the amount granted to finance relevant illegal activities.
Reporting persons subject to both laws include:
- a financial institution;
- a telecommunications company providing financial services;
- a person engaged in private legal
practice, when he or she represents or assists his or her clients
outside any legal proceeding, in particular within the framework of
the following activities:
- buying and selling a property, a company or businesses;
- managing money, negotiable instruments and other assets belonging to the client;
- opening and managing current, savings or securities accounts; and
- creating, managing or directing a company, trusts or other similar ventures or executing any other financial transactions;
- an auditor, accountant and tax advisor;
- a real estate agent;
- a dealer in precious stones and precious metals;
- a person or entity involved in the business of distributing money;
- a casino and national lotteries;
- non-governmental organisations;
- trusts; and
- other reporting persons that may be determined by an Order of the Minister.
Law No. 74/2019 confers substantial responsibilities and powers on the FIC. Compared to its repealed predecessor, Law No. 75/2019 imposes harsher penalties for non-compliance and also punishes the financing of proliferation of WMDs. Both Laws align Rwanda’s anti-money laundering and countering the financing of terrorism laws closer with international standards. It is, therefore, essential that reporting persons ensure that internal policies, guidelines and training align with the new laws in order to prevent their contravention.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.