DESIGNATION OF ENTITY COMPLIANCE OFFICERS FOR PURPOSES OF AML/CFT COMPLIANCE
UPDATED: 13/05/2016
DESIGNATION AND ROLE OF AML/CFT COMPLIANCE OFFICER - Insurance Guideline
1. Introduction
In response to queries received from the insurance industry, regarding the circular sent to all Non-Bank Financial Institutions dated December 18, 2015 regarding: “DESIGNATION OF ENTITY COMPLIANCE OFFICERS FOR PURPOSES OF AML/CFT COMPLIANCE”, the Anti-Money Laundering (“AML”) Project team of The Non-Bank Financial Institutions Regulatory Authority (“NBFIRA”) has compiled a detailed guide to the industry on its obligations regarding this appointment.
1.1 Role of the designated AML/CFT Compliance Officer
The following are the roles of the AM/CFT Compliance Officer;
i. To implement and enforce corporate wide AML/CFT policies;
ii. To at all times have full and timely access to customer identification data, transaction records and other relevant information;
iii. To coordinate and monitor day to day compliance with applicable AML/CFT related laws and regulations, the Financial Intelligence Act and its regulations, as well as with its internal policies, practices, procedures and controls;
iv. To be the central point of contact for communicating with the regulatory and/or investigation agencies regarding issues related to the NBFI’s AML/CFT program;
v. To monitor, review and coordinate applications and enforcement of the financial institutions AML/CFT policies. This will include an AML/CFT risk assessment, practices, procedures and controls for account opening, KYC procedures and ongoing account/transaction monitoring for detecting suspicious transaction/account activity. The AML/CFT risk assessment has not yet been legislated locally but it is a requirement of the Financial Action Task Force (“FATF”) who Botswana is an indirect member of; and
vi. To ensure that the financial institution has an AML/CFT policy in place as well as provision for annual review of the AML/CFT policy. The AML/CFT policy is required to be approved at Board level or by Senior/Executive Management;
The AML/CFT Compliance Officer therefore has to be an employee of the entity, have sufficient authority and resources to carry out the above duties effectively and be able to report directly to the Chief Executive Officer/Managing Director and/or the Board of Directors. Sufficient authority and resources require that the designated officer be at a managerial level in order to be able to effectively carry out his/her duties. This would enable the officer to be able to delegate certain duties to other officers of the NBFI especially those based in other regions, where the entity is a large NBFI (insurance agents, insurers and reinsurers).
1.2 Who is eligible for appointment?
The size, nature and operational structure of the NBFI will greatly influence which officer should be designated as the AML/CFT Compliance Officer. In a small entity, the AML/CFT Officer could be a Principal Officer, Senior Manager or the owner/operator of the entity as long as their current duties do not in any way conflict with the AML/CFT Compliance Officers duties. In a large entity the designated officer should be at a senior level and have direct access to Senior Management and/or the Board of Directors. Further, the designated officer in a large entity should not be directly involved in the receipt, transfer or payment of funds
1.3 Fit and proper examination of designated AML/CFT Compliance Officer
As stated in paragraph 5 of the designation of Compliance Officer Circular, once an NBFI has designated an AML/CFT Compliance Officer, they are required to submit details of such officer to the insurance department of NBFIRA in order to perform an independent fit and proper assessment on the officer.
The fit and proper test procedure should be in accordance with the normal fit and proper tests that subject key persons and controllers of insurance entities.
1.4 Qualifications and experience
The designated AML/CFT reporting officer should have a working knowledge of the diverse financial products offered by the NBFI. The officer could have obtained relevant financial institutional and compliance experience with exposure to different financial institutional products and businesses. Product and financial institutional knowledge could be obtained from being a regular staff member or internal auditor of the financial institution.
There are no specific qualifications or any minimum years of work experience required by NBFIRA but the NBFI will be required to make its own assessment to ensure that the designated officer can carry out their role effectively. In the event that no such person exists within the entity, NBFIRA requires that there still be an appointment followed by a developmental plan to equip the designated officer with AML/CFT skills and knowledge.
1.5 Definition of “independence” in paragraph 9 of the Designation of AML/CFT Compliance
Officer circular
Paragraph 9 of the designation of Compliance Officer circular states that the officer’s role should not in any way conflict with any other role. Conflict in this context is defined as meaning that the officer must retain a level of independence as a second line monitoring and oversight function.
Independence means that the designated officer’s role should be independent from any operations or transactions that can facilitate money laundering or pose a money laundering risk. In the event that the officer is the one that formulates the NBFI’s AML/CFT policy, they must ensure that its approval is done by the Board and/or Senior Management of the NBFI. An annual review must also be carried out by an independent audit function as provided for by section 9(2) (a) (iii) of the Financial Intelligence Act. The designated officer can however take part in the evaluation of internal reports that constitute a subject for suspicious transactions and/or activities but they should not need Board and/or Senior Management permission before reporting suspicious transactions and activities to the Financial Intelligence Agency.
2. Conclusion
In conclusion, these frequently asked questions are a guide to be used to clarify any queries that may arise from the circular. If there are questions that have not addressed here, kindly refer them to the AML Project team for clarity.
ACKNOWLEDGEMENT OF RECEIPT
I acknowledge receipt of the circular on the Designation of Entity Compliance Officers For Purposes of AML/CFT Compliance dated December 18, 2015.
Kindly fill in and return this form to NBFIRA on or before February 01, 2016.
_______________________________________
Name of Non-Bank Financial Institution (“NBFI”)
________________________________________ _____________
Name and signature Date
(Chief Executive Officer/Managing Director)
Contact ____________________
