New Know Your Client (KYC)

Author:PLMJ Team
Profession:PLMJ
 
FREE EXCERPT

Instruction no. 13/2018, of 19 September 2018 was published recently and establishes procedures that financial and banking institutions must comply with to identify the risk profile of their clients in carrying out import and export of goods transactions. The Instruction also addresses measures to prevent money laundering, terrorism financing and underlying infractions (jointly the "AML" rules) that must be applied to clients classified as "high-risk".

Under the Instruction, banks must have "in-depth knowledge" of the client's business model. The client must provide and update information concerning: (i) the business model, (ii) the main counterparties and countries, (iii) the goods and services traded and (v) history and prospects for annual volume and value of operations.

The Instruction also establishes a presumption of a high risk of money laundering under certain circumstances, including:

Operations with countries that do not apply or apply in an insufficient way the international AML requirements, making it possible to conceal illegal cash flows, the creation of special purpose vehicles (SPVs) without the need for a physical structure in the country of incorporation, which lack transparency and are not subject to corporate governance rules equivalent to those required in Angola; and/or Operations with traders that act exclusively as intermediaries for one or more companies that import with a price distortion (and in violation of the transfer pricing rules) or that are not domiciled in the country of origin of the majority of the products; and/or Operations with a single shareholder company (unipessoal), of small size and without a robust corporate governance structure, and no international exposure and reputation. The Instruction provides that importers that trade with exporters in the manner described above are classified as "High-Risk Importers", which triggers stronger KYC diligence procedures. Additionally, if a bank determines the existence of a "High-Risk Importer", it must not allow the client to use prepayments to pay for its imports.

The stronger KYC procedures include those provided for in Law 34/1 of December 12, and the ones...

To continue reading

REQUEST YOUR TRIAL