Financial Crime World

Rwanda’s Banking Regulator Issues New Regulation on Administrative Sanctions for AML/CTF Non-Compliance

The National Bank of Rwanda (BNR) has issued a new regulation outlining administrative sanctions that can be imposed on regulated institutions for non-compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) requirements. The regulation, known as Regulation No. 72/2023, comes into effect on June 27, 2023.

Regulated Institutions

A regulated institution is defined as any institution licensed by the BNR, including:

  • Banks
  • Microfinance institutions
  • Insurance companies
  • Payment service providers

These institutions have been categorized into seven categories based on their level of systemic importance. Category 1 institutions are considered the most systemically important, while Category 7 institutions are the least.

AML/CTF Violations and Sanctions

The regulation lists various AML/CTF violations that can result in administrative sanctions, including:

  • Failing to establish and maintain an AML/CTF compliance program
  • Failing to identify and report suspicious transactions
  • Failing to keep adequate records
  • Failing to cooperate with the BNR or Financial Intelligence Centre (FIC)

Sanctions for non-compliance vary depending on the severity of the violation and the category of the regulated institution. These can include:

  • Written warnings
  • Suspension of all support from the BNR
  • Prohibition on declaring or paying dividends to shareholders
  • Revocation of the license

Pecuniary Sanctions

The regulation also allows for pecuniary sanctions to be imposed on regulated institutions that violate AML/CTF requirements. The amount of the sanction will be determined based on the severity of the violation and the category of the regulated institution.

Appeal Process

Regulated institutions in Rwanda can appeal administrative sanctions by filing with the BNR within seven working days of the date of notification. The BNR’s decision on an appeal is final.

Conclusion

The new regulation is a significant step forward in Rwanda’s efforts to combat money laundering and terrorist financing, providing a clear framework for imposing administrative sanctions on regulated institutions that fail to comply with AML/CTF requirements. Regulated institutions in Rwanda are advised to familiarize themselves with the new regulation and take steps to ensure compliance.

What Regulated Institutions Need to Do

To ensure compliance, regulated institutions should:

  • Establish and maintain an AML/CTF compliance program
  • Identify and report suspicious transactions
  • Keep adequate records
  • Cooperate with the BNR and Financial Intelligence Centre (FIC)

By taking these steps, regulated institutions can help prevent non-compliance and avoid administrative sanctions.