Financial institutions regulated by the Central Bank in Rwanda will face administrative sanctions including losing licenses for financing terrorism, non-compliance with money laundering prevention as well as financing of proliferation of weapons of mass destruction.
The new regulation replaces that of 2020 was issued by the Central Bank and has now been published in the national gazette.
It is part of enforcing Law nº 75/2019 of 29/01/2020 on prevention and punishment of money laundering, financing of terrorism and financing of Proliferation of weapons of mass destruction.
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The sanctions will be imposed on commercial banks, cooperative banks, deposit-taking microfinance companies, large deposit taking microfinance cooperatives, mortgage banks and large e- money issuers.
Those to face sanctions also include development banks, life insurers, pension schemes and non-deposit taking financial service providers subject to anti-money laundering, countering the financing of terrorism or the financing of proliferation of weapons of mass destruction (AML/CFT) obligations.
Other institutions include forex bureaus, remittances service providers, deposit taking microfinance cooperatives, small e- money issuers, insurance brokers and Trust and Company service providers.
“When a regulated institution violates or fails to comply with the provisions of laws, regulations, directives or decisions of the Central Bank or Financial Intelligence Centre regarding anti-money laundering, combating the financing of terrorism and financing of proliferation of weapons of mass destruction, commits a fault,” warned the regulation.
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A look at the sanctions
The Central Bank may impose sanctions against the institution depending on the gravity of the fault.
These include written warning, suspension of all support from the Central Bank, prohibition on declaring or paying dividends to shareholders, prohibition from establishing new branches, prohibition from engaging in new activities or expanding existing activities, suspending of lending, investment and credit extension operations and prohibition from acquiring additional assets through purchase, rent or lease.
Prohibition from accepting further deposits, insurance premiums or other lines of credit, prohibition from declaring any types of bonuses, severance packages, or other discretionary compensation to Board of Directors, prohibition from declaring any types of salary incentives other than discretionary compensation to senior managers and staff, prohibition of payment of management and technical fees to parent companies and related parties, suspension of the license for a period not exceeding six months, revocation of license are among the sanctions.
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Article six of the regulation includes sanctions against members of the Board of Directors and senior managers if the Central Bank finds that a member of the board of directors or a senior manager of a regulated institution has violated the provisions of the Law on prevention and punishment of money laundering, financing of terrorism and financing of Proliferation of weapons of mass destruction and related regulations.
The violators may be sanctioned with suspension, revocation of the approval as well as dismissal.
Up to Rwf10 million fines
According to the central bank, the institution may also face fines ranging between Rwf100,000 and Rwf10 million depending on the gravity of the fault.
The pecuniary sanctions are paid to the Central Bank account by the regulated institution voluntarily within a period of ten days upon receipt of the notification letter.
If the institution does not pay voluntarily, the sanctioned amount is recovered in the favour of the Central Bank through automatic debiting of the concerned regulated institution’s account in the Central Bank.
“A regulated institution may appeal to the Central Bank on pecuniary and/or administrative sanction imposed on it within seven working days counted from the date of receipt of the letter communicating the sanction. The Central Bank decision on the appeal is administratively final,” says the regulation.