Ten changes in money laundering, anti-terrorism law

A new law on the prevention and punishment of money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction, was recently promulgated and published in Rwanda’s Official Gazette. It replaces the law of January 29, 2020. According to the explanatory note of the law, Rwanda ratified International Conventions on the prevention of money laundering, financing of terrorism and financing of proliferation. Also, the Financial Action Task Force (FATF), an intergovernmental organisation, was established and mandated to develop policies and strategies for anti-money laundering and countering the financing of terrorism (AML/CFT). It indicated that the law seeks to ensure Rwanda’s sufficient level of compliance with the international standards in this regard, which “will have a huge impact on the national financial systems and on country economy, mostly the country’s vision of becoming a Financial Hub [under the Kigali International Financial Centre] as it will prevent actions that could be taken against Rwanda which may have negative impact on it”. Here are 10 of the changes in the law that you need to know: 1. Non-prescription The offences of money laundering, terrorist financing and financing of proliferation of weapons of mass destruction are imprescriptible, which means that they cannot be taken away by statutory limitation period, rather the culprit will have to face sanctions anytime in their lifetime, once he or she is convicted. This provision was not in the previous law. ALSO READ: Law sets tougher punishments for terrorism, money laundering On December 30, 2020, when Parliament was voting on the previous law, MP Veneranda Nyirahirwa proposed that money laundering should be an imprescriptible offence. 2. Penalties against money laundering The new law stipulates that a person who carries out one of the acts of money laundering, or who is involved in an association aiming at committing one of the acts of money laundering, commits an offence. Upon conviction, he or she is liable to imprisonment for a term of not less than 10 years, but not more than 15 years and a fine of three to five times the value of proceeds of crime laundered. Such a penalty (in terms of imprisonment) is higher than the previous one that was provided for in the law of 2020, as it was not less than a seven-year jail term, but not more than 10 years. The fines remained the same, though. Also, a person who carries out an act aimed at helping another person to have a share in the funds or property obtained through money laundering, or of a terrorist or of someone who may be a terrorist by any means commits an offence. Upon conviction, he or she is liable to imprisonment for a term of not less than 10 years but not more than 15 years. 3. Penalties against terrorist financing According to the law, a person who carries out one of the acts of terrorist financing, or who is involved in an association aiming at committing one of the acts of terrorist financing, commits an offence. Upon conviction, he or she is liable to imprisonment for a term of not less than 20 years but not more than 25 years and a fine of 3 to 5 times the value of the financing given. These penalties also apply to a person who knowingly makes an agreement or has interest in it in order to acquire property, funds or any other assets, or enables another person to acquire money or support, knowing or having serious grounds to believe that they may be used for terrorist purpose. In case the terrorist financing results into death, the penalty is life imprisonment – a punishment which was not provided for in the previous law. 4. Penalities against the financing of proliferation of weapons of mass destruction In the new law, a person who carries out one of the acts of financing of proliferation of weapons of mass destruction commits an offence. Upon conviction, he or she is liable to imprisonment for a term of not less than 20 years, but not more than 25 years and a fine of 5 to 10 times the value of the financing given. In terms of imprisonment, this penalty means that the convict will have to serve five years more in jail compared to the previous punishment of not less than 15 years but not more than 20 years. However, the fine does not change. The same penalties apply to a person who knowingly makes an agreement, or has interest in it, in order to acquire property or funds or enables another person to acquire money or support, knowing or having serious grounds to suspect that they may be used for financing of proliferation of weapons of mass destruction. ALSO READ: Government reviews anti-money laundering laws 5. Disclosure/declaration obligation for the cash courier A person who leaves, transits or enters Rwanda carrying or transporting currency or bearer negotiable instruments of a value equal to or exceeding a pre-set threshold, must declare or disclose them to the competent authority. Regulation of the Financial Intelligence Centre sets the threshold of currency and requirements for cash courier declaration or disclosure and sanctions in relation to non-compliance thereof. 6. Penalties against a legal person (entity) A legal person that conducts money laundering, terrorist financing or financing of proliferation of weapons of mass destruction acts, commits an offence. Upon conviction, it is liable to a fine of 10 to 20 times the value of proceeds of crime laundered or the value of the financing given, the law says. In addition to this, the legal person is also liable to one or more of the penalties, namely dissolution, permanent closure of establishments in which incriminated acts have been committed or which have been used to commit such acts – all of which were not provided for earlier – and publication of the related court decision in the newspaper or through any other means used by the media. ALSO READ: Central Bank introduces new sanctions to combat money laundering 7. Extradition Subject to the provisions of other laws on extradition, the offence of money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction are extraditable – meaning that the suspects of such crimes can be sent to the countries that requested them for trial. 8. Requirements for a non-profit organisation In the context of preventing and countering money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction, the law provides that a non-profit organisation must issue annual financial statements that provide detailed breakdowns of incomes and expenditures; and have appropriate controls in place to ensure that all funds are fully accounted for, and are spent in a manner that is consistent with the purpose and objectives of planned activities. Other requirements include taking reasonable measures to verify the identity of its significant donors, and characteristics of beneficiaries and associate non-profit organisations, with a view to preventing funds granted to it from being used to support terrorist acts or a terrorist entity; and taking reasonable measures to maintain the identity of its significant donors; They must also maintain information on the purpose and objectives of its stated activities and the identity of the persons who own, control or direct its activities, including senior officers, board members and trustees; and keep for a period of 10 years, all records of domestic and international transactions and other information stated above, and make these records available to competent authorities. 9. Countermeasures appropriate to higher-risk countries A reporting person (such as a financial institution, an advocate, an auditor, accountant or tax advisor) must apply enhanced due diligence, proportionate to the risks, to business relationships and transactions with entities in question, including financial institutions from countries for which this is called for by the Financial Action Task Force. Regulation of the Financial Intelligence Centre may determine countermeasures proportionate to the risks originating from high-risk jurisdictions when called upon to do so by the Financial Action Task Force or independently of any call to do so. The Centre must notify, and provide advice to, a reporting person of concerns about weaknesses in anti-money laundering, countering terrorist financing or the financing of proliferation of weapons of mass destruction systems of other countries. 10. Reporting of a suspicious transaction If a reporting person suspects or has reasonable grounds to suspect that funds or property are the proceeds of crime, related or linked to, or are to be used for, terrorist financing or terrorist acts, or by a terrorist or a terrorist organisation or persons who finance terrorism, it must promptly submit a report setting forth the suspicion to the Centre. A reporting person must report all suspicious transactions, including an attempted transaction, regardless of the amount of the transaction. The Financial Intelligence Centre determines modalities and time limits for submission of a report of suspicious transactions.

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Ten changes in money laundering, anti-terrorism law