NBE drafts vital directive to cripple illegal financial acts

National Bank of Ethiopia (NBE) drafts a directive titled “knowing your customer” (KYC) and “customer due diligences” (CDD) to tighten the activity on illegal financial acts.
The draft directive that was sent to banks to give their comments and known as ‘enhance know your customers, customers due diligences and account transfer transaction limits directive’ on its preamble stated that enhanced KYC and CDD practices are critical to ensure proper identification of customers, appropriate assessments and monitoring of transactions including assessments of related risks and prevention of money laundering, terrorism financing, and other illegal deeds.
It added that enhanced KYC/CDD procedure of banks including introducing of proper risk mitigation mechanism enables banks to better combat illegal and unauthorized transactions being operated through their infrastructure and platform in a manner that promotes shadow banking practice.
According to the draft directive banks shall put in place comprehensive and up to date KYC/ anti money laundry policy and procedure, assign independent and dedicated KYC compliance officer, establish KYC unit with appropriate staff and provide the staff training on KYC/AML procedures, risk and other similar to the area.
Banks shall assign unique customer ID to any of its depositors irrespective of deposit types and deposit holders. It stated that deposit accounts owned by a single person should be put under a single customer ID on the bank’s core banking system.
The system shall have the capability to put transfer or cash withdrawal restrictions on the customer using his ID and shall be able to control transfer or withdrawals amount and regulatory limits as per the restriction given to it.
With the objective of regulatory assessing the adequacy and comprehensiveness of its overall KYC/AML framework; i.e., systems, policies and procedures, and staff in respect of effectively mitigating changing tactics of illegal perpetrators and related emerging risks, a bank shall undertake independent assessment of the same by its compliance officers at least on biannual basis and shall make necessary amendment on the same.
Banks are also expected to be equipped with required technology to in place the directive.
Banks are expected to record and maintain comprehensive customer profile information containing all info. Under the draft directive final approval to open any deposit account shall be done at head office by the KYC unit established at a center. It stated that any account that has not been approved by KYC unit at head office shall not be in use and be considered as active account.
“A bank shall undertake bank to bank account transfer request of its customers through real time gross settlement system (RTGS). Any failure of the bank in doing so will be subject to penalty,” it said.
It also prohibited a bank to not allow cash deposit transaction to a third party account including telegraphic transfers that are done by walk in/ or no account holder customers using the bank’s system in any manner.
Multiple account to account transfers limited to five per week and the restriction shall apply on all types of deposit accounts irrespective of the channels used to access the accounts i.e., mobile, internet, ATM, POS, and electronic accounts operated through mobile money service.
On the aim to counter illegal act the directive has also imposed banks to conduct regular due diligence on the overall operation of its partner international money transfer service provider.