Anti-Money Laundering (AML)/ Countering Terrorist Financing (CFT) and Proliferation of Weapons of Mass Destruction (CPF)
Q: What is Anti-Money Laundering (AML)/ Combating the Financing of Terrorism (CFT)/ Combating the Proliferation of Weapons of Mass Destruction (CPF)?
A: These measures are designed to combat financial crime.
• Anti-Money Laundering (AML) refers to measures that prevent criminals from converting, concealing, or transferring funds derived from illegal activities, with the purpose of disguising their illicit origin.
• Combating the Financing of Terrorism (CFT) focuses on preventing the provision or collection of funds with the unlawful intention or knowledge that they will be used to carry out a terrorist act or to support a terrorist organization.
• Combating the Proliferation of Weapons of Mass Destruction (CPF) is a more recent but critical component, involving measures to counter the financing of the proliferation of weapons of mass destruction.
Q: What is the purpose of AML/CFT/CPF Compliance for the Ghanaian securities market?
A: These regulations are essential for the safety and integrity of Ghana’s financial system. Money laundering, terrorist financing, and proliferation financing are considered ongoing threats that have the potential to adversely affect Ghana’s reputation and the financial sector. By implementing robust measures that align with international standards set by bodies like the Financial Action Task Force (FATF), the SEC aims to protect the financial market from misuse by criminals and to ensure that Market Operators (MOs) and investors are not unknowingly participating in illicit financial activities.
Q: Who is responsible for complying with these laws and regulations?
A: The regulations apply to all “Accountable Institutions”, which include Market Operators (MOs) licensed by the Securities and Exchange Commission (SEC). The responsibility for compliance rests with the entire institution, from the Board of Directors and senior management to the employees. However, the Anti-Money Laundering Reporting Officer (AMLRO) is the central figure, tasked with managing the day-to-day compliance activities.
Q: What is the role of the SEC in enforcing these laws and regulations?
A: The SEC is designated as a “Supervisory Body” under Section 52(1) and (5) of the Anti-Money Laundering Act, 2020 (Act 1044), giving it the mandate to supervise and enforce compliance by Market Operators. This role extends beyond mere guidance; the SEC has the power to impose a range of penalties and sanctions for non-compliance, from administrative fines to license revocation. The Securities Industry Act, 2016 (Act 929) as amended also empowers the SEC under Section 3 to license and regulate a wide range of entities within the securities industry to maintain proper standards of conduct and practices.
Q: What is a risk-based approach to AML/CFT/CPF compliance?
A: The risk-based approach (RBA) is a core principle of the framework published by FATF. It means that Market Operators must identify, assess, and understand their specific money laundering, terrorist financing, and proliferation financing risks related to their customers, products, and services, delivery channel, and location/geography. Based on this assessment, MOs must apply preventive and mitigation measures that are proportionate to the risks identified. This ensures that resources are allocated effectively, with enhanced measures for higher-risk scenarios and simplified measures for lower-risk ones.
Q: What are the consequences of non-compliance?
A: Non-compliance can have severe consequences for both the Market Operator (MO) entity and the individuals responsible. Administrative penalties include financial fines ranging from 1,000 to 100,000 penalty units for an entity and 500 to 20,000 penalty units for an individual, like the AMLRO. For persistent or serious contraventions, the SEC and the Financial Intelligence Centre (FIC) can take prerogative actions, which include:
• Blacklisting the AMLRO from working in any financial institution for one or more years.
• Suspension or revocation of the MO’s license.
• “Naming and shaming” the non-compliant entity in the media.
Q: What is Know Your Customer (KYC)/ Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD)?
A: Customer Due Diligence (CDD) is a legal requirement for all new business relationships and for occasional transactions above the designated threshold, as mandated by Section 30 of the Anti-Money Laundering Act, 2020 (Act 1044). Enhanced Due Diligence (EDD) is a mandatory, risk-based procedure for high-risk customers, such as Politically Exposed Persons (PEPs) and non-resident clients. These relationships require senior management approval before being established.
Q: As an investor, how does SEC protect my investments from being used for ML/TF/PF?
A: The SEC mandates that all Market Operators (MOs) develop and implement a comprehensive Board-approved AML/CFT/CPF compliance program. This program requires them to perform thorough customer identification and continuous transaction monitoring to detect and report illicit activities. These measures protect the integrity of the market, ensuring that your investments are not commingled with the proceeds of crime, thereby safeguarding your financial interests.
Q: As an investor, why does SEC Licensed Market Operators ask for so much personal information?
A: This is a legal requirement under Section 30 of the Anti-Money Laundering Act, 2020 (Act 1044) and the AML/CFT Regulations known as Know-Your-Customer (KYC) and Customer Due Diligence (CDD). In this regard, Market Operators identify and verify their customers to protect the financial system from being used for money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction which is a crucial step in ensuring the safety and integrity of the entire financial market.
Q: How does the SEC monitor compliance?
A: The SEC has established a Unit under its Risk Management Department for supervising AML/CFT/CPF compliance by Market Operators. As part of the Unit’s operational mandate, off-site and on-site inspections are conducted on Market Operators based on its risk-based supervisory manual.
Downloads
Suspicious Transaction Report – Reporting Template
Cash Transaction Report – Reporting Template
National Policy AML/CFT & Action Plan
AML/CFT/CPF Administrative Sanctions/Penalties
Anti-Money Laundering Act, 2020 (Act 1044)
National Risk Assessment Report 2016
AMLRO Downloadable Questionnaires
Annex XI – Instruction Guide for Completing the Data Collection Template
SEC Data Capture Questionnaire 2020
SEC Risk Management Questionnaire 2020