Rwanda recently amended anti-money laundering and counter-terrorist financing law and regulations leading to questions on the necessity of the move. Was it out of a rise in cases and incidences? Was it to improve attractiveness to investment?
The amendment to the law comes at a time when the country is seeking to attract regional and international investors to the Kigali International Financial Centre (KIFC), an initiative by the Government that seeks to position Rwanda as a business hub in Africa.
Rwanda Finance Limited, the government agency overseeing the establishment of KIFC has been involved in steering reforms of laws and regulations within the financial service sector to improve the relevance of the investment climate.
The amendment earlier this year saw Rwanda replace the Law n° 69/2018 of 31/08/2018 on prevention and punishment of money laundering and terrorism financing with a new one titled “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”.
The new law is designed to improve measures against money-laundering and the financing of terrorism and serve towards detecting, seizing and confiscating illicit proceeds, as required pursuant to relevant instruments and other globally accepted standards.
Among the major changes between the two laws is the full criminalization of money laundering and financing of terrorism which was cited as a gap previously.
The reforms were deemed necessary, according to Ntoudi Mouyelo, the KIFC Coordinator, to ensure compliance to international standards and requirements as Kigali International Financial Centre (KIFC) seeks to position itself as a safe complaint and pro-business financial hub.
“In response to increasing regulation coming from international institutions, economic blocs, there is a need for access to compliant financial centers by international and institutional investors. Rwanda wants to be at the forefront of this trend and ensure that we are compliant. As a country we want to upgrade our legal framework to the highest standards possible to be attractive to investors,” he said.
The reforms are also in response to global trends and concerns on anti-money laundering and counterterrorism financing such as increased scrutiny of capital flows leading to blacklisting of countries as well as an increase in economic crimes.
To ensure the relevance of the reforms, Dr. Adelit Nsabimana the KIFC Technical Advisor at Rwanda Finance Limited said that the process was inclusive and cross-cutting ensuring input from stakeholders while Rwanda Finance Limited served to coordinate efforts.
“The process of conducting law reforms is inclusive and cross-cutting; we bring all stakeholders on board at policy level, private sector members, professional associations and bodies, regulators. We include various disciplines for instance (Rwanda Bar Association, custodian ministries or institutions, Capital Markets Authority, Central Bank),” Dr. Nsabimana said.
The process also involved research on other markets as well as international bodies’ recommendations.
“As a safe, compliant, and pro-business financial center we look to comply with recommendations by international bodies such as the Financial Action Taskforce (FATF) – an intergovernmental body based in Paris with a mandate to ‘develop and promote policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction,” Antonny Mukulu Chief Legal Officer at Rwanda Finance Limited added.
Going forward, following the gazetting of the law, efforts are geared at raising awareness and building capacity with all relevant stakeholders as well as engaging financial institutions (involved in transactions such as telecoms, forex bureaus, lawyers to ensure they are aware of the new law.
Among key aspects include how to go about reporting money laundering and suspicious financial activity for further investigations at law enforcement agencies.Follow https://twitter.com/ByCollinsMwai