Why the Financial Intelligence Centre was set up

Rwanda, like the majority of the countries, has enacted a new law n° 74/2019 of 29/01/2020 establishing the Financial Intelligence Centre (FIC) to counter money-laundering, the financing of terrorism and proliferation of weapons of mass destruction as well as related crimes.

The Financial Intelligence Centre has come into being to strengthen and protect the economy and particularly the financial integrity of the country. The FIC is likely to mitigate financial threats triggered by transnational organized crimes.

 

As noted recently in this column, money-laundering and the financing of terrorism are the two main crimes committed in finance-related area. However, I don’t wish to seem like downplaying financing of proliferation of weapons of mass destruction.

 

Specifically, what’s the mandate of the Financial Intelligence Centre (FIC) under the new law?

 

Under Article 4 of the aforesaid law, FIC has a legal personality and enjoys administrative, financial and human resource management autonomy. In other words, it has rights and obligations to exercise in the eyes of the law. FIC is independent, and shall not take injunctions from any other agency.

According to Article 8 of the same law, FIC is responsible, among others, for carrying out operational and strategic analysis of received suspicious transaction reports, disseminating the results to relevant authorities and coordinating preventive activities carried out by all institutions in relation to the implementation of the law relating to the prevention and punishment of money laundering, the financing of terrorism and the financing of proliferation of weapons of mass destruction.

Establishing FIC is in the light of frameworks based on the Financial Action Task Force (FATF) recommendations, the International Monetary Fund, the World Bank, the Commonwealth guidelines and the Egmont Group guidelines. In particular, the Financial Action Task Force is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.

The mandate of the FATF is to set standards and to promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and the financing of proliferation, and other related threats to the integrity of the international financial system.

The FATF recommends member states and non-member states to establish competent authorities for receiving and processing suspicious transaction reports.

In many countries around the world, such authority is popularly known as Financial Intelligence Unit (FIU).

FIC is principally expected to investigate and receive suspicious or currency transactions above a certain limit; give instructions to financial institutions; have a computerized database, have compliance control and supervision powers, and regulatory powers; issue guidelines; carry out international information exchange, and freeze and seize suspicious property or funds.

It is noteworthy that FIC isn’t part of law enforcement agencies as its principal mandate is to collect information on suspicious or unusual financial activity from the financial industry and other entities or professions and required to report transactions suspected of being money laundering or terrorism financing to relevant law enforcement authorities.

In other words, FIC’s mission is to process and analyze the information received. If sufficient evidence of unlawful activity is found, the matter is passed to Rwanda Investigative Bureau (RIB).

Establishing FIC is tremendous progress in the fight against money laundering and the financing of terrorism. What about the financing proliferation of weapons of mass destruction?

By definition, the proliferation of Weapons of Mass Destruction (WMD) is the transfer and export of nuclear, chemical or biological weapons, their means of delivery and related materials. The issue of proliferation received international attention for several years.

A number of international conventions provide for measures to detect and prohibit proliferation, especially with regard to nuclear materials (such as the Nuclear Non-Proliferation Treaty). These treaties do not, however, consider the aspect of financing proliferation.

In 2004, the UN Security Council issued Resolution 1540, requiring UN member states to put in place a number of measures in order to prevent the proliferation of nuclear, chemical or biological weapons.

In this regard, the FATF started in 2007 to consider the threats related to proliferation financing and its interconnection with terrorism and terrorism financing.

Similarly, the Convention on the prohibition of the development, production, stockpiling and use of chemical weapons and on their destruction, commonly referred to as (“the Chemical Weapons Convention”), aims at eliminating an entire category of weapons of mass destruction by States Parties.

States Parties are under obligation to take steps necessary to enforce that prohibition in respect of persons within their jurisdiction.

As a signatory to both the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction (ratified on 17 October 2003) and the African Nuclear-Weapons-Free Zone Treaty (ratified on 28 December 2004), Rwanda commits to put in place to legal measures concerning the prevention, suppression and disruption of proliferation of weapons of mass destruction and its financing.

There’s an interconnection between financing terrorism and financing proliferation of weapons of mass destruction based on the fact that proliferation might be a means for supporting the undertaking of terrorist activities.

Its disruption is therefore essential for the prevention of terrorist acts. Moreover, the practical undertaking of proliferation financing often uses the same channels as terrorist financing.

The writer is a law expert.

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