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Designation of Motor Vehicle Dealers as a Designated Non-Financial Business and Professions (Directive No. 934/2022)

Financial Intelligence Service934/2022

Summary

This directive designates Motor Vehicle Dealers as Designated Non-Financial Business and Professions (DNFBPs) to prevent and suppress money laundering and terrorism financing within the sector. It outlines requirements for internal AML/CFT compliance programs, risk assessments, customer due diligence, enhanced due diligence for high-risk customers, reporting suspicious transactions, record-keeping, and prohibits tipping off.

Who's affected

Motor vehicle dealers, including manufacturers, importers, exporters, wholesalers, retailers, and renters of motor vehicles.

Action required

Motor vehicle dealers must establish and implement an AML/CFT compliance program, conduct risk assessments, perform customer due diligence, report suspicious transactions, and maintain records as per the directive.

Key points

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  • Motor Vehicle Dealers are now classified as Designated Non-Financial Business and Professions (DNFBPs).
  • The directive aims to combat money laundering and terrorism financing in the motor vehicle sector.
  • Mandatory AML/CFT compliance programs, risk assessments, and customer due diligence are required.
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    • Suspicious transactions must be reported promptly.
    • Record-keeping for ten years is required.
    • Penalties include administrative and criminal liability for non-compliance.

Requirements

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  • Establish, implement, monitor, and maintain an effective Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) Compliance Program.
  • Develop policies, procedures, processes, and controls including a written compliance policy, appointment of a compliance officer, training, employee screening, and independent evaluation.
  • Conduct risk assessments to identify, assess, and understand ML/TF risks related to customers, business, products, services, geographical exposures, transactions, delivery channels, and size.
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    • Document risk assessments, consider all relevant risk factors, keep assessments up-to-date, and provide risk assessment information to the Service.
    • Implement Customer Due Diligence (CDD) measures to identify and verify customers and beneficial owners.
    • Conduct ongoing due diligence on business relationships.
    • Undertake CDD measures when establishing business relationships, when suspicion of ML/TF arises, or when doubts exist about previously obtained client information.
    • Employ Enhanced Due Diligence (EDD) when information raises doubt about accuracy, justifies re-classification to high-risk, or when establishing business with persons from high-risk countries.
    • Take EDD measures for high-risk customers, including those from countries with inadequate AML standards, PEPs, those with opaque ownership, dubious reputations, non-residents, or those from countries with significant corruption or terrorist funding.
    • Report any suspicious transactions or attempts thereof to the Financial Intelligence Service without delay.
    • Maintain detailed, organized, and confidential records of all transactions, CDD measures, account files, suspicious transaction reports, and risk assessments for ten years or as long as the business relationship exists.
    • Ensure reported information is protected from access by unauthorized persons.

Rights and permissions

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  • The right to be approved by the Service and registered on the Ministry of Justice's website for the directive to be effective.

Restrictions

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  • Prohibition against disclosing any information related to suspicious transactions being reported or about to be reported.
  • Restrictions on customers attempting to conceal taxes or launder money through vehicle transactions.
  • Restrictions on using individuals to hide criminal activities or illegally obtained money.
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    • Restrictions on exporting high foreign currency under the guise of car import for illegal money laundering.

Penalties

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  • Criminal liability for failure to comply with the directive, as per the Proclamation.
  • Administrative punishment by the appropriate regulatory authority for infringing the directive's provisions.

Objectives

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  • To prevent and suppress money laundering and terrorism financing in the motor vehicle purchasing and sale transaction sector.
  • To ensure accountability and transparency of car dealers.
  • To establish a comprehensive legal framework for AML/CFT in the motor vehicle sector.
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    • To enhance the ability of motor vehicle dealers to identify threats and comply with AML/CFT regulations.
    • To enable motor vehicle dealers to identify their customers and protect them from being used for illicit purposes.

Organizations

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  • Financial Intelligence Service
  • Ministry of Transport and Logistics
  • Ministry of Trade and Regional Integration
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    • Regional Bureaus
    • Addis Ababa City Administration Bureaus
    • Dire Dawa City Administration Bureaus
    • Ministry of Justice

Legal references

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  • Proclamation No. 780/2013 (Prevention and Suppression of Money Laundering and Financing of Terrorism Proclamation)
  • Directive No. 02/2016 (Designated Non-Financial Business and Professions' Anti-Money Laundering and Countering the Financing of Terrorism Compliance Directives)
  • Council of Ministers Regulation No. 490/2022 (Financial Intelligence Service Establishment)
Original sourcehttps://justice.gov.et/en/directives/designation-of-motor-vehicle-dealers-as-a-designated-non-financial-business-and-professions-directive-no-934-2022/
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