Role of Bank Al-Maghrib within the AML/CFT framework

Bank Al-Maghrib serves as the supervisory authority for the banking sector with regards to anti-money laundering and countering terrorist financing (AML/CFT), pursuant to the provisions of Law No. 43-05 on the fight against money laundering, as amended and supplemented, and of Law No. 103-12 on credit institutions and similar bodies:

Law 43-05 on the fight against money laundering defines Bank Al-Maghrib's role as the banking sector's supervisory authority in matters related to AML/CFT. It conferred on it the power to ensure that entities under its supervision comply with the provisions of Law No. 43-05 and to set the procedures for the application of the pertaining obligations.
Law No. 103-12 on credit institutions and similar bodies (Articles 96 and 97) establishes the Bank's role in defining the terms and conditions for applying the legal framework for AML/CFT and monitoring its implementation.

In carrying out its supervisory and oversight mandate over credit institutions and similar bodies with respect to AML/CFT, Bank Al-Maghrib issued several regulatory texts setting out the due diligence measures to be implemented, namely:

Circular No. 5/W/2017 on the due diligence obligation incumbent on credit institutions, as amended and supplemented by Circular 3/W/2019
Circular No. 5/w/2015 on the required documentation for the processing of licensing applications, as amended and supplemented
Directive No. 3/W/2019 of November 4, 2019, on the implementation of a risk-based approach in the due diligence obligation incumbent on credit institutions and similar bodies
Directive No. 2/W/2019 of November 4, 2019, on the identification and knowledge of business relationships, occasional customers, and beneficial owners
Directive No. 6/W/2021 on the group-wide application of due diligence obligations incumbent on credit institutions and similar bodies
The guide for microcredit associations to strengthen their understanding of regulatory requirements and facilitate the operational implementation of these provisions
Circular letter No. 1/W/2020 setting out the procedures for applying the provisions of Article 20 of Circular No. 5/W/2017 (opening of remote accounts), issued in 2020, in the context of the COVID-19 health crisis
The model agreement on third-party introduction shared with banks and insurance companies, defining their roles and responsibilities in applying due diligence obligations in this area
Due diligence measures applicable to third-party introduction by insurance companies in the field of bancassurance

A consultation phase preceded the enactment of these texts. It involved credit institutions and similar bodies through their professional associations, as well as the ANRF, AMMC, ACAPS, and the Foreign Exchange Office.

1. AML-CFT supervision approach

a) Market access supervision

Bank Al-Maghrib is the authority legally empowered to grant licenses for conducting banking activities in Morocco. Its thorough understanding of ML/TF risks within the sector—stemming from its supervisory role—enables it to effectively carry out its responsibilities in the areas of licensing and market entry control. The review of license applications for banking activities specifically takes into account the AML/CFT component.

The procedures for processing licenses are detailed in the following sections: Licensing (BANK AL-MAGHRIB - Licensing)

It should be noted that Bank Al-Maghrib’s Circular No. 5/w/2015 outlines the procedures for identifying the beneficial owner in the context of licensing request, as well as the documents and information required for its processing and the template of the application form to be completed.

b) Supervision and control of credit institutions and similar bodies in relation to AML-CFT

Bank Al-Maghrib adopts an approach based on a combination of off-site and on-site inspection missions aimed at assessing credit institutions and similar bodies’ compliance with the legal and regulatory AML/CFT provisions.

Off-site and on-site AML/CFT inspections are governed by formalized internal procedures and methodological guidelines that are regularly updated.

The implementation of these two forms of supervision is based on a risk-based approach focused on areas of vulnerability, using a credit-institution rating system that makes it possible to assess their ML/TF risk profile.

Furthermore, a unit in charge of “Financial Integrity” was established since 2016 to monitor risks that may undermine the financial integrity of credit institutions and similar bodies. Staffed with dedicated specialists, this unit provides its contribution and technical support alongside both off-site and on-site supervisors on AML/CFT matters. Its main tasks include:

assessing AML/CFT frameworks of the obligated institutions, ensuring the follow up of the recommendations issued following the inspections of these institutions, and proposing, where appropriate, suitable supervisory actions.
maintaining relations with the ANRF, monitoring the outcome of reported transactions and their typology, in coordination with this authority;
ensuring the monitoring of AML/CFT practices and fostering relations with the competent international bodies in this area.

In 2020, Bank Al-Maghrib developed an ML/TF risk mapping for the banking sector, based on a qualitative and quantitative approach to assessing these risks. This mapping is structured around the following axes:

Threat assessment: It is based on data relating to suspicious transaction reports linked to the 13 banking business lines (Retail Banking, Private Banking, Corporate and Investment Banking, Trade Finance, Correspondent Banking, Consumer Credit, Mortgage Credit, Leasing, Factoring, Participatory Finance, Payment Accounts, Money Transfer, and Microcredit), the associated predicate offences, as well as the conclusions of the national risk assessment.
Vulnerability assessment: This is carried out for the aforementioned business lines through the analysis of several risk factors (customers, products/services/transactions, distribution channels, and geographic areas), based on qualitative and quantitative data collected from credit institutions.
Determination of the inherent risk exposure of these business lines through the cross-referencing of threats and vulnerabilities.
Risk profiling of each credit institution: This is determined based on the rating of the main business lines.

For the determination of the residual risk profile, the quality of the risk management system is assessed based on an annual AML/CFT questionnaire sent to the concerned institutions. The assessment includes the implementation of policies and procedures as well as the adequacy of human and technical resources to control the ML/TF risks incurred by each institution.

This questionnaire is divided into nine distinct areas covering: (1) the internal due-diligence framework, (2) the identification and understanding of business relationships, occasional customers, and beneficial owners, (3) transaction oversight and monitoring, (4) correspondent banking, (5) group-wide considerations, (6) information system, (7) training and awareness, (8) document retention and archiving, and (9) questions specific to payment institutions.

It also includes quantitative data that enable assessing the effectiveness of the institution’s AML/CFT framework.

The results of this risk mapping enable the identification of risk areas that require heightened due-vigilance and thus guide the Bank's control objectives and activities through a more effective allocation of resources. They aim to tailor the intensity of off-site and on-site supervision of each credit institution according to its level of risk.

The on-site inspections carried out have resulted in corrective measures, including (financial and administrative) disciplinary sanctions in accordance with Law 43-05 on the fight against money laundering and Law 103-12 on credit institutions and similar bodies.

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Information and data relating to the national AML/CFT framework, including the legal and regulatory framework and the role and responsibilities of each stakeholder in the framework, are available via the following links: