Financial Crime World

AML/CTF Best Practices for Banks in French Polynesia

Introduction

In an effort to curb criminal activity and protect the integrity of the financial system, banks in French Polynesia must adhere to Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) best practices. Money laundering, or the process of concealing illegally obtained funds, is a serious threat to the stability of financial institutions and the economy as a whole.

FATF Standards for AML/CFT Compliance

The Financial Action Task Force (FATF), an intergovernmental body, has set standards for AML/CFT compliance, which banks must follow. The FATF identifies three key lines of defense:

  • First line: Business units
  • Second line: Independent oversight and advice
  • Third line: Internal audit function

Client Due Diligence

Banks in French Polynesia must conduct thorough due diligence on clients, including:

  • Verifying their identity
  • Financial background
  • Nature of their business or company

This includes checking for any criminal activity or suspicious transactions, such as:

  • Large cash withdrawals
  • Structured transactions

Transaction Monitoring

Transaction monitoring is a critical aspect of AML/CFT compliance, allowing banks to identify criminal activities and report them to the relevant authorities. Suspicious transactions must be reported if they do not “make economic sense,” involve unusual withdrawals, or are part of a structured transaction.

Information Management

Information management is also crucial in ensuring:

  • Proper audit trails
  • Supervisory reporting
  • Support for criminal prosecution

Banks must record and document all information obtained through client and transaction due diligence, including inputting transcripts into their information technology systems. This recorded information should be retained for at least five years.

Governance and Organization

French Polynesian banks must also ensure that their governance and organization are robust, with a clear AML/CFT policy defined by the board of directors and implemented by the chief officer in charge of AML/CFT, compliance, human resources, and technology.

Conclusion

By adhering to these best practices, French Polynesian banks can effectively prevent money laundering and terrorist financing, protect their reputation, and maintain public trust.