Financial Crime World

Here is the converted article in Markdown format:

Financial Institutions Required to Implement Risk-Based Customer Due Diligence Programmes

The Central Bank has issued revised guidelines on anti-money laundering (AML) and combating the financing of terrorism (CFT), requiring all regulated entities to conduct a risk-based customer due diligence programme.

New Guidelines for AML/CFT Compliance

According to the new guidelines, financial institutions must develop a programme that is tailored to their specific risks and assesses the level of due diligence required for each customer. The programme should include measures such as:

  • Customer identification
  • Verification
  • Ongoing monitoring

The guidelines provide examples of risk factors for specific sectors and industries, as well as guidance on how to apply these risk factors in developing the programme.

Implementation Timeline

All regulated entities must conduct a gap analysis against the requirements of the guideline and submit an implementation plan to the Central Bank by July 13, 2018. The revised guideline comes into effect from the date of issue, and financial institutions will be required to conduct their 2018 AML/CFT external audits using the new guidelines.

Enforceability

The revised guideline is enforceable by law, and non-compliance can result in regulatory action. The bank has been empowered to issue compliance directions to ensure compliance with the guideline, and failure to comply may lead to:

  • Suspension or revocation of a licence

Key Concepts

Money laundering is the process of concealing the illegal origin and ownership of funds derived from criminal activities. It involves three main stages:

  • Placement
  • Layering
  • Integration

Terrorism financing is defined as the provision of funds to individuals or groups to finance terrorist acts.

Financial institutions must be aware of these key concepts and implement effective measures to prevent money laundering and terrorism financing.