Compliance with Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) Regulations

Financial institutions play a crucial role in preventing money laundering and terrorist financing. To achieve this, they must comply with the AML/CFT Act, Regulations, and Guidelines.

Statutory Duties and Compliance

According to the guidelines, directors of financial institutions must demonstrate their commitment to an effective AML/CFT programme by:

• Understanding statutory duties
• Approving policies and procedures
• Appointing a Compliance Officer
• Ensuring compliance with local laws and regulations

Senior management, in collaboration with the Compliance Officer, is responsible for developing sound risk management programmes and keeping directors informed about these programmes. The programmes should provide for a thorough knowledge of customers’ businesses and financial transactions.

Documented Policies and Procedures

Financial institutions must formally document policies and procedures that cover various aspects of AML/CFT compliance, including:

• Customer account opening
• Verification of customer identity
• Business relations with third parties
• Internal reporting

Training and Oversight

The guidelines also emphasize the importance of:

• Training employees on AML/CFT compliance
• Appointing a Compliance Officer at an appropriate level of authority
• Establishing management information systems to facilitate monitoring
• Independent risk-based oversight functions to test and evaluate compliance programmes

Risk-Based Approach

The Financial Action Task Force (FATF) recommends that financial institutions adopt a risk-based approach to customer due diligence. This means that institutions should determine the appropriate level of information and documentation required to verify a customer’s identity based on the nature and degree of risk inherent in the customer relationship.

Financial institutions are expected to develop and implement a risk-based framework in their AML/CFT programme, which must be approved by its board of directors. The framework should assess the level of potential risk each client relationship poses to the institution and include:

• Segregation of client relationships by risk categories
• Differentiation by risk factors
• Know Your Customer (KYC) documentation requirements

Compliance and Consequences

The Bank of Ghana will assess the adequacy of financial institutions’ risk rating policies, processes, and procedures as part of its on-going examination. Failure to comply with AML/CFT regulations may result in penalties, including fines and other sanctions.

Therefore, it is essential for directors and senior management to demonstrate their commitment to compliance and ensure that their institutions are in line with the guidelines.