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Regulated Institutions Must Implement Enhanced Customer Due Diligence Measures
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A recent guidance issued by the [Name of Regulator] emphasizes the importance of monitoring transactions to ensure compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. As part of these measures, regulated institutions must implement enhanced customer due diligence (CDD) procedures to detect unusual and potentially suspicious transactions.
Monitoring Transactions
Regulated institutions are required to continuously monitor all transactions undertaken through their business relationships to ensure that they are consistent with the customer’s knowledge, purpose of account/transaction, relationship, and risk profile. This monitoring process must be triggered by specific transactions or account activity, including significant changes in a customer’s behavior or transaction patterns.
Trigger Events
Examples of trigger events that may require regulated institutions to verify or re-verify a customer’s identity include:
- A significant transaction or series of transactions taking place
- A significant change occurs in the way the customer operates their account or conducts their transactions
- The nature of the product and services requested by the customer changes
Reporting Suspicious Transactions
Regulated institutions must have appropriate internal monitoring systems to detect unusual and potentially suspicious transactions. If they suspect or have reasonable grounds to suspect that a transaction is related to any proceeds of crime, including money laundering (ML) or terrorist financing (TF), they must file a suspicious transaction report (STR) with the Financial Intelligence Unit (FIU) within three days.
Record-Keeping
Regulated institutions must ensure that all information, documentation, and data obtained for CDD purposes are recorded and maintained in accordance with relevant regulations. This includes maintaining records of customer identity documents and other relevant information for a minimum period of five years from the date the business or transaction was completed.
Sanctions
Failure to implement simplified CDD measures may result in sanctions, including fines, issued by the Central Bank in accordance with its policy. The level of administrative penalty will be determined based on factors such as the severity of the violation, the asset size of the institution, and the nature and duration of the violations.
Annex I: Simplified Customer Due Diligence Requirements
The annex provides a summary of the simplified CDD requirements for lower-value transactions (Tier 1) and low-value transactions (Tier 2), including customer type, transaction limits, and CDD requirements. Regulated institutions must ensure that they comply with these requirements to maintain their licenses.
Glossary of Terms
The guidance includes a glossary of terms used in the document, which defines key phrases such as “business relationship,” “customer due diligence,” and “financial inclusion.”