Financial Crime World

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Suspicious Transactions Report Highlights: CROs Must Take Lead on AML/CT Compliance

A new report has highlighted the importance of appointing a Chief Risk Officer (CRO) to oversee Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) compliance for reporting entities in Seychelles.

Responsibilities of the CRO

According to the report, all reporting entities must designate a CRO with overall responsibility for AML/CFT compliance. The CRO must be:

  • A senior officer with sufficient qualifications and experience to comply with the detailed requirements of the AML Act.
  • Resident in Seychelles at all times, with an alternate appointed to assume responsibilities in their absence.
  • Able to command necessary independence and authority to train and supervise all other officers, employees, and agents within the organization.

Specific Responsibilities

The CRO’s specific responsibilities include:

  • Establishing and maintaining a manual of compliance procedures
  • Establishing an audit function to test AML/CFT procedures and systems
  • Taking overall responsibility for all Suspicious Transaction Reports (STRs)
  • Ensuring that all officers, employees, and agents are:
    • Screened before recruitment
    • Trained to recognize suspicious transactions and trends
    • Comply with all relevant obligations under AML/CFT laws

Customer Due Diligence

The report emphasizes the importance of customer due diligence, which has four key components:

  • Identifying customers
  • Verifying their identity
  • Obtaining information about the nature of the business relationship and the customer’s business
  • Taking reasonable measures to ascertain the purpose of one-off transactions and the origin and ultimate destination of all funds transfers

Beneficial Ownership

The report highlights that the concept of beneficial ownership is broader than legal ownership and cannot be determined by reference to the legal position alone. Beneficial ownership focuses on real benefit and/or ultimate effective control.

Conclusion

The report concludes that the four core Customer Due Diligence obligations apply across the full range of business relationships and transactions undertaken by reporting entities, and continue after a business relationship has been established.

Key Takeaways

  • All reporting entities must designate a CRO with overall responsibility for AML/CFT compliance.
  • The CRO must be a senior officer with sufficient qualifications and experience to comply with the detailed requirements of the AML Act.
  • Customer due diligence has four key components: identifying customers, verifying their identity, obtaining information about the business relationship and customer’s business, and taking reasonable measures to ascertain the purpose of one-off transactions.

What Does This Mean for Reporting Entities?

Reporting entities must:

  • Appoint a CRO with overall responsibility for AML/CFT compliance
  • Conduct customer due diligence, including identifying customers, verifying their identity, obtaining information about the business relationship and customer’s business, and taking reasonable measures to ascertain the purpose of one-off transactions.

What Does This Mean for Financial Institutions?

Financial institutions must:

  • Appoint a CRO with overall responsibility for AML/CFT compliance
  • Conduct customer due diligence, including identifying customers, verifying their identity, obtaining information about the business relationship and customer’s business, and taking reasonable measures to ascertain the purpose of one-off transactions.