Preventing Money Laundering and Terrorism Financing: Key Requirements

Financial institutions and other accountable persons play a crucial role in preventing money laundering and the financing of terrorism. To achieve this, they must comply with various requirements outlined by Anti-Money Laundering (AML) legislation or regulation.

Customer Due Diligence

Accountable persons are required to conduct customer due diligence, which involves:

• Identifying and verifying the identity of customers
• Understanding the nature of their business
• Assessing the risk associated with them

This process helps financial institutions understand their customers and manage potential risks.

Third-Party Reliance

In certain circumstances, accountable persons can rely on third-party service providers to perform elements of the due diligence process. However, they must ensure that:

• The third party is regulated
• Supervised or monitored for AML compliance

This allows financial institutions to leverage specialized expertise while maintaining AML standards.

Risk Assessment

Accountable persons are required to identify, assess, and mitigate money laundering and terrorism financing risks associated with their products, services, and business practices. This includes:

• Identifying high-risk customers and transactions
• Implementing controls to prevent suspicious activity
• Continuously monitoring and updating risk assessments

By understanding and managing risks, financial institutions can minimize the potential for money laundering and terrorism financing.

Record-Keeping

Accountable persons must maintain accurate and detailed records of customer information, transactions, and correspondence. These records must be kept for a minimum period of ten years from the date they were obtained or the account was closed.

Proper record-keeping is essential for:

• Tracking customer activity
• Identifying suspicious behavior
• Meeting regulatory requirements