Financial Crime World

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Financial Institutions Face Liability Over AML/CFT Compliance

In a move aimed at strengthening anti-money laundering and combating the financing of terrorism (AML/CFT) regulations in Guyana, financial institutions are now under increased scrutiny to ensure compliance with relevant laws and international standards.

Penalties for Non-Compliance

According to recent developments, employees, directors, officers, or agents of financial institutions found guilty of “tipping off” authorities about suspicious transactions may face severe penalties, including fines of up to $1 million and imprisonment for up to three years. The Guyana Financial Intelligence Unit (FIU) has jurisdiction over the reporting of suspicious transactions, and any breach of confidentiality agreements can result in criminal charges.

Board of Directors’ Responsibility

The Board of Directors (BOD) has ultimate responsibility for ensuring the effectiveness of a financial institution’s AML/CFT framework, which includes oversight and compliance with relevant laws, regulations, and international standards. The BOD must demonstrate its commitment to an effective AML/CFT program by:

  • Understanding statutory duties
  • Approving policies and procedures that are appropriate for the risks faced by the institution
  • Ensuring the appointment of a Compliance Officer
  • Reviewing reports from the Compliance Officer, internal audit, external auditors, and supervisory authority

Risk-Based Framework

Financial institutions must develop and implement a risk-based framework in their AML/CFT program, which should be approved by the BOD and tailored to the institution’s products and services. The framework should assess the level of potential risk posed by each client relationship and include:

  • Segregation of client relationships by risk categories
  • Differentiation of client relationships by risk factors
  • Know your customer (KYC) documentation and due diligence information requirements
  • A process for approving changes to customer risk ratings

The risk rating framework should be periodically reviewed to ensure its effectiveness in identifying high-risk customers, who must be subject to more frequent review.

Implications for Financial Institutions

Failure to comply with AML/CFT regulations can result in severe consequences, including criminal charges and reputational damage. Financial institutions must prioritize AML/CFT compliance to avoid these risks and maintain the trust of their customers and stakeholders.

The Guyana Banking and Financial Services Commission (BOG) will continue to monitor financial institutions’ compliance with AML/CFT regulations and ensure that they adopt a risk-based approach to customer due diligence.

Conclusion

In conclusion, financial institutions in Guyana must take immediate action to strengthen their AML/CFT compliance programs to avoid liability and maintain the integrity of the financial system.