Financial Crime World

Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) Regulations

Customer Due Diligence Requirements

Financial institutions must implement effective customer due diligence processes to prevent money laundering and terrorist financing. Here are the key requirements:

Risk-Based Approach

  • Financial institutions must use a risk-based approach when implementing CDD measures, taking into account factors such as:
    • Country or geographic region
    • Product or service
    • Transaction or delivery channel

Identify and Verify Customers

  • Institutions must identify and verify the identity of customers, including beneficial owners, using reliable and independent sources.

Obtain Information on Purpose and Intended Nature of Business Relationship

  • Institutions must obtain information on:
    • The purpose of the business relationship
    • The intended nature of the business relationship
    • The source of funds and wealth

Ongoing Due Diligence

  • Institutions must conduct ongoing due diligence to monitor customer relationships and transactions.

Specific Requirements

Politically Exposed Persons (PEPs)

  • Institutions must take enhanced measures when dealing with PEPs, including:
    • Ongoing monitoring and verification of their identity

Business Relationships

  • Institutions must establish the purpose and intended nature of business relationships, as well as the source of funds and wealth.

Wire Transfers

  • Wire transfers must be accompanied by accurate and meaningful originator information.

Third-Party Providers

Reliance on Third Parties

  • Institutions may rely on third-party providers to perform elements of CDD processes, but they must ensure that these providers meet the same standards as the institution.

Regulated and Supervised Third Parties

  • Institutions must only rely on third parties that are regulated and supervised to standards established in their jurisdiction or higher.

Cross-Border Correspondent Banking

Gather Information about Respondent Bank

  • Institutions must gather sufficient information about respondent banks, including:
    • Their reputation
    • Supervision

Assess Anti-Money Laundering and Terrorist Financing Controls

  • Institutions must assess the anti-money laundering and terrorist financing controls of respondent banks.

Record-Keeping Procedures

Retain Records for Period Prescribed in Act

  • Institutions must maintain procedures that require the retention of records for the period prescribed in the Act.

Provide Records to Supervisory Authority

  • Institutions must be able to provide records or other information to the supervisory authority or other competent and authorized domestic authorities upon request.