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Financial Institutions Must Comply with AML/CFT Regulations to Ensure Transparency and Security
In order to combat money laundering and terrorist financing, financial institutions in [Country/Region] must comply with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations set by the Financial Action Task Force (FATF).
Watch List Filtering Programs
According to Article 8 of the AML/CFT Regulations, financial institutions are required to establish policies and procedures for watch list filtering programs to detect and filter out customers, senior managerial officers, beneficial owners, or connected parties who are:
- Sanctioned under the Terrorism Financing Prevention Act
- Identified as terrorists by foreign governments or international organizations
Ongoing Monitoring of Accounts and Transactions
Under Article 9, financial institutions must implement ongoing monitoring of accounts and transactions using a risk-based approach. This includes:
- Establishing internal control procedures for requests and inquiries regarding customer information
- Reviewing policies and procedures periodically
- Utilizing information systems to detect suspicious transactions
Customer Due Diligence (CDD) Measures
Article 10 emphasizes the importance of conducting CDD measures on customers who are Politically Exposed Persons (PEPs). Financial institutions must:
- Assess the PEP’s risks
- Adopt enhanced CDD measures if necessary
Insurance Companies and Post Offices
Insurance companies and post offices engaging in simple life insurance business are also required to identify and verify whether beneficiaries and beneficial owners of life insurance policies, investment-related insurance policies, or annuity insurance policies are PEPs before paying out benefits or cash surrender value.
Exemption for Insurance Agents and Brokers
Article 11 provides an exemption for insurance agents and brokers from certain AML/CFT regulations, but only if they meet specific conditions. However, insurance agent companies that undertake underwriting and claim settlement business on behalf of insurance companies must comply with the same regulations as insurance companies.
Record Keeping Requirements
Finally, Article 12 requires financial institutions to maintain records on all business relations and transactions with customers in hard copy or electronic form for at least five years or a longer period as otherwise required by law.