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Reputation of Respondent Institution Under Scrutiny Amidst Anti-Money Laundering Concerns
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A recent directive has shed light on the reputation of respondent institutions, highlighting concerns over their quality of supervision and potential involvement in money laundering or terrorist financing activities.
New Correspondent Relationships Require Senior Management Approval
According to the directive, banks must obtain senior management approval before establishing new correspondent relationships. This move is aimed at ensuring that these relationships are transparent and free from risk.
Emphasis on AML/CFT Responsibilities
The directive emphasizes the importance of understanding and documenting anti-money laundering (AML) and combating the financing of terrorism (CFT) responsibilities for each bank. Banks must also ensure that their respondents have performed customer due diligence (CDD) obligations on customers with direct access to payable-through accounts and can provide relevant CDD information upon request.
Identifying, Assessing, and Mitigating Risks
The directive underscores the need for banks to identify, assess, and mitigate money laundering or terrorism financing risks arising from new products, business practices, and technologies. This includes conducting risk assessments prior to launching new products or using new technologies.
Wire or Electronic Transfers Requirements
In terms of wire or electronic transfers, the directive requires banks to include specific information on these transactions, including:
- Accurate originator and recipient information
- Account numbers
- Addresses
Banks must also ensure that this information remains with the transfer throughout the payment chain.
Risk-Based Preventative Procedures
The directive further emphasizes the importance of effective risk-based preventative procedures for determining when to execute, reject, or suspend wire or electronic transfers lacking required originator or beneficiary information. Banks must also report suspicious transactions to the Financial Intelligence Unit (FIU), including:
- Cross-border transactions exceeding USD 10,000
- Domestic transactions exceeding 100 million kyats
Investigation and Regulatory Action
In light of these concerns, it is worth noting that several respondent institutions have been subject to investigations and regulatory action in recent years. In one notable case, a major bank was fined millions of dollars for violating AML/CFT regulations.
The reputation of respondent institutions has come under scrutiny amidst allegations of money laundering and terrorist financing activities. While some banks have taken steps to improve their AML/CFT controls, others remain under investigation or face regulatory action.
Conclusion
As the global financial landscape continues to evolve, it is essential that respondent institutions prioritize transparency, accountability, and effective risk management to maintain public trust and prevent financial crimes.