Financial Crime World

Severe Consequences for Non-Compliance with Anti-Money Laundering and Counter-Terrorism Financing Standards

Financial regulators in Seychelles have issued a stern warning to financial institutions, emphasizing the importance of compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) standards. Failure to comply with these core obligations may result in severe consequences, including:

  • Compliance action by the Financial Intelligence Unit (FIU)
  • Disciplinary action by relevant supervisory authorities
  • Criminal prosecution for breaching AML or Prevention of Terrorism Acts or complicity in money laundering

Understanding the AML Regulations

The AML Regulations 2012 reflect a risk-sensitive approach to due diligence and monitoring by reporting entities. This means that:

  • Reporting entities are permitted to adopt different approaches to customer due diligence (CDD) and ongoing monitoring according to different risk ratings of their customers
  • However, it is crucial for reporting entities to identify and address actual risks arising in the course of their business

Internal Controls and Compliance Officers

Every reporting entity must take appropriate measures to ensure that all officers, employees, and agents:

  • Understand and comply with applicable AML/CFT procedures
  • Appoint a compliance officer (CRO) with overall responsibility for AML/CFT compliance

The CRO should be a senior officer who is:

  • Sufficiently qualified and experienced to comply with detailed requirements of the AML Act
  • The liaison point with the FIU and relevant supervisory authorities
  • Commanding necessary independence and authority to train and supervise all other officers, employees, and agents within the organization

Customer Due Diligence

Customer due diligence (CDD) has four key components:

  • Identifying customers
  • Verifying their identity
  • Obtaining information about the nature of the business relationship and the customer’s business
  • Taking reasonable measures to ascertain the purpose of one-off transactions and the origin and ultimate destination of all funds transfers

The CRO must ensure that all officers, employees, and agents are trained to:

  • Recognize suspicious transactions and trends associated with money laundering and financing of terrorism
  • Review arrangements on a regular basis to verify compliance with internal procedures and update them in light of any amendments to the AML/CFT legislation

Ongoing Monitoring

The CDD obligations apply across the full range of business relationships and transactions undertaken by reporting entities, and continue after a business relationship has been established. Reporting entities must:

  • Ongonally monitor their customers’ activities
  • Report any suspicious transactions or activities to the FIU

In conclusion, financial institutions in Seychelles must take immediate action to ensure compliance with AML/CFT standards. Failure to do so may result in severe consequences, including criminal prosecution. It is crucial for reporting entities to prioritize AML/CFT compliance and maintain robust internal controls and procedures to prevent money laundering and terrorist financing activities.