Financial Crime World

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Dominica Cracks Down on Money Laundering with Stringent AML-KYC Regulations

In its efforts to combat money laundering and terrorist financing, Dominica has enacted tough new regulations aimed at financial institutions operating within its borders. The Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations require strict identity verification procedures to prevent illicit activities.

Key Provisions Under the Spotlight

The regulations outline several key provisions, including:

  • Customer Screening: Identifying and verifying customers to detect and prevent money laundering and terrorist financing.
  • Identification and Verification: Requiring financial institutions to verify customer identities using various methods.
  • End-User Identification: Defining end-users as clients’ customers subject to AML-KYC checks.

Understanding the Scope of Identity Verification

This report serves as a valuable resource for financial institutions seeking to navigate the complex requirements outlined in Dominica’s Money Laundering (Prevention) Act and related regulations. For clarity, several key terms have been defined:

  • Client: The individual or entity seeking services from a financial institution.
  • Customer: The client’s customer subject to AML-KYC checks.
  • End-user: The client’s customer as viewed by the financial institution.

Required Identity Attributes

According to Dominica’s AML-KYC regulations, natural persons must provide the following identity attributes:

  • Name
  • Address
  • Identity document number

Compliant CDD Methods

Financial institutions can verify an individual’s identity using various methods, including:

  • Document Verification: Verifying documents through specialized services like Shufti Pro.
  • Biometric Identification: Using biometric technologies to identify individuals.

Accepted Documents for Verification

In Dominica, accepted proof-of-identity documents include:

  • Social Security Cards
  • Passports
  • Other valid photo identification documents

Address verification can be accomplished using current utility bills, government-issued documents, and bank statements.

Timing of Verification

Identity verification is not a one-time process but rather requires multiple instances, depending on specific requirements and convenience. Appropriate timing includes:

  • Onboarding new customers
  • Handling transaction data
  • When facing higher risks from customers

Enhanced Due Diligence for PEPs

Under Dominica’s enhanced due diligence regulations, it is crucial to identify customers deemed Politically Exposed Persons (PEPs) or holding public office. Shufti Pro offers an AML Screening service to help financial institutions determine if a potential customer falls under these categories and adjust the level of risk assessment accordingly.

Importance of External Services for Compliance

Dominican regulations allow the use of third-party services to apply measures of due diligence, but the ultimate responsibility for maintaining compliance lies with the financial institution. Shufti Pro can act as an external service provider, providing document verification, sanctions screening, and enhanced due diligence services to help institutions stay compliant.

Record Retention

Finally, Dominican regulations require record retention for seven years as part of due diligence obligations for financial institutions. Institutions remain responsible for collecting all necessary information without undue delay, even when using third-party service providers.

The implementation of these stringent AML-KYC regulations is a crucial step in Dominica’s efforts to combat money laundering and terrorist financing. Financial institutions operating within the country must ensure compliance with these regulations to maintain a reputation for integrity and avoid potential penalties.