New Guidelines Issued by Financial Intelligence Unit for Combating Money Laundering and Terrorist Financing in the Securities Industry
The Financial Intelligence Unit (FIU) has issued new guidelines for Combating Money Laundering and Terrorist Financing in the Securities Industry. The guidelines aim to enhance the fight against money laundering and terrorist financing in the securities industry.
CMSA Licensees Face Challenges in Completing Customer Due Diligence Measures
According to the guidelines, a CMSA licensee that is unable to complete Customer Due Diligence (CDD) measures or where the customer is reluctant to provide information may face serious consequences. The guidelines emphasize the importance of developing and implementing internal policies, procedures, and controls to prevent money laundering and terrorist financing.
Key Requirements for CMSA Licensees
- Develop and implement internal policies, procedures, and controls to prevent money laundering and terrorist financing
- Conduct Customer Due Diligence (CDD) measures, including record retention, detection of unusual and/or suspicious transactions, and obligation to make suspicious transaction reports
- Train staff and agents on AML/CFT laws and regulations, including CDD measures, detecting and reporting suspicious transactions
- Have an audit function that is adequately resourced and independent to regularly assess the effectiveness of internal policies, procedures, and controls
Challenges in Completing CDD Measures or Obtaining Information from Customers
The guidelines highlight instances where CMSA licensees may face challenges in completing CDD measures or obtaining information from customers. For instance:
- A customer may refuse to provide identification documents that cannot be readily verified or are inconsistent with other statements or documents provided
- A customer may request to keep personal information confidential, which may raise suspicions
Suspicious Indicators for Money Laundering and Terrorist Financing
The FIU has also provided a list of suspicious indicators that may indicate money laundering or terrorist financing activity in the securities industry. These include:
- A customer providing unusual or suspicious identification documents that cannot be readily verified or are inconsistent with other statements or documents provided
- A customer refusing to provide information during the account opening process
Action Required by CMSA Licensees
- Be vigilant in monitoring for these signs of money laundering or terrorist financing activity and take prompt action to report any suspicions to the FIU.
Compliance with Guidelines Mandatory
The guidelines come into effect on 1st February 2012 and are expected to enhance the fight against money laundering and terrorist financing in the securities industry. Failure to comply with the guidelines may result in serious consequences for CMSA licensees.