Money Laundering Prevention: Institutions Must Have Written Audit Procedures
The fight against money laundering and terrorist financing has taken a significant step forward with the introduction of new regulations. Financial institutions and individuals engaged in other business activities are now required to have written audit procedures in place to assess compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) legislation.
Review and Effectiveness
According to Regulation 5, these procedures must be reviewed on an ongoing basis to ensure their effectiveness. This move aims to strengthen the ability of financial institutions to detect and prevent money laundering and terrorist financing activities.
Suspicious Transaction Reporting: A Key Responsibility
In addition, financial institutions and individuals engaged in other business activities are required to report suspicious transactions to the relevant authorities. Regulation 14 outlines the responsibility for reporting suspicious transactions, which includes providing detailed information about the transaction and the customer involved.
Investigation and Decision-Making
The regulation also requires that a Compliance Officer investigate the details of the report and determine whether the information contained in it supports the suspicion of money laundering or other criminal conduct. If the information does not substantiate the suspicion, the Compliance Officer must record this decision and make the record available to the authorities on request.
Reporting Suspicious Transactions to the Authority
Regulation 16 sets out the requirements for reporting suspicious transactions to the authority. The report must be made in Form 1 of the Schedule and delivered by hand in sealed and confidential envelopes. The regulation also requires that a register of all suspicious transaction reports be maintained, including details of the date of the report, the person who made it, and the person to whom it was forwarded.
Complex Transactions or Unusual Transactions: Additional Requirements
Financial institutions and individuals engaged in other business activities are required to monitor complex transactions or unusual patterns of transactions under Regulation 21. This regulation requires that transaction monitoring be risk-based and carried out on an ongoing basis.
Criteria for Determining Unusual Transactions
The regulation also sets out the criteria for determining whether a transaction is unusual, including:
- Whether it is inconsistent with a client’s known legitimate business or personal activities
- Whether it has no apparent economic or visible lawful purpose
These new regulations demonstrate the government’s commitment to preventing money laundering and terrorist financing. Financial institutions and individuals engaged in other business activities must now take proactive steps to ensure compliance with AML/CTF legislation, including having written audit procedures in place and reporting suspicious transactions to the authorities.