Financial Crime World

Financial Institutions Face Tough Penalties for Non-Compliance with Anti-Money Laundering Regulations

In a bid to combat money laundering and terrorist financing, financial institutions in Seychelles have been warned that failure to comply with anti-money laundering (AML) regulations could result in severe consequences.

Consequences of Non-Compliance

Reporting entities that fail to adhere to AML/CFT obligations may face:

  • Compliance action
  • Disciplinary action from regulatory bodies
  • Criminal prosecution for breaching the AML or Prevention of Terrorism Acts or complicity in money laundering

AML Regulations and Due Diligence

The AML Regulations (2012) take a risk-sensitive approach to due diligence and monitoring, allowing reporting entities to adopt different approaches to customer due diligence (CDD) and ongoing monitoring based on the risk rating of their customers. However, this does not mean that reporting entities can slack off on their responsibilities.

Responsibilities of Reporting Entities

  • Establish and maintain a manual of compliance procedures
  • Appoint a Compliance and Reporting Officer (CRO) to oversee AML/CFT compliance
  • Train all officers, employees, and agents on AML/CFT procedures
  • Conduct customer due diligence (CDD) on all customers
    • Identify and verify their identity
    • Ascertain the nature of the business relationship
    • Obtain information about complex or unusual transactions
  • Conduct ongoing monitoring to review arrangements regularly and update procedures in light of changes to AML/CFT legislation

Role of the Compliance and Reporting Officer (CRO)

The CRO is responsible for:

  • Ensuring that all reporting obligations are met
  • Establishing an audit function to test AML/CFT procedures and systems
  • Taking overall responsibility for suspicious transaction reports (STRs)
  • Ensuring that all personnel understand the risks associated with money laundering and terrorist financing

Importance of Compliance

Non-compliance with AML/CFT good practices removes the risk of money laundering and/or terrorist financing charges, while preserving the integrity and reputation of the reporting entity.

Conclusion

Financial institutions in Seychelles must take necessary steps to ensure compliance with AML/CFT regulations to avoid severe penalties, including criminal prosecution for money laundering and/or terrorist financing. The Financial Intelligence Unit (FIU) urges all reporting entities to prioritize AML/CFT compliance to maintain their integrity and reputation.