Understanding Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Regulations

The regulations outlined below are crucial for financial institutions to adhere to in order to prevent money laundering and terrorist financing activities. These guidelines help ensure the integrity of the financial system by enforcing strict measures against suspicious transactions and high-risk customers.

Ongoing Monitoring: A Key Component of AML/CTF Regulations

Financial institutions play a vital role in detecting and preventing illicit activities through ongoing monitoring systems. The key points related to this component are:

• Establishment of Ongoing Monitoring Systems: Financial institutions must set up systems for continuous monitoring of accounts and transactions.
• Identification of Suspicious Indicators: They must identify suspicious indicators published by relevant associations and develop additional indicators based on their ML/TF risk assessment or daily transaction information.

Customer Due Diligence (CDD) Measures

In order to determine the level of risk associated with a customer, financial institutions must put in place effective CDD measures. These include:

• Risk Management Systems: Establishing systems to identify if a customer is a politically exposed person (PEP).
• Assessment of PEPs: Current PEPs of foreign governments are treated as high-risk customers.
• Risk Assessment for Domestic and International Organizations: Current PEPs of the domestic government or international organizations are assessed for risks and may require enhanced CDD measures.
• Senior Managerial Officers: Senior managerial officers of PEPs may also be subject to enhanced CDD measures.

Exemptions and Special Cases

Certain entities, such as insurance agents and brokers, may be exempt from certain AML/CTF provisions. However:

• Insurance Agent Companies Undertaking Underwriting and Claim Settlement Business: Must comply with the regulations despite any exemptions.

Record-Keeping Requirements

Financial institutions must maintain accurate records of all business relations and transactions for a specified period. This includes:

• Retention Period: Keeping records for at least five years or a longer period as required by law.
• Information to be Retained: Records must include information obtained through CDD measures, such as copies of passports, identity cards, driver’s licenses, and other identification documents.