Financial Crime World

Corporate Governance and AML/KYC Requirements

In an effort to promote transparency and accountability in the financial sector, the Superintendency of Banks and Financial Institutions (SUGEF) has implemented new regulations for corporate governance and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) requirements.

Corporate Governance Requirements

According to SUGEF Regulation CONASSIF 4-16, regulated entities must:

  • Establish a performance evaluation policy for each member of the management body and senior management. This policy must be approved on a regular basis and identify and value weakness points in order to execute a mitigation plan to correct such discrepancies.
  • Approve remuneration conditions and define incentives that encourage good performance and promote acceptable risk management criteria.
  • Establish a Remunerations Technical Committee, which will monitor the design and function of an adequate remunerations system.

AML/CFT Requirements

SUGEF has implemented AML/CFT requirements for regulated entities, including banks and financial institutions. These requirements include:

  • Obtaining and keeping information about the identity of clients and beneficiaries.
  • Implementing know-your-client (KYC) and know-your-employee (KYE) procedures.
  • Reporting suspicious transactions or activities.

Regulated entities must also ensure that:

  • Bearer shares and numbered accounts are forbidden.
  • Foreign entities requesting the opening of an account or transaction must be legally registered in their country of origin.

Depositor Protection

The Law of the Deposit Guarantee Fund and Liquidation of Financial Entities regulates deposit insurance through a special fund and banking resolution. The Deposit Guarantee Fund covers deposits such as:

  • Savings
  • Accounts
  • Investments opened in public banks, private banks, and non-bank financial entities

The maximum coverage amount is approximately USD10,000 per person/entity, in local or foreign currency. Regulated entities must contribute to the Fund, with a maximum contribution of 0.15% of total financial intermediation liabilities covered.

Consequences of Non-Compliance

Breaching these regulations could trigger:

  • Internal disciplinary actions by the company.
  • Economic penalties or fines imposed by SUGEF.

SUGEF will periodically supervise the execution and results of the Corporate Governance Code, and issue mandatory changes or adjustments that must be implemented by regulated entities. Regulated entities are urged to ensure compliance with these new regulations to avoid any potential consequences.