Financial Crime World

Acquisition of Information: New Requirements for Financial Institutions

Financial institutions across the European Union are facing new requirements to ensure the accurate acquisition and storage of customer information. The latest guidelines from the European Banking Authority (EBA) aim to strengthen anti-money laundering (AML) and countering the financing of terrorism (CFT) measures by defining clear policies and procedures.

Identification and Verification

Financial institutions must ensure that customer identification information is:

  • Up-to-date
  • Readable
  • Timestamped
  • Properly stored

This includes gathering information from documentation, clients, or external sources. For legal entities, it’s essential to note the persons authorized to act on behalf of the customer and beneficial owners.

Oversight and Verification

To maintain document authenticity and integrity, financial institutions should:

  • Verify documents with reliable third-party sources whenever possible
  • Double-check documents in cases where there is ambiguity or uncertainty
  • Consult with experts and conduct thorough investigations when necessary
  • Implement strict guidelines for Remote Customer Onboarding Solutions to prevent fraudulent activities

AML/CFT Compliance Officers

Financial institutions are required to appoint AML/CFT compliance officers who will:

  • Develop risk assessment frameworks, policies, and procedures
  • Monitor compliance
  • Recommend corrective measures
  • Report on ML/TF risk assessments to management bodies

Group Level Organization

For group-level organizations, the parent entity must ensure that each branch or entity has the necessary knowledge and data to perform their duties. This includes:

  • A cartography of ML/TF risks at the group level
  • Remediation actions in case of identified risks

New Directive on Criminal Offences and Penalties

The European Parliament and Council have proposed a new directive on criminal offences and penalties for violating Union restrictive measures. The aim is to standardize enforcement across the EU and discourage attempts to evade or circumvent sanctions.

Key Takeaways

  • Financial institutions must ensure accurate acquisition and storage of customer information.
  • AML/CFT compliance officers play a crucial role in developing risk assessment frameworks and monitoring compliance.
  • Group-level organizations must have a cartography of ML/TF risks and remediation actions in place.
  • The new directive on criminal offences and penalties aims to standardize enforcement across the EU.

Conclusion

Financial institutions must adapt to these new requirements to ensure effective AML/CFT measures are in place. Failure to comply may result in severe penalties, including fines and imprisonment. It is essential for financial institutions to prioritize compliance and ensure that they are meeting the new requirements to avoid any potential risks.