Article 9: Customer Due Diligence Requirements for Monitoring Entities in Azerbaijan
Introduction
The “Law on Countering Money Laundering and Financing Terrorism” in Azerbaijan outlines the requirements for Customer Due Diligence (CDD) by monitoring entities such as banks and financial institutions. Article 9 of this law specifies the necessary measures to prevent money laundering and financing terrorism.
Key Requirements for Monitoring Entities
Monitoring entities are required to:
- Identify customers and beneficial owners before establishing business relations or carrying out transactions above a certain threshold.
- This includes verifying customer identity and obtaining necessary documentation.
- Verify identification data of customers and beneficial owners using reliable sources, including:
- Proof of incorporation for legal persons
- ID documents for individuals
- Monitor business relationships through ongoing due diligence, including:
- Scrutiny of transactions to ensure consistency with customer risk profiles
- Updates to customer records
- Conduct enhanced due diligence on higher-risk categories of customers, business relationships, or transactions, such as:
- Non-resident customers
- Companies with nominee shareholders
- Correspondent banking relationships
Verification Measures
Monitoring entities must verify the identity of:
- Legal persons: through proof of incorporation and other relevant documentation.
- Individuals: through ID documents, birth certificates, and utility bills.
- Permanent address: through state registry extracts or lease contracts.
Ongoing Due Diligence Measures
To ensure effective ongoing due diligence, monitoring entities must:
- Scrutinize transactions to ensure consistency with customer risk profiles and source of funds.
- Keep customer records up-to-date and relevant.
Conclusion
Article 9 aims to prevent money laundering and financing terrorism by requiring monitoring entities to implement robust CDD measures to identify, verify, and monitor their customers. By adhering to these requirements, monitoring entities can mitigate the risks associated with financial crime and contribute to a safer and more secure financial system.