International Banks Must Identify Beneficial Owners Behind Professional Intermediaries
A New Prudential Guideline for International Banks in Vanuatu
The Reserve Bank of Vanuatu has recently issued a new Prudential Guideline (No.9) to ensure that international banks in the country maintain high standards of customer identification, risk management, and compliance with anti-money laundering regulations.
Identifying Beneficial Owners Behind Professional Intermediaries
International banks may hold “pooled” accounts managed by professional intermediaries on behalf of entities such as mutual funds, pension funds, and money funds. However, where funds are co-mingled, the bank must look through to the beneficial owners. The guideline emphasizes that international banks should only accept such accounts if they can establish that the intermediary has engaged in a sound due diligence process and has the systems and controls to allocate assets to relevant beneficiaries.
Identifying Politically Exposed Persons (PEPs)
The guideline also stresses the importance of identifying PEPs who hold important public positions or are related to them. Accepting funds from corrupt PEPs can severely damage an international bank’s reputation and expose it to costly information requests, seizure orders, and potential liabilities.
Customer Identification Procedures
In addition, the guideline highlights the need for international banks to apply equally effective customer identification procedures and ongoing monitoring standards for non-face-to-face customers as for those available for interview. This includes:
- Certification of documents presented
- Independent contact with the customer
- Third-party introduction
- Verification of the source of funds
Correspondent Banking
Correspondent banking is also subject to particular care, requiring international banks to apply an appropriate level of due diligence to prevent financial crimes.
Enhancing Effectiveness and Integrity
The Prudential Guideline No.9 aims to ensure that international banks in Vanuatu maintain high standards of customer identification, risk management, and compliance with anti-money laundering regulations. The guideline is expected to enhance the effectiveness of measures to prevent financial crimes and protect the integrity of the financial system.
Conclusion
The new Prudential Guideline for International Banks in Vanuatu highlights the importance of due diligence and risk management in preventing financial crimes such as money laundering. By identifying beneficial owners behind professional intermediaries, international banks can reduce the risk of financial crimes and maintain a strong reputation in the industry.