Financial Crime World

Maldives Banks Crack Down on Financial Crime

In an effort to prevent money laundering and terrorism financing in the Maldives, banks are being urged to adhere to strict regulations. The Maldives Monetary Authority (MMA), the country’s central bank, is closely monitoring financial institutions’ adherence to laws and regulations aimed at preventing financial crime.

The Need for Strict Regulations

According to Bank of Maldives, the country’s banking system requires strong measures to protect customers as well as the bank and the banking system from financial crimes. The Prevention of Money Laundering and Financing of Terrorism Act (10/2014) requires banks to gather detailed information from customers, including personal or business details, and confirm income and expenditure details.

Key Regulations

  • Gather detailed information from customers
  • Confirm income and expenditure details
  • Verify the source of funds and purpose of transactions

The Three Stages of Money Laundering

Money laundering is a three-stage process:

Stage 1: Placement

Funds derived from criminal activity are placed into legitimate financial institutions.

Stage 2: Layering

Those funds are layered in order to disguise their origins.

Stage 3: Integration

The funds are integrated into the mainstream economy through a series of transactions.

Bank’s Due Diligence Obligations

As a responsible financial institution, Bank of Maldives has implemented detailed policies and procedures setting out the standards relating to preventing money laundering and terrorism financing. The bank is required to:

  • Acquire valid personal or business information from all customers and beneficial owners
  • Confirm income and expenditure details
  • Verify the source of funds and purpose of transactions

Reporting Requirements

If a customer refuses to provide the required information, the bank is no longer allowed to permit them to operate their account(s). In such cases, the bank must send a report to MMA’s Financial Intelligence Unit advising of this refusal. The bank must also submit suspicious transaction reports to the FIU if it cannot fulfill its due diligence obligations under the applicable laws and regulations.