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Banks Must Investigate Source of Funds Before Accepting Politically Exposed Persons (PEPs) as Customers
In an effort to curb money laundering and terrorist financing, the Financial Supervisory Commission has emphasized the need for banks to thoroughly investigate the source of funds before accepting Politically Exposed Persons (PEPs) as customers.
Banks Must Ensure Adequate Measures in Place
According to the commission’s latest statement, banks must ensure that they have adequate measures in place to mitigate the higher risk associated with PEPs. This includes:
- Conducting a thorough background check on the customer
- Verifying their identity
- Ensuring senior management is aware of the personal circumstances of high-risk customers
- Being vigilant regarding business relationships with PEPs and high-profile individuals or companies related to them
Investigating Source of Funds Crucial
“Investigating the source of funds is crucial in identifying potential money laundering and terrorist financing risks,” said a spokesperson for the commission. “Banks must ensure that they have robust customer due diligence procedures in place, including verifying the identity and background of customers, particularly PEPs.”
Non-Face-to-Face Customers Also Require Thorough Investigation
In addition to PEPs, non-face-to-face customers also require thorough investigation before opening an account. This includes individuals who conduct electronic banking via the internet or similar technology.
“Electronic banking has made it easier for criminals to hide their identities and engage in illegal activities,” said a financial expert. “Banks must ensure that they have robust customer due diligence procedures in place, including verifying the identity and background of customers, particularly those who do not present themselves for personal interview.”
On-Going Monitoring Crucial
The commission’s statement also emphasizes the importance of on-going monitoring of customers to detect any suspicious activity.
“Banks must have a system in place to monitor customer accounts and transactions regularly,” said the spokesperson. “This includes identifying unusual or suspicious transactions, reporting them to the relevant authorities, and taking appropriate action.”
Training and Education Crucial
Finally, the commission’s statement highlights the importance of training and education for bank employees to ensure that they are equipped to identify and report suspicious activity.
“Banks must ensure that their employees receive regular training on anti-money laundering and combating the financing of terrorism,” said the spokesperson. “This includes educating them on the risks associated with PEPs, non-face-to-face customers, and other high-risk individuals or companies.”
By investigating the source of funds, conducting thorough background checks, and monitoring customer activity, banks can play a crucial role in preventing money laundering and terrorist financing.