Risk Alert: Banks Warned to Exercise Caution with Incomplete Customer Information
New Regulatory Framework Introduced
A new regulatory framework has been introduced to ensure that banks take a more cautious approach when dealing with customer transactions involving incomplete information. The move is aimed at preventing potential risks and money laundering activities.
Guidelines for Handling Incomplete Customer Information
According to the guidelines, if a bank receives incomplete information from an ordering customer, it must:
- Estimate the degree of risk involved
- Take necessary measures to mitigate those risks
- This may include rejecting the transaction or reporting it to the relevant authorities
Obligations on Intermediary Banks
The new regulations also impose obligations on intermediary banks that participate in transferring funds without being the original sender or receiver. These banks are required to:
- Retain all information annexed with the transfer
- Provide it to the receiving bank upon request
- Notify the receiving bank immediately if they receive incomplete information about the ordering customer
Record-Keeping Requirements
Article 7 of the regulations requires banks to keep detailed records and documents of all financial transactions, both domestically and internationally. These records must be maintained for at least five years from the date of completion or termination of the transaction.
- The bank must also develop an integrated system for keeping records and documents that enables it to respond quickly and timely to requests from regulatory authorities.
- This includes providing information about ongoing relations with customers and the nature of those relationships.
Reporting Suspected Transactions
Article 8 of the regulations emphasizes the importance of reporting transactions suspected to be related to money laundering or terrorist financing. Bank administrators who suspect such transactions must:
- Notify the Reporting Officer
- Notify the relevant authorities immediately
The bank is also required to maintain files for transactions suspected to be related to money laundering or terrorist financing and keep them for at least five years or until a final adjudication is issued.
Establishing an Internal System
Article 9 of the regulations requires banks to establish an internal system for anti-money laundering and counter-terrorist financing. This system must:
- Include policies, procedures, and controls that prevent the misuse of modern technologies in money laundering and terrorist financing transactions
- Be approved by the bank’s board of directors or regional manager
- Be updated regularly
- Include preventative measures to detect and prevent suspicious transactions
Consequences of Non-Compliance
Failure to comply with these regulations may result in severe consequences, including fines and penalties. Therefore, banks are advised to review their procedures and ensure that they meet the new regulatory requirements.
In summary, the new regulations aim to enhance transparency and accountability in financial transactions and prevent potential risks and money laundering activities. Banks must be cautious when dealing with incomplete customer information and maintain detailed records of all financial transactions.