Financial Institutions Must Identify Beneficial Owners

A new regulation has been introduced to require financial institutions to identify the beneficial owners of their customers. This move aims to combat money laundering and terrorist financing by ensuring that financial institutions have a better understanding of who they are doing business with.

Requirements for Identifying Beneficial Owners

Under the new regulation, financial institutions must determine whether there are natural persons, alone or jointly with close family members, who hold more than 25% of the ownership interests in a legal entity or association. They must also identify any natural persons who control the legal entity or association through shareholding, unit holding or membership.

Scope of the Regulation

The regulation applies to all financial institutions, including:

• Banks
• Insurance companies
• Estate agents

Enhanced Customer Due Diligence Measures

Financial institutions must apply enhanced customer due diligence measures when there is a high risk of money laundering or terrorist financing. This may involve:

• Obtaining additional information about the customer
• Verifying their identity
• Assessing their business relationship with the financial institution

Politically Exposed Persons

In addition, financial institutions must apply enhanced customer due diligence measures when dealing with politically exposed persons, including government officials and their family members. This involves:

• Ensuring senior management approval is obtained before establishing a customer relationship
• Conducting adequate measures to establish the source of wealth and the source of funds

Correspondent Relationships

Financial institutions must also apply enhanced customer due diligence measures when entering into correspondent relationships with institutions from outside the European Economic Area (EEA). This involves:

• Gathering sufficient information about the respondent institution
• Assessing its measures to combat money laundering and terrorist financing
• Ensuring senior management approval is obtained before establishing a new correspondent relationship

Prohibition Against Correspondent Relationships with Shell Banks

Financial institutions are prohibited from entering into correspondent relationships with shell banks. A shell bank is defined as a bank that lacks substance or transparency in its ownership structure and operations.

Compliance Deadline

The regulation comes into effect on [insert date] and financial institutions must comply with it by that date. Failure to comply may result in fines and other penalties.

Contact Information

For more information about the new regulation, please contact:

• [Insert name and title of spokesperson]
• [Insert contact details]