Financial Crime World

Financial Institutions Urged to Boost Customer Verification Measures

Combating Money Laundering and Terrorist Financing

In an effort to combat money laundering and terrorist financing, financial institutions have been directed to enhance their customer verification measures. The new regulations require financial institutions to identify and verify the identity of customers and beneficial owners, as well as monitor business relationships on an ongoing basis.

Regulation 5: Customer Due Diligence (CDD) Measures

According to Regulation 5, financial institutions must perform various CDD measures when establishing a business relationship with a customer. These measures include:

  • Identifying and verifying the customer’s identity using reliable sources
  • Understanding the purpose and nature of the business relationship
  • Obtaining tax identification numbers and financial statements where applicable

Financial institutions are also required to monitor business relationships on an ongoing basis and examine transactions carried out to ensure they are consistent with their knowledge of the customer. For legal persons, financial institutions must understand and document the ownership and control structure of the customer.

Regulation 6 outlines the requirements for identifying and verifying the identity of legal persons. Financial institutions must verify the identities of their customers, including natural persons who claim to act on behalf of a legal person or legal arrangement.

Key Requirements

  • Identify and verify the identity of customers and beneficial owners using reliable sources
  • Understand the purpose and nature of the business relationship and obtain tax identification numbers and financial statements where applicable
  • Monitor business relationships on an ongoing basis to ensure transactions are consistent with the customer’s profile
  • Take legible file copies of relevant identification and supporting documentation, with the customer’s signature or fingerprint obtained on each page

Compliance

Financial institutions are urged to take immediate action to comply with these regulations. Failure to do so may result in serious consequences, including fines and penalties.

“We urge financial institutions to take these regulations seriously and implement the necessary measures to ensure compliance,” said a spokesperson for the regulatory body. “It is crucial that we protect our financial system from money laundering and terrorist financing threats.”