Financial Crime World

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Reasonable Measures Needed to Combat Money Laundering and Terrorist Financing

As the government continues to crack down on money laundering and terrorist financing, financial institutions are being urged to take reasonable measures to establish the source of wealth and property. In a bid to curb these illicit activities, accountable institutions have been tasked with implementing enhanced monitoring systems.

Source of Wealth and Property

According to new regulations, accountable institutions must take reasonable measures to ascertain the purpose of any transaction exceeding M100,000 or such amount as may be prescribed by the Minister. This includes identifying the origin and ultimate destination of funds involved in the transaction.

Cross-Border Correspondent Banking

Accountable institutions with cross-border correspondent banking relationships are required to:

  • Adequately identify and verify the person with whom they conduct business
  • Gather sufficient information about the nature of the business
  • Determine the reputation of the person
  • Assess their anti-money laundering and terrorist financing controls
  • Obtain approval from senior management before establishing a new relationship

Payable-Through Accounts

In cases where an accountable institution establishes a payable-through account with another entity, it is required to:

  • Ensure that the other entity has verified the identity of its customers
  • Perform ongoing due diligence on those customers who have direct access to accounts at the accountable institution

Reliance on Intermediaries

Accountable institutions that rely on intermediaries or third parties to undertake their obligations must:

  • Immediately obtain the necessary information and documents
  • Ensure that copies of identification data and other relevant documentation are made available upon request without delay

Official Documents

The Minister has the power to prescribe official documents, identifying documents, reliable and independent source documents, data or information, or other evidence required for customer identification or verification.

Exceptions

There are certain circumstances under which the production of evidence of identity may be waived, including:

  • Situations where the applicant is an accountable institution supervised by a regulatory authority
  • Transactions that are part of an existing business relationship
  • Occasional transactions not exceeding M100,000
  • Other circumstances as may be prescribed by the Minister

Reporting Suspicious Transactions

Accountable institutions must report any transaction exceeding M100,000 or such amount as may be prescribed by the Minister in a format to be prescribed by the Minister. They are also required to:

  • Maintain records of all suspicious transactions for at least 5 years from the date the relevant business or transaction was completed

Customer Records

Accountable institutions must establish and maintain customer records that include:

  • Particulars sufficient to identify each person conducting a transaction
  • Information about the nature and date of the transaction

These records must be kept in the true name of the account holder and maintained for at least 5 years from the date the relevant business or transaction was completed.

In conclusion, accountable institutions have a critical role to play in combating money laundering and terrorist financing. By implementing these reasonable measures, they can help prevent illicit activities and maintain trust in the financial system.