Ultimate Responsibility for Customer Due Diligence Measures

As a financial institution, it is crucial to understand that you are ultimately responsible for ensuring compliance with customer due diligence (CDD) requirements. This includes verifying the accuracy and completeness of information provided by third parties, as well as taking adequate steps to ensure that identification data and other relevant documentation are readily available upon request.

Reliance on Third Parties

When relying on a third party to provide CDD information, it is essential to ensure that you satisfy yourself that the third party is regulated, supervised or monitored, and has appropriate measures in place for compliance with CDD and record-keeping requirements. Additionally, the jurisdiction where the third party is based must have anti-money laundering/combating the financing of terrorism (AML/CFT) regulations in place consistent with the standards set out by the Financial Action Task Force (FATF).

Effective Watchlist Filtering Programs

Financial institutions must establish policies and procedures for watchlist filtering programs that detect, match, and filter customers against sanctions lists and terrorist organizations. These policies and procedures must be: * Risk-based * Documented * Regularly reviewed

Ongoing Monitoring of Accounts and Transactions

Financial institutions are required to: * Use a database to consolidate basic information and transaction data on all customers for AML/CFT purposes * Establish internal control procedures for requests and inquiries regarding customer information * Establish policies and procedures for account and transaction monitoring based on a risk-based approach

Identifying Politically Exposed Persons (PEPs)

Financial institutions must: * Identify PEPs, including current and former government officials, their family members, and close associates * Adopt enhanced CDD measures for customers determined to be high-risk due to their association with PEPs

Insurance Companies and Post Offices

Article 10 of the Regulations on Combating Money Laundering and Terrorist Financing also applies to: * Insurance companies engaging in simple life insurance business * Post offices engaging in simple life insurance business These entities must take reasonable measures to identify and verify whether beneficiaries and their beneficial owners are PEPs before paying out policy proceeds.

Exemptions for Insurance Agents and Brokers

Article 11 of the Regulations on Combating Money Laundering and Terrorist Financing exempts: * Insurance agents that solicit or negotiate insurance policies from certain CDD requirements * However, if an insurance agent company undertakes underwriting and claim settlement business on behalf of an insurance company, it must comply with the same regulations as the insurance company.

Record-Keeping Requirements

Financial institutions are required to keep records of all business relations and transactions with customers in hard copy or electronic form for at least five years or a longer period as otherwise required by law.