Customer Due Diligence: A Must for Financial Institutions
The Armenian government has introduced new regulations to strengthen customer due diligence processes in the financial sector, ensuring a safe and secure environment for customers. These regulations require financial institutions to implement enhanced monitoring measures to prevent money laundering and terrorist financing.
Enhanced Monitoring for Politically Exposed Persons
For customers who are considered politically exposed persons (PEPs), financial institutions must conduct enhanced ongoing monitoring. This involves measures specified in Clause 34 of the regulation, with the periodicity determined by internal legal statutes.
Establishing a Business Profile
When establishing a customer’s business profile, financial institutions must ensure they have obtained sufficient information to determine whether the customer is a PEP.
- Verify customer identity
- Obtain necessary documentation
- Conduct thorough research on the customer’s background and business activities
Identifying Suspicious Transactions and Relationships
Financial institutions are required to identify suspicious transactions and relationships using customer due diligence information and additional data. They must also consult the Financial Monitoring Center of the Central Bank of Armenia as necessary.
- Monitor customer activity regularly
- Analyze transaction patterns and behavior
- Report any suspicious activity to the Authorized Body
Internal Signals
Internal signals can come from various sources within the financial institution, including:
- Customer service staff
- Management bodies
- Internal audit
- Staff with competencies in preventing money laundering and terrorist financing
External Signals
External signals can come from:
- The Authorized Body
- Other reporting entities
- Foreign counterparts
- Limited access and publicly available sources of information
Reporting Suspicious Transactions and Relationships
In cases where a financial institution identifies a suspicious transaction or relationship, they must file a report with the Authorized Body in accordance with the Law. They may also be required to take additional measures as prescribed by the assignments of the Authorized Body.
These regulations aim to prevent money laundering and terrorist financing by strengthening customer due diligence processes in Armenia’s financial sector. Financial institutions are urged to comply with these regulations to ensure a safe and secure environment for their customers.