Due Diligence Procedures Essential for Financial Transactions in Kiribati
Preventing Money Laundering and Terrorist Financing
The Republic of Kiribati has implemented strict due diligence procedures to prevent money laundering and terrorist financing activities through financial transactions. As part of its anti-money laundering (AML) regime, intermediary banks are required to adhere to these measures to ensure the integrity of financial dealings.
Customer Due Diligence: A Critical Component
According to the Kiribati Financial Intelligence Unit (FIU), customer due diligence is a critical component in preventing illegal activities. As stated by an FIU spokesperson, “Member States shall prohibit their credit institutions and financial institutions from keeping anonymous accounts or anonymous passbooks. We require that owners and beneficiaries of existing anonymous accounts or passbooks be subject to customer due diligence measures as soon as possible.”
Customer Due Diligence Measures
Customer due diligence measures entail:
- Identifying the customer
- Verifying their identity through reliable sources
- Identifying beneficial owners
- Understanding ownership and control structures
- Assessing business purposes
- Conducting ongoing monitoring of transactions
Intermediary Banks: A Crucial Role
Intermediary banks play a crucial role in these procedures. As explained by an industry expert, “When Intermediary Bank takes part in the vetting process, the Bank Specialist provides the Reference Data with a signed Legal Entity Assertion. The Vetting Specialist then considers the Reference Data reliability according to the source and can carry out less checks.”
Special Agreements: Roles and Responsibilities
Special agreements outline roles and responsibilities between intermediary banks, ensuring that all parties are aware of their obligations in the due diligence process.
Verification Requirements
In Kiribati, the FIU requires that verification of customer identity and beneficial ownership take place before establishing a business relationship or carrying out a transaction. This ensures that financial transactions are transparent and secure, protecting against illicit activities.
Importance of Due Diligence Procedures
The implementation of these due diligence procedures is crucial for maintaining the integrity of Kiribati’s financial system and preventing illegal activities such as money laundering and terrorist financing.