Financial Crime World

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Dominican Republic Correspondent Banking: Enhanced Due Diligence Requirements

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Santo Domingo, Dominican Republic - In a bid to combat money laundering and terrorist financing, correspondent banks operating in the Dominican Republic must adhere to strict enhanced due diligence requirements, according to Article 8 of the “Know Your Customer” (KYC) guidelines issued by the Superintendence of Banks (SIB).

KYC Guidelines

The KYC guidelines mandate that correspondent banks verify the source of wealth for all control units and proprietors, including their reputation and credibility in the market. Additionally, they must investigate:

  • The experience and competency of each member of the executive commission
  • Recent changes in ownership

Regulations for Foreign Investments and Opening of Border Institutions

Article 18 of the local regulations prohibits banks from operating with “shell” banks that lack substance.

Non-Face-to-Face Transactions

In non-face-to-face transactions, correspondent banks are required to perform additional due diligence, including:

  • Identifying physical or legal persons who receive or transfer funds
  • Submitting Suspicious Activity Reports (SARs) to the Financial Analysis Unit (UAF)

Reporting Requirements

Correspondent banks must report:

  • Cash transactions exceeding USD 10,000
  • Electronic transfers up to USD 1,000
  • Daily reports of remittances

Failure to comply with these requirements can result in imprisonment of 2-5 years and a fine of 50-100 minimum wage salaries.

Automated Suspicious Transaction Monitoring

There are no legal or regulatory requirements for the use of automated suspicious transaction monitoring technology. However, correspondent banks are required to determine whether it is appropriate to proceed with a current/ongoing transaction that has been identified as suspicious after a certain period without response from UAF.

Data Protection and Credit Reports

The definition of personal data protection does not cover direct information about KYC. The Superintendence of Banks’ KYC guide provides guidance on the processing of personal data. There are no restrictions on the transfer of credit reports for KYC and credit risk analysis purposes.

Risk-Based Approach

The Dominican Republic has a risk-based approach to combating money laundering and terrorist financing, with regulators promoting a proactive approach based on risk.

Case Law and Constitutional Law

Law 172-13 of Personal Data Protection regulates the personal data transfer. However, Article 89 of this law governs international agreements to which the Dominican Republic is a signatory, including information exchange treaties.

Article 56, Paragraph b) of the Monetary and Financial Law No. 183-02 establishes the legal obligation of banking secrecy and confidentiality.

Conclusion

Correspondent banks operating in the Dominican Republic must adhere to strict enhanced due diligence requirements to combat money laundering and terrorist financing. Failure to comply with these requirements can result in severe penalties, including imprisonment and fines.