Due Diligence Procedures Crucial for Financial Transactions in Vanuatu
Reporting entities providing banking services in Vanuatu are required to conduct thorough due diligence on their cross-border correspondent banking relationships, as per a recent regulatory requirement.
Identifying and Verifying Customer Information
The reporting entity must identify and verify the identity of any individual who:
- Opens an account
- Engages its services
- Enters into a business relationship with it
This includes verifying the identity of persons conducting transactions on behalf of others, as well as those suspected of money laundering or terrorist financing activities.
Ongoing Due Diligence Requirements
Vanuatu-based reporting entities must also conduct ongoing due diligence on their relationships with customers and scrutinize all transactions to ensure they are consistent with the entity’s knowledge of the customer and its business risk profile. This includes:
- Paying special attention to transactions involving jurisdictions with inadequate anti-money laundering systems in place
- Examining electronic funds transfers lacking complete originator information
Record Keeping and Reporting
As part of this ongoing scrutiny, reporting entities must:
- Examine the background and purpose of transactions, business relations, and transfers
- Record their findings in writing
- Be prepared to provide these findings to the Vanuatu Financial Intelligence Unit upon request, should an investigation into a money laundering or terrorist financing offence arise
Wire Transfer Due Diligence Requirements
Reporting entities providing wire transfer services in Vanuatu are also mandated to conduct due diligence on each wire transfer transaction. This includes:
- Identifying and verifying the identity of the sender and recipient
- Examining the background and purpose of the transaction
Importance of Compliance
The implementation of these due diligence procedures is critical for ensuring that financial transactions in Vanuatu are conducted in a transparent and secure manner, thereby preventing money laundering and terrorist financing activities. Reporting entities must prioritize compliance with these requirements to maintain their reputation and avoid potential legal and reputational risks.