Financial Crime World

Financial Institutions Must Take Enhanced Measures to Combat Money Laundering and Terrorist Financing

Key Requirements for Financial Institutions

Termination of Business Relationship and Suspicious Transactions Report

  • Financial institutions must terminate a business relationship with a customer who fails to provide required identification data or if there are doubts about the accuracy, veracity, or adequacy of such data.
  • In addition, they should consider making a suspicious transactions report in relation to the customer.

Closure of Account and Restoration of Balance

  • If update problems with customer identification data arise after an account is opened, the financial institution must close the account, inform the holder, and restore the balance unless otherwise stipulated by a competent authority.

Evaluation of Risk Exposure

Financial institutions should evaluate their level of risk exposure based on factors such as:

  • The purpose of an account or relationship
  • The level of assets to be deposited
  • The regularity or duration of the business relationship

Associated CDD Measures

CDD measures must be consistent with the identified risk level. For higher-risk business relationships, enhanced measures include:

  • Obtaining additional information about the customer and updating identification data regularly
  • Verifying the source of funds or wealth of the customer
  • Conducting enhanced monitoring of the business relationship

For lower-risk customers, simplified CDD measures can be applied, including:

  • Verifying the identity of the customer and beneficial owner after the establishment of the business relationship
  • Reducing the frequency of identification updates
  • Reducing the degree of ongoing monitoring and scrutiny of transactions

Non-Compliance Consequences

Failure to comply with these guidelines may subject financial institutions to sanctions under relevant legislation and regulations. In addition, disciplinary proceedings may be initiated against banks and financial institutions for freezing measures linked to terrorist assets.

Note

This note cancels and replaces previous guidance on CDD measures issued by the General Director.