Financial Crime World

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Financial Institution Conducts Due Diligence on Third-Party Partners

A major financial institution has announced that it will conduct thorough due diligence on its third-party partners, ensuring compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Preventing Risks Associated with Shell Banks and Cross-Border Correspondent Banking Relationships

The institution’s efforts aim to prevent any potential risks associated with shell banks and cross-border correspondent banking relationships. Shell banks are entities that lack a physical presence or a genuine business purpose, making them vulnerable to money laundering and terrorist financing activities.

Gathering Information and Evaluating AML/CFT Controls

To mitigate these risks, the financial institution will:

  • Gather sufficient information about its respondent bank and understand their business nature, as required by section 26(a) of the Law.
  • Evaluate the AML/CFT controls implemented by the respondent bank.
  • Assess their reputation.
  • Examine the quality of supervision to which they are subject.

Establishing New Correspondent Relationships

Additionally, the institution will:

  • Obtain approval from senior management before establishing new correspondent relationships.
  • Clearly document the respective AML/CFT responsibilities of each party.

Wire Transfer Policies and Procedures

The financial institution has also developed policies and procedures for wire transfers, ensuring that accurate originator and recipient information is included in all transactions. This includes:

  • Full names
  • Account numbers
  • Addresses
  • Date and place of birth for originators
  • Names and account numbers for recipients

If the institution is unable to comply with these specifications, it will not execute the wire transfer.

Reporting Suspicious Transactions

In cases where several individual cross-border wire transfers are bundled together in a batch file, the institution will:

  • Include the originator’s information.
  • Report suspicious transactions to the Financial Intelligence Unit (FIU).

Guidelines for Reporting Threshold Transactions

The FIU has issued guidelines for reporting threshold transactions, which exceed amounts defined by the Central Board. Banks and financial institutions must submit reports within:

  • 24 hours if situated in an urban center
  • Three days if located in a remote district

Preventing Tipping-Off Offenses

To prevent tipping-off offenses, banks and financial institutions are prohibited from disclosing to customers or other individuals that a report has been made to the FIU. This ensures the integrity of the reporting process and helps to combat money laundering and terrorist financing activities.

Commitment to AML/CFT Regulations

By conducting thorough due diligence on its third-party partners, the financial institution is demonstrating its commitment to AML/CFT regulations and its dedication to protecting the financial system from illegal activities.