Financial Crime World

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Financial Institution Due Diligence Crucial in Jordan

Amidst growing concerns about money laundering and terrorist financing, financial institutions in Jordan are under increasing pressure to ensure robust due diligence practices. The country’s regulatory bodies have implemented strict measures to prevent these illicit activities, making it essential for financial institutions to comply with Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations.

Regulatory Framework

Jordan has a well-established legal and regulatory framework in place to combat money laundering and terrorist financing. The country’s Anti-Money Laundering & Counter Terrorist Financing Unit (AMLU) plays a central role in implementing AML and CTF measures, while the Financial Action Task Force (MENAFATF) provides valuable insights into Jordan’s compliance with international standards.

Key Regulatory Bodies

  • Anti-Money Laundering & Counter Terrorist Financing Unit (AMLU): responsible for implementing AML and CTF measures
  • Financial Action Task Force (MENAFATF): provides insights into Jordan’s compliance with international standards

Obligations on Financial Institutions

Financial institutions in Jordan are required to establish anti-money laundering policies and procedures, conduct customer due diligence, report suspicious transactions, and maintain records. Article 4 of the Anti-Money Laundering and Counter Terrorist Financing Law No. (20) of 2021 outlines the duties of financial institutions, which include implementing AML policies and procedures.

Key Obligations

  • Establish anti-money laundering policies and procedures
  • Conduct customer due diligence
  • Report suspicious transactions
  • Maintain records

Enhanced Due Diligence

Financial institutions are also required to apply enhanced due diligence measures when dealing with Politically Exposed Persons (PEPs). This involves conducting more thorough customer due diligence to assess the source of funds and wealth of PEP clients. The law defines PEPs as individuals holding prominent public positions, their immediate family members, and close associates.

Key Features of Enhanced Due Diligence

  • Conducting thorough customer due diligence
  • Assessing the source of funds and wealth of PEP clients

Reporting Entities

Reporting entities, including banks, financial institutions, and designated non-financial businesses and professions (DNFBPs), are mandated to implement comprehensive AML/CFT programs. These programs must include risk-based procedures for identifying and verifying the identity of customers, especially PEPs.

Key Features of AML/CFT Programs

  • Risk-based procedures for identifying and verifying customer identities
  • Comprehensive AML/CFT training for employees

Record-Keeping and Reporting Suspicious Activities

Reporting entities must maintain records of customer identification and transaction data for a specified period and report suspicious transactions to the Financial Intelligence Unit (FIU) or relevant authorities. This includes any transactions involving PEPs that raise suspicions of money laundering or terrorist financing.

Key Features of Record-Keeping and Reporting

  • Maintaining records of customer identification and transaction data
  • Reporting suspicious transactions

Sanctions and Penalties

The law outlines penalties for non-compliance, which may include fines, sanctions, or criminal charges against individuals or entities that fail to adhere to AML/CFT obligations.

Key Sanctions and Penalties

  • Fines
  • Sanctions
  • Criminal charges

In conclusion, financial institutions in Jordan must prioritize due diligence practices to comply with AML/CTF regulations. The country’s regulatory framework provides a robust mechanism for preventing money laundering and terrorist financing, making it essential for financial institutions to ensure compliance.