Financial Crime World

Financial Institutions Take on Ultimate Responsibility for CDD Measures

In an effort to strengthen anti-money laundering (AML) and combating the financing of terrorism (CFT) efforts, financial institutions are now required to take on ultimate responsibility for their customer due diligence (CDD) measures.

Immediate Access to CDD Information

Financial institutions must be able to immediately obtain the necessary CDD information from third-party providers. They must also take adequate steps to satisfy themselves that copies of identification data and other relevant documentation will be made available without delay.

Third-Party Provider Regulation

To ensure compliance with AML/CFT regulations, financial institutions must ensure that the jurisdiction where their third-party provider is based has regulations in place consistent with the standards set out by the Financial Action Task Force (FATF).

Watch List Filtering Programs

Financial institutions are required to establish watch list filtering programs to detect, match and filter customers or connected parties who are:

  • Sanctioned under the Terrorism Financing Prevention Act
  • Identified as terrorists or terrorist groups by foreign governments or international organizations

Ongoing Monitoring of Accounts and Transactions

To strengthen account and transaction monitoring, financial institutions must:

  • Use a database to consolidate basic information and transaction data on all customers
  • Establish internal control procedures for requests and inquiries regarding customer information
  • Exercise care to ensure the confidentiality of that information

Politically Exposed Persons (PEPs)

Financial institutions are required to identify and verify whether customers or their beneficial owners are PEPs. They must:

  • Treat them as high-risk customers
  • Adopt enhanced CDD measures for PEPs
  • Conduct annual reviews thereafter

Record-Keeping Requirements

Financial institutions are required to keep records of all business relations and transactions with customers in hard copy or electronic form, and maintain those records for at least five years or a longer period as otherwise required by law.

These new regulations aim to strengthen the AML/CFT efforts of financial institutions and ensure that they are taking adequate measures to prevent money laundering and terrorist financing.