UN Security Council Designated Individuals and Entities Gain Access to Funds and Assets
The United Nations Security Council has designated certain individuals and entities under Chapter VII of the Charter of the United Nations. As a result, countries are required to make funds and other assets available directly or indirectly to these designated persons or entities.
Non-Profit Organizations Face Terrorist Financing Risks
Countries have been urged to identify non-profit organizations (NPOs) that fall within the definition of FATF and assess their terrorist financing risks. These organizations must take measures to prevent their funds from being misused for terrorism.
Financial Institutions Must Implement Anti-Money Laundering Measures
In a bid to combat money laundering and terrorist financing, financial institutions are required to implement strict anti-money laundering (AML) and counter-terrorist financing (CFT) measures. These measures include:
- Conducting customer due diligence (CDD) on all new customers
- Maintaining records of transactions for at least five years
- Keeping records obtained through CDD measures, such as identification documents and account files
- Implementing risk management systems to determine the level of risk associated with a customer or transaction
Politically Exposed Persons Face Enhanced Scrutiny
Financial institutions are required to apply enhanced due diligence measures when dealing with politically exposed persons (PEPs). These measures include:
- Determining whether a customer or beneficial owner is a PEP
- Obtaining senior management approval for establishing business relationships with PEPs
- Taking reasonable measures to establish the source of wealth and source of funds
- Conducting enhanced ongoing monitoring of business relationships with PEPs
Correspondent Banking Relationships Must Meet Strict Requirements
Financial institutions are required to apply strict requirements when engaging in correspondent banking and other similar relationships. These requirements include:
- Gathering sufficient information about a respondent institution
- Assessing the respondent institution’s AML/CTF controls
- Obtaining approval from senior management before establishing new correspondent relationships
- Clearly understanding the respective responsibilities of each institution
The implementation of these measures is crucial in preventing the misuse of funds and assets for terrorist financing and money laundering. Financial institutions must take their anti-money laundering and counter-terrorist financing responsibilities seriously to prevent harm to individuals, communities, and economies around the world.