Customers in the Crosshairs: Guatemala’s Stricter Due Diligence Requirements
Guatemala has strengthened its efforts to combat money laundering and terrorist financing by implementing more stringent due diligence requirements for businesses operating within the country. These regulations aim to ensure that companies are taking sufficient measures to identify and verify their customers, detect suspicious transactions, and prevent illicit activities.
Proof of Identity: A Key Requirement
At the heart of Guatemala’s due diligence requirements is the need for proof of identity. This can be obtained through government-issued documents such as:
- Identity card
- Passport
- Driving license
These documents must include the customer’s name and address.
Enhanced Due Diligence (EDD) for High-Risk Customers
For high-risk customers, including Politically Exposed Persons (PEPs), businesses are required to conduct Enhanced Due Diligence (EDD). This involves a more thorough investigation into:
- Customer background
- Financial transactions
- Business relationships
Third-Party Services: A Convenient Solution
Businesses may choose to outsource their due diligence requirements to third-party service providers. However, it is essential for companies to remain liable for ensuring compliance with regulatory requirements and maintaining accurate records of their due diligence activities.
Record Retention: A Crucial Aspect
Companies must retain customer data for at least five years, as part of their anti-money laundering (AML) and know-your-customer (KYC) obligations. This information must be collected from third-party service providers without undue delay.
The Importance of Timely Verification
Identity verification is not a one-time process but rather an ongoing requirement. Businesses must verify customer identities at multiple instances, including:
- Onboarding new customers
- Processing transactions above certain monetary thresholds
Conclusion
Guatemala’s stricter due diligence requirements aim to create a more transparent and secure business environment. Companies operating in the country must be prepared to adapt to these new regulations and ensure that they are taking adequate measures to identify and verify their customers, detect suspicious transactions, and maintain accurate records of their due diligence activities.