Financial Crime World

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Institutions Must Take Responsibility for Anti-Money Laundering Measures

A recent guideline has highlighted the importance of institutions taking responsibility for anti-money laundering (AML) and anti-terrorism financing (ATF) measures. The guideline emphasizes that institutions must conduct thorough customer due diligence (CDD) to identify and verify their customers, including those with complex structures.

Conducting Customer Due Diligence

Institutions are responsible for drawing up a risk profile and conducting CDD to identify and verify their customers. This includes identifying the ultimate beneficial owner (UBO) of each customer, which is defined as the natural person who ultimately controls or benefits from the customer’s assets.

  • Institutions must conduct thorough CDD to identify and verify their customers.
  • Identify and verify the UBO of each customer, including those with complex structures.

Protected Accounts

The guideline notes that institutions must be particularly vigilant when dealing with protected accounts, which are accounts where a customer’s identity is not visible or is otherwise protected. Institutions must maintain a central register containing data on such accounts and ensure that only authorized personnel have access to this information.

  • Maintain a central register containing data on protected accounts.
  • Ensure that only authorized personnel have access to this information.

Complex Structures

The guideline emphasizes the importance of understanding the customer’s reasons for using complex structures, including examining their ownership and control structure, as well as their tax motives. This enables institutions to identify potential tax integrity risks and take appropriate measures to mitigate them.

  • Examine the customer’s reasons for using complex structures.
  • Understand their ownership and control structure as well as their tax motives.
  • Identify potential tax integrity risks and take appropriate measures to mitigate them.

Designating UBOs

The guideline provides guidance on how institutions can designate UBOs, which includes designating senior management or directors appointed under the articles of association as the customer’s UBO. However, it notes that this is only a fallback option and should only be used if all other possible measures have been exhausted and there are no grounds for suspicion.

  • Designate senior management or directors appointed under the articles of association as the customer’s UBO.
  • Only use this option if all other possible measures have been exhausted and there are no grounds for suspicion.

Conclusion

Overall, the guideline underscores the importance of institutions taking responsibility for AML and ATF measures, including conducting thorough CDD and identifying and verifying their customers’ identities. By doing so, institutions can help prevent money laundering and terrorist financing activities and ensure the integrity of the financial system.

Key Takeaways:

  • Institutions are responsible for drawing up a risk profile and conducting customer due diligence to identify and verify their customers.
  • Institutions must identify and verify the ultimate beneficial owner (UBO) of each customer, including those with complex structures.
  • Institutions must maintain a central register containing data on protected accounts and ensure that only authorized personnel have access to this information.
  • Institutions must examine the customer’s reasons for using complex structures and understand their ownership and control structure as well as their tax motives.
  • Designating senior management or directors appointed under the articles of association as the customer’s UBO is a fallback option that should only be used if all other possible measures have been exhausted.