Financial Institutions (Customer Due Diligence) Rules No. 1 of 2016: Requirements for Beneficial Ownership Information

Overview

The Financial Institutions (Customer Due Diligence) Rules No. 1 of 2016 aim to prevent money laundering and other illicit activities by requiring financial institutions to obtain and record beneficial ownership information from their customers.

Recording Beneficial Ownership Information

To comply with these rules, financial institutions must follow the below requirements:

Identifying Customer Information

• Identify the natural person opening an account (or the legal person/arrangement) and their designation.
• Record the name, registration number, address, deed number, trustee, and address of the legal arrangement (if applicable).

Obtaining Declaration from Customer

• Obtain a declaration from the customer stating whether they are the sole beneficial owner or not.

Identifying Beneficial Owners

• If not the sole beneficial owner, identify all beneficial owners who own or control 10% or more of the customer’s equity.
• Identify at least one person who exercises effective control over the legal entity.

Recording Beneficial Owner Information

• Record the name, NIC/passport number, country of issue/citizenship, date of birth, current address, and source of beneficial ownership for each identified beneficial owner.

Checking PEPs

• Check if any of the beneficial owners are Politically Exposed Persons (PEPs).

Verification and Signature

• Obtain a signature from the authorized person acting on behalf of the customer.
• Verify by an authorized financial institution official.

Retention and Availability of Records

The original completed and signed form must be retained by the financial institution and made available to competent authorities upon request.