Financial Crime World

Money Laundering and Financing of Terrorism Regulations: Exemptions and Penalties

The Maldives Monetary Authority has introduced new regulations aimed at preventing money laundering and financing of terrorism in the country’s financial system.

Exemption from Liability

Under these regulations, Licensees, their directors, officers, or employees will not be held liable for executing suspicious transactions where a suspicious transaction report was made in good faith. This exemption also applies to individuals who carry out transactions at the request of law enforcement authorities acting in accordance with Sections 27(d)(1) and 44 of the Prevention of Money Laundering and Financing of Terrorism Act.

Programs to Combat Money Laundering and Financing of Terrorism

Each Licensee is required to develop and implement internal programs for preventing money laundering and financing of terrorism. These programs must include:

  • Establishing internal policies, procedures, and controls to ensure high standards in hiring employees and prescribing compliance management arrangements and adequate screening procedures.
  • Carrying out internal audit arrangements to check conformity, compliance with, and effectiveness of measures taken to implement the Act and these Regulations.
  • Implementing internal control measures to ensure safety and security of systems and records.

Licensees must also ensure that their employees and agents are trained on:

  • The Prevention of Money Laundering and Financing of Terrorism Act and these Regulations, as well as the Licensee’s internal policies and procedures on preventing money laundering and financing of terrorism.
  • Customer due diligence measures, identification of customers and their beneficiaries, detecting and reporting suspicious transactions, and duties and responsibilities in preventing money laundering and financing of terrorism.

Administrative Penalties

The Financial Intelligence Unit may impose administrative penalties on Licensees, their directors, officers, or employees who fail to comply with the provisions of these Regulations. These penalties include:

  • Issuing a notice in writing to comply within a specified period.
  • Imposing a fine between 10,000 Maldivian Rufiyaa and 500,000 Maldivian Rufiyaa.
  • Imposing a daily fine of an amount between 10,000 Maldivian Rufiyaa and 100,000 Maldivian Rufiyaa until compliance is obtained.

The Authority may also publish any administrative actions taken for non-compliance.

Transitional Provisions and Definitions

Existing customers must undergo customer due diligence measures within three months of the commencement of these Regulations. The terms and expressions used in these Regulations have the same meaning as in the Prevention of Money Laundering and Financing of Terrorism Act, unless otherwise defined or required by context.

The Financial Intelligence Unit is established under Section 27 of the Prevention of Money Laundering and Financing of Terrorism Act to gather and analyze information related to money laundering and financing of terrorism. The Authority is responsible for issuing licenses and monitoring compliance with these Regulations.

Conclusion

The new regulations aim to prevent money laundering and financing of terrorism in the Maldivian financial system, and it is essential that all Licensees comply with these regulations to ensure the integrity of the financial system.