Money Laundering and Terrorism Financing: New Rules for Financial Institutions in Maldives
New Regulations to Combat Money Laundering and Terrorism Financing
The Maldivian government has introduced new regulations for financial institutions operating in the country to combat money laundering and terrorism financing. These regulations aim to prevent the misuse of financial systems while ensuring the smooth flow of legitimate transactions.
Enhanced Due Diligence Requirements
Under the new regulations, financial institutions are required to conduct thorough due diligence on their customers, including:
- Verifying customer identity
- Identifying the source of wealth and funds
- Strengthening ongoing monitoring of business relationships
Financial institutions must also obtain approval from senior management before establishing a business relationship with a customer who is not physically present.
Correspondent Banking Relationships
Financial institutions operating in Maldives are required to:
- Identify and verify the identification of foreign financial institutions with which they conduct correspondent banking relationships
- Collect information on the nature of the foreign institution’s activities
- Evaluate its reputation and supervision
- Obtain approval from senior management before establishing a correspondent banking relationship
- Document respective responsibilities and obligations
- Evaluate measures implemented by the foreign institution
Reporting Suspicious Transactions
Financial institutions are required to report suspicious transactions to the Financial Intelligence Unit (FIU) immediately. Failure to comply with these regulations may result in penalties, including fines and even imprisonment.
Special Identification Requirements
Certain industries are subject to special identification requirements, including:
- Insurance companies and insurance brokers: must identify customers when entering into pension insurance contracts
- Dealers in real estate: must identify parties involved in transactions buying or selling real estate
- Dealers in precious metals and stones, and dealers in other high-value goods: must identify customers when receiving cash payments equal to or above a certain amount prescribed by the Maldives Monetary Authority
- Lawyers, notaries, accountants, and other independent legal professionals: must identify parties involved in transactions related to buying and selling real estate, managing client money, securities, or assets, acting as a formation agent for legal persons, providing registered office or business address, acting as a trustee of an express trust, or acting as a nominee shareholder
Obligations of Persons Providing Money or Value Transfer Services
Financial institutions providing money or value transfer services are required to:
- Obtain and verify certain information from their customers, including:
- Full name
- Address
- National identity number
- Passport number
- Work permit number
- Account number
- The name of the financial institution of the originator
- Maintain all information stated above when acting as intermediaries in a money or value transfer that involves three or more financial institutions
- Issue regulations regarding cross-border money or value transfers executed as batch transfers and domestic money or value transfers
The new regulations aim to prevent the misuse of financial systems for money laundering and terrorism financing, while ensuring the smooth flow of legitimate transactions.