Financial Crime World

Suspicion of Money Laundering and Terrorist Financing Rocks Financial Sector

The financial sector is facing increased scrutiny and penalties for non-compliance with the newly enacted anti-money laundering (AML) and counter-terrorist financing (CFT) law. The law’s provisions aim to combat illegal activities, but have raised concerns over potential breaches in financial institutions.

Provisions of the Law

  • Article 16: Customer Due Diligence: Reporting entities are required to conduct customer due diligence measures to determine whether customers or beneficial owners are politically exposed persons.
  • If a suspicious transaction is detected, the entity may choose not to pursue further investigation and instead report it to the Unit.

Record Keeping Requirements

  • Article 17: Record Maintenance: Reporting entities must maintain records of transactions for at least five years, including:
    • Customer due diligence records
    • Business correspondence The records must be kept in a way that allows for reconstruction of individual transactions.

Reporting and Notification Obligations

  • Article 18: Suspicious Transactions: Reporting entities are required to notify the Unit immediately if they suspect or have reasonable grounds to suspect that funds are linked to money laundering, associated predicate offenses, or terrorist financing.
  • The law prohibits reporting entities from disclosing information related to suspicious transactions submitted to the Unit. Breaches of this provision can result in severe penalties.

Compliance and Enforcement

  • Regulatory and supervisory authorities will conduct on-site and offsite inspections to assess AML/ CFT regimes.
  • Authorities are empowered to adopt measures preventing persons convicted of felonies or misdemeanors related to the violation of the law from holding senior positions in financial institutions.
  • The Unit is responsible for implementing the provisions of the law and will work closely with counterpart entities to exchange information and coordinate efforts against money laundering and terrorist financing.

Conclusion

As the financial sector continues to grapple with the implications of these new regulations, one thing is clear: non-compliance will not be tolerated. The authorities are poised to take swift action against any entity found to be in violation of the law. Financial institutions must prioritize compliance to avoid severe penalties and reputational damage.

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