Financial Institutions Required to Implement New Measures to Combat Money Laundering and Terrorism Financing
In an effort to strengthen the fight against money laundering and terrorism financing, the government has introduced new regulations that require financial institutions to take additional measures to identify and mitigate risks.
Enhanced Due Diligence Requirements for Politically Exposed Persons (PEPs)
According to the regulations, financial institutions will be required to:
- Take reasonable measures to establish the source of wealth and the source of funds of customers and beneficial owners identified as PEPs
- Determine whether a customer or beneficial owner is a PEP and take enhanced monitoring measures when there is higher risk involved
Ongoing Monitoring and Enhanced Risk Assessment
Financial institutions will be required to:
- Conduct ongoing monitoring of relationships with PEPs, including family members and close associates
- Inform senior management before making any payments to beneficiaries who are PEPs
Cross-Border Correspondent Banking and Anti-Money Laundering Controls
In the context of cross-border correspondent banking and other similar relationships, financial institutions will be required to:
- Gather sufficient information about respondent institutions
- Assess their anti-money laundering and combating the financing of terrorism controls
- Obtain approval from senior management before establishing new relationships
Prohibition on Shell Banks and Maintenance of Agent Lists
Financial institutions will be prohibited from entering into or continuing business relationships with shell banks. They will also be required to:
- Maintain a list of agents or subagents
- Include them in their anti-money laundering programs
Wire Transfer Requirements
Financial institutions will be required to provide accurate and traceable information about the originators and beneficiaries of cross-border wire transfers, including:
- The originator’s account number or unique transaction reference number
- The beneficiary’s name and account number
They will also be required to maintain all originator and beneficiary information collected, retain it for a minimum period of 7 years, and take reasonable measures to identify wire transfers that lack required information.
Industry Expert Response
Industry experts have welcomed the new regulations, stating that they will help to strengthen the country’s anti-money laundering regime and prevent the misuse of its financial system by criminal organizations. The regulations are expected to come into effect in the coming months, following a period of public consultation.