Regulator Cracks Down on Financial Institutions: New Rules Mandate Enhanced Client Due Diligence
The regulatory body has introduced new rules requiring financial institutions to conduct enhanced client due diligence (CDD) and know-your-customer (KYC) procedures to strengthen anti-money laundering and combat financial crimes.
Mandatory Requirements
- Verify the identity of clients through documents that establish their address beyond reasonable doubt.
- For corporate entities, the required KYC documents include:
- Certificates of incorporation
- Trade licenses
- Memorandum and articles of association
- Proof of beneficial ownership
- Other relevant documents
- Politically exposed persons (PEPs) are considered high-risk and require enhanced due diligence. PEPs include:
- Heads of state
- Government ministers
- Members of parliament
- Senior officials in judicial bodies
Retention of Documents and Ongoing Monitoring
- Financial institutions must retain client KYC documents and transaction records for at least five years after the termination of the relationship with the client.
- Conduct ongoing monitoring and reporting of suspicious transactions.
According to a spokesperson for the regulatory body, “We are committed to ensuring the integrity of our financial system by implementing robust measures to prevent money laundering and other financial crimes. These new rules will help us achieve that goal by requiring financial institutions to conduct enhanced due diligence on their clients and maintain accurate records.”
Effective Date
The new regulations come into effect immediately, with financial institutions required to implement the necessary changes within a specified timeframe.
Key Highlights:
- Verify client identity through documents establishing address beyond reasonable doubt
- Corporate entities must provide additional KYC documents, including proof of beneficial ownership
- Politically exposed persons (PEPs) are considered high-risk and require enhanced due diligence
- Financial institutions must retain client KYC documents and transaction records for at least five years after termination of relationship
- Ongoing monitoring and reporting of suspicious transactions is mandatory
What This Means:
The new regulations aim to strengthen the fight against money laundering and other financial crimes by requiring financial institutions to conduct enhanced due diligence on their clients. The rules are designed to improve transparency and accountability in the financial system, ensuring that customers can trust that their assets are safe and secure.