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Sanctions Screening and Compliance in Oman: A Look at the Regulatory Framework

The Sultanate of Oman has been at the forefront of implementing robust anti-money laundering (AML) and combating the financing of terrorism (CFT) measures to safeguard its financial system. The National Committee for Anti-Money Laundering and Combating the Financing of Terrorism (NAC), established by Royal Decree No. 30/2016, serves as the primary coordinating body in Oman, ensuring effective implementation of AML/CFT regulations.

Risk-Based Approach

Financial institutions in Oman must adopt a risk-based approach to identify, assess, and mitigate money laundering and terrorism financing risks. This involves evaluating customer risk factors, such as country of operation, nature of products/services, and transactional activity. The NAC has outlined specific risk levels, with higher-risk customers requiring enhanced due diligence measures.

  • Country of Operation: Financial institutions must consider the level of risk associated with a customer’s country of operation.
  • Nature of Products/Services: Institutions must assess the level of risk associated with the type of products or services provided to a customer.
  • Transactional Activity: Institutions must monitor and assess transactional activity, including volume and frequency.

Customer Due Diligence

The regulation emphasizes the importance of customer due diligence (CDD), which includes identifying and verifying beneficial owners, representatives, and account holders. Financial institutions must obtain reliable identification documents from customers, including proof of identity, address, and business registration. Enhanced CDD measures are required for high-risk customers, such as those from countries with a high risk of money laundering or terrorism financing.

  • Identification Documents: Institutions must require valid identification documents, such as passports, national ID cards, or driver’s licenses.
  • Address Verification: Institutions must verify the customer’s address to ensure it matches the provided identification document.
  • Business Registration: Institutions must obtain business registration documents for non-individual customers.

Correspondent Banking Relationships

Financial institutions in Oman must maintain written documentation for correspondent banking relationships, particularly those formed before the implementation of these regulations. This includes regular review and updating of customer information to ensure compliance with AML/CFT requirements.

  • Written Documentation: Institutions must maintain detailed records of all correspondent banking relationships.
  • Regular Review: Institutions must regularly review and update customer information to ensure compliance.

Transaction Reporting and Record-Keeping

The regulation requires financial institutions to maintain accurate records of all transactions, including domestic and international transactions. These records must be stored for a minimum of ten years post-execution of the transaction. Additionally, financial institutions must submit regular reports to the Center on suspicious transactions and other relevant information.

  • Transaction Records: Institutions must maintain detailed records of all transactions.
  • Record-Keeping Period: Institutions must store transaction records for a minimum of ten years.
  • Reporting Requirements: Institutions must submit regular reports to the Center.

Internal Controls and Compliance

Financial institutions in Oman are required to establish and maintain effective internal controls, including AML/CFT policies, procedures, and training programs for employees. This includes appointment of a senior management-level compliance officer responsible for overseeing AML/CFT obligations, conducting regular audits, and providing ongoing employee training.

  • AML/CFT Policies: Institutions must establish and implement comprehensive AML/CFT policies.
  • Employee Training: Institutions must provide regular training to employees on AML/CFT procedures.
  • Compliance Officer: Institutions must appoint a senior management-level compliance officer responsible for overseeing AML/CFT obligations.

Conclusion

The Sultanate of Oman has established a robust regulatory framework to combat money laundering and terrorism financing in the financial sector. Financial institutions must adhere to these regulations to ensure effective implementation of AML/CFT measures, maintain public trust, and prevent illicit activities. Regular updates on new developments and obligations related to AML/CFT are essential for compliance with these regulations.

References:

  • National Committee for Anti-Money Laundering and Combating the Financing of Terrorism (NAC)
  • Central Bank of Oman
  • Capital Market Authority of Oman