Financial Crime World

Title: Oman’s National Committee for Anti-Money Laundering and Combating the Financing of Terrorism: Strengthening AML/CFT Compliance

Overview

In the Sultanate of Oman, the fight against money laundering and terrorist financing has gained momentum under the leadership of the National Committee for Anti-Money Laundering and Combating the Financing of Terrorism (NAC). Adhering to international standards, financial institutions in Oman are expected to comply with stringent regulations outlined by the NAC. In this article, we discuss the roles and responsibilities of the NAC, regulations and compliance, and measures financial institutions must take.

Roles and Responsibilities of the NAC

The NAC holds the primary coordinating and oversight role in Oman, setting standards for the effective implementation of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) measures. Some of their responsibilities include:

  • Formulating policies
  • Fostering inter-agency collaboration
  • Directing strategic efforts to combat money laundering and terrorist financing

Regulations and Compliance

  • Under Royal Decree No. 30/2016, financial institutions in Oman are expected to assess money laundering and terrorism financing risks.
  • They must document these risks clearly by evaluating various factors such as customer risk, countries of operation, and nature of products or services, leading to different due diligence measures.

Risk Assessment and Customer Classification

Financial institutions must classify customers based on their risk profile, with risk classifications including Low, Normal, and High. Based on this assessment, they will determine the required due diligence measures.

Prohibition on Anonymous Accounts and Due Diligence Requirements

Anonymous, fictitious, or coded accounts are strictly prohibited. Financial institutions are required to carry out due diligence:

  • Before starting a business relationship
  • Before transactions exceeding OMR 6000
  • Before wire transfers exceeding OMR 400
  • When there’s suspicion of illegal activities
  • When doubts exist regarding previously obtained identification information

Identifying Representatives and Beneficial Owners

Verification is also required for the person representing a customer and for beneficial owners. Oman’s regulations apply to lawyers and law offices opening accounts on behalf of their clients but include certain exclusions, such as publicly listed companies with adequate transparency.

Identification Measures

For Natural Persons and Beneficial Owners

  • Legal name
  • Address
  • Contact details
  • Date/place of birth
  • Nationality
  • Occupation
  • ID numbers
  • Account details
  • Purpose of business relationship
  • Signature

Verification Methods

  • Official documents
  • Utility bills
  • HR letters
  • Other reliable documents
  • Name
  • Legal form
  • Powers
  • Address
  • Contact details
  • Purpose of business relationship
  • Signatures

Understanding Business and Ownership Structures

Financial institutions must identify:

  • The customer’s business nature
  • Ownership/control structures
    • Natural persons with controlling ownership
    • Persons exercising control other than ownership
    • Senior managing officials in the absence of natural persons with control

When opening accounts for trusts or legal arrangements:

  1. Gather specific information:
    • Name
    • Legal form
    • Evidence of trust or legal arrangement existence
    • The trust deed or related document detailing the powers
    • Names of all trustees
    • Their contact details
    • Official identification numbers
    • Purpose or activities of the trust
  2. Verify information through the authenticated copy of the trust agreement and use additional verification methods

Verification Process and Ongoing Preventive Measures

Financial institutions must:

  • Verify information provided by the customers and their representatives and beneficial owners
  • Apply customer due diligence measures for existing business relationships
  • Apply enhanced measures for non-face-to-face relationships
  • Implement ongoing preventive measures
  • Have a written documentation for correspondent banking relationships
  • Scrutinize complicated and unusual large transactions
  • Apply prescribed enhanced due diligence measures for transactions with high-risk countries

Internal Policies, Controls, and Procedures

Financial institutions must:

  • Develop and implement AML/CFT policies
  • Establish identification and verification procedures for customers and beneficial owners
  • Create systems for record maintenance of customer information and transactions
  • Implement an independent audit function
  • Have a senior management-level compliance officer
  • Provide ongoing employee training
  • Implement recruitment screening procedures

By adhering to international standards and taking a proactive stance against money laundering and terrorist financing, Oman is paving the way for a more transparent and secure financial system.

[Sources]

  • Capital Market Authority of Oman
  • Central Bank of Oman