Financial Crime World

FSPs in Peru Adopt Innovative Approach to Customer Due Diligence

Simplified CDD for Financial Service Providers

Lima, Peru - The Superintendencia de Banca y Seguros (SBS), Peru’s financial regulator, has approved a single low-risk threshold for simplified customer due diligence (CDD) processes. This innovative approach aims to streamline CDD while minimizing regulatory burden.

Low-Risk Threshold

Under this regime, financial service providers (FSPs) can operate below a monetary threshold of US$580 consolidated customer balance per institution. To comply with the simplified CDD requirements, FSPs will need to:

  • Collect only basic information
  • Verify identity through a valid ID presented after account opening
  • Perform ongoing transaction monitoring on a risk basis

The SBS has explicitly authorized this regime for certain non-bank financial services, including insurance products. This legal cover provides FSPs with the necessary protection to proceed with simplified CDD.

Expert Opinion

“This hybrid model combines fixed limits with provider discretion, making it more likely that simplified CDD will be used within defined thresholds,” said an industry expert. “Peru’s approach offers a compromise between ensuring compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations while allowing providers some discretion.”

Criticisms and Benefits

While some critics argue that a single threshold constrains both discretionary and rule-based CDD, proponents point out that the system simplifies implementation for providers and supervisors while providing legal cover.

International Interest

The Peruvian approach has sparked interest among international regulatory bodies, which are exploring ways to balance AML/CFT compliance with the need for simplified CDD processes. As one of the first countries to adopt this hybrid model, Peru is set to become a benchmark for other jurisdictions seeking to strike a balance between regulation and provider discretion.

Source: [FSP Name], approved by Superintendencia de Banca y Seguros (SBS)