Financial Crime World

Institutions Must Implement Effective AML/CFT Procedures to Combat Financial Crime

The financial authorities have recently issued a guideline emphasizing the importance of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) procedures for consumer finance institutions. The guidelines aim to ensure that institutions have robust measures in place to prevent and detect money laundering and terrorist financing activities.

Key Requirements

To effectively implement AML/CFT procedures, institutions must:

  • Establish a mechanism to assess the effectiveness of their AML/CFT system and adapt it to changing trends and risks
  • Ensure secure communication channels between employees, branch/subsidiary compliance officers, and the Compliance Officer
  • Provide training for all employees on AML/CFT measures, policies, and procedures
  • Conduct regular internal assessments of suspicious transactions before submitting them to the Financial Intelligence Unit (FIU)
  • Identify ML/TF risks associated with new products or services and operational changes
  • Act as the main point of contact for the FIU on AML/CFT matters

Employee Due Diligence Procedures

Institutions must establish an employee assessment system that evaluates personal information, including:

  • Criminal records
  • Employment history
  • Financial history

Employees must be aware that they may be held personally liable for non-compliance with AML/CFT requirements.

Employee Training and Awareness Programs

Consumer finance institutions must conduct regular awareness and training programs on AML/CFT practices and measures for all employees. The training must include:

  • Refresher sessions
  • General background on money laundering, the requirements to monitor and report suspicious transactions, and the importance of Know Your Customer (KYC) and Customer Due Diligence (CDD)

Independent Audit Function

The Board must ensure regular independent audits of internal AML/CFT measures to determine their effectiveness and compliance with relevant laws and regulations. The auditor’s roles and responsibilities must be clearly defined and documented.

Implementation Guidance for Front-Line Employees, Supervisors, and Managers

Front-line Employees

  • Trained to conduct effective on-going Customer Due Diligence (CDD), detect suspicious transactions, and take appropriate measures upon determining a transaction as suspicious.

Employees who Establish Business Relationships

  • Trained on customer identification, verification, and CDD procedures, including enhanced CDD requirements.

Supervisors and Managers

  • Trained on overall AML/CFT procedures, risk-based approach to CDD, risk profiling of customers, and enforcement actions for non-compliance.

By implementing these guidelines, consumer finance institutions can effectively prevent and detect money laundering and terrorist financing activities, ensuring a safer financial system for all.