Financial Crime World

Risk of Money Laundering and Financing of Terrorism: Financial Institutions Must Be Vigilant

In the Maldives, financial institutions are being urged to be more vigilant when conducting business relationships or executing transactions with customers who are not physically present for purposes of identification. This is a crucial step in preventing money laundering and financing of terrorism.

New Regulations

According to new regulations, financial institutions must determine if a customer or beneficial owner is a politically exposed person (PEP) and take extra measures to identify their source of wealth and funds. They must also obtain approval from senior management before establishing a business relationship with the customer.

  • Identify customers as PEPs
  • Verify identification of foreign financial institutions
  • Obtain approval from senior management for correspondent banking relationships
  • Document AML/CFT responsibilities and obligations

Correspondent Banking Relationships

Financial institutions operating in the Maldives are required to identify and verify the identification of foreign financial institutions with which they conduct correspondent banking relationships. This includes:

  • Collecting information on the nature of the foreign financial institution’s activities
  • Evaluating its reputation and supervision
  • Obtaining approval from senior management before establishing a correspondent banking relationship

AML/CFT Compliance

Financial institutions are prohibited from maintaining anonymous accounts or accounts in obviously fictitious names. They must also identify parties involved in transactions related to:

  • Buying or selling of real estate, precious metals and stones, and other high-value goods
  • Managing client money and assets
  • Creating and operating companies

Lawyers, notaries, accountants, and other independent legal professionals who prepare for or carry out transactions on behalf of clients are required to identify the parties involved in such transactions.

Consequences of Non-Compliance

Failure to comply with these regulations can result in financial institutions being unable to establish or maintain business relationships, and even reporting their non-compliance to the Financial Intelligence Unit (FIU).

Maldives Monetary Authority’s Stance

The Maldives Monetary Authority has emphasized the importance of AML/CFT compliance, stating that it is essential to prevent money laundering and financing of terrorism. The authority has also warned financial institutions against ignoring these regulations, as this can lead to severe consequences, including fines and even criminal prosecution.

Conclusion

In conclusion, financial institutions in the Maldives must be vigilant and proactive in their efforts to prevent money laundering and financing of terrorism. Failure to comply with these regulations can result in severe consequences, and it is essential that all financial institutions take these regulations seriously and comply with them without delay.