Financial Crime World

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Bearer Share Certificates: The Key to Combating Money Laundering and Terrorist Financing

The Central Bank of Belize has recently issued new guidelines aimed at regulating bearer share certificates, a type of security linked to money laundering and terrorist financing activities. These regulations are designed to curb the illicit flow of funds by requiring financial institutions to conduct thorough customer due diligence.

What is a Bearer Share Certificate?

A bearer share certificate represents ownership in a company or financial institution. It can take the form of a physical document or an electronic record, and can be transferred simply by possessing it.

New Regulations

Under the new regulations, financial institutions will be required to conduct thorough customer due diligence on individuals and entities purchasing bearer share certificates. This includes:

  • Verifying the identity of the customer
  • Determining the source of funds used to purchase the certificate

Additionally, financial institutions will also need to define a “close associate” as an individual who maintains an unusually close relationship with a Politically Exposed Person (PEP). Enhanced due diligence will be required for such individuals and entities, including monitoring their transactions and reporting any suspicious activity.

Definitions

  • A PEP is defined as an individual in a position of power, as well as their family members and close associates. These individuals are considered high-risk for money laundering and terrorist financing activities.
  • Enhanced due diligence will be required for PEPs, which includes conducting thorough background checks and monitoring their transactions.

Importance of Reporting Suspicious Activity

The Central Bank of Belize has also emphasized the importance of reporting suspicious activity to the Financial Intelligence Unit (FIU). The FIU is responsible for monitoring and analyzing reports of suspicious activity to identify potential money laundering and terrorist financing schemes.

Conclusion

The new guidelines on bearer share certificates are an important step towards combating money laundering and terrorist financing. By regulating these types of securities, financial institutions can help prevent the illicit flow of funds and protect the integrity of the financial system.

Key Terms

  • Bearer Share Certificate: A type of security that represents ownership in a company or financial institution.
  • Customer Due Diligence: The process of verifying the identity of customers and determining the source of their funds.
  • Close Associate: An individual who maintains an unusually close relationship with a PEP.
  • Politically Exposed Person (PEP): An individual in a position of power, as well as their family members and close associates.
  • Financial Intelligence Unit (FIU): A public authority responsible for monitoring and analyzing reports of suspicious activity.