Regulation on Combating Money Laundering and Financing of Terrorism in the Financial Sector

Summary of Key Provisions

The following are the key points of the regulation:

Customer Due Diligence (CDD)

• Banks must perform CDD measures on all customers, including existing ones, within 3 months from the regulation’s commencement.
• This ensures that banks have adequate information about their customers to prevent and detect suspicious activities.

Suspicious Transaction Reporting

• Banks are required to report suspicious transactions to the Financial Intelligence Unit (FIU).
• The FIU is responsible for receiving and analyzing reports of suspicious transactions to identify potential money laundering and terrorism financing activities.

Exemption from Liability

• No criminal, civil, disciplinary, or administrative proceedings can be brought against banks or their employees for reporting suspicious transactions in good faith.
• This provision encourages banks to report suspicious transactions without fear of liability.

Programs to Combat Money Laundering and Financing of Terrorism

• Banks must develop and implement internal programs to prevent money laundering and financing of terrorism, including:
  • Establishing internal policies and procedures
  • Carrying out internal audits
  • Implementing control measures for safety and security
  • Training employees on CDD measures, suspicious transaction reporting, and their duties

Administrative Penalties

• The FIU can impose administrative penalties on banks that fail to comply with the regulation, including fines and daily fines.
• These penalties aim to deter non-compliance and ensure that banks implement effective anti-money laundering and combating financing of terrorism measures.

Definitions

The regulation defines various terms and expressions used in it, such as:

• Agent: A person who acts on behalf of another person or entity.
• Beneficiary Institution: An institution that receives funds or assets on behalf of a beneficiary.
• Beneficial Owner: The natural person who ultimately owns or controls an entity.
• Business Relationship: A relationship between a bank and a customer where the bank provides financial services to the customer.

Conclusion

This regulation aims to strengthen the anti-money laundering (AML) and combating financing of terrorism (CFT) framework in the Maldives by requiring banks to implement robust measures to prevent and detect suspicious activities. By following these provisions, banks can help prevent money laundering and financing of terrorism, and contribute to a safer financial system for all.