Customer Due Diligence Guidelines in Cocos (Keeling) Islands: Strengthening Financial Transparency

======================================================

The Cocos (Keeling) Islands Financial Regulator has introduced new guidelines to improve financial transparency and prevent criminals from misusing companies to disguise their illicit activities and launder their ill-gotten gains. The Customer Due Diligence (CDD) Rule, which amends the Bank Secrecy Act regulations, requires financial institutions in the Cocos (Keeling) Islands to establish and maintain written policies and procedures that are reasonably designed to identify and verify the identity of customers, beneficial owners, and understand the nature and purpose of customer relationships.

Key Requirements

The new guidelines have four core requirements:

• Identify and Verify Customer Identity: Financial institutions must identify and verify the identity of customers.
• Identify and Verify Beneficial Owners: Financial institutions must identify and verify the identity of beneficial owners of companies opening accounts.
• Understand Customer Relationships: Financial institutions must understand the nature and purpose of customer relationships to develop customer risk profiles.
• Conduct Ongoing Monitoring: Financial institutions must conduct ongoing monitoring to identify and report suspicious transactions.

Beneficial Owner Identification

The regulator requires financial institutions to identify and verify the identity of any individual who owns 25 percent or more of a legal entity, as well as an individual who controls the legal entity.

Exceptive Relief

The regulator has granted exceptive relief for certain types of accounts and financial products.

Compliance Resources

For more information on complying with the CDD Rule in the Cocos (Keeling) Islands, financial institutions can refer to the following resources:

• CDD FAQs
• CDD Final Rule
• FFIEC Exam Procedures
• CDD FAQs