Financial Institutions Face Stricter Regulations Under New Bill

In an effort to combat money laundering and terrorist financing, the government has introduced a new bill that imposes stricter regulations on financial institutions.

Key Definitions

The bill defines several key terms related to customer due diligence, international electronic currency transfers, and money laundering. These definitions are crucial in understanding the new regulations.

• Intermediary Entity: A financial institution that receives and transmits electronic currency transfers on behalf of an originating entity or beneficiary entity.
• International Electronic Currency Transfer: A single or chain of electronic currency transfers where one party to the transaction is located outside the Republic.
• Money Laundering: Dealing with property that is criminal property, including concealing, disguising, converting, transferring, removing from the country, or using the proceeds of a crime to acquire assets.

Stricter Regulations

The bill imposes stricter regulations on financial institutions in several areas:

• Customer Due Diligence: Financial institutions are required to conduct thorough customer due diligence, including identifying and verifying the identity of customers.
• Reporting Suspicious Transactions: Financial institutions must report suspicious transactions to the relevant authorities.
• Maintaining Accurate Records: Financial institutions are required to maintain accurate records of all transactions and activities.

Additional Requirements

The bill also requires financial institutions to:

• Identify and report Politically Exposed Persons, senior management, and shell banks.
• Politically Exposed Person: An individual who is or has been entrusted with a prominent public function, such as a head of state or government, or an important political position.
• Senior Management: The directors or key employees of a financial institution who are responsible for overseeing its proper conduct.
• Shell Bank: A bank that is incorporated or licensed in a country where it has no physical presence and is not affiliated with a financial group subject to effective consolidated supervision.

Rationale Behind the Bill

The government believes that these stricter regulations will help to prevent money laundering and terrorist financing, and ensure the integrity of the financial system. The bill is expected to come into effect soon, and financial institutions are advised to familiarize themselves with its provisions and requirements.