French Polynesia Introduces Tougher Due Diligence Rules for Financial Transactions to Combat Money Laundering
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From October 2, 2023, financial institutions in French Polynesia will be required to adopt stricter due diligence measures when conducting transactions with clients and their beneficial owners. The new regulations aim to combat money laundering and terrorist financing by strengthening the risk-based approach and introducing additional identity verification measures.
New Regulations for Financial Institutions
The updated guidelines, set out in Position Recommendation DOC-2019-16, clarify the due diligence obligations for financial institutions in French Polynesia, which are governed by Articles L. 561-4-1 and following of the Monetary and Financial Code. The regulations have been reinforced to take into account the essential contributions of the 4th and 5th European Union Directives on anti-money laundering (AML) and combating the financing of terrorism (CFT).
Key Changes
- Financial institutions will be required to identify and verify the identity of clients, including their beneficial owners.
- In cases where the risk is deemed low, entities may be exempt from consulting the register of beneficial owners of client companies listed in the Trade and Companies Register. However, when dealing with high-risk countries or transactions, additional diligence measures must be implemented.
Additional Guidance on Third-Party Introducers and Outsourcing
The regulations also provide specific guidance on the regimes for third-party introducers and outsourcing of AML-CFT obligations. Financial institutions will need to ensure that their due diligence procedures are robust and effective in identifying and mitigating money laundering and terrorist financing risks.
Key Points
- Financial institutions must ensure that their due diligence procedures are robust and effective.
- The regulations apply to all financial institutions operating in the territory, including banks, insurance companies, and other financial institutions.
- Entities will need to implement additional measures when dealing with high-risk countries or transactions.
Conclusion
The introduction of these tougher due diligence rules is a significant step forward in French Polynesia’s efforts to combat financial crime and maintain the integrity of its financial system. The regulations are designed to strengthen the risk-based approach and introduce additional identity verification measures, ensuring that financial institutions operating in the territory can effectively identify and mitigate money laundering and terrorist financing risks.