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Financial Institutions Must Verify Beneficial Ownership and Conduct Due Diligence

Background

Financial institutions in Lesotho are required to take reasonable measures to verify the identity of beneficial owners of clients or customers, according to the Money Laundering and Proceeds of Crime Regulations, 2019.

Requirements for Beneficial Ownership Verification

  • Identify the natural person or persons who ultimately have a controlling ownership interest in a legal person
  • Identify those exercising control through other means
  • If no natural person is identified, identify relevant natural persons holding senior management positions

Consequences of Non-Compliance

  • Prohibition from opening an account or establishing a business relationship with a client or customer if they fail to identify and verify their identity
  • Termination of existing business relationships if unable to obtain additional information on identification data, the intended nature and purpose of the business relationship, or the source of funds or wealth of the client or customer

Due Diligence Requirements for Correspondent Banking Relationships

  • Gather sufficient information about the corresponding respondent institution
  • Assess its anti-money laundering and counter-terrorism controls
  • Obtain approval from senior management before establishing new relationships

Reliance on Intermediaries or Third Parties

  • Financial institutions may rely on intermediaries or third parties to perform certain requirements, but remain ultimately responsible for ensuring compliance with anti-money laundering and counter-terrorist financing measures.

Enhanced Measures for Higher-Risk Clients or Customers

  • The sector supervisory authority and the Unit may issue directives or instructions to apply enhanced measures to clients or customers from higher-risk countries, where necessary.

What This Means for Financial Institutions

Financial institutions in Lesotho must take steps to:

  • Verify the identity of beneficial owners of clients or customers
  • Conduct due diligence on correspondent banking relationships
  • Ensure compliance with anti-money laundering and counter-terrorism controls

Failure to comply with these regulations may result in termination of business relationships or prohibition from conducting certain activities.

Contact

For more information on the Money Laundering and Proceeds of Crime Regulations, 2019, please contact [insert relevant authority or agency].