Financial Crime World

Financial Institutions Must Verify Customer Identity

Strengthening Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Regulations

The Reserve Bank of Vanuatu has issued Prudential Guideline No. 9, requiring financial institutions to verify the identity of customers and ensure they have sufficient information about their clients’ identities.

Verification Requirements

  • Financial institutions must verify the due diligence undertaken by introducers or intermediaries who may open accounts on behalf of customers.
  • Introducers are expected to conduct thorough due diligence processes to ensure that they conform to set criteria.
  • Financial institutions must reach an agreement with introducers that allows them to verify the due diligence process at any stage, and all relevant identification data and documents should be submitted immediately.

Identifying Beneficial Owners

  • The guideline emphasizes the importance of identifying beneficial owners in pooled accounts managed by professional intermediaries such as lawyers or stockbrokers.
  • In cases where funds are co-mingled, financial institutions should look through to identify beneficial owners.

Politically Exposed Persons (PEPs)

  • PEPs pose a significant reputational and legal risk for financial institutions.
  • The guideline advises financial institutions to gather sufficient information from new customers and check publicly available information to establish whether or not the customer is a PEP.
  • Financial institutions are required to investigate the source of funds before accepting a PEP as a customer.

Risks Associated with Accepting Funds from Corrupt PEPs

  • Accepting and managing funds from corrupt PEPs can damage financial institutions’ reputations and undermine public confidence in the ethical standards of Vanuatu’s financial system.

Enhanced Customer Identification Processes for PEPs

  • Financial institutions must have risk-based systems and controls in place to identify, verify, and understand whether customers or their beneficial owners are PEPs.
  • The guideline requires enhanced customer identification processes for PEPs and their immediate family members.

Compliance with AML/CTF Regulations

By implementing these measures, financial institutions can ensure that they comply with Vanuatu’s AML/CTF regulations and maintain a reputation for ethical and responsible business practices.