Financial Crime World

FINANCIAL INSTITUTIONS URGED TO ENHANCE CUSTOMER IDENTITY VERIFICATION AND RECORD-KEEPING PRACTICES

In an effort to combat money laundering and terrorist financing, financial institutions are being reminded of their obligations to take reasonable measures to establish the true identity of customers and maintain accurate records of transactions.

Reasonable Measures for Customer Identity Verification

According to Section 16 of the Anti-Money Laundering and Counter Terrorist Financing Act No.29, reporting persons must verify the identity of customers and determine whether they are acting on behalf of another party, such as a trustee, nominee, or agent. This requirement is in addition to existing regulations that require financial institutions to maintain accurate records of transactions.

Factors Considered for Reasonable Measures

In determining what constitutes reasonable measures, the circumstances of each case will be taken into account, including factors such as:

  • The customer’s country of origin
  • The industry’s customary practices

Suspicious Transaction Reporting

Financial institutions are also being reminded of their obligation to report suspicious transactions to the Financial Intelligence Unit (FIU) within 24 hours of forming a suspicion. This includes reporting any transaction that may involve money laundering or terrorist financing, as well as providing information about:

  • The purpose and origin of the funds involved

Record-Keeping Requirements

Under Section 17 of the Act, financial institutions must maintain records of all transactions above a certain amount, including:

  • The name and address of each party involved
  • The nature and date of the transaction
  • The type and amount of currency involved

These records must be kept for at least five years from the completion of the relevant business or transaction.

Consequences of Non-Compliance

Failure to comply with these regulations can result in serious penalties, including:

  • Fines
  • Imprisonment

Recommendations for Financial Institutions

In light of these requirements, financial institutions are urged to review their internal procedures and ensure that they are taking all reasonable measures to prevent money laundering and terrorist financing. This includes:

  • Establishing and maintaining accurate records of transactions
  • Verifying the identity of customers
  • Reporting suspicious activities to the FIU

Importance of Robust Anti-Money Laundering and Counter-Terrorist Financing Practices

By implementing robust anti-money laundering and counter-terrorist financing practices, financial institutions can help to protect the integrity of the financial system and prevent the misuse of funds for illegal purposes.