Business relationship requirements
The main aims of the bill are to place a greater emphasis on monitoring and relating to the purpose and intended nature of the business relationship and to. c) Obtaining information on the purpose and intended nature of the business relationship. d) Conducting ongoing due diligence on the business relationship and. Under paragraph of EP , a beneficial owner is defined as “the natural . How can the purpose and intended nature of the business relationship be.
Examples of the types of circumstances in addition to those referred to above for beneficiaries of life insurance policies where it would be permissible for verification to be completed after the establishment of the business relationship, because it would be essential not to interrupt the normal conduct of business, include: In the securities industry, companies and intermediaries may be required to perform transactions very rapidly, according to the market conditions at the time the customer is contacting them, and the performance of the transaction may be required before verification of identity is completed.
Financial institutions will also need to adopt risk management procedures with respect to the conditions under which a customer may utilise the business relationship prior to verification. Financial institutions should be required to apply CDD measures to existing customers on the basis of materiality and risk, and to conduct due diligence on such existing relationships at appropriate times, taking into account whether and when CDD measures have previously been undertaken and the adequacy of data obtained.Business Relationship Management – A Strategic Role Unleashed
The examples below are not mandatory elements of the FATF Standards, and are included for guidance only. The examples are not intended to be comprehensive, and although they are considered to be helpful indicators, they may not be relevant in all circumstances. There are circumstances where the risk of money laundering or terrorist financing is higher, and enhanced CDD measures have to be taken.
When assessing the money laundering and terrorist financing risks relating to types of customers, countries or geographic areas, and particular products, services, transactions or delivery channels, examples of potentially higher-risk situations in addition to those set out in Recommendations 12 to 16 include the following: There are circumstances where the risk of money laundering or terrorist financing may be lower.
In such circumstances, and provided there has been an adequate analysis of the risk by the country or by the financial institution, it could be reasonable for a country to allow its financial institutions to apply simplified CDD measures.
When assessing the money laundering and terrorist financing risks relating to types of customers, countries or geographic areas, and particular products, services, transactions or delivery channels, examples of potentially lower risk situations include the following: In making a risk assessment, countries or financial institutions could, when appropriate, also take into account possible variations in money laundering and terrorist financing risk between different regions or areas within a country.
Having a lower money laundering and terrorist financing risk for identification and verification purposes does not automatically mean that the same customer is lower risk for all types of CDD measures, in particular for ongoing monitoring of transactions. When assessing the money laundering and terrorist financing risks relating to types of customers, countries or geographic areas, and particular products, services, transactions or delivery channels risk, a financial institution should take into account risk variables relating to those risk categories.
Getting to Know Your Client Better
These variables, either singly or in combination, may increase or decrease the potential risk posed, thus impacting the appropriate level of CDD measures. Examples of such variables include: Enhanced CDD measures Financial institutions should examine, as far as reasonably possible, the background and purpose of all complex, unusual large transactions, and all unusual patterns of transactions, which have no apparent economic or lawful purpose.
Where the risks of money laundering or terrorist financing are higher, financial institutions should be required to conduct enhanced CDD measures, consistent with the risks identified. In particular, they should increase the degree and nature of monitoring of the business relationship, in order to determine whether those transactions or activities appear unusual or suspicious.
Examples of enhanced CDD measures that could be applied for higher-risk business relationships include: Simplified CDD measures Where the risks of money laundering or terrorist financing are lower, financial institutions could be allowed to conduct simplified CDD measures, which should take into account the nature of the lower risk.
The simplified measures should be commensurate with the lower risk factors e. Examples of possible measures are: Simplified CDD measures are not acceptable whenever there is a suspicion of money laundering or terrorist financing, or where specific higher-risk scenarios apply.
Financial transactions above the designated threshold include situations where the transaction is carried out in a single operation or in several operations that appear to be linked. There is no limit on the kind of document or information that may be used to confirm the identity of a client or beneficail owner.
Under Section 57 CJA the requirement was to report suspicions of money laundering or terrorist financing in relation to the business of a designated body. This change brings the reporting obligation nearer a type of whistleblowing obligation.
FINTRAC Policy Interpretations - Business Relationship
If a DP has knowledge, suspicion or reasonable grounds that another person has been or is engaged in money laundering or terrorist financing then they are obliged to make a suspicious transaction report STR to the Garda or the Revenue as soon as is practicable.
They are also required to adopt policies and procedures in relation to the monitoring and management of compliance with, and the internal communication of the policies and procedures above.
Training for client identification and reporting procedures is to be ongoing. Provision for enhanced due diligence procedures for non face to face customers. Provisions with respect to the authorisation of trust or company service providers. Provisions with respect to certain credit institutions.
- Business relationship requirements
- FINTRAC Policy Interpretations
- Purpose and intended nature of a business relationship (regs. 15-16)
On indictment, to a fine or imprisonment for a term not exceeding 5 years or both. In Summary The bill is attempting to bring a common sense approach to AML compliance and move away from the document collection method.
It essentially involves differentiating between different clients and using a subjective use of judgment to ascertain how closely a client or transaction should be scrutinised.