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FAQs
What are some of the acceptable options for verification given that the majority of business is non-face to face during the COVID-19 pandemic?
The FSC is mindful of the challenges posed to conducting customer verification in the current environment of COVID-19, where curfew orders, social distancing, and self-isolation have become a part of our daily existence.
Emerging risks arising out of the current pandemic environment have been identified by the FATF, which makes it even more important to confirm that a client is who they say they are. Independent verification options are a critical part of the client acceptance process, particularly for ECDD purposes.
Section 23 of the AML/CFT Code of Practice provides for the acceptance of electronic/ digital verification of identity. The FSC does not wish to be overly prescriptive in outlining acceptable verification options; instead, customer verification options should align with licensees’ risk assessments of their clients. Accepted documents, electronic or otherwise, should fit with clients’ risk profiles and be subject to appropriate risk management processes.
As the AML/CFT Code of Practice requires you to take a risk-based approach to your operations, licensees should have client monitoring procedures commensurate with any risk assessment carried out.
What should a licensee do if ID verification attempts are unsuccessful during the COVID-19 pandemic?
Where verification has been attempted unsuccessfully due to restrictions relating to the ongoing pandemic, such attempts should be documented and made available to the supervisor upon request. Licensees should review unsuccessful ID verifications at regular intervals during the pandemic period.
Can Licensees accept IDs that have expired during the COVID-19 pandemic?
Where identification documents may have recently expired, these may still be accepted but should be flagged for follow up within a reasonable time to ensure they are updated accordingly.
Can the FSC confirm whether the staff training requirements for this calendar year would be suspended in light of the cancellation of several scheduled conferences and whether proof of cancellations or other options that suit the Commission would be required?
Licensees are strongly encouraged to consider alternative delivery methods for AML related staff training. Options which do not require persons to travel or be physically present in a classroom-type environment may be facilitated via online platforms, or through participation in webinars and other online learning modules. In-house training, which may be facilitated by your MLRO, compliance officer, or another qualified senior officer, should be considered to meet the staff training obligations.
Licensees should document any instance where scheduled AML training is postponed or cancelled by the organiser or yourself, due to COVID-19 pandemic restrictions, and specify (a) the reasons for the cancellation, whether due to travel or other social distancing restrictions and (b) that attempts to source alternative arrangements were unsuccessful
Suspicious Transaction Reporting FAQs: Financial Institutions
Red Flags for Suspicious Transaction or Activities FAQs
Suspicious Transaction Reporting FAQs
Suspicious Transaction Reporting Filing Process FAQs
Suspicious Transaction Potential Examples
What is Customer Due Diligence?
Customer Due Diligence (CDD), as defined by section 19 (1) of the Anti-Money Laundering and Terrorist Financing Code of Practice (AMLTF Code Practice), is the process undertaken by Financial Institutions (FIs) and Designated Non-Financial Businesses and Professionals (DNFBPs) to gather information about applicants for business or customers.
Why is Customer Due Diligence important?
CDD is important because it aids in preventing money laundering (ML), terrorist financing (TF), proliferation financing (PF) and other financial crimes by facilitating an understanding of FIs’ and DNFBPs’ applicants for business, customers, their business and risk profiles, and supports the monitoring of their activities.
What key steps are included in the CDD process?
The initial CDD process includes the following key steps, as detailed in section 19 (3) of the AMLTF Code of Practice and the explanatory notes:
- Identifying the applicant for business or customer;
- Verifying the applicant for business or customer’s identity;
- Obtaining details of the purpose or intended nature of the business relationship or transaction; and
- Understanding the applicant for business or customer and their circumstances (which includes gathering information on the source of wealth and funds, size and volume of the business, and expected nature and level of the transaction sought)
What is source of funds?
Source of funds refers to where the funds or assets that will be used for the business relationship or transaction were derived (e.g. income, business profits, investments, dividends, inheritance, property sale, business sale, etc.).
What is source of wealth?
Source of wealth refers to how the applicant for business or customer derived his or her or its wealth, particularly in higher risk scenarios (e.g., income, business profits, investments, dividends; inheritance, property sale, business sale, etc.) and level of wealth (i.e. the total value of wealth).
What is the difference between source of wealth and source of funds?
Source of wealth provides a snapshot of the overall financial profile of an applicant for business or customer, whereas source of funds is more narrowly focused and helps FIs and DNFBPs to verify the legitimacy of funds to be used for a specific business relationship or transaction. As an example, source of funds for an investment holding company may be proceeds of a property sale by the beneficial owner. Whereas the beneficial owner’s source of wealth may include employment and investment income.
