Risk assesment and preventive measures

Risk assesment

Financial institutions and designated non-financial businesses and professions (DNFBPs) should identify, assess and take effective action to mitigate their money laundering and terrorist financing risks.

Customer due diligence

Financial institutions should be required to undertake customer due diligence (CDD) measures when:
(i) establishing business relations;
(ii) carrying out occasional transactions:

  • (i) above the applicable designated threshold (USD/EUR 15,000); or
  • (ii) that are wire transfers;

(iii) there is a suspicion of money laundering or terrorist financing; or
(iv) the financial institution has doubts about the veracity or adequacy of previously obtained customer identification data.

Politically exposed persons

Financial institutions and DNFBP should be required, in relation to foreign politically exposed persons (PEPs) (whether as customer or beneficial owner), in addition to performing normal customer due diligence measures, , to:
(a) have appropriate risk-management systems to determine whether the customer or the beneficial owner is a politically exposed person;
(b) obtain senior management approval for establishing (or continuing, for existing
customers) such business relationships;
(c) take reasonable measures to establish the source of wealth and source of funds; and
(d) conduct enhanced ongoing monitoring of the business relationship.

New technologies

Financial institutions and DNFBP should identify and assess the money laundering or terrorist financing risks that may arise in relation to
(a) the development of new products and new business practices, including new delivery mechanisms, and
(b) the use of new or developing technologies for both new and pre-existing products.

Internal controls and foreign branches and subsidiaries

Financial institutions should be required to implement programmes against money laundering and terrorist financing. Financial groups should be required to implement group wide programmes against money laundering and terrorist financing, including policies and procedures for sharing information within the group for AML/CFT purposes.

Reporting of suspicious transactions

If a financial institution/ DNFBP suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity, or are related to terrorist financing, it should be required, by law, to report promptly its suspicions to the financial intelligence unit (FIU).

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