Lecture 7. Customer due diligence measures undertaken by financial institutions

Key words

· customer due diligence (CDD)

· enhanced customer due diligence (ECDD)

· simplified customer due diligence

· threshold for occasional transactions

· veracity

· adequacy

· purpose

· intended nature

· beneficial owner

· customer

· reasonable measures

· to verify one’s identify

· scrutiny

· source of funds

Key questions

· Define the AML/CFT program of a financial institution.

· What should be included in the AML/CFT program of a financial institution?

· Which statements regarding employees should be included in the AML/CFT program of a financial institution?

· On what levels of firm hierarchy should compliance officers be appointed?

· Under which four circumstances must a financial organization undertake CDD?

· Which Recommendation defines CDD measures for financial institutions?

· A customer carries out an occasional transaction that exceeds the threshold. Why is the financial institution required to perform customer due diligence?

· What is the threshold, that occasional transactions exceed, necessary for performing CDD on the customer who is carrying out the transactions?

· Define the term “veracity of previously obtained customer identification data.”

· What is the difference between identifying a customer and verifying his identify?

· List two general qualities of sources of information used for verification of a customer identify.

· Give a general qualification of financial institution’s activities in the course of verifying the identity of the beneficial owner.

· The beneficial owner of an arrangement of legal persons is being identified and his identity is being verified. What should the financial institution learn about structure of this arrangement of legal persons?

· List two aspects of a business relationship with a client, that financial institution needs to obtain information on and understand.

· Define the ongoing customer due diligence.

· List two groups of profiles that transactions conducted should be consistent with in the course of ongoing CDD.

· Under what circumstances is it necessary to assure, during ongoing CDD, that transactions being conducted are consistent with the source of funds?

· In what case can it be permitted to complete the verification of identification data as soon as practically possible?

· Give examples when application of the full set of CDD measures can interrupt the normal conduct of business.

· List the risk variables that determine the extent of applying CDD measures.

· A bank is performing CDD of a customer that is a legal person. Which three facts about such customer are required to be understood by the bank staff?

· What information needs to be obtained in the course of identifying a customer that is a legal person?

· What is unique about identifying owners of a company listed on a stock exchange and subject to disclosure requirements?

· A company wants to open an account. The bank is identifying the beneficial owners of the company. List the steps of this procedure.

· What should a financial institution do when it is not possible to complete the CDD?

· What should a financial institution refrain from doing when it is not possible to complete the CDD?

· How can CDD process result in tipping-off?

· Can employees of financial institutions be made liable for reporting to the FIU? Why?

· Give the general definition of record-keeping requirements.

· Which three groups of records need to be kept?

· An insurance company complies with record-keeping requirements. Which two qualities should these records possess?

7.1. General requirements for AML/CFT programs of financial institutions and groups of financial institutions

Date: 2015-01-29; view: 1181