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Simplified customer due diligence measures
| Simplified CDD measures |
| Where the risks of money laundering and terrorist financing are lower |
| Are not acceptable if |
| There is a suspicion of money laundering or terrorist financing |
| Specific higher-risk scenarios apply |
| After the establishment of the business relationship |
| Verify the identity of |
| The customer |
| The beneficial owner |
| Reducing |
| The degree of on-going monitoring and scrutinizing transactions |
| Based on a reasonable monetary threshold |
| The frequency of customer identification updates |
| Inferring the purpose and nature of the business relationship |
| From the type of transactions |
| From the business relationship established |
| Not collecting specific information |
| Not carrying out specific measures |
| To understand the purpose and intended nature of the business relationship |
| E.g. if account transactions rise above a defined monetary threshold |
Lecture 9. Additional AML/CFT measures for specific activities of financial institutions
Key terms
· correspondent banking
· payable-through accounts
· wire transfer
· originator
· cover payment
· serial payment
· beneficiary financial institution
· batch transfer
· straight-through processing
· domestic wire transfer
· European Economic Area (EEA)
· cross-border wire transfer
· qualifying wire transfer
· originator’s information
· transaction reference number
Key questions
· What financial institutions should be required to perform in addition to normal CDD measures when they establish cross-border correspondent banking and other similar relationship?
· How can a financial institution determine the reputation of a counterpart in cross-border correspondent banking relationship?
· Define payable-through accounts.
· List the main parties of a wire transfer.
· What does the intermediary financial institution do in a wire transfer?
· Give the definition of a cover payment.
· What are the responsibilities of a beneficiary financial institution involved in a wire transfer?
· Define straight-through processing.
· Give the definition of a batch transfer.
· What is the difference between a cross-border wire transfer and a qualifying wire transfer?
· Where can the system used to transfer the payment message of a domestic wire transfer be located?
· Which way domestic wire transfers can be designated supra-national jurisdiction? Give an example.
· List three objectives of applying AML/CFT measures to wire transfers.
· What information are financial institutions required to gather on the originator of any wire transfer?
· What information should contain the customer identification number of the originator of a qualifying cross-border wire transfer?
· What are the responsibilities of the ordering financial institution in a wire transfer?
· List the obligations of the intermediary financial institution in a wire transfer.
· What is common in responsibilities of the intermediary financial institution and the beneficiary financial institution in a wire transfer?
· Which procedure should the beneficiary financial institution in a qualifying wire transfer perform toward the beneficiary?
· Define money or value transfer services.
· Should separate licensing for MVTS be imposed on financial institutions that are already licensed as banks and provide such services?
· What information about its agents should the MVTS provider maintain?
9.1. AML/CFT requirements for cross-border correspondent banking relationships
| Cross-border correspondent banking and other similar relationships, R. 13 |
| Financial institutions should be required to perform in addition to normal CDD measures |
| (a) To gather sufficient information about a respondent institution |
| (b) To assess the respondent institution’s AML/CFT controls |
| (c) To obtain approval from senior management before establishing new correspondent relationships |
| (d) To clearly understand the respective responsibilities of each institution |
| (e) To be satisfied that the respondent bank has conducted CDD on |
| The customers having direct access to accounts |
| Of the correspondent bank |
| “Payable-through accounts” – correspondent accounts that are used directly by third parties to transact business on their own behalf |
| The respondent bank is able to provide relevant CDD information upon request to the correspondent bank |
| To understand fully the nature of the respondent’s business |
| To determine from publicly available information the reputation of the institution and the quality of supervision |
| Including whether the institution has been subject to a money laundering or terrorist financing investigation or regulatory action |
| These criteria should also apply to relationships established for securities transactions or funds transfers, R. 13, IN |
| Regardless of whether for cross-border institution as principal or for its customers |
Date: 2015-01-29; view: 1287
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| Lecture 8. Risk-based approach pursued by financial institutions in customer due diligence | | | Definition of wire transfers and activities of involved parties |