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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: 1153

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