Customer risk rating (High, Low) is assigned based on ML/TF risk posed by each relevant factor (Customer, Geography, Product and Transaction Risk), whereas the level of due diligence (Simplified or Enhanced) is determined based on the ML/TF risk posed by the customer.
No. The regulated person should establish the three lines of defense to combat ML/TF namely Business Units, Compliance Officer and Internal Audit. Therefore, the scope of responsibilities will vary between compliance officer and internal audit functions. However, dual hatting is allowed for the role of Compliance Officer.
An AML/CFT programme sets out a reporting entity’s internal policies, procedures and controls to detect money laundering and financing of terrorism and to manage and mitigate the risk of it occurring. The programme must be in writing and be based on its risk assessment. Certain elements of a programme are specifically required by the Regulations,
Risk Based Approach means that financial institutions identify, assess, and understand the money laundering and terrorist financing risks to which the financial institution is exposed and implement the most appropriate mitigation measures. This approach enables financial institutions to focus their resources where the risks are higher.
Risk assessment is the identification and assessment of ML/TF risk faced by the regulated person in relation to the jurisdictions or countries its customers are from or in; the jurisdictions or countries the regulated person has operations or dealings in and products, services, transactions and delivery channels of the regulated person. Whereas KYC/CDD measures determine
Reporting entities are required to assess the money laundering and financing of terrorism risk that they may reasonably expect to face in the course of their business. In making this assessment, the reporting entity is required to consider: i. Nature, size and complexity of its business; ii. Products and services it offers; iii. Methods by
No. The definition of Financial Institution includes lending business activity. Therefore, the Non-deposit taking financial institutions are required to comply with AML/CFT Regulations, 2018 in the same manner as applicable to the other Non-Banking Financial sector institutions.
Financial institutions means any natural or legal person who conducts as a business one or more of the following activities or operations for or on behalf of a customer: i. Acceptance of deposits and other repayable funds from the public; ii. Lending; iii. Financial leasing; iv. Money or value transfer services; v. Issuing and managing
There are three stages involved in money laundering: 1. Placement: involves placing the proceeds of crime in the financial system; 2. Layering: involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the audit trail and the source and ownership of funds (e.g., the buying and selling