To combat money laundering activity two types of offences exist. The first is the offence of money laundering ("ML"), which was addressed in a previous article. The second type of offence is any breach of anti-money laundering ("AML") regulations.
The AML regime was established to prevent or minimise the risk that ML poses to the financial sector and to report such activities in order to assist in the detection and prevention of ML, and to penalise those who fail to implement AML.
The Proceeds of Crime Act ("POCA") is the primary Act which deals with the offence of ML and the confiscation of proceeds of crime. The Financial Obligation Regulations ("FORs") is the secondary legislation to the POCA. It is the FORs that sets out the obligations for an AML regime which must be implemented by financial institutions, non-regulated financial institutions such as credit unions and money or value transfer services, and "Listed Businesses".
"Listed Businesses" are those types of businesses and professionals listed under POCA such as real estate services, motor vehicle sales, jewellery business, private members' clubs, national lotteries and online betting games, pool betting, art dealers, trust and company providers, as well as attorneys-at-law and accountants who perform certain services.
The FORs include regulations for Customer Due Diligence ("CDD") which must be carried out by all the businesses and institutions listed. It can be simplified or enhanced depending on categories of customers considered as either high risk or low risk. It refers to the gathering of customer identification and information which would assist a business in assessing any risk posed by the customer including the risk of involvement in ML.
Apart from CDD regulations dealing specifically with insurance companies, Regulation 11 states that CDD must be carried out on all customers at the outset of forming a business relationship–where there is a one-off occasional transaction of ninety-thousand dollars or more; where there is a series of transactions amounting to ninety-thousand dollars or more; or where there is one-off, occasional or series of wire transfer(s) amounting to six thousand dollars or more. For private members clubs CDD must be done where there is a transaction or series of transactions amounting to eighteen thousand dollars or more.
Regulation 15 mandates businesses to therefore obtain the following information: full name of customer; permanent address and proof of same; date and place of birth; nationality; place of business/occupation; occupational income (where applicable); a signature; purpose and intended nature of purpose and source of funds; and any other information which may be relevant.
Satisfactory proof of identification is a valid passport, a national identification card or a driver's licence.
Where a customer is a business, in addition to what is set out in Regulation 15 there must be verification of the identity of the directors, partners, account signatories, beneficial owners and any other relevant officers. Other documents required will include a certificate of incorporation, articles of incorporation, copy of bye-laws, management account for previous three years or three- year estimates as would apply, and information on the identity of shareholders holding more than 10 per cent of share capital.
This column is not legal advice. If you have a legal problem, you should consult an attorney-at-law.