Section 6: Identification of clients, customers, other persons

and other anti-money laundering measures (1) An accountable person who maintains an account for a client or customer shall maintain the account in the true name of the account holder, and shall not open or keep anonymous accounts or accounts which are in fictitious or incorrect names. (2) An accountable person shall carry out due diligence measures in the following circumstances- (a) before or during the course of opening an account for or establishing a business relationship with a customer; (b) before carrying out an occasional transaction equal to or above the amount of five thousand currency points or its equivalent in foreign currency; whether conducted as a single transaction or several transactions that appear to be linked; (c) before carrying out an occasional transaction that is a domestic or international wire transfer; (d) whenever there is a suspicion of money laundering or terrorism financing; (e) understand the ownership and control structure of the customer; (f) whenever doubts exist about the veracity or adequacy of previously obtained customer identification data; (g) take any other measures as may be specified by the Minister by regulation. (3) An accountable person shall apply the following due diligence measures on a risk sensitive basis and shall take into account the outcome of a risk assessment- (a) verify the identity of the client using reliable, independent source documents, data or information; (b) identify and take reasonable measures to verify the identity of a beneficial owner; (c) understand and, as appropriate, obtain information on the purpose and intended nature of the business relationship to permit the accountable person to fulfil its obligations under this Act; (d) if another person is acting on behalf of the customer, identify and verify the identity of that other person, and verify that person's authority to act on behalf of the customer; (e) take any other measures as may be specified by the Minister upon the advice of the Board and the Authority. (4) An accountable person shall, in addition to the measures specified in subsection (3), undertake further customer due diligence measures to- (a) verify the identity of a customer using reliable, independent source documents, data or information, such as passports, birth certificates, driver's licences, identity cards, national identification card, utility bills, bank statements, partnership contracts and incorporation papers or other identification documents prescribed by regulations made under this Act, in addition to documents providing convincing evidence of legal existence and powers of legal representatives; (b) verify the identity of the beneficial owner of the account, in the case of legal persons and other arrangements, including taking reasonable measures to understand the ownership, control and structure of the customer obtaining information concerning provisions regulating the power to bind the legal person and verifying that any person purporting to act on behalf of the customer is authorised, and to identify those persons; and (c) conduct ongoing due diligence on all business relationships and scrutinise transactions undertaken throughout the course of the business relationship to ensure that the transactions are consistent with the accountable person's knowledge of the customer and the risk and business profile of the customer, and where necessary, the source of funds. (5) An accountable person shall identify and verify the identity of the customer and beneficial owner before or during the course of establishing a business relationship or conducting an occasional transaction. (6) An accountable person may complete the verification of the customer or beneficial owners' identity after the establishment of the business relationship or carrying out of the occasional transaction provided that- (a) the verification occurs as soon as reasonably practicable; (b) the money laundering and terrorism financing risks are effectively managed; and (c) delaying the verification is essential not to interrupt the normal conduct of business. (7) In addition to customer due diligence measures, an accountable person shall implement appropriate risk management systems to determine whether a customer or beneficial owner is a politically exposed person and if so, apply the following additional measures- (a) for a foreign politically exposed person, take reasonable measures to establish the source of wealth and funds; (b) apply enhanced ongoing monitoring of the business relationship and obtain the approval of senior management before establishing or continuing a business relationship with such a person; (c) for a domestic politically exposed person, and a person who is or has been entrusted with a prominent function by an international organization, apply the measures referred to in paragraph (a) where the risks of money laundering or terrorism financing are high. (8) In relation to cross-border correspondent banking and other similar relationships, an accountable person shall, in addition to customer due diligence measures, apply the following measures- (a) adequately identify and verify the respondent institution with which it conducts such a business relationship; (b) gather sufficient information about a respondent institution to understand fully the nature of the respondent's business and to determine from publicly available information, the reputation of the institution and the quality of supervision, including whether it has been subject to a money laundering or terrorist financing investigation or regulatory action; (c) assess the respondent institution's anti-money laundering and terrorism financing controls; (d) document the respective responsibilities of the accountable person and the respondent institution; (e) obtain written approval from the Central Bank before establishing a new correspondent financial institution relationship; (f) obtain approval from senior management before establishing a new correspondent relationship; (g) with respect to payable-through accounts, be satisfied that the respondent institution has verified the identity of and performed on-going due diligence on the customers having direct access to accounts of the correspondent and that the respondent bank is able to provide relevant customer identification data upon request to the correspondent bank. (9) An accountable person shall apply the requirements under this section to cross-border correspondent banking and similar relationships established prior to the commencement of this Act. (10) An accountable person shall not enter into, or continue, a correspondent banking relationship with a shell bank, or a respondent institution that is known to permit its accounts to be used by a shell bank. (11) An accountable person shall implement specific and adequate measures to address the risks of money laundering and terrorism financing where the accountable person opens an account or establishes a business relationship or executes a transaction with a customer that is not physically present for the purpose of identification. (12) An accountable person shall apply enhanced due diligence measures to business relationships and transactions with persons or financial institutions from or in countries identified by the Authority or the accountable person as high risk. (13) An accountable person shall, as far as reasonably possible, examine the background and purpose of all complex, unusual large transactions and all unusual patterns of transactions which have no apparent economic or lawful purpose, document all information concerning those transactions and the identity of all parties involved in those transactions, and retain such records in accordance with this Act. (14) Where the accountable person considers the risk of money laundering or terrorism financing is high, an accountable person shall apply enhanced customer due diligence measures, and shall increase the degree and nature of monitoring of the business relationship to determine whether those transactions or activities appear unusual or suspicious. (15) An accountable person shall not, when unable to comply with the provisions of this section, open an account, commence a business relationship, or conduct the transaction, or shall terminate the business relationship, and make a suspicious transactions report in relation to the customer. (16) An accountable person shall apply the provisions of this section to accounts and customers existing prior to the commencement of this Act and on the basis of materiality and risk, and shall conduct due diligence on such existing relationship at appropriate times, or as prescribed by supervisory authorities. (17) An accountable person shall develop and implement programs for the prevention of money laundering and terrorism financing that are appropriate to the risks and the size of the accountable person's business and the programs shall include- (a) internal policies, procedures, and controls to fulfil the obligations under this Act; (b) appropriate compliance management arrangements; (c) adequate screening procedures to ensure high standards when hiring employees; (d) an employee training program to ensure that employees, managers and directors are kept informed of all the aspects of the anti-money laundering and combating terrorism financing requirements, new developments, money laundering and terrorism financing techniques, methods and trends, and concerning due diligence measures and suspicious transaction reporting; (e) an independent audit function to test and verify compliance with and the effectiveness of the measures taken in accordance with the Act; (f) mechanisms for sharing with other members of the financial group, information obtained under this section, and to protect the confidentiality and use of exchanged information. (18) An accountable person shall apply the measures under this section to its branches and majority owned subsidiaries to the extent permissible by the laws of the host country where the subsidiary or branch is situated. (19) Where the laws of the host country do not permit the proper implementation of the requirements under this Act, the accountable person shall implement additional measures, as appropriate, to manage the money laundering and terrorism financing risks and inform its supervisory authority. (20) An accountable person may rely on a third party to perform elements of the due diligence process where the following conditions are satisfied- (a) the accountable person immediately obtains all information required under this section; (b) the accountable person is satisfied that copies of identification data and other relevant documentation relating to customer due diligence under this section shall be made available from the third party upon request and without delay; and (c) the accountable person is satisfied that the third party is regulated, supervised or monitored for and has measures in place to comply with the requirements of this section. (21) An accountable person who relies on a third party that is part of the same financial group as the accountable person may consider that the requirements are satisfied where- (a) the group applies customer due diligence and record-keeping requirements and applies internal controls and measures in accordance with the requirements of this Act; (b) the implementation of the controls and measures referred to in paragraph (a) is supervised at a group level by a competent authority; and (c) any higher country risk is adequately mitigated by the group's anti money laundering and combatting the financing of terrorism policies. (22) For the avoidance of doubt, the responsibility for customer identification and verification shall at all times remain with the accountable person relying on the third party. (23) An accountable person shall ensure that simplified or reduced customer due diligence measures permitted for customers resident in another country are limited to countries that are compliant with or which have effectively implemented the internationally accepted standards. (24) An accountable person shall ensure that documents, data or information collected under the customer due diligence process are kept up to date and relevant by undertaking regular reviews of existing documents. (25) An accountable person shall ensure that it has or establishes policies and procedures to address specific risks associated with non face-to-face business relationships. (26) An accountable person shall pay special attention to business relationships with persons from or in countries which do not apply or insufficiently apply or observe internationally recognized anti- money laundering and combatting of terrorism requirements. (27) A competent authority shall establish guidelines to assist accountable persons to implement and comply with the anti-money laundering and combatting of terrorism requirements under this Act. (28) A competent authority shall provide feedback to all accountable persons reporting under this Act. (29) An accountable person shall take reasonable measures to ascertain the purpose of any transaction in excess of five thousand currency points or of five thousand currency points in case of cash transactions and the origin and ultimate destination of the funds involved in the transaction. [section 6 substituted by section 2 of Act 3 of 2017]