Anti-money laundering requirements Financial adviser guide

Transcription

1 Anti-money laundering requirements Financial adviser guide

2 Contents 03 Background 04 What is a risk based approach? 05 Customer due diligence requirements 08 When is customer due diligence applied? 10 How is customer due diligence applied to companies, trusts and charities? 12 When is extra customer due diligence sought? 13 Frequently asked questions

3 Background In Ireland, the requirements associated with anti-money laundering are outlined within the Criminal Justice (Money Laundering & Terrorist Financing) Act 2010 ( the Act ) which came into effect in July This transposed the 3rd EU Money Laundering Directive into Irish law. To help the financial services industry understand and apply the requirements set out in the Act, a set of draft Core Industry Guidelines was created by various sectors of the financial services industry in 2010 and was finalised in February Financial services companies, including Life Companies are obliged to comply with the Act and use the Guidelines to help them do this. Anti-money laundering requirements 03/16

4 What is a risk based approach? A key feature of the Core Industry Guidelines, particularly in the area of customer due diligence, is the concept of a risk-based approach. This essentially means that each company assesses the risk of money laundering or terrorist financing associated with its products, customers, delivery channels etc. and from this, it determines the amount of customer due diligence measures it needs to apply as a result. In instances where the firm deems there to be a theoretically higher risk of money laundering or terrorist financing, additional customer information may be requested. The Guidelines set out recommended customer due diligence measures which should be applied to a number of low risk (e.g. pension products) and high risk (politically exposed persons) scenarios. However, the specific measures applied are effectively determined by each firm s own financial crime risk assessments. This can result in firms within the same industry requesting different amounts of documentation when processing cases. The approach within Standard Life is live and is continually scrutinised by the ROI Risk Team. The customer due diligence measures applied under Standard Life s risk-based approach are outlined in Section 3. 04/16 Anti-money laundering requirements

5 Customer due diligence requirements Customer due diligence is essentially the steps a firm takes to know: from whom money is coming who is controlling it while it s with us and to whom it will ultimately be paid As part of its annual Anti-Financial Crime Risk Assessment, Standard Life looks at its products, customer types, delivery channels, and geographical regions and assigns an appropriate risk rating in each case. The risk rating in turn determines the level of customer due diligence which should be applied. In all instances, customer information such as name, address and date of birth will be obtained. In addition, information regarding income and occupation, source of funds and source of wealth are typically captured on the application form. Using product type as an example, the risk-based approach to customer due diligence at new business stage is illustrated on the following page*: Anti-money laundering requirements 05/16

6 Customer due diligence requirements Pension products Synergy Personal Pension Synergy Executive Pension Synergy PRSA Synergy Buy Out Bond Post-retirement products Synergy ARF Synergy AMRF Synergy Annuity Savings and Investments products Synergy Regular Invest Synergy Investment Bond Synergy Portfolio Bond Customer due diligence requirements Customer information such as name, address, source of funds and date of birth is requested on the application form but is not independently verified (referred to as simplified customer due diligence ). Customer due diligence requirements Customer information such as name, address, source of funds and date of birth is requested on the application form but is not independently verified. Full customer due diligence is applied prior to processing any withdrawal. Customer due diligence requirements Customer information such as name, address, source of funds and date of birth is requested on the application form. Information in relation to source of wealth is also requested on the application form and sometimes additional information is sought to verify this. Certified copies of photo ID and address verification. * Where Stocktrade is selected on an application, full customer due diligence will be applied irrespective of product type. 06/16 Anti-money laundering requirements

7 When using certified copies of documentation in order to verify an individual s identity and address, the following are typically used; To verify an individual s identity: Current passport Current driver s licence Current National Identity card To verify an individual s address: Recent utility bill Recent bank statement Credit card statements Recent correspondence from financial institutions (other than Standard Life) Where current is referenced, this generally means not being expired. For recent, this means that the document is dated within 6 months of the application date. The above list is not exhaustive and other types of documentation may be acceptable. Source of funds Source of funds basically means the account from which the money has been transferred to Standard Life and the owner of that account. Firms are obliged to take measures to ensure the source of funds is determined and some cases verified (e.g. bank drafts). Source of wealth The Source of Wealth is how the policy was funded or how the applicant was able to generate the funds being invested (e.g. earnings, inheritance, sale of investments or property etc.) Firms must capture this information when processing applications. Depending on the size of the premium compared with the stated source of wealth, we may request additional information to verify the information provided. Anti-money laundering requirements 07/16

8 When is customer due diligence applied? New customers The customer due diligence measures outlined earlier are applied in all new business cases. Existing customers - increments Implementing customer due diligence measures on existing customers has been the most challenging element of the Act since it was enacted. When faced with simply applying the requirements retrospectively or using some form of risk-based approach, many firms opted for the latter. Standard Life s approach to customer due diligence for existing customer involves the use of pre-defined trigger points. Basically, when a customer performs a top-up or another subsequent investment, the documentation on file is reviewed. If the documentation is on file and continues to represent the current details of the customer, the transaction will proceed. Where any documentation is absent or no longer valid, updated documentation will be sought and obtained prior to processing the increment. Existing customers - withdrawals and surrenders When a customer wishes to withdraw funds from a policy, the customer due diligence documentation on file is once again reviewed to ensure it is still valid and up-to-date. Where documentation is absent, updated documentation will be sought including proof of identity and address. If the payment is being made by cheque, the above steps are in place to ensure that the cheque is being posted to the correct person and that the address is current. If the payment is being made by electronic transfer, the above check will be performed and a bank statement will also be requested if one is not already on file. 08/16 Anti-money laundering requirements

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10 How is customer due diligence applied to companies, trusts and charities? Our customer due diligence requirements for non-individual contracts are outlined in the table below: Customer type Regulated or listed entity Customer due diligence requirements Company information as detailed on the application form including: Name Principle business address Register number Source of funds/wealth Name of regulator Regulator reference number Beneficial ownership details including: List of names of all directors List of names of all shareholders who own greater than 25% of shares or voting rights Private company (not regulated) Company information as detailed on the application form including: Name Principle business address Register number Source of funds/wealth Beneficial ownership details including: List of names of all directors List of names of all shareholders who own greater than 25% of shares or voting rights Verification documentation: Certificate of Incorporation Photo ID and address verification for at least two beneficial owners Authorised signatory list 10/16 Anti-money laundering requirements

11 Customer type Trust Customer due diligence requirements Company information as detailed on the application form including: Name Nature and purpose of trust Country established Details of settlor (name and address) Beneficial ownership details including: Names of all trustees Names of all beneficiaries (> 25%) Verification documentation: Extract of Trust Deed which evidences parties to the trust Photo ID and address verification for at least two Trustees Charities Company information as detailed on the application form including: Name Nature and purpose of charity Principal address of charity Registration number of charity Beneficial ownership details including: Names of all those with a mandate to act on behalf of the charity Details of those controlling the charity Verification documentation: Clear mandate for the charity (and those submitting the application) to carry out the investment, for example resolution Photo ID and address verification for at least two signatories Anti-money laundering requirements 11/16

12 When is extra customer due diligence sought? The Core Industry Guidelines set out scenarios which require the application of what s referred to as, enhanced customer due diligence. This means that firms may request additional information in relation to these customers should it be deemed necessary. Additional information may be sought in cases involving politically exposed persons, non-face-to-face business and transactions involving customers resident in countries which do not have equivalent antifinancial crime requirements. Politically Exposed Persons (PEPs) are the most common. In addition, Standard Life routinely review the stated source of wealth and details regarding an individual s income and occupation. Additional information may also be sought if the premium is not compatible with this information. Politically Exposed Persons (PEPs) A PEP is an individual who is entrusted with a prominent public function or who has held such a position within the last twelve months. Examples include: Heads of State Government ministers Judges Ambassadors If you are aware that your client is a PEP or is a close family member or known associate of a PEP, you should highlight this on the application form. 12/16 Anti-money laundering requirements

13 Frequently asked questions What are the requirements regarding bank drafts and why do they differ between life companies? Firms are, among other things, obliged to determine, and if necessary, verify the source of funds for incoming premiums as warranted by the risk of financial crime. Some firms may look to get the account information detailed on the application forms when processing a payment in via bank draft. In line with its risk-based approach, Standard Life seeks to verify the source of funds in cases involving bank drafts. Therefore, Standard Life looks to independently verify that the funds on the draft have come from the account owned and controlled by the customer prior to processing the case. Incoming premiums via bank draft should have the following enclosed: The bank draft itself Copy of the policyholder s bank statement or other bank document showing all of the following; _ Customer name _ Customer account number _ The raising of the bank draft listed on the statement as a transaction Anti-money laundering requirements 13/16

14 Does the documentation need to be certified? Firms are obliged to take steps to satisfy themselves as to the authenticity of the documentation received when applying customer due diligence measures. To that end, Standard Life accept the following: Original documentation Copies of documentation where the original and copy has been presented in person to a staff member Certified copies of documentation Where a document is certified, it should be certified by a suitably qualified individual such as: Authorised financial adviser Chartered accountant Member of An Garda Siochana Solicitor or Notary Public This list is not exhaustive. If you have questions in relation to who should certify documentation, feel free to contact us. And if you have further questions in relation to customer due diligence requirements, please contact us at compliance_roi@standardlife.ie 14/16 Anti-money laundering requirements

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16 Pensions Savings Investments Find out more Talk to your Standard Life Business Manager facebook.com/standardlifeireland youtube.com/standardlifeireland Standard Life Assurance Limited is authorised by the Prudential Regulation Authority in the UK and is regulated by the Central Bank of Ireland for conduct of business rules. Standard Life Assurance Limited is registered in Dublin, Ireland (905495) at 90 St Stephen s Green, Dublin 2 and Edinburgh, Scotland (SC286833) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. AML10 V Standard Life