i e V04 ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (AMENDMENT) CODE 2018

Transcription

1 i e V04 ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (AMENDMENT) CODE 2018

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3 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code 2018 Index ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (AMENDMENT) CODE 2018 Index Paragraph Page 1 Title Commenement Interpretation Amendment of the 2015 Code Interpretation: paragraph 3 amended General requirements: paragraph 4 amended Customer risk assessment: paragraph 7 amended Ongoing monitoring: paragraph 9 amended Introdued business: paragraph 10A inserted Enhaned ustomer due diligene: paragraph 15 amended Reliane upon third parties: paragraph 21 substituted Eligible introduers: paragraph 23 amended V04 Page 3

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5 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code 2018 Code 1 Statutory Doument No. 20XX/XXXX Proeeds of Crime At 2008 Terrorism and Other Crime (Finanial Restritions) At 2014 ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (AMENDMENT) CODE 2018 Laid before Tynwald: Coming into Operation: The Department of Home Affairs makes the following Code under setion 157 of the Proeeds of Crime At and setion 68 of the Terrorism and Other Crime (Finanial Restritions) At , after onsulting suh persons and bodies as appear to be appropriate 3. 1 Title This Code is the Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code Commenement This Code omes into operation on. 3 Interpretation In this Code the 2015 Code means the Anti-Money Laundering and Countering the Finaning of Terrorism Code Amendment of the 2015 Code The 2015 Code is amended as follows. 1 AT 13 of AT 13 of As required by setion 157(4) of the Proeeds of Crime At 2008 and setion 68(4) of the Terrorism and Other Crime (Finanial Restritions) At SD 2015/0102. V04 Page 5

6 Code 5 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code Interpretation: paragraph 3 amended At the appropriate point in the main alphabetial list of definitions in paragraph 3(1) insert «santions list means the list of persons who are urrently subjet to international santions whih apply in the Isle of Man: this list is maintained by the Customs and Exise Division of the Treasury of the Isle of Man;». 6 General requirements: paragraph 4 amended (1) Paragraph 4 is amended as follows. (2) In sub-paragraph (1) () (3) At the end add omit and at the end of subhead (v); after that subhead insert the following «(vi) proedures to determine whether a person, with whom it is proposed to enter into a business relationship or an oasional transation, is for the time being listed on the santions list; and»; and renumber the existing subhead (vi) as subhead (vii). «(5) The ultimate responsibility for ensuring that ustomer due diligene omplies with this Code is that of the relevant person, regardless of any outsouring or reliane upon third parties during the proess.». 7 Customer risk assessment: paragraph 7 amended In paragraph 7(3) () omit and at the end of head (); insert «; and» at the end of head (d); and at the end add «(e) whether the relevant person and the ustomer have met during the business relationship or its formation or in the ourse of an oasional transation.». 8 Ongoing monitoring: paragraph 9 amended In paragraph 9(1) omit and at the end of head ; insert «; and» at the end of head (); and () at the end add Page 6 V04

7 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code 2018 Code 9 «(d) appropriate srutiny of a ustomer to ensure that the ustomer is not for the time being listed on the santions list.». 9 Introdued business: paragraph 10A inserted After paragraph 10 insert «10A Introdued business (1) If a ustomer is introdued to a relevant person by a third party (the introduer ), the relevant person must omply with this paragraph, and suh of paragraphs 10, 12, 15, 17 or 19 as are appliable. (2) The relevant person must undertake a ustomer risk assessment in aordane with paragraph 7 and whih also satisfies subparagraph (3). (3) The risk assessment referred to in sub-paragraph (2) must () inlude a risk assessment of the introduer; indiate whether the introduer has met the ustomer, and if not identify any third party that has met the ustomer; indiate whether third parties were involved in the proess and if so (i) (ii) (iii) (iv) how many third parties were involved; who those third parties were; whether any third party was not a trusted person; whether any third party is in a jurisdition whih is for the time being inluded in List A or List B. (4) If the risk assessment indiates higher risk, the relevant person must undertake enhaned ustomer due diligene on the ustomer in aordane with paragraph 15 inluding, but not limited to, reasonable measures to establish the soure of wealth of the ustomer and any benefiial owner. (7) The relevant person must be satisfied that the ustomer due diligene information and any evidene produed in respet of the identity of the ustomer onforms to the requirements of the Code; that douments produed to evidene the ustomer s identity are genuine and true. (9) If the relevant person is unable to satisfy himself of the ustomer s identify in aordane with the relevant provisions of the Code V04 Page 7

8 Code 10 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code 2018 () the business relationship or oasional transation must proeed no further; the relevant person must onsider terminating that business relationship; and the relevant person must onsider making an internal dislosure, in relation to that business relationship or oasional transation, in aordane with paragraphs 26 and 27.». 10 Enhaned ustomer due diligene: paragraph 15 amended In paragraph 15(5) () omit and at the end of head (i); insert «; and» at the end of head (j); and at the end add «(k) irumstanes in whih the ustomer have not met (i) (ii) relevant person and the during the business relationship or during its formation; or in the ourse of an oasional transation.». 11 Reliane upon third parties: paragraph 21 substituted For paragraph 21 substitute «21 Persons in a regulated setor ating on behalf of a third party (1) This paragraph applies only to a regulated person holding a liene issued under setion 7 of the Finanial Servies At 2008 to arry on regulated ativities under () (d) Class 1 (deposit-taking); Class 2 (investment business); Class 3 (servies to olletive investment shemes); or Class 8 (money transmission servies), of the Regulated Ativities Order (2) Where the regulated person determines that a ustomer is ating on behalf of another person who is an underlying lient of the ustomer, the regulated person need not omply with paragraph 13(2)() if the following onditions are met the regulated person has satisfied itself that the ustomer is a person speified in sub-paragraph (6); 5 SD 2011/884, amended by SD 2013/0373, 2016/0099 and 0188 and 2017/0344. Page 8 V04

9 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code 2018 Code 11 () (d) (e) (f) (g) (h) (i) the regulated person is satisfied the ustomer is regulated and supervised, or monitored for and has measures in plae for ompliane with, ustomer due diligene and reord keeping requirements in line with FATF Reommendations 10 and 11; the ustomer has identified and verified the identity of the underlying lient in aordane with paragraphs 10 to 13 and has no reason to doubt those identities; the ustomer has risk assessed the underlying lient in aordane with paragraph 7 or to AML/CFT requirements at least equivalent to those in this Code and has onfirmed to the regulated person there are no higher risk underlying lients in the arrangement; the regulated person and the ustomer know the nature and intended purpose of the business relationship; the ustomer has identified the soure of funds of the underlying lients; the regulated person has not identified any suspiious ativity; written terms of business are in plae between the regulated person and the ustomer in aordane with subparagraph (3); and the ustomer does not pose a higher risk of ML/FT. (3) The written terms of business required to be in plae in aordane with sub-paragraph (2)(h) must in all ases require the ustomer to () supply to the regulated person information onerning the identity of the underlying lients (inluding any benefiial owners) (i) (ii) in relation to persons to whom any of heads to (d) of subparagraph (6) applies, on request; and in relation to persons to whom head (e) or (f) that subparagraph applies, immediately; supply to the regulated person immediately on request, opies of the evidene verifying the identity of the underlying lient and all other due diligene information held by the ustomer in respet of the underlying lient in any partiular ase; onfirm to the regulated person there are no underlying lients in the arrangement who have been assessed as higher risk by the ustomer; V04 Page 9

10 Code 11 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code 2018 (d) (e) (f) inform the regulated person speifially of eah ase where the ustomer is not required or has been unable to verify the identity of an underlying lient; inform the regulated person if the ustomer is no longer able to omply with the provisions of the written terms of business beause of a hange of the law appliable to the ustomer; and do all suh things as may be required by the regulated person to enable the regulated person to omply with its obligations under sub-paragraph (2). (4) In satisfying the onditions under sub-paragraph (2), the regulated person must take reasonable measures to ensure that the evidene produed or to be produed is satisfatory; and the ustomer due diligene proedures of the ustomer are fit for purpose. (5) The regulated person must take reasonable measures to satisfy itself that the proedures for implementing this paragraph are effetive by testing them on a random and periodi basis no less than one every 12 months; and the written terms of business onfer the neessary rights on the regulated person. (6) The persons referred to in sub-paragraph (2) are () (d) (e) a regulated person; a nominee ompany of a regulated person where the regulated person is responsible for the nominee ompany s ompliane with the AML/CFT requirements; a olletive investment sheme (exept for a sheme within the meaning of Shedule 3 (exempt shemes) to the Colletive Investment Shemes At 2008) where the manager or administrator of suh a sheme is a regulated person, or where the person referred to in sub-paragraph (2) is an equivalent sheme in a jurisdition in List C where the manager or administrator of that sheme is a person referred to in head (e); a designated business; a person who ats in the ourse of external regulated business and who is (i) regulated under the law of a jurisdition in List C; and Page 10 V04

11 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code 2018 Code 12 (f) (ii) subjet to AML/CFT requirements and proedures that are at least equivalent to the Code, but does not solely arry on ativities equivalent to either or both of Class 4 (orporate servies) or Class 5 (trust servies) under the Regulated Ativities Order 2011; and a nominee ompany of a person speified in head (e) where that person is responsible for the nominee ompany s ompliane with the equivalent AML/CFT requirements. (7) If suspiious ativity is identified this paragraph eases to apply and an internal dislosure must be made in aordane with paragraphs 26 and 27. (8) If the regulated person is unable to omply with any of the provisions of this paragraph, this paragraph eases to apply and the regulated person must omply with the requirements of Part 4 of Code. (9) In this paragraph underlying lient inludes a benefiial owner of that underlying lient.». 12 Eligible introduers: paragraph 23 amended (1) Paragraph 23 is amended as follows. (2) For introduer wherever ourring substitute «eligible introduer». (3) For sub-paragraph (2) substitute «(2) The relevant person must establish, maintain and operate a ustomer risk assessment proedure in aordane with paragraph 7.». (4) Omit sub-paragraph (4). (5) In sub-paragraph (5) () after head insert «(ba) has taken reasonable steps to identify the soure of funds;»; at the end of head (d)(i) omit or for head (d)(ii) substitute «(ii) sub-paragraph (5A) applies; or» and (d) in head (e) at the beginning insert «has onduted a risk assessment of the eligible introduer and». (6) After sub-paragraph (5) insert «(5A) This subparagraph applies if, but only if, the following four onditions are met V04 Page 11

12 Code 12 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code 2018 () (d) (7) In sub-paragraph (6) the relevant person and the ustomer are bodies orporate in the same group; the group operates AML/CFT programmes and proedures whih onform to Part 4 and paragraphs 32 to 34 of this Code; the operation of those programmes and proedures is supervised at a group level by an appropriate authority; and the group s AML/CFT poliies adequately mitigate any risk assoiated with a jurisdition for the time being speified on List A or List B.». at the end of head (f) insert «; or (iv) the eligible introduer informs the relevant person that it no longer intends to omply with the terms of business under this paragraph;»; and in head (g) after benefiial owner (if any) insert «: in suh a ase (i) (ii) (iii) the business relationship or oasional transation must proeed no further; the relevant person must onsider terminating that business relationship; and the relevant person must onsider making an internal dislosure, in relation to that business relationship or oasional transation, in aordane with paragraphs 26 and 27.». MADE W M MALARKEY Minister for Home Affairs Page 12 V04

13 Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code 2018 Explanatory Note EXPLANATORY NOTE (This note is not part of the Code) This Code amends the Anti-Money Laundering and Countering the Finaning of Terrorism Code 2015 (SD 2015/0102: the 2015 Code ) to give effet to reommendations made in the Mutual Evaluation Report issued by MONEYVAL (a permanent monitoring body established by the Counil of Europe for anti-money laundering ( AML ) and ountering the finaning of terrorism ( CFT )) following its Fifth Round Mutual Evaluation of the Isle of Man. Paragraphs 1 to 3 are introdutory, providing for the title ommenement and interpretation of this amending Code. Paragraph 4 introdues the amendments to the 2015 Code. Paragraph 5 amends paragraph 3 of the 2015 Code to insert a definition of santions list in the main list of defined expressions in paragraph 3(1) (i.e. the list of persons subjet to international santions applying in the Isle of Man and whih is maintained by the Customs and Exise Division of the Treasury). Paragraph 6 amends paragraph 4 of the 2015 Code to emphasise that the ultimate responsibility for the ompliane of ustomer due diligene requirements with the Code s requirements is always that of the relevant person, regardless of outsouring of funtions or reliane upon third parties. It also imposes a general obligation on a relevant person to hek that a ustomer or prospetive ustomer is not on the santions list. Paragraph 7 amends paragraph 7 of the 2015 Code and adds an additional onsideration in determining the level of risk for a ustomer relationship or an oasional transation, namely whether the relevant person and the ustomer have met in the ourse of the relationship or the transation. Paragraph 8 adds to the ongoing monitoring requirements in paragraph 9 of the 2015 Code an obligation to arry out appropriate heks to establish that a ustomer is not on the santions list Paragraph 9 inserts a new paragraph 10A in the 2015 Code. The relevant person must omply with the new paragraph whih imposes a requirement to undertake a risk assessment in addition to the existing obligations in whihever of paragraphs 10, 12, 15, 17 and 19 applies. Paragraph 10 makes an amendment to paragraph 15 of the 2015 Code in respet of enhaned due diligene whih orresponds to that made by paragraph 6 in respet of other due diligene. Paragraph 11 replaes the existing paragraph 21 to expand the onditions whih must be satisfied, where a regulated person who is also a lieneholder under Class 1, 2, 3 or V04 Page 13

14 Explanatory Note Anti-Money Laundering and Countering the Finaning of Terrorism (Amendment) Code of the Regulated Ativities Order 2011 determines that a ustomer is ating on behalf of a third party, before the regulated person is relieved of the obligation under paragraph 13(2)() to verify the identity of the third party using reliable independent information. Paragraph 12 amends paragraph 23 of the 2015 Code to expand the obligations of the eligible introduer. Page 14 V04