Anti-Money Laundering and Countering the Finaning of Terrorism Index ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM CODE 2015 Index Paragraph Page PART 1 INTRODUCTORY 3 1 Title... 3 2 Commenement... 3 3 Interpretation... 3 PART 2 GENERAL REQUIREMENTS 13 4 General requirements... 13 5 Speified non-profit organisations... 14 PART 3 RISK ASSESSMENT AND ONGOING MONITORING 14 6 Business risk assessment... 14 7 Customer risk assessment... 15 8 Tehnologial developments risk assessment... 15 9 Ongoing monitoring... 16 PART 4 CUSTOMER DUE DILIGENCE 17 10 New business relationships... 17 11 Continuing business relationships... 18 12 Oasional transations... 19 13 Benefiial ownership and ontrol... 19 14 Politially exposed persons... 21 15 Enhaned ustomer due diligene... 21 PART 5 SPECIFIED NON-PROFIT ORGANISATIONS 23 16 Appliation... 23 17 New business relationships of speified non-profit organisations... 23 18 Continuing business relationships of speified non-profit organisations... 23 19 Oasional transations of speified non-profit organisations... 24 PART 6 SIMPLIFIED CUSTOMER DUE DILIGENCE 25 20 Aeptable appliants... 25 21 Persons in a regulated setor ating on behalf of a third party... 26 SD No.2015/0102 Page 1
Index Anti-Money Laundering and Countering the Finaning of Terrorism 22 Generi designated business... 28 23 Eligible introduers... 28 24 Misellaneous... 31 PART 7 REPORTING AND DISCLOSURES 34 25 Money Laundering Reporting Offier... 34 26 Reporting proedures... 34 27 Internal dislosures... 35 28 External dislosures... 35 PART 8 COMPLIANCE 36 29 Monitoring and testing ompliane... 36 30 New staff appointments... 36 31 Staff training... 36 32 Reord keeping... 37 33 Reord retention... 37 34 Reord format and retrieval... 38 35 Registers of internal and external dislosures... 38 36 Register of money laundering and finaning of terrorism enquiries... 39 PART 9 MISCELLANEOUS 39 37 Foreign branhes and subsidiaries... 39 38 Shell banks... 39 39 Correspondent servies... 40 40 Fititious, anonymous and numbered aounts... 40 PART 10 OFFENCES AND REVOCATIONS 41 41 Offenes... 41 42 Revoations... 42 Page 2 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 1 Statutory Doument No. 2015/0102 Proeeds of Crime At 2008, Terrorism and Other Crime (Finanial Restritions) At 2014 ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM CODE 2015 Laid before Tynwald: 17 Marh 2015 Coming into Operation: 1 April 2015 The Department of Home Affairs makes the following Code under setion 157 of the Proeeds of Crime At 2008 1 and setion 68 of the Terrorism and Other Crime (Finanial Restritions) At 2014 2 after onsulting suh persons and bodies that appeared to it to be appropriate 3. PART 1 INTRODUCTORY 1 Title This Code is the Anti-Money Laundering and Countering the Finaning of Terrorism. 2 Commenement This Code omes into operation on 1 April 2015. 3 Interpretation (1) In this Code aeptable appliant means a ustomer that satisfies the onditions of paragraph 20; AML/CFT means anti-money laundering and ountering the finaning of terrorism; AML/CFT requirements means the requirements of the following enatments 1 AT 13 of 2008 2 AT 13 of 2014 3 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 2014 SD No.2015/0102 Page 3
Paragraph 3 Anti-Money Laundering and Countering the Finaning of Terrorism setion 9 of the Prevention of Terrorism At 1990 4 ; setions 7 to 11 and setion 14 of the Anti-Terrorism and Crime At 2003 5 ; part 3 of the Proeeds of Crime At 2008; (e) parts 2, 3 and 4 of the Terrorism and Other Crime (Finanial Restritions) At 2014; this Code, and inludes, in the ase of anything done otherwise than in the Island, anything that would onstitute a requirement under the enatments speified in to if done in the Island; benefiial owner means the natural person who ultimately owns or ontrols the ustomer or on whose behalf a transation or ativity is being onduted and inludes but is not restrited to in the ase of a legal person other than a ompany whose seurities are listed on a reognised stok exhange, a natural person who ultimately owns or ontrols (whether through diret or indiret ownership or ontrol, inluding through bearer share holdings) 25% or more of the shares or voting rights in the legal person; in the ase of any legal person, a natural person who otherwise exerises ultimate effetive ontrol over the management of the legal person; in the ase of a legal arrangement, the trustee or other person who exerises ultimate effetive ontrol over the legal arrangement; and in the ase of a foundation, a natural person who otherwise exerises ultimate effetive ontrol over the foundation; business in the regulated setor has the meaning assigned by paragraph 1 of Shedule 4 to the Proeeds of Crime At 2008, exept that paragraph 1(o) (online gambling) of that Shedule is exluded; business relationship means an arrangement between two or more persons where at least one of those persons is ating in the ourse of a business; the purpose of the arrangement is to failitate the arrying on of business in the regulated setor between the persons onerned on a frequent, habitual or regular basis; and the total amount of any payments to be made by any person to 4 Although this At has been repealed it is possible for proeedings to be taken in respet of ats that took plae when it was in fore 5 AT 6 of 2003 Page 4 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 3 any other person in the ourse of that arrangement may neither be known nor be apable of being asertained at the time the arrangement is made; olletive investment sheme has the meaning given in setion 1 of the Colletive Investment Shemes At 2008 6 ; ompetent authority means all Isle of Man administrative and law enforement authorities onerned with AML/CFT, inluding in partiular the Finanial Supervision Commission, the Insurane and Pensions Authority, the Isle of Man Gambling Supervision Commission, the Department of Home Affairs, the Finanial Crime Unit of the Isle of Man Constabulary, the Offie of Fair Trading, the Attorney General, and the Customs and Exise and Inome Tax Divisions of the Treasury; onstable inludes any offier appointed under setion 1(2) of the Customs and Exise Management At 1986 7 ; orrespondent servies means banking, money or value transfer servies and other similar relationships provided by a finanial institution in one jurisdition ( the orrespondent institution ) to a finanial institution in another jurisdition ( the respondent institution ); urreny for the purposes of this Code inludes virtual urrenies; ustomer of a relevant person other than a relevant person that is a speified non-profit organisation, means a person (i) (ii) seeking to form a business relationship or arry out an oasional transation; or arrying on a business relationship or arrying out an oasional transation, with a relevant person who is arrying on business in the regulated setor in or from the Island and inludes a person introdued to the relevant person within the meaning of paragraph 23; and of a speified non-profit organisation, means the persons, or groups of persons, who reeive benefit (either diretly or indiretly) for haritable, religious, ultural, eduational, politial, soial or fraternal purposes. For the purposes of paragraphs 17 and 18, a ustomer is onsidered to be establishing a business relationship; ustomer due diligene (exept in the expression enhaned ustomer due diligene ) means the measures speified in paragraphs 9 to 14, 17 to 24, 37 and 39 of this Code; 6 AT 7 of 2008 7 AT 34 of 1986 SD No.2015/0102 Page 5
Paragraph 3 Anti-Money Laundering and Countering the Finaning of Terrorism designated non-finanial businesses and professions or designated businesses means relevant persons that are subjet to oversight for ompliane with the AML/CFT requirements by the Insurane and Pensions Authority, the Isle of Man Gambling Supervision Commission, or the Finanial Supervision Commission or one of its delegates, apart from regulated persons; diretor and offier inlude for a limited liability ompany onstituted under the Limited Liability Companies At 1996 8, a member, manager or registered agent of suh a ompany; for a limited partnership with legal personality in aordane with setions 48B to 48D of the Partnership At 1909 9 (i) (ii) (iii) if a general partner is a natural person, that person; if a general partner is a body orporate, the diretors and offiers of that body orporate; if a general partner is a foundation, the ounil members (or equivalent) of that foundation; and for a foundation, a member of the ounil (or equivalent) of the foundation; doument inludes information reorded in any form and, in relation to information reorded otherwise than in legible form, referenes to its prodution inlude referenes to produe a opy of the information in legible form; donor in respet of a speified non-profit organisation means any person who provides funds to that speified non-profit organisation. For the purposes of paragraph 19, a donor is onsidered to be undertaking an oasional transation; eligible introduer means an introduer that satisfies the onditions of paragraph 23; employee and worker of a relevant person have the same meanings as in setion 173 of the Employment At 2006 10 and inlude an individual who works under a ontrat of employment or any other ontrat of servie for the relevant person; pratises alone or with others under the terms of a partnership agreement for the relevant person; is otherwise engaged within the business of a relevant person, in 8 AT 19 of 1996 9 AT 3 of 1909 10 AT 21 of 2006 Page 6 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 3 all ases where the individual undertakes to do or perform, diretly or indiretly, any work or servie for a relevant person, whether or not engaged diretly by the relevant person or through another entity forming part of the group of entities of whih the relevant person is a part, and the relevant person is not by virtue of the ontrat a ustomer of the individual; or is a diretor or offier of the relevant person; enhaned ustomer due diligene means steps, additional to the measures speified in paragraphs 9 to 14, 17 to 24, 37 and 39, for the purpose of identifying ustomers and other persons, namely onsidering whether additional identifiation information needs to be obtained; onsidering whether additional aspets of the identity of the ustomer need to be verified; the taking of reasonable measures to establish the soure of the wealth of the ustomer and any benefiial owner; and onsidering what on-going monitoring should be arried on in aordane with paragraph 9; evidene of identity means evidene of a person s identity obtained in aordane with the proedures speified in paragraphs 10(1), 12(1), 17(1) or 19(1) (as appliable); exempted oasional transation means an oasional transation (whether a single transation or a series of linked transations) where the amount of the transation or, as the ase may be, the aggregate in the ase of a series of linked transations, is less in value than 3,000 in the ase of a transation entered into in the ourse of business referred to in paragraph 1(l) (asinos) or 1(n) (bookmakers) of Shedule 4 to the Proeeds of Crime At 2008; or 5,000 in the ase of a transation entered into in the ourse of business referred to in paragraph 1(x) (bureau de hange) or 1(z) (heque enashment only) of Shedule 4 to the Proeeds of Crime At 2008; or 1,000 in the ase of a transation entered into in the ourse of business referred to in paragraph 1(z) (money transmission servies apart from heque enashment) or 1(mm) (virtual urreny) of Shedule 4 to the Proeeds of Crime At 2008; or 15,000 in any other ase; external dislosure means a report made under paragraphs 26(1)(f) and 28; external regulated business means business outside the Island that is regulated or supervised for AML/CFT purposes by an authority (whether a governmental or professional body and whether in the Island SD No.2015/0102 Page 7
Paragraph 3 Anti-Money Laundering and Countering the Finaning of Terrorism or elsewhere) empowered (whether by law or by the rules of the body) to regulate or supervise suh business for suh purposes; FATF Reommendations means the 40 Reommendations set out in the Finanial Ation Task Fore ( FATF ) doument International Standards on Combating Money Laundering and the Finaning of Terrorism & Proliferation, adopted by the FATF in February 2012; finaning of terrorism inludes the finaning of proliferation and is to be onstrued in aordane with the definitions of finaning, terrorism and proliferation in setion 3 of the Terrorism and Other Crime (Finanial Restritions) At 2014; foundation means a foundation established under the Foundations At 2011 11 or a foundation or similar entity established under the law of another jurisdition; information inludes data; insurer means a person authorised to arry on insurane business under setion 8 of the Insurane At 2008 12 or to whom a permit is issued under setion 22 of that At; internal dislosure means a report made under paragraphs 26(1) and 27; introduer has the meaning given in paragraph 23(1); legal arrangement means an express trust; or any other arrangement that has a similar legal effet (suh as a fiduie, Treuhand or fideiomiso); legal person inludes any body orporate or uninorporate apable of establishing a ustomer relationship with a finanial institution or of owning property; List A is a list maintained by the Department of Home Affairs on its website speifying jurisditions regarding whih the FATF (or a FATF-style regional body) has made a all on its members and other jurisditions to apply ountermeasures to protet the international finanial system from the on-going and substantial risks of ML/FT emanating from the jurisdition; List B is a list maintained by the Department of Home Affairs on its website speifying jurisditions with strategi AML/CFT defiienies or those onsidered to pose a higher risk of ML/FT; List C is a list maintained by the Department of Home Affairs on its website speifying jurisditions whih are onsidered to operate laws equivalent to those of the Isle of Man; 11 AT 17 of 2011 12 AT 16 of 2008 Page 8 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 3 ML/FT means money laundering and finaning of terrorism, or both, and inludes attempted transations in relation to ML/FT; Money Laundering Reporting Offier or MLRO means an individual appointed under paragraph 25 and inludes a deputy MLRO appointed under paragraph 25(3); money laundering means an at that falls within setion 158(11) of the Proeeds of Crime At 2008; nominee ompany means a wholly owned subsidiary that omplies with paragraphs 2.7 or 3.1 of Shedule 1 to the Finanial Servies (Exemptions) Regulations 2011 13 or similar legislation in a jurisdition in List C; oasional transation means any transation (whether a single transation or series of linked transations) other than a transation arried out in the ourse of an established business relationship formed by a relevant person and, for the purposes of this definition, a business relationship is an established business relationship if it is formed by a relevant person where that person has obtained, or is required to obtain, under proedures established, maintained and operated in aordane with this Code, satisfatory evidene of identity of the person who, in relation to the formation of that business relationship, was the ustomer; payable-through aount means an aount maintained by a orrespondent institution that may be operated diretly by a ustomer of the respondent institution; person inludes any body of persons, orporate or uninorporate; politially exposed person or PEP means any of the following a natural person who is or has been entrusted with prominent publi funtions, inluding (i) (ii) (iii) (iv) (v) (vi) (vii) a head of state, head of government, minister or deputy or assistant minister; a senior government offiial; a member of parliament; a senior politiian; an important politial party offiial; a senior judiial offiial; a member of a ourt of auditors or the board of a entral bank; (viii) an ambassador, hargé d affaires or other high-ranking offier in a diplomati servie; (ix) a high-ranking offier in an armed fore; 13 SD 0885/11 as amended by SD 0374/13 SD No.2015/0102 Page 9
Paragraph 3 Anti-Money Laundering and Countering the Finaning of Terrorism (x) (xi) (xii) a senior member of an administrative, management or supervisory body of a state-owned enterprise; a senior member of management of, or a member of, the governing body of an international entity or organisation; or an honorary onsul; any of the following family members of a natural person in (i) (ii) (iii) (iv) (v) (vi) (vii) a spouse; a partner onsidered by national law as equivalent to a spouse; a hild or the spouse or partner of a hild; a brother or sister (inluding a half-brother or half-sister); a parent; a parent-in-law; a grandparent; or (viii) a grandhild; any lose assoiate of a natural person in, inluding (i) (ii) (iii) (iv) any natural person known to be a joint benefiial owner of a legal entity or legal arrangement, or any other lose business relationship, with suh a person; any natural person who is the sole benefiial owner of a legal entity or legal arrangement known to have been set up for the benefit of suh a person; any natural person known to be benefiiary of a legal arrangement of whih suh a person is a benefiial owner or benefiiary; or any natural person known to be in a position to ondut substantial finanial transations on behalf of suh a person; and for the purposes of this definition domesti PEP means a natural person in who is or has been entrusted with prominent publi funtions in the Isle of Man and any family members or lose assoiates of that person in or, regardless of the loation of those family members or lose assoiates; and foreign PEP means a natural person in who is or has been entrusted with prominent publi funtions outside the Isle of Man and any family members or lose assoiates of that person in or, regardless of the loation of those family members or lose Page 10 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 3 assoiates; regulated person means any person holding a finanial servies liene issued under setion 7 of the Finanial Servies At 2008 14 ; any person authorised under setion 8 the Insurane At 2008; any person registered under setion 25 of the Insurane At 2008; (e) a retirement benefits shemes administrator registered under setion 36 of the Retirement Benefits Shemes At 2000 15 ; or a person holding an online gambling liene issued under setion 4 of the Online Gambling Regulation At 2001 16 ; relevant person means a person arrying on a business in the regulated setor; senior management means the diretors or key persons who are nominated to ensure that the relevant person is effetively ontrolled on a day-today basis and who have responsibility for overseeing the relevant person s proper ondut; shell bank means a bank that is inorporated in a jurisdition in whih it has no physial presene; and not affiliated with a finanial servies group that is subjet to effetive onsolidated supervision; and for the purposes of this definition onsolidated supervision, in relation to a finanial servies group, means supervision of the group by a regulatory body on the basis of the totality of its business, wherever onduted; finanial servies group means a group of ompanies whose ativities inlude to a signifiant extent ativities that are, or if arried on in the Island would be, regulated ativities under the Finanial Servies At 2008; and physial presene means the presene of staff and management based in the jurisdition who operate at a level at whih they are able to make meaningful deisions in respet of the funtions and ativities of the bank; speified non-profit organisation means a relevant person arrying on the business of a speified non-profit organisation within the meaning assigned by paragraph 1(6) of Shedule 4 to the Proeeds of Crime At 2008; 14 AT 8 of 2008 15 AT 14 of 2000 16 AT 10 of 2001 SD No.2015/0102 Page 11
Paragraph 3 Anti-Money Laundering and Countering the Finaning of Terrorism suspiious ativity means any ativity or information reeived in the ourse of a business relationship, oasional transation or attempted transation that auses the relevant person to know or suspet; or have reasonable grounds for knowing or suspeting, that the ativity or information is related to money laundering or the finaning of terrorism; trusted person means (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; an advoate within the meaning of the Advoates At 1976 17, a registered legal pratitioner within the meaning of the Legal Pratitioners Registration At 1986 18 or an aountant arrying on business in or from the Isle of Man, if the relevant person is satisfied that the rules of the professional body of the advoate, legal pratitioner or aountant embody requirements and proedures that are at least equivalent to this Code; a person who ats in the ourse of external regulated business and is regulated under the law of a jurisdition in List C, unless the relevant person has reason to believe that the jurisdition in question does not apply, or insuffiiently applies, the FATF Reommendations in respet of the business of that person; or a nominee ompany of a person who ats in the ourse of external regulated business and is regulated under the law of a jurisdition inluded in List C where the person is responsible for the nominee ompany s ompliane with the AML/CFT requirements, unless the relevant person has reason to believe that the jurisdition in question does not apply, or insuffiiently applies, the FATF Reommendations in respet of the business of that person; unusual ativity means any ativity or information reeived in the ourse of a business relationship, oasional transation or attempted transation where there are transations that have no apparent eonomi or lawful purpose, examples of whih inlude transations that are (i) (ii) omplex; both large and unusual; or 17 AT 27 of 1976 18 AT 15 of 1986 Page 12 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 4 (iii) of an unusual pattern; the relevant person beomes aware of anything that auses the relevant person to doubt the identity of a person it is obliged to identify under this Code; the relevant person beomes aware of anything that auses the relevant person to doubt the good faith of a ustomer, benefiial owner, benefiiary or introduer. virtual urreny means onvertible virtual urrenies suh as ryptourrenies or similar onepts where the onept is aepted by persons as a means of payment for goods or servies, a unit of aount, a store of value or a ommodity; virtual urreny business means the business of issuing, transmitting, transferring, providing safe ustody or storage of, administering, managing, lending, buying, selling, exhanging or otherwise trading or intermediating virtual urrenies. (2) In this Code, a referene to an amount of urreny expressed in Euros is to be onstrued as also meaning that amount onverted into, and expressed as, an amount of any other urreny. (3) In this Code, in any ase where a finanial produt (suh as a life assurane poliy) has been transferred by its holder (the assignor) to another person (the assignee), referenes in any provision to requirements in relation to a ustomer should be onstrued as inluding a referene to an assignee. PART 2 GENERAL REQUIREMENTS 4 General requirements (1) In onduting business in the regulated setor a relevant person must not enter into or arry on a business relationship or arry out an oasional transation with or for another person unless the relevant person establishes, maintains and operates (i) (ii) (iii) risk assessment and ongoing monitoring proedures in aordane with Part 3; ustomer due diligene proedures in aordane with parts 4, 5 and 6 and paragraphs 37 and 39; reporting and dislosure proedures in aordane with Part 7; (iv) ompliane proedures in aordane with Part 8; (v) proedures in aordane with Part 9; and SD No.2015/0102 Page 13
Paragraph 5 Anti-Money Laundering and Countering the Finaning of Terrorism (vi) internal ontrols and ommuniation proedures that are appropriate for the purposes of forestalling and preventing ML/FT; takes appropriate measures for the purpose of making employees and workers aware of (i) (ii) the AML/CFT requirements; and the proedures established, maintained and operated under ; monitors and tests ompliane in aordane with paragraph 29; provides eduation and training in aordane with paragraph 31; and (e) omplies with paragraphs 38 and 40. (2) The proedures and ontrols referred to in sub-paragraph (1) must be approved by the senior management of the relevant person. (3) The ustomer due diligene proedures referred to in sub-paragraph (1)(ii) must enable the relevant person to manage and mitigate the risks of ML/FT that have been identified by the risk assessments and ongoing monitoring arried out in aordane with Part 3. (4) A relevant person must arry out ustomer due diligene in aordane with parts 4 to 6 on the basis of materiality and risk of ML/FT; in aordane with the risk assessments and ongoing monitoring arried out under Part 3; and having partiular regard to whether a ustomer poses a higher risk of ML/FT. 5 Speified non-profit organisations Despite paragraph 4, paragraphs 10 to 12 and 13(5) do not apply to speified non-profit organisations. PART 3 RISK ASSESSMENT AND ONGOING MONITORING 6 Business risk assessment (1) A relevant person must arry out an assessment (a business risk assessment ) that estimates the risk of ML/FT on the part of the relevant person s business and ustomers. (2) The business risk assessment must be undertaken as soon as reasonably pratiable after the relevant Page 14 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 7 person ommenes business; regularly reviewed and, if appropriate, amended so as to keep it up-to-date; and doumented in order to be able to demonstrate its basis. (3) The business risk assessment must have regard to all relevant risk fators inluding (e) the nature, sale and omplexity of the relevant person s ativities; the produts and servies provided by the relevant person; the persons to whom and the manner in whih the produts and servies are provided; reliane on third parties for elements of the ustomer due diligene proess; and tehnologial developments. 7 Customer risk assessment (1) A relevant person must arry out an assessment (a ustomer risk assessment ) that estimates the risk of ML/FT posed by a ustomer. (2) The ustomer risk assessment must be undertaken prior to the establishment of a business relationship or the arrying out of an oasional transation with or for that ustomer; regularly reviewed and, if appropriate, amended so as to keep it up-to-date; and doumented in order to be able to demonstrate its basis. (3) The ustomer risk assessment must have regard to all relevant risk fators, inluding the business risk assessment arried out under paragraph 6; the nature, sale, omplexity and loation of the ustomer s ativities; the persons to whom and the manner in whih the produts and servies are provided; and reliane on third parties for elements of the ustomer due diligene proess. 8 Tehnologial developments risk assessment (1) A relevant person must arry out an assessment (a tehnologial developments risk assessment ) that estimates the risk of ML/FT posed by any tehnologial developments to the relevant person s business. SD No.2015/0102 Page 15
Paragraph 9 Anti-Money Laundering and Countering the Finaning of Terrorism (2) The tehnologial developments risk assessment must be undertaken prior to the launh or implementation of new produts, new business praties and delivery methods inluding new delivery systems; undertaken prior to the use of developing tehnologies for both new and pre-existing produts; and doumented in order to be able to demonstrate its basis. (3) The tehnologial developments risk assessment must have regard to all relevant fators inluding the business risk assessment arried out under paragraph 6; digital information and doument storage; eletroni verifiation of douments; and data and transation sreening systems. 9 Ongoing monitoring (1) A relevant person must perform ongoing and effetive monitoring of any business relationship, inluding review of information held for the purpose of ustomer due diligene to ensure that it is up-to-date and appropriate (in partiular where the relationship poses a higher risk of ML/FT); appropriate srutiny of transations and other ativities, paying partiular attention to suspiious and unusual ativity; and appropriate srutiny of transations to ensure that they are onsistent with (i) (ii) (iii) (iv) the relevant person s knowledge of the ustomer, the relevant person s business and risk profile and, if neessary, the soure of funds for the transation; the business risk assessment arried out under paragraph 6; the ustomer risk assessment arried out under paragraph 7; and any relevant tehnologial developments risk assessment arried out under paragraph 8. (2) The extent and frequeny of any monitoring under this paragraph must be determined on the basis of materiality and risk of ML/FT; in aordane with the risk assessments arried out under this Part; and Page 16 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 10 having partiular regard to whether a ustomer poses a higher risk of ML/FT. PART 4 CUSTOMER DUE DILIGENCE 10 New business relationships (1) A relevant person must, in relation to eah new business relationship, establish, maintain and operate the proedures speified in subparagraph (3), whih proedures must omply with the requirements of this paragraph. (2) The proedures must be undertaken before a business relationship is entered into; or during the formation of that relationship. (3) The proedures referred to in sub-paragraph (1) are (e) the identifiation of the ustomer; the verifiation of the identity of the ustomer using reliable, independent soure douments; the verifiation of the legal status of the ustomer using relevant information obtained from a reliable, independent soure; the obtaining of information on the nature and intended purpose of the business relationship; and the taking of reasonable measures to establish the soure of funds. (4) In exeptional irumstanes the verifiation of the identity of the ustomer in aordane with sub-paragraph (3) may be undertaken following the establishment of the business relationship if (e) (f) it ours as soon as reasonably pratiable; it is essential not to interrupt the normal ourse of business; the ustomer has not been identified as posing a higher risk of ML/FT and the risks of ML/FT are effetively managed; the relevant person has not identified any suspiious ativity; the relevant person s senior management has approved the establishment of the business relationship and any subsequent ativity until sub-paragraph (3) has been omplied with; and the relevant person ensures that the amount, type and number of transations is appropriately limited and monitored. (5) Exept as provided in sub-paragraph (4) and Part 6, proedures omply with this paragraph if they require, when satisfatory evidene of identity in aordane with sub-paragraph (1) is not obtained or SD No.2015/0102 Page 17
Paragraph 11 Anti-Money Laundering and Countering the Finaning of Terrorism produed the business relationship to proeed no further; and the relevant person to terminate the business relationship and onsider making an internal dislosure in aordane with paragraphs 26 and 27. 11 Continuing business relationships (1) A relevant person must, in relation to eah ontinuing business relationship, establish, maintain and operate the proedures speified in sub-paragraph (3), whih proedures must omply with the requirements of this paragraph. (2) The proedures must be undertaken during a business relationship as soon as reasonably pratiable. (3) The proedures referred to in sub-paragraph (1) are an examination of the bakground and purpose of the business relationship; if no evidene of identity was produed after the business relationship was established, the taking of suh measures as will require the prodution of suh information in aordane with paragraph 10(1); if evidene of identity was produed in aordane with paragraph 10(1), the taking of suh measures as will determine whether the evidene of identity produed under that paragraph is satisfatory; and if evidene of identity produed in aordane with paragraph 10(1) is not for any reason satisfatory, the taking of suh measures as will require the prodution by the ustomer of evidene of identity or the taking of suh measures as will produe evidene of identity in aordane with paragraph 10(1). (4) The relevant person must keep written reords of any examination, steps, measures or determination made or taken under sub-paragraph (1) (whih reords shall be reords to whih paragraph 32 applies); and must, on request, make suh findings available to the ompetent authorities and auditors (if any). (5) Exept as provided in Part 6, proedures omply with this paragraph if they require, when satisfatory evidene of identity, in aordane with paragraph 10(1), is not obtained or produed the business relationship to proeed no further; and the relevant person to onsider terminating the business Page 18 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 12 relationship and onsider making an internal dislosure in aordane with paragraphs 26 and 27. 12 Oasional transations (1) A relevant person must, in relation to an oasional transation, establish, maintain and operate the proedures speified in subparagraph (3), whih proedures must omply with the requirements of this paragraph. (2) The proedures must be undertaken before the oasional transation is entered into. (3) The proedures referred to in sub-paragraph (1) are (e) the identifiation of the ustomer; the verifiation of the identity of the ustomer using reliable, independent soure douments; the verifiation of the legal status of the ustomer using relevant information obtained from a reliable, independent soure; the obtaining of information on the nature and intended purpose of the oasional transation; and the taking of reasonable measures to establish the soure of funds. (4) Exept as provided in paragraph 12(5) and Part 6, proedures omply with this paragraph if they require, when satisfatory evidene of identity in aordane with sub-paragraph (1) is not obtained or produed the oasional transation not to be arried out; and the relevant person to onsider making an internal dislosure in aordane with paragraphs 26 and 27. (5) Sub paragraph (1) does not require verifiation of identity in aordane with paragraph 12(3) to be produed if the transation is an exempted oasional transation. 13 Benefiial ownership and ontrol (1) This paragraph applies when a relevant person is operating the proedures required by paragraph 9 and parts 4, 5 and 6 (as appliable). (2) A relevant person must, in the ase of any ustomer where that ustomer is not a natural person, identify who is the benefiial owner of the ustomer; take reasonable measures to verify the identity of any benefiial owner of the ustomer, using relevant information obtained from a reliable, independent soure; and SD No.2015/0102 Page 19
Paragraph 13 Anti-Money Laundering and Countering the Finaning of Terrorism subjet to paragraphs 21 and 24, determine whether the ustomer is ating on behalf of another person and, if so, identify that other person, and take reasonable measures to verify that other person s identity using relevant information obtained from a reliable, independent soure. (3) Without limiting sub-paragraph (2), the relevant person must, in the ase of a ustomer that is a legal person or legal arrangement verify that any person purporting to at on behalf of the ustomer is authorised to do so; identify that person and take reasonable measures to verify the identity of that person using reliable, independent soure douments; in the ase of a legal arrangement, identify (i) (ii) (iii) the trustees or any other ontrolling party; any known benefiiaries; and the settlor or other person by whom the legal arrangement is made or on whose instrutions the legal arrangement is formed; in the ase of a foundation, identify (e) (f) (g) (i) (ii) (iii) the ounil members (or equivalent); any known benefiiaries; and the founder and any other dediator; obtain information onerning the names and addresses of any other natural persons having power to diret the ustomer s ativities and take reasonable measures to verify that information; obtain information onerning the person by whom, and the method by whih, binding obligations may be imposed on the ustomer; and obtain information to understand the ownership and ontrol struture of the ustomer. (4) Without limiting sub-paragraph (2), in the ase of a ustomer for a life assurane poliy, an insurer must identify the benefiiaries of the life assurane poliy; and immediately prior to the making of any payment or loan to a benefiiary of the life assurane poliy, verify the identity of eah suh benefiiary using relevant information obtained from a reliable, independent soure; and subjet to paragraph 24(7), determine whether the ustomer is ating on behalf of another person and, if so, identify that other Page 20 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 14 person, and take reasonable measures to verify that other person s identity using relevant information obtained from a reliable, independent soure. (5) Subjet to paragraph 24(7) and without limiting sub-paragraphs (2) and (3), the relevant person must not, in the ase of a ustomer that is a legal person or legal arrangement, make any payment or loan to a benefiial owner of that person or benefiiary of that arrangement unless it has identified the reipient of the payment or loan; and on the basis of materiality and risk of ML/FT, verified the identity of the reipient using relevant information or data obtained from a reliable, independent soure. 14 Politially exposed persons (1) A relevant person must maintain appropriate proedures and ontrols for the purpose of determining whether any of the following is a PEP any ustomer; any natural person having power to diret the ativities of a ustomer; any benefiial owner or known benefiiaries. (2) A relevant person must maintain appropriate proedures and ontrols for requiring the approval of its senior management before any business relationship is established with; before any oasional transation is arried out with; or before a business relationship is ontinued with, a domesti PEP who has been identified as posing a higher risk of ML/FT, or any foreign PEP. (3) A relevant person must take reasonable measures to establish the soure of wealth of a domesti PEP who has been identified as posing a higher risk of ML/FT, or any foreign PEP. (4) A relevant person must perform ongoing and effetive enhaned monitoring of any business relationship with a domesti PEP who has been identified as posing a higher risk of ML/FT, or any foreign PEP. (5) For the avoidane of doubt, this paragraph does not remove the requirement to ondut enhaned ustomer due diligene where a PEP has been identified as posing a higher risk of ML/FT. 15 Enhaned ustomer due diligene (1) A relevant person must obtain enhaned ustomer due diligene where a ustomer poses a higher risk of ML/FT as assessed by the SD No.2015/0102 Page 21
Paragraph 15 Anti-Money Laundering and Countering the Finaning of Terrorism ustomer risk assessment arried out in aordane with paragraph 7; or in the event of any unusual ativity. (2) A relevant person must onsider whether to obtain enhaned ustomer due diligene in the event of any suspiious ativity. (3) For the avoidane of doubt, if higher risk of ML/FT within the meaning of sub-paragraph (1) is assessed then paragraphs 10(4), 20, 22, 23(5), 24(2), (5) and (7) to (9) do not apply. (4) Matters that pose a higher risk of ML/FT inlude but are not restrited to a business relationship or oasional transation with a ustomer resident or loated in a jurisdition in List A; and a ustomer that is the subjet of a warning in relation to AML/CFT matters issued by a ompetent authority or equivalent authority in another jurisdition. (5) Matters that may pose a higher risk inlude but are not restrited to ativity in a jurisdition the relevant person deems to be higher risk of ML/FT; a business relationship or oasional transation with a ustomer resident or loated in a jurisdition in List B; ativity in a jurisdition in List A or B; (e) (f) (g) (h) (i) a situation that by its nature presents a signifiant risk of ML/FT; a business relationship or oasional transation with a PEP; a ompany that has nominee shareholders or shares in bearer form; the provision of high risk produts; the provision of servies to high-net-worth individuals; a legal arrangement; and (j) persons performing prominent funtions for international organisations. (6) Exept as provided in Part 6, when enhaned due diligene is not obtained or produed either where it is required under sub-paragraph (1) or onsidered appropriate under sub-paragraph (2) the business relationship or oasional transation must proeed no further; and the relevant person must onsider terminating that relationship and onsider making an internal dislosure in aordane with paragraphs 26 and 27. Page 22 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 16 PART 5 SPECIFIED NON-PROFIT ORGANISATIONS 16 Appliation This Part only applies to speified non-profit organisations. 17 New business relationships of speified non-profit organisations (1) A speified non-profit organisation must, in relation to eah new business relationship, establish, maintain and operate the proedures speified in sub-paragraph (3), whih proedures must omply with the other requirements of this paragraph. (2) The proedures must be undertaken before a business relationship is entered into; or during the formation of that relationship. (3) The proedures referred to in sub-paragraph (1) are the identifiation of the ustomer; the taking of reasonable measures to verify the identity of the ustomer using reliable, independent soures; and the obtaining of information on the nature and intended purpose of the business relationship. (4) A speified non-profit organisation must, in the ase of any orrespondent non-profit organisation reeiving funds on behalf of a ustomer, identify that orrespondent non-profit organisation, and take reasonable measures to verify that orrespondent non-profit organisation s identity using relevant information obtained from reliable, independent soures. (5) Exept as provided in Part 6, proedures omply with this paragraph if they require, when satisfatory evidene of identity in aordane with sub-paragraph (1) is not obtained or produed the business relationship to proeed no further; and the speified non-profit organisation to terminate the business relationship and onsider making an internal dislosure in aordane with paragraphs 26 and 27. (6) Correspondent non-profit organisation for the purposes of subparagraph (4) means a non-profit organisation that ats as an intermediary between a speified non-profit organisation and its ustomers. 18 Continuing business relationships of speified non-profit organisations SD No.2015/0102 Page 23
Paragraph 19 Anti-Money Laundering and Countering the Finaning of Terrorism (1) A speified non-profit organisation must, in relation to eah ontinuing business relationship, establish, maintain and operate the proedures speified in sub-paragraph (3), whih proedures must omply with the requirements of this paragraph. (2) The proedures must be undertaken during a business relationship as soon as reasonably pratiable. (3) The proedures referred to in sub-paragraph (1) are an examination of the bakground and purpose of the business relationship; if no evidene of identity was obtained after the business relationship was established, the taking of suh measures as will require the prodution of suh information in aordane with paragraph 17(1); if evidene of identity was obtained under paragraph 17(1), the taking of suh measures as will determine whether the evidene of identity obtained under that paragraph is satisfatory; and if evidene of identity obtained under paragraph 17(1) is not for any reason satisfatory, the taking of suh measures as will require the identifiation of the benefiiaries or the taking of suh measures as will produe evidene of identity in aordane with paragraph 17(1). (4) A speified non-profit organisation must keep written reords of any examination, steps, measures or determination made or taken under sub-paragraph (1) (whih reords shall be reords to whih paragraph 32 applies); and must, on request, make suh findings available to the ompetent authorities and auditors (if any). (5) Exept as provided in Part 6, proedures omply with this paragraph if they require, when evidene of identity in aordane with paragraph 17(1) is not obtained or produed the business relationship to proeed no further; and the speified non-profit organisation to onsider terminating that business relationship and onsider making an internal dislosure in aordane with paragraphs 26 and 27. 19 Oasional transations of speified non-profit organisations (1) A speified non-profit organisation must, in relation to an oasional transation, establish, maintain and operate the proedures speified in sub-paragraph (3), whih proedures must omply with the requirements of this paragraph. Page 24 SD No.2015/0102
Anti-Money Laundering and Countering the Finaning of Terrorism Paragraph 20 (2) The proedures speified in sub-paragraph (1) must be undertaken before the oasional transation is aepted. (3) The proedures speified in sub-paragraph (1) are the identifiation of the donor of the funds for the transation; and the verifiation of the identity of the donor using reliable, independent soures. (4) Exept as provided in Part 6, proedures omply with this paragraph if they require, when satisfatory evidene of identity in aordane with sub-paragraph (1) is not obtained or produed the oasional transation not to be arried out; and the speified non-profit organisation to onsider making an internal dislosure in aordane with paragraphs 26 and 27. (5) Sub paragraph (1) does not require evidene of identity in aordane with paragraph 19(3) to be obtained if the transation is an exempted oasional transation. PART 6 SIMPLIFIED CUSTOMER DUE DILIGENCE 20 Aeptable appliants (1) Verifiation of the identity of a ustomer for a new business relationship in aordane with paragraph 10(1); or an oasional transation in aordane with paragraph 12(1) or 19(1), is not required to be produed if the onditions in sub-paragraph (2) are met. (2) The onditions referred to in sub-paragraph (1) are that the identity of the ustomer is known to the relevant person; the relevant person knows the nature and intended purpose of the business relationship or oasional transation; the relevant person has not identified any suspiious ativity; and the relevant person has satisfied itself that (i) (ii) the ustomer is a trusted person; or the ustomer is a ompany listed on a reognised stok exhange or a wholly owned subsidiary of suh a ompany in relation to whih the relevant person has taken reasonable measures to establish that there is effetive ontrol of the ompany by an individual, group of SD No.2015/0102 Page 25
Paragraph 21 Anti-Money Laundering and Countering the Finaning of Terrorism individuals or another legal person or legal arrangement (whih persons are treated as benefiial owners for the purposes of this Code); and (iii) the ustomer does not pose a higher risk of ML/FT. 21 Persons in a regulated setor ating on behalf of a third party (1) This paragraph only applies to a regulated person holding a finanial servies liene issued under setion 7 of the Finanial Servies At 2008 to arry on regulated ativities under 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 2011 19. (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 (e) (f) the regulated person has satisfied itself that the ustomer is a person speified in sub-paragraph (6); 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 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 lient; the regulated person has not identified any suspiious ativity; and written terms of business are in plae between the regulated person and the ustomer in aordane with sub-paragraph (3). (3) The written terms of business required to be in plae in aordane with sub-paragraph (2)(f) must in all ases require the ustomer to supply to the regulated person immediately on request, information on the identity of the underlying lient, 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; inform the regulated person speifially of eah ase where the ustomer is not required or has been unable to verify the identity of the underlying lient; 19 SD 0884/11 as amended by SD 0373/13 Page 26 SD No.2015/0102