- When conducting an enterprise-wide AML/CFT risk assessment, an FI must notably identify, assess and understand its Money Laundering/Terrorism Financing (“ML/TF”) risks in relation to the countries or jurisdictions its customers are from or in and the countries or jurisdictions the FI has operations in. One of the criteria which the FI should consider when assessing ML/TF risks of countries and jurisdictions is whether the country or jurisdiction is a member of international groups that only admit countries or jurisdictions which meet certain AML/CFT benchmarks. FATF is the standard-setting group in this respect.
- In its customer due diligence (“CDD”), the FI takes the country / jurisdiction of residence of its customers and their operations – and possibly other persons and/or entities such as connected persons, persons authorised to act on behalf of the customer and beneficial owners – into consideration. If the FI considers that the ML/TF risks are low, it may perform simplified CDD measures in relation to this customer. This is more likely the case where the customer (and associated parties) are resident and active in an FATF member country. The FI may also take the Malaysia’s status as an FATF member country into consideration in determining whether a customer falls into a higher risk category. Examples of potentially higher risk categories include countries or jurisdictions the FI is exposed to, either through its own activities or the activities of its customers which have relatively higher levels of corruption, organised crime or inadequate AML/CFT measures, as identified by the FATF. The FI may consider that FATF member countries pose lesser risk, but the FI would still need to assess its risks in relation to other criteria.
- In order to rely on a third party, the FI must foremost be satisfied that the third party it intends to rely upon is subject to and supervised for compliance with AML/CFT requirements consistent with standards set by the FATF, and has adequate AML/CFT measures in place to comply with those requirements.
- The FI is not required to inquire if there exists any beneficial owner in relation to a customer that is a financial institution incorporated or established outside Singapore that is subject to and supervised for compliance with AML/CFT requirements that meet FATF standards unless the FI has doubts about the veracity of the CDD information, or suspects that the customer, business relations with, or transaction for the customer, may be connected with ML or TF.
Thursday, March 3, 2016
Malaysia welcomed as a member to the FATF
The Financial Action Task Force (FATF) granted full membership to Malaysia during its plenary meeting in Paris on 17-19 February.
In its 2015 Mutual Evaluation Report, FATF had recognized that Malaysia had overall “good levels of compliance with the FATF Recommendations”, although improvements were “needed”. Since this evaluation, Malaysia has worked to develop an action plan for addressing the key effectiveness issues identified during the evaluation. FATF said it agreed to grant membership “based on the commitment demonstrated by the action plan and the continuing progress in efforts to improve its Anti-Money Laundering and Countering Financing of Terrorism (“AML/CFT”)”. FATF will continue to monitor Malaysia’s progress through its enhanced follow-up process.A financial institution (“FI”) may take Malaysia’s new FATF membership favourably into account in various aspects of AML/CFT.
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