• AML 8.4 AML 8.4 Enhanced Customer Due Diligence

    • AML 8.4.1 AML 8.4.1

      Where a Relevant Person is required to undertake Enhanced CDD, having assigned a customer a high risk rating or it or its Beneficial Owners is a PEP, then, in addition to CDD under Rule 8.3.1, it must:

      (a) obtain:
      (i) additional identification information on the customer and all Beneficial Owners;
      (ii) additional information on the intended nature of the business relationship;
      (iii) information on the reasons for a Transaction;
      (b) update the CDD information which it holds on the customer and any Beneficial Owners more regularly;
      (c) identify and verify:
      (i) the Source of Funds; and
      (ii) the Source of Wealth;
      of the customer and, if applicable, all Beneficial Owners;
      (d) conduct enhanced monitoring of the business relationship, by increasing the frequency and intensity of controls applied, and determining which groups of transactions need further examination;
      (e) obtain the approval of Senior Management to commence a business relationship with the customer; and
      (f) require the first payment to be carried out through an account in the customer's name with a financial institution that is subject to money laundering regulation and supervision in a jurisdiction that has standards equivalent to those set out in the FATF Recommendations.
      Amended on (15 April, 2019).

      • Guidance

        1. In Rule 8.4.1 Enhanced CDD measures are mandatory to the extent that they are applicable to the relevant customer or the circumstances of the business relationship and to the extent that the risks would reasonably require it. Therefore, the extent of additional measures to be conducted is a matter for the Relevant Person to determine on a case by case basis.
        2. In Rule 8.4.1(e), Senior Management approval may be given by an individual member of the Relevant Person's Senior Management or by a committee of senior managers appointed to consider high-risk customers. Such approval may also be outsourced within the Group, but only to a suitably qualified individual or committee.
        3. For high-risk customers, a Relevant Person should, in order to mitigate the perceived potential and actual risks, exercise a greater degree of diligence throughout the course of the customer relationship and should endeavour to understand the nature of the customer's business and consider whether it is consistent and reasonable.
        4. A Relevant Person should be satisfied that a customer's use of complex legal structures and/or the use of trust and private investment vehicles, has a genuine and legitimate purpose.
        5. For Enhanced CDD, where there are one or more Beneficial Owners, verification of the customer's Source of Funds and Wealth may require enquiring into the Beneficial Owners' Source of Funds and Wealth because the Source of Funds would normally be associated with the Beneficial Owners and not the customer.
        6. The Regulator considers that verification of Source of Funds includes obtaining independent corroborating evidence such as the proof of dividend payments connected to a shareholding, bank statements, salary/bonus certificates, loan documentation and proof of all Transactions which gave rise to payments into the account. A customer should be able to demonstrate and have documented how the relevant funds are connected to a particular event which gave rise to the payment into the account or to the source of the funds for a Transaction.
        7. The Regulator considers that verification of Source of Wealth includes obtaining independent corroborating evidence such as share certificates, publicly-available registers of ownership, bank or brokerage account statements, probate documents, audited accounts and financial statements, news items from a reputable source and other similar evidence.
        8. A Relevant Person may commission a report from a third party vendor to obtain further information on a customer or Transaction or to investigate a customer or Beneficial Owners in very high-risk cases. Such a report may be particularly useful where there is little or no publicly-available information on a Person or on a Legal Arrangement or where the Relevant Person has difficulty in obtaining and verifying information.
        9. For Rule 8.4.1, circumstances where it may be applicable to require the first payment made by a customer in order to open an account with a Relevant Person to be carried out through a bank account in the customer's name Customer include:
        (a) where, following the use of other Enhanced CDD measures, the Relevant Person is not satisfied with the results of due diligence; or
        (b) as an alternative measure, where one of the measures in Rule 8.4.1 (a) to (e) cannot be carried out.
        Amended on (3 February, 2020).