• AML 10. AML 10. Correspondent Banking, Wire Transfers, Anonymous Accounts And Audit

    • AML 10.1 AML 10.1 Application

      • AML 10.1.1

        This Chapter applies to Recognised Bodies and all Authorised Persons, other than Credit Rating Agencies and Representative Offices.

        Amended on (3 February, 2020).

    • AML 10.2 AML 10.2 Correspondent banking

      • AML 10.2.1

        An Authorised Person proposing to have a correspondent banking relationship with a respondent bank must:

        (a) undertake CDD on the respondent bank;
        (b) as part of (a), gather sufficient information about the respondent bank to understand fully the nature of the business, including making appropriate enquiries as to its management, its major business activities and the countries or jurisdictions in which it operates;
        (c) determine from publicly-available information the reputation of the respondent bank and the quality of supervision that it is subject to, including whether it has been the subject of a money laundering or terrorist financing investigation or relevant regulatory action;
        (d) assess the respondent bank's Anti-Money Laundering controls and ascertain if they are adequate and effective in light of the FATF Recommendations;
        (e) ensure that prior approval of the Authorised Person's Senior Management is obtained before entering into a new correspondent banking relationship;
        (f) ensure that the respective responsibilities of the parties to the correspondent banking relationship are properly documented; and
        (g) be satisfied that, in respect of any customers of the respondent bank who have direct access to accounts of the Authorised Person, the respondent bank:
        (i) has undertaken CDD (including on-going CDD) at least equivalent to that in Rule 8.3.1 in respect of each Customer; and
        (ii) is able to provide the relevant CDD information in (i) to the Authorised Person upon request; and
        (h) document the basis for its satisfaction that the requirements in (a) to (g) are met.
        Amended on (15 April, 2019).

      • AML 10.2.2 AML 10.2.2

        An Authorised Person must:

        (a) not enter into a correspondent banking relationship with a Shell Bank; and
        (b) take appropriate measures to ensure that it does not enter into, or continue a corresponding banking relationship with, a bank which is known to permit its accounts to be used by Shell Banks.

        • Guidance

          1. The rules and guidance set out in Rule 9.2 above also applies to correspondent banking business partners. This Rule provides further details on specific requirements applicable to a correspondent banking business relationship.
          2. With regard to Correspondent Banking Clients and, if applicable, other qualified professionals, specific care should be taken to assess their Anti-Money Laundering arrangements regarding Customer identification, Transaction monitoring, terrorist financing and other relevant elements, and to verify that these business partners comply with the same or equivalent Anti-Money Laundering requirements as the Relevant Person. Information on applicable laws and regulations regarding the prevention of money laundering should be obtained.
          3. A Relevant Person should ensure that a Correspondent Banking Client does not use the Relevant Person's products and services to engage in business with Shell Banks. A Shell Bank would be a bank that has no physical presence in the country in which it is incorporated and licensed, and which is unaffiliated with a regulated financial Group that is subject to effective consolidated supervision. The Regulator does not consider that the existence of a local agent or low-level staff constitutes physical presence.
          4. If applicable, information on distribution networks and delegation of duties should be obtained.
          Amended on (15 April, 2019).

    • AML 10.3 AML 10.3 Wire transfers

      • AML 10.3.1

        In this section:

        (a) "beneficiary" means the natural or Legal Person or the Legal Arrangement that is identified by the originator as the receiver of the requested wire transfer;
        (b) "originator" means the account holder who instructs the wire transfer from the relevant account, or where there is no account, the Natural or Legal Person that places the order with the ordering Financial Institution to perform the wire transfer;
        (c) "wire transfer" includes any value transfer arrangement; and
        (d) "batch transfer" means a transfer comprised of a number of individual wire transfers that are bundled for transmission, whether or not the individual wire transfers are intended ultimately for one or more beneficiaries.
        Amended on (3 February, 2020).

      • AML 10.3.2 AML 10.3.2

        (1) An Authorised Person and Recognised Body must:
        (a) when it sends or receives funds by wire transfer on behalf of a customer, ensure that the wire transfer and any related messages contain accurate originator and beneficiary information;
        (b) ensure that, while the wire transfer is under its control, the information in (a) remains with the wire transfer and any related message throughout the payment chain;
        (c) monitor wire transfers for the purpose of detecting those wire transfers that do not contain both originator and beneficiary information and take appropriate measures to identify any money laundering risks; and
        (d) not effect wire transfers without the information required under (3) and (4).
        (2) The requirement in (1) does not apply to an Authorised Person or Recognised Body which:
        (a) provides Financial Institutions with messages or other support systems for transmitting funds; or
        (b) transfers funds to another Financial Institution where both the originator and the beneficiary are Financial Institutions acting on their own behalf.
        (3) An Authorised Person and Recognised Body must ensure that information accompanying all wire transfers contains at a minimum:
        (a) the name of the originator;
        (b) the originator account number where such an account is used to process the Transaction or unique Transaction reference number if no originator account number exists;
        (c) the originator's address, or national identity number, or Customer identification number, or date and place of birth;
        (d) the name of the beneficiary; and
        (e) the beneficiary account number where such an account is used to process the Transaction or unique Transaction reference number if no beneficiary account number exists.
        (4) An Authorised Person and Recognised Body must ensure that for batch transfers:
        (a) it has verified the originator information required under (3)(a) to (c); and
        (b) the batch file contains the beneficiary information required under (3)(d) and (e) for each beneficiary and that the information is fully traceable in the beneficiaries jurisdiction.
        Amended on (15 April, 2019).

        • Guidance

          1. 'FATF Recommendation Number 16' seeks to ensure that national or international electronic payment and message systems, including fund or wire transfer systems such as SWIFT, are not misused as a means to break the money laundering audit trail. Therefore, the information about a customer as the originator of the transfer of funds should remain with the payment instruction throughout the payment chain.
          2. Relevant Persons should monitor for, and conduct enhanced scrutiny of, suspicious activities, including incoming fund transfers that do not contain complete originator information, including name, address and account number or unique reference number.
          3. The Regulator considers that concealing or removing in a wire transfer any of the information required by Rule 10.3.2(3) would be a breach of the requirement to ensure that the wire transfer contains accurate originator and beneficiary information.
          Amended on (15 April, 2019).

    • AML 10.4 AML 10.4 Audit

      • AML 10.4.1 AML 10.4.1

        An Authorised Person or a Recognised Body must ensure that its internal audit function undertakes regular reviews and assessments of the effectiveness of the Authorised Person or Recognised Body's money laundering policies, procedures, systems and controls, and its compliance with its obligations in the AML Rulebook.

        Amended on (15 April, 2019).

        • Guidance

          1. The review and assessment undertaken for the purposes of Rule 10.4.1 may be undertaken:
          (a) internally by the Authorised Person or Recognised Body's internal audit function; or
          (b) by a competent firm of independent, external auditors or compliance professionals.
          2. The review and assessment undertaken for the purposes of Rule 10.4.1 should cover at least the following:
          (a) sample testing of compliance with the Authorised Person or the Recognised Body's CDD arrangements;
          (b) an analysis of all notifications made to the MLRO to highlight any area where procedures or training may need to be enhanced; and
          (c) a review of the nature and frequency of the dialogue between Senior Management and the MLRO.
          Amended on (15 April, 2019).

    • AML 10.5 AML 10.5 Anonymous and nominee accounts

      • AML 10.5.1

        An Authorised Person or a Recognised Body must not establish or maintain:

        (a) an anonymous account or an account in a fictitious name; or
        (b) a nominee account which is held in the name of one Person, but which is controlled by or held for the benefit of another Person whose identity has not been disclosed to the Authorised Person or the Recognised Body.
        Amended on (15 April, 2019).