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  • AML-1.11 AML-1.11 Enhanced Due Diligence for Correspondent Accounts

    • AML-1.11.1

      This Section, AML1.11, applies to a Capital Market Licensee when it provides correspondent account services or characteristic similar to correspondent account services.

      Amended: January 2022
      Added: January 2020

    • AML-1.11.2

      When providing correspondent account services, Capital Market Licensee, must gather sufficient information (e.g. through a questionnaire) about their respondent financial institution to understand the nature of the respondent's business. Factors to consider to provide assurance that satisfactory measures are in place at the respondent financial institution includes:

      (a) Information about the respondent financial institution’s ownership structure and management;
      (b) Major business activities of the respondent financial institution and its location (i.e. whether it is located in a FATF compliant jurisdiction) as well as the location of its parent (where applicable);
      (c) Where the customers of the respondent financial institution are located;
      (d) The respondent financial institution AML/CFT controls;
      (e) The purpose for which the account will be opened;
      (f) Confirmation that the respondent financial institution has verified the identity of any third party entities that will have direct access to the account without reference to the respondent financial institution (payable through account);
      (g) The extent to which the respondent financial institution performs on-going due diligence on customers with direct access to the account (payable through account), and the condition of regulation and supervision in the respondent financial institution’s country (e.g. from published FATF reports). Capital Market Licensees must take into account the country where the respondent financial institution is located and whether that country abides by the FATF Recommendations when establishing correspondent relationships with foreign entities. Capital Market Licensees must obtain where possible copies of the relevant laws and regulations concerning AML/CFT and satisfy themselves that the respondent financial institution have effective customer due diligence measures consistent with the FATF Recommendations;
      (h) Confirmation that the respondent financial institution is able to provide relevant customer identification data on request to the Capital Market Licensees; and
      (i) Whether the respondent financial institution has been subject to a money laundering or terrorist financing investigation.
      Amended: January 2022
      Added: January 2020

    • AML-1.11.3

      Capital Market Licensees must implement the following additional measures, prior to opening a correspondent account:

      (a) Complete a signed statement that outlines the respective responsibilities of each institution in relation to money laundering detection and monitoring responsibilities; and
      (b) Ensure that the correspondent relationship has the approval of senior management.
      Amended: January 2022
      Added: January 2020

    • AML-1.11.4

      Where the correspondent account services involve a payable through account, Capital Market Licensees must be satisfied that:

      (a) The respondent financial institution has performed appropriate measures at least equivalent to those specified in Sections AML-1.1 to AML-1.8 (Customer Due Diligence) on the third party having direct access to the payable-through account; and
      (b) The respondent financial institution is able to perform ongoing monitoring of its business relations with that third party and is willing and able to provide CDD information to the Capital Market Licensees upon request.
      Amended: January 2022
      Added: January 2020

    • AML-1.11.5

      Capital Market Licensees must document the basis for their satisfaction that the requirements in Paragraphs AML-1.11.2, AML-1.11.3 and AML-1.11.4 are met.

      Amended: January 2022
      Added: January 2020

    • AML-1.11.6

      Capital Market Licensees must not enter into or continue correspondent account services relationship with another financial institution that does not have adequate controls against money laundering or terrorism financing activities, is not effectively supervised by the relevant authorities or is a shell financial institution. Capital Market Licensees must pay particular attention when entering into or continuing relationships with respondents located in jurisdictions that have poor KYC standards or have been identified by the FATF as being ‘non-cooperative’ in the fight against money laundering/terrorist financing.

      Amended: January 2022
      Added: January 2020

    • AML-1.11.7

      Capital Market Licensees must also take appropriate measures when establishing a correspondent account services relationship, to satisfy themselves that their respondent financial institutions do not permit their accounts to be used by shell financial institutions.

      Amended: January 2022
      Added: January 2020

    • AML-1.11.8

      In the case of correspondent account services relationships, the Capital Market Licensee generally does not have direct relationships with the customers of the respondent financial institution. Therefore, there is no expectation or requirement for the Capital Market Licensee to apply CDD on a respondent financial institution’s customer, which is, instead the responsibility of the respondent financial institution. Nonetheless, it is consistent with the risk-based approach for the Capital Market Licensee to have some general sense of the respondent financial institution’s customer base as part of ascertaining the risks associated with the respondent financial institution itself.

      Amended: January 2022
      Added: January 2020