FC-A.1.1

This Module applies, to all investment firm licensees, a comprehensive framework of Rules and Guidance aimed at combating money laundering and terrorist financing. In so doing, it helps implement the FATF Recommendations on combating money laundering and the financing of terrorism & proliferation, issued by the Financial Action Task Force (FATF), that are relevant to investment firm licensees. It also helps implement IOSCO guidance in this area. (Further information on these can be found in Chapter FC-9.) The Module also contains measures relating to the combating of fraud in the investment business sector.

FC-A.1.2

The Module requires investment firm licensees to have effective anti-money laundering ('AML') policies and procedures, in addition to measures for combating the financing of terrorism ('CFT'). The Module contains detailed requirements relating to customer due diligence, reporting and the role and duties of the Money Laundering Reporting Officer (MLRO). Furthermore, examples of suspicious activity are provided, to assist investment firm licensees monitor transactions and fulfil their reporting obligations under Bahrain law.

FC-A.1.3

This Module also covers measures in place to combat fraud: these apply to Category 1 investment firms and Category 2 investment firms. Chapter FC-10 sets out basic requirements regarding measures to deter, detect and report instances of fraud and attempted fraud.

FC-A.1.4

This Module contains the Central Bank of Bahrain's ('CBB') Directive (as amended from time to time) regarding the combating money laundering and terrorism financing and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to all investment firm licensees.

FC-A.1.5

For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

FC-A.2.1

This Module was first issued in April 2006, as part of the first phase of Volume 4 (Investment Business) to be released by the BMA. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

FC-A.2.2

When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 4 was updated in July 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued where the update necessitated changes to actual requirements.

FC-A.2.3

A list of recent changes made to this Module is detailed in the table below:

FC-A.2.4

Prior to the introduction of this Module, the CBB had issued various regulatory instruments containing requirements covering different aspects of financial crime. These requirements were consolidated and updated into a comprehensive financial crime regulation, issued in January 2006 to all non-bank and non-insurance licensees (including investment firm licensees, except those licensed as Bahrain Stock Exchange brokers). In turn, this new consolidated regulation was transposed, with no major changes, into the initial version of this Module. This and other instruments replaced by this Module are listed below:

FC-A.2.5

Guidance on the implementation and transition to Volume 4 (Investment Business) is given in Module ES (Executive Summary).

FC-C.2.5

Country/geographic area risk, in conjunction with other risk factors, provides useful information as to potential ML/TF/PF risks. Factors that may be considered as indicators of higher risk include:

FC-C.2.7

An overall risk assessment should include determining the potential risks presented by product, service, transaction or the delivery channel of the investment firm licensee. A licensee should assess, using a RBA, the extent to which the offering of its product, service, transaction or the delivery channel presents potential vulnerabilities to placement, layering or integration of criminal proceeds into the financial system.

FC-C.2.8

Determining the risks of product, service, transaction or the delivery channel offered to customers may include a consideration of their attributes, as well as any associated risk mitigation measures. Products and services that may indicate a higher risk include:

FC-C.2.9

A customer may request transactions that pose an inherently higher risk to the investment firm licensee. Factors that may be considered as indicators of higher risk include:

FC-C.2.10

An investment firm licensee should analyse the specific risk factors, which arise from the use of intermediaries and their services. Intermediaries’ involvement may vary with respect to the activity they undertake and their relationship with the licensees. Licensee should understand who the intermediary is and perform a risk assessment on the intermediary prior to establishing a business relationship. Licensees and intermediaries should establish clearly their respective responsibilities for compliance with applicable regulation.

FC-1.1.1

Investment firm licensees must establish effective systematic internal procedures for establishing and verifying the identity of their customers and the source of their funds. Such procedures must be set out in writing and approved by the investment firm licensee's senior management and must be strictly adhered to.

FC-1.1.2

Investment firm licensees must implement the customer due diligence measures outlined in Chapter FC-1 when:

FC-1.1.2A

Investment firm licensees must understand, and as appropriate, obtain information on the purpose and intended nature of the business relationship.

FC-1.1.2B

Investment firm licensees must conduct ongoing due diligence on the business relationship, including;

FC-1.1.2C

An investment firm licensee must also review and update the customer’s risk profile based on their level of ML/TF/PF risk upon onboarding the customer and regularly throughout the life of the relationship. The risk management and mitigation measures implemented by a licensee must be commensurate with the risk profile of a particular customer or type of customer.

FC-1.1.3

For the purposes of this Module, 'customer' includes counterparties such as financial markets counterparties, except where financial institutions are acting as principals where simplified due diligence measures may apply. These simplified measures are set out in Section FC-1.8.

FC-1.1.4

The CBB's specific minimum standards to be followed with respect to verifying customer identity and source of funds are contained in Section FC-1.2, with further explanations provided in Guidance Notes (see Supplementary Information, item FC-(v), in Part B of Volume 4). Enhanced requirements apply under certain high-risk situations: these requirements are contained in Sections FC-1.3 to FC-1.5 inclusive. Additional requirements apply where a licensee is relying on a professional intermediary to perform certain parts of the customer due diligence process: these are detailed in Section FC-1.6. Simplified customer due diligence measures may apply in defined circumstances: these are set out in Section FC-1.8.

FC-1.1.5

Investment firm licensees must obtain a signed statement, in hard copy or through digital means from all new customers confirming whether or not the customer is acting on his own behalf or not. This undertaking must be obtained prior to conducting any transactions with the customer concerned.

FC-1.1.6

Where a customer is acting on behalf of a third party, the licensee must also obtain a signed statement from the third party, confirming they have given authority to the customer to act on their behalf. Where the third party is a legal person, the licensee must have sight of the original Board resolution (or other applicable document) authorising the customer to act on the third party's behalf, and retain a certified copy.

FC-1.1.7

Investment firm licensees must establish and verify the identity of the customer and (where applicable) the party/parties on whose behalf the customer is acting, including the Beneficial Owner of the funds. Verification must take place in accordance with the requirements specified in this Chapter.

FC-1.1.8

Where financial services are provided to a minor or other person lacking full legal capacity, the normal identification procedures as set out in this Chapter must be followed. In the case of minors, investment firm licensees must additionally verify the identity of the parent(s) or legal guardian(s). Where a third party on behalf of a person lacking full legal capacity wishes to open business relations, the licensee must establish the identity of that third party as well as the person conducting the business.

FC-1.1.9

Investment firm licensees must not establish or keep anonymous accounts or accounts in fictitious names. Where investment firm licensees maintain a nominee account, which is controlled by or held for the benefit of another person, the identity of that person must be disclosed to the licensee and verified by it in accordance with the requirements specified in this Chapter.

FC-1.1.10

Investment firm licensees must not commence a business relationship or undertake a transaction with a customer before completion of the relevant customer due diligence (‘CDD’) measures specified in Chapter FC-1. Licensees must also adopt risk management procedures with respect to the conditions under which a customer may utilise the business relationship prior to verification. However, verification may be completed after receipt of funds in the case of non face-to-face business, or the subsequent submission of CDD documents by the customer after undertaking initial customer due diligence provided that no disbursement of funds takes place until after the requirements of this Chapter have been fully met.

FC-1.1.11

Where a licensee is unable to comply with the requirements specified in Chapter FC-1, it must consider whether to terminate the relationship or not proceed with the transaction. If funds have been received, these must be returned to the counterparty in the same method as originally received. If it proceeds with the transaction (to avoid tipping off the customer), it should additionally consider whether it should file a suspicious transaction report (STR).

FC-1.1.12

See also Chapter FC-4, which covers the filing of suspicious transaction reports. Regarding the return of funds to the counterparty, if funds are received in cash, funds should be returned in cash. If funds are received by wire transfer, they should be returned by wire transfer.

FC-1.1.12A

Investment firm licensees that open accounts or otherwise transact or deal with non-resident customers who are natural persons must have documented criteria for acceptance of business with such persons. For non-resident customers, assessed as high risk, investment firm licensees must ensure the following:

FC-1.1.12B

Investment firm licensees must not accept non-residents customers from high risk jurisdictions subject to a call for action by FATF.

FC-1.1.12C

Investment firm licensees must take adequate precautions and risk mitigation measures before onboarding non-resident customers from high risk jurisdictions. The licensees must establish detailed assessments and criteria that take into consideration FATF mutual evaluations, FATF guidance, the country national risk assessments (NRAs) and other available guidance on onboarding and retaining non-resident customers from the following high risk jurisdictions:

FC-1.1.12D

Investment firm licensees must establish systems and measures that are proportional to the risk relevant to each jurisdiction and this must be documented. Such a document must show the risks, mitigation measures for each jurisdiction and for each non-resident customer.

FC-1.1.12E

Investment firm licensees must establish a comprehensive documented policy and procedures describing also the tools, methodology and systems that support the licensee’s processes for:

FC-1.1.12F

Investment firm licensees must ensure that only the official/government documents are accepted for the purpose of information in Subparagraphs FC-1.2.1 (a) to (f) in the case of non-resident customers.

FC-1.1.12G

[This Paragraph has been deleted in October 2023].

FC-1.1.13

[This Paragraph was deleted in October 2014.]

FC-1.1.14

[This Paragraph was deleted in October 2014.]

FC-1.1.15

Investment firm licensees must follow the below CDD and customer onboarding requirements:

FC-1.2.1

If the customer is a natural person, investment firm licensees must identify the person’s identity and obtain the following information before providing financial services of any kind:

FC-1.2.1A

Investment firm licensees obtaining the information and customer signature electronically using digital applications must comply with the applicable laws governing the onboarding/business relationship including but not limited to the Electronic Communications and Transactions Law (Law No. 54 of 2018) for the purposes of obtaining signatures as required in Subparagraph FC-1.2.1 (k) above.

FC-1.2.2

See the Guidance Notes (filed under Supplementary Information in Part B of Volume 4) for further information on source of funds (FC-1.2.1(1)) and CDD requirements for Bahrain residents (FC-1.2.1(c) & (f)).

FC-1.2.3

Investment firm licensees must verify the information in Paragraph FC-1.2.1 (a) to (f), by the following methods below; at least one of the copies of the identification documents mentioned in (a) and (b) below must include a clear photograph of the customer:

FC-1.2.4

Any document copied or obtained for the purpose of identification verification in a face-to-face customer due diligence process must be an original. An authorised official of the licensee must certify the copy, by writing on it the words 'original sighted', together with the date and his signature. Equivalent measures must be taken for electronic copies.

FC-1.2.5

Identity documents which are not obtained by an authorised official of the licensee in original form (e.g. due to a customer sending a copy by post following an initial meeting) must instead be certified (as per FC-1.2.4) by one of the following from a GCC or FATF member state:

FC-1.2.6

The individual making the certification under FC-1.2.5 must give clear contact details (e.g. by attaching a business card or company stamp). The licensee must verify the identity of the person providing the certification through checking membership of a professional organisation (for lawyers or accountants), or through checking against databases/websites, or by direct phone or email contact.

FC-1.2.7

If the customer is a legal entity or a legal arrangement such as a trust, the licensee must obtain and record the following information from original identification documents, databases or websites, in hard copy or electronic form, to identify the customer and to take reasonable measures to verify its identity, legal existence and structure:

FC-1.2.8

The information provided under FC-1.2.7 must be verified by obtaining certified copies of the following documents, as applicable (depending on the legal form of the entity):

FC-1.2.8A

For customers that are legal persons, Investment firm licensees must identify and take reasonable measures to verify the identity of beneficial owners through the following information:

FC-1.2.9

Documents obtained to satisfy the requirements in Paragraph FC-1.2.8 above must be certified in the manner specified in Paragraphs FC-1.2.4 to FC-1.2.6.

FC-1.2.9A

For the purpose of Paragraph FC-1.2.8(a), the requirement to obtain a certified copy of the commercial registration, may be satisfied by obtaining a commercial registration abstract printed directly from the Ministry of Industry, Commerce and Tourism's website, through "SIJILAT Commercial Registration Portal".

FC-1.2.10

The documentary requirements in Paragraph FC-1.2.8 above do not apply in the case of listed companies: see Section FC-1.8 below. Also, the documents listed in Paragraph FC-1.2.8 above are not exhaustive: for customers from overseas jurisdictions, documents of an equivalent nature may be produced as satisfactory evidence of a customer's identity.

FC-1.2.11

Investment firm licensees must also obtain and document the following due diligence information. These due diligence requirements must be incorporated in the licensee's new business procedures:

FC-1.2.12

For the purposes of Paragraph FC-1.2.11, acceptable means of undertaking such due diligence might include taking bank references; visiting or contacting the company by telephone; undertaking a company search or other commercial enquiries; accessing public and private databases (such as stock exchange lists); making enquiries through a business information service or credit bureau; confirming a company's status with an appropriate legal or accounting firm; or undertaking other enquiries that are commercially reasonable.

FC-1.2.13

In cases where an investment firm licensee is providing investment management services to a regulated mutual fund, and is not responsible for receiving investors' funds being paid into the fund, it may limit its CDD to confirming that the administrator of the fund is subject to FATF-equivalent customer due diligence measures (see FC-1.6 for applicable measures). Where there are reasonable grounds for believing that investors' funds being paid into the fund are not being adequately verified by the administrator, then the investment firm licensee should consider terminating its relationship with the fund.

FC-1.4.7

Customers onboarded digitally must be subject to enhanced on-going account monitoring measures.

FC-1.4.8

The CBB may require a licensee to share the details of the enhanced monitoring and the on-going monitoring process for non face-to-face customer relationships.

FC-1.4.9

Investment firm licensees may use its digital ID applications that use secure audio-visual real time (live video conferencing/live photo selfies) communication means to identify the natural person.

FC-1.4.10

Investment firm licensees must maintain a document available upon request for the use of its digital ID applications that includes all the following information:

FC-1.4.11

Investment firm licensees that intends to use its digital ID application to identify the customer and verify identity information must meet the following additional requirements:

FC-1.4.12

Investment firm licensees using its digital ID application must establish and implement an approved policy which lays down the governance, control mechanisms, systems and procedures for the CDD which include:

FC-1.4.13

Investment firm licensees must ensure that the information referred to in Paragraph FC-1.2.1 is collected in adherence to privacy laws and other applicable laws of the country of residence of the customer.

FC-1.4.14

Investment firm licensees must ensure that the information referred to in Subparagraphs FC-1.2.1 (a) to (f) is obtained prior to commencing the digital verification such that:

FC-1.4.15

The licensee must also obtain the customer’s explicit consent to record the session and capture images as may be needed.

FC-1.4.16

Investment firm licensees must verify the information in Paragraph FC-1.2.1 (a) to (f) by the following methods below:

FC-1.4.17

For the purposes of Paragraph FC-1.4.16, actions taken for obtaining and verifying customer identity could include:

FC-1.4.18

Not all elements of a digital ID system are necessarily digital. Some elements of identity proofing and enrolment can be either digital or physical (documentary), or a combination, but binding and authentication must be digital.

FC-1.4.19

Sufficient controls must be put in place to safeguard the data relating to customer information collected through the video conference and due regard must be paid to the requirements of the Personal Data Protection Law (PDPL). Additionally, controls must be put in place to minimize the increased impersonation fraud risk in such non face-to-face relationship where there is a chance that customer may not be who he claims he is.

FC-1.4.20

Where investment firm licensees intend to use a digital ID application in a foreign jurisdiction in which it operates, it must ensure that the digital ID application meets with the requirements under Paragraph FC-B.2.1.

FC-2.2.1

Investment firm licensees must develop risk-based monitoring systems appropriate to the complexity of their business, their number of clients and types of transactions. These systems must be configured to identify significant or abnormal transactions or patterns of activity. Such systems must include limits on the number, types or size of transactions undertaken outside expected norms; and must include limits for cash and non-cash transactions.

FC-2.2.2

Investment firm licensees' risk-based monitoring systems should therefore be configured to help identify:

Automated Transaction Monitoring

Unusual Transactions or Customer Behaviour

On-going Monitoring

FC-3.3.1

Investment firm licensees must take appropriate steps to identify and assess their money laundering and terrorist financing risks (for customers, countries or geographic areas; and products, services, transactions or delivery channels). They must document those assessments in order to be able to demonstrate their basis, keep these assessments up to date, and have appropriate mechanisms to provide risk assessment information to the CBB. The nature and extent of any assessment of money laundering and terrorist financing risks must be appropriate to the nature and size of the business.

FC-3.3.1A

Investment firm licensees should always understand their money laundering and terrorist financing risks, but the CBB may determine that individual documented risk assessments are not required, if the specific risks inherent to the sector are clearly identified and understood.

FC-3.3.1B

Investment firm licensees must review the effectiveness of its AML/CFT procedures, systems and controls at least once each calendar year. The review must cover the licensee and its branches and subsidiaries both inside and outside the Kingdom of Bahrain. An investment firm licensee must monitor the implementation of those controls and enhance them if necessary. The scope of the review must include:

FC-3.3.2

The reports listed under Paragraph FC-3.3.1B (a) and (b) must be made by the MLRO. The sample testing and report required under Paragraph FC-3.3.1B (c) and (d) must be made by the licensee’s external auditor or a consultancy firm approved by the CBB.

FC-3.3.2A

In order for a consultancy firm to be approved by the CBB for the purposes of Paragraph FC-3.3.2, such firm should provide the CBB's Compliance Directorate with:

FC-3.3.2B

The firm should indicate which personnel (by name) will work on the report (including, where appropriate, which individual will be the team leader) and demonstrate that all such persons have appropriate qualifications in one of the following areas:

FC-3.3.2C

At least two persons working on the report (one of whom would normally expected to be the team leader) should have:

FC-3.3.2D

Submission of a curriculum vitae for all personnel to be engaged on the report is encouraged for the purposes of evidencing the above requirements.

FC-3.3.2E

Upon receipt of the above required information, the CBB Compliance Directorate will assess the firm and communicate to it whether it meets the criteria required to be approved by the CBB for this purpose. The CBB may also request any other information it considers necessary in order to conduct the assessment.

FC-3.3.3

The reports listed under Paragraph FC-3.3.1B must be submitted to the licensee's Board, for it to review and commission any required remedial measures, and copied to the licensee's senior management.

FC-3.3.4

The purpose of the annual compliance review is to assist a licensee's Board and senior management to assess, amongst other things, whether internal and external reports are being made (as required under Chapter FC-4), and whether the overall number of such reports (which may otherwise appear satisfactory) does not conceal inadequate reporting in a particular segment of the licensee's business (or, where relevant, in particular branches or subsidiaries). Investment firm licensees should use their judgement as to how the reports listed under Paragraph FC-3.3.1B(a) and (b) should be broken down in order to achieve this aim (e.g. by branches, departments, product lines, etc).

FC-3.3.5

Investment firm licensees must instruct their appointed firm to produce the report referred to in Paragraph FC-3.3.1B (c) and (d). The report must be submitted to the CBB by the 30^th of June of the following year. The findings of this review must be received and acted upon by the licensee.

FC-3.3.6

[This Paragraph has been deleted in January 2022].

FC-3.3.7

[This Paragraph has been deleted in 2022].

FC-4.1.1

Investment firm licensees must implement procedures to ensure that staff who handle customer business (or are managerially responsible for such staff) make a report promptly to the MLRO if they know or suspect that a customer (or a person on whose behalf a customer may be acting) is engaged in money laundering or terrorism financing, or if the transaction or the customer's conduct otherwise appears unusual or suspicious. These procedures must include arrangements for disciplining any member of staff who fails, without reasonable excuse, to make such a report.

FC-4.1.2

Where investment firm licensees' internal processes provide for staff to consult with their line managers before sending a report to the MLRO, such processes must not be used to prevent reports reaching the MLRO, where staff have stated that they have knowledge or suspicion that a transaction may involve money laundering or terrorist financing.

FC-4.2.1

Investment firm licensees must take reasonable steps to ensure that all reports made under Section FC-4.1 are considered by the MLRO (or his duly authorised delegate). Having considered the report and any other relevant information, if the MLRO (or his duly authorised delegate) still suspects that a person has been engaged in money laundering or terrorism financing, or the activity concerned is otherwise still regarded as suspicious, he must report the fact promptly to the relevant authorities. Where no report is made, the MLRO must document the reasons why.

FC-4.2.2

To take reasonable steps, as required under Paragraph FC-4.2.1, investment firm licensees must:

FC-4.2.3

Reports to the relevant authorities made under Paragraph FC-4.2.1 must be sent to the Financial Intelligence Directorate at the Ministry of the Interior, and to the CBB's Compliance Directorate using the Suspicious Transaction Reporting Online System (Online STR system). STRs in paper format will not be accepted.

FC-4.2.4

Investment firm licensees must report all suspicious transactions or attempted transactions. This reporting requirement applies regardless of whether the transaction involves tax matters.

FC-4.2.5

Investment firm licensees must retain all relevant details of STRs submitted to the relevant authorities, for at least five years.

FC-4.2.6

In accordance with the AML Law, investment firm licensees, their Directors, officers and employees:

FC-4.3.1

Reports made by the MLRO or his duly authorised delegate under Section FC-4.2 must be sent electronically using the Suspicious Transaction Reporting Online System (Online STR system).

FC-4.3.2

The relevant authorities are:
Financial Intelligence Directorate (FID)
Ministry of Interior
P.O. Box 26698
Manama, Kingdom of Bahrain
Telephone: + 973 17 749397
Fax: + 973 17 715502
E-mail: bahrainfid@moipolice.bh

Director of Compliance Directorate
Central Bank of Bahrain
P.O. Box 27
Manama, Kingdom of Bahrain
Telephone: 17 547107
Fax: 17 535673
E-mail: Compliance@cbb.gov.bh

FC-6.1.1

Investment firm licensees must comply with the record-keeping requirements contained in the AML Law and in the CBB Law. Investment firm licensees must therefore retain adequate records (including accounting and identification records), for the following minimum periods:

FC-6.1.2

Investment firm licensees must retain copies of the reports produced for their annual compliance review, as specified in Paragraph FC-3.3.1B, for at least five years. Investment firm licensees must also maintain for 5 years reports made to, or by, the MLRO made in accordance with Sections FC-4.1 and FC-4.2, and records showing how these reports were dealt with and what action, if any, was taken as a consequence of those reports.

FC-6.1.3

Investment firm licensees must maintain for at least five years, records showing the dates when AML/CFT training was given, the nature of the training, and the names of the staff that received the training.

FC-6.1.4

All records required to be kept under this Section must be made available for prompt and swift access by the relevant authorities or other authorised persons.

FC-9.1.1

The FATF Recommendations (see www.fatf-gafi.org) (together with their associated interpretative notes and best practices papers) issued by the Financial Action Task Force (FATF), provide the basic framework for combating money laundering activities and the financing of terrorism. FATF Recommendations 2, 9-12, 15, 17-21, 26-27, 33-35 and 40 and the AML/CFT Methodology are relevant to the investment business sector.

FC-9.1.2

The relevant authorities in Bahrain believe that the principles established by these Recommendations should be followed by investment firm licensees in all material respects, as representing best practice and prudence in this area.

FC-9.1.3

The following lists a selection of other websites relevant to AML/CFT:

FC-11.1.5

Licensees must establish and implement policies for identification of wallet addresses that are suspected of ML/TF (suspicious wallet addresses). Licensees must not establish or continue business relationship with or transact with suspicious wallet addresses.

FC-11.1.6

Where a licensee identifies or becomes aware of a suspicious wallet address, it must immediately file a Suspicious Transaction Report (STR) in accordance with Chapter FC-4.

FC-11.1.7

Licensees must consider all transfers of crypto-assets as cross-border wire transfers rather than domestic transfers.

FC-11.1.8

Licensees must include all required originator information and required beneficiary information details with the accompanying transfer of crypto-assets and/or wire transfer of funds they make on behalf of their customers.

FC-11.1.9

For purposes of this Section, originator information refers to the information listed in Subparagraphs FC-11.1.12 (a) to (c) and beneficiary information refers to the information listed in Subparagraphs FC-11.1.12 (d) and (e).

FC-11.1.10

Licensees must:

FC-11.1.11

While undertaking crypto-asset transfers, licensees must ensure that the ordering financial institution transmits the originator and beneficiary information immediately.

FC-11.1.12

Information accompanying all crypto-asset transfers as well as wire transfers must always contain:

FC-11.1.13

Where a licensee undertakes a transfer of crypto-assets it is not necessary for the information referred to in Paragraph FC-11.1.12 to be attached directly to the crypto-asset transfers itself. The information can be submitted either directly or indirectly.

FC-11.1.14

Licensees while undertaking transfer of crypto-assets must ensure that the required originator and beneficiary information is transmitted immediately and securely.

FC-11.1.15

For the purposes of Paragraph FC-11.1.14, “Securely” means that the provider of the information must protect it from unauthorized disclosure as well as ensure that the integrity and availability of the required information is maintained so as to facilitate recordkeeping and the use of such information by financial institution. The term “immediately” means that the provider of the information must submit the required information simultaneously or concurrently with the transfer of the crypto-asset.

FC-11.1.16

The CBB recognises that unlike traditional fiat currency wire transfers, not every crypto-asset transfer involves (or is bookended by) two institutions (crypto-asset entities or financial institutions). In instances in which a crypto-asset transfer involves only one financial institution on either end of the transfer (e.g. when an ordering financial institution sends crypto-assets on behalf of its customers, the originator, to a beneficiary that is not a customer of a beneficiary financial institution but rather an individual user who receives the crypto-asset transfer using his/her own distributed ledger technology (DLT) software, such as an unhosted wallet), the financial institution must still ensure adherence to Paragraph FC-11.1.12 for their customer. The CBB does not expect that financial institutions, when originating a crypto-asset transfer, would submit the required information to individual users who are not financial institutions. However, financial institutions receiving a crypto-asset transfer from an entity that is not a financial institution (e.g. from an individual crypto-asset user using his/her own DLT software, such as an unhosted wallet), must obtain the required originator information from their customer.

FC-11.1.17

Information accompanying domestic wire transfers must also include originator information as indicated for cross-border wire transfers unless this information can be made available to the beneficiary financial institution and the CBB by other means. In this latter case, the ordering financial institution need only include the account number or a unique transaction reference number, provided that this number or identifier will permit the transaction to be traced back to the originator or the beneficiary.

FC-11.1.18

For the purposes of Paragraph FC-11.1.17, the information should be made available by the ordering financial institution within three business days of receiving the request either from the beneficiary financial institution or from the CBB.

FC-11.1.19

It is not necessary for the recipient institution to pass the originator information on to the beneficiary. The obligation is discharged simply by notifying the beneficiary financial institution of the originator information at the time the transfer is made.

FC-11.1.20

The ordering financial institution must ensure that crypto-asset transfers and wire transfers contain required and accurate originator information and required beneficiary information.

FC-11.1.21

The ordering financial institution must maintain all originator and beneficiary information collected in accordance with Chapter FC-6.

FC-11.1.22

The ordering financial institution must not execute the crypto-asset transfer or wire transfer if it does not comply with the requirements of Paragraphs FC-11.1.20 and FC-11.1.21.

FC-11.1.23

For crypto-asset transfers and cross-border wire transfers, financial institutions processing an intermediary element of such chains of transfers must ensure that all originator and beneficiary information that accompanies a crypto-asset transfer or wire transfer is retained with it.

FC-11.1.24

Where technical limitations prevent the required originator or beneficiary information accompanying a cross-border wire transfer from remaining with a related domestic wire transfer, a record must be kept, for at least five years, by the receiving intermediary financial institution of all the information received from the ordering financial institution or another intermediary financial institution.

FC-11.1.25

An intermediary financial institution must take reasonable measures to identify crypto-asset transfers and cross-border wire transfers that lack the required originator information or required beneficiary information.

FC-11.1.26

An intermediary financial institution must have effective risk-based policies and procedures for determining:

FC-11.1.27

A beneficiary financial institution must take reasonable measures to identify crypto-asset transfers and cross-border wire transfers that lack the required originator or the required beneficiary information. Such measures may include post-event monitoring or real-time monitoring where feasible.

FC-11.1.28

For crypto-asset transfers and wire transfers, a beneficiary financial institution must verify the identity of the beneficiary, if the identity has not been previously verified, and maintain this information in accordance with Chapter FC-6.

FC-11.1.29

A beneficiary financial institution must have effective risk-based policies and procedures for determining: