On 27 January 2017, the FIAU published a revised version of Part I of its Implementing Procedures. The amendments are aimed at revising the customer due diligence requirements by introducing alternative documents and procedures as well as allowing the use of technological alternatives to traditional paper-based measures. Other updates reflect recent legislative amendments to the Prevention of Money Laundering Act (“PMLA”), the Criminal Code and the Prevention of Money Laundering and Funding of Terrorism Regulations (“PMLFTR”). The salient amendments are summarised below.
Definitions – Chapter 1
The definition of ‘relevant financial business’ with respect to the undertaking of insurance business by cell companies has been updated. Following these revisions, the insurance business carried on by Protected Cell Companies and Incorporated Cell Companies is only considered to fall within the definition of ‘relevant financial business’ where this concerns long-term insurance business.
Customer Due Diligence – Chapter 3
The definition of ‘occasional transaction’ has been amended to clarify that, in determining whether the €15,000 threshold has been met or exceeded, one should take into account the monetary value of the transaction or a series of linked transactions carried out for the customer, and not the actual fee charged by the subject person for its services. For the purpose of verifying the identity details and residential address of customers, additional documents and measures have been introduced, including technological alternatives (such as the use of video conferencing) and the use of registered mail or other courier services.
It is helpful to note that, where the applicant for business is not present for verification purposes, the document on the basis of which the subject person is to verify the customer’s address should be obtained in original or copy, thus removing the requirement to obtain a certified copy. The requirement to apply enhanced due diligence measures as applicable in these circumstances remains.
Requirements around simplified and enhanced due diligence (“SDD/EDD”) measures have also been amended. Notably, insofar as SDD measures are concerned, legal persons who present a low risk of ML/FT, which fulfil the criteria set out in Regulation 10(2) of the PMLFTR no longer qualify automatically for SDD; subject persons carrying on affiliated insurance business may still apply SDD subject to fulfilling certain criteria. From an EDD measures perspective, the Implementing Procedures clarify the additional documents to be obtained under EDD measure (a) as well as the circumstances in which EDD measure (d) can be adopted.
Other amendments relate to additional requirements being imposed when determining the beneficial owners of companies whose shares are issued to bearer and further guidance being provided in identifying beneficial owners and carrying out customer due diligence of certain legal entities and arrangements.
Record-Keeping Procedures – Chapter 5
The list of records to be retained has been revised to reflect changes in Chapter 3 above and amendments have been introduced to establish that records may be retained either physically or electronically. In addition, further guidance on how to determine the date of commencement of the five-year retention period is welcomed.
Reporting Procedures and Obligations – Chapter 6
Whilst the Money Laundering Reporting Officer (“MLRO”) must still occupy a senior position within the subject person that enables him/her to exercise effective influence on the AML/CFT policy as well as be in a position to exert effective challenge, it is no longer a requirement for the MLRO to report directly to the Board of Directors; rather, the MLRO should communicate directly with the Board where he/she deems necessary.
Other amendments in this Chapter relate to changes to the five working day period for reporting suspicious transactions, which will now start to run from when the MLRO makes a determination that there is knowledge or suspicion of ML/FT or otherwise from when the subject person came into possession of, or became aware of, information that constitutes a reasonable ground to suspect ML/FT. Ancillary changes to internal reporting procedures have been made to expand on the additional information and/or documentation that the MLRO should consider in arriving at this determination.
Other Ancillary Matters – Chapter 8
Various sections were revised to reflect legislative amendments to the PMLA and the PMLFTR which have increased the value of administrative penalties that may be imposed for AML/CFT breaches and have provided the FIAU with further powers, namely to issue directives and request the termination of a business relationship.
The FIAU has clarified that these set of amendments are not linked to the transposition of the EU’s Fourth Anti-Money Laundering Directive, which will be dealt with under a separate exercise and consulted upon separately in due course.
The amended version of the Implementing Procedures has been uploaded on the website of the FIAU and can be accessed here. It shall replace the previous version and shall enter into force with immediate effect. The FIAU shall be organising a training event to present and explain these amendments on 17 February 2017.