On January 1 2016 the Anti-money Laundering (AML) (Amendment) Regulations 2015 came into effect, amending the AML Regulations 2008.
Paragraph 3(1) of the Schedule to the AML (Amendment) Regulations provides that every 'relevant person' conducting 'relevant business' must comply with the AML (Amendment) Regulations by December 31 2016, subject to any extension of time sought by a relevant person under Paragraph 4.
The Financial Services Commission (FSC) recently issued guidance notes which modify the compliance date. The guidance notes provide as follows:
- For companies that have been incorporated or registered as of January 1 2016, the relevant person must collect and maintain beneficial ownership information before or at the time of incorporation or registration.
- For companies that were incorporated or registered before January 1 2016, there is a transition period of 12 months ending on December 31 2016, within which time the relevant person must collect and maintain beneficial ownership information.
The FSC may extend the compliance period where:
- the relevant person has made sufficient progress to comply with its obligations to source and maintain the applicable client customer due diligence (CDD) information;
- due to the number of clients on a relevant person's client books, it may not be practical for it to comply with the requirements set out in the AML (Amendment) Regulations and obtain all of the applicable CDD information; or
- other situations make it desirable for the FSC to grant an extension in favour of the relevant person.
The grounds for obtaining an extension are as follows:
- By July 31 2016 the relevant person must show that it has made effort and obtained CDD information for at least 50% of its clients; and
- By October 31 2016 the relevant person must show that it has made effort and obtained CDD information for at least 75% of its clients.
The FSC will have regard to the following:
- Before submitting applications for extensions, the applicant must comply with the thresholds set out above. Failure to meet the thresholds will render the application non-compliant and it will likely be denied.
- The application must be in writing from the relevant person and should be submitted no later than:
- August 31 2016 (where the relevant person seeks to rely on the 50% threshold); or
- November 30 2016 (where the relevant person seeks to rely on the 75% threshold).
There is no need to satisfy both thresholds to qualify for the extension.
- The application must provide:
- CDD information for the relevant person (ie, name and address);
- the number of entities that it serves (divided into active and struck-off companies);
- the number and percentages of entities for which CDD information has been obtained in full;
- the number and percentages of outstanding entities for which beneficial ownership remains to be obtained and maintained;
- the extension period requested (not exceeding six months from the compliance date); and
- "such other information" requested by the FSC in the fixed form "Application and Declaration for Extension of Time pursuant to paragraph 4 of the Schedule to the Anti-money Laundering Regulations 2008" (attached to the guidance notes).
- A director or the registered agent of the relevant person must attest to the fixed form extension application.
- The guidance notes provide that although the FSC will base its assessment on the level of compliance with a specified threshold in respect of active companies for which CDD information has been obtained, relevant parties are encouraged to obtain and maintain the same information for struck-off companies with which a relationship exists. The guidance notes highlight that a policy document regarding struck-off companies is being discussed.
An application made under the above "such other information" consideration will likely be considered by the commission on a case-by-case basis. The relevant person will need to demonstrate why the extension should be granted and provide cogent evidence of the factors being used in order to obtain the extension. The information on the fixed form extension application will be relevant when this ground is being used.
An extension application made under this ground must be submitted to the FSC by November 30 2016; no application made under this ground will be reviewed or processed before November 1 2016.
The FSC can grant an extension for a period of up to six months (ie, until June 2017). The length of the extension granted will depend on:
- the efforts made by the relevant person to obtain and maintain the CDD information;
- the number of clients for which the relevant person still needs to collect CDD information;
- the likelihood of completion of the CDD information in the time specified in the request; and
- the resources available to complete the CDD exercise.
For further information on this topic please contact Mirza Manraj at Harney Westwood & Riegels by telephone (+1 284 852 2565) or email (firstname.lastname@example.org). The Harney Westwood & Riegels website can be accessed at www.harneys.com.
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