6. A Malaysian Banking Perspective: Responsibilities and Obligations (1)
A Malaysian bank (or called Reporting Institution, RI) will follow the guidelines provided by BNM for Banking and Deposit Taking Institutions (Sector 1). In today's post, I will detail a few of the key sections of these guidelines for your information. (My summary and paraphrase PLUS excerpts)
Section 13: Customer Due Diligence (CDD)
1. CDD is required to be conducted by the Bank when:
signing up a customer;
providing money changing / wholesale currency business for transactions of RM3,000 and above;
providing wire transfer services;
carrying out occasional transactions of RM50,000 and above, including transactions carried out in a single/several transactions in a day that appear to be linked;
carrying out cash transactions of RM50,000 and above;
it has any suspicion of ML/TF, regardless of amount; or
it has any doubt about the veracity or adequacy of previously obtained information.
2. RIs should conduct CDD by:
identify the customer and verify that customer's identity using reliable, independent source documents, data or information;
verify that any person purporting to act on behalf of the customer is so authorised, and identify and verify the identity of that person;
identify the beneficial owner and take reasonable measures to verify the identity of the beneficial owner, using the relevant information or data obtained from a reliable source, such that the reporting institution is satisfied that it knows who the beneficial owner is; and
understand and, where relevant, obtain information on, the purpose and intended nature of the business relationship.
3. Timing of verification:
generally should be before, or during, the course of establishing a business relationship or conducting a transaction for an occasional customer;
where ML/TF risks are low,and verification not possible while establishing relationship, RIs may do so after establishment of relationship;
if verification delayed, have to meet following conditions:
this occurs as soon as reasonably practicable (not later than 10 working days);
the delay is essential so as not to interrupt the reporting institution‟s normal conduct of business;
the ML/TF risks are effectively managed; and
there is no suspicion of ML/TF risks.
4. Specific CDD Measures
Individuals
There are generally 9 pieces of information required:
Full name,
National ID number / passport number / reference number of photo bearing document
Residential and Mailing address,
Date of Birth,
Nationality,
Occupation type,
Name of employer / Nature of business,
Contact number,
Purpose of transaction
Verification
Can be done by customer producing original and a photocopy to be made, or via biometric identification
If needed, may request for other supporting official identification documents bearing their photographs, issued by an official authority or an international organisation
Legal persons (Entities)
RIs are required to understand the nature of the customer's business, its ownership and control structure.
RIs should identify the customer and verify its identity through the following information:
a. the identity of the natural person(s) (if any) who ultimately has a controlling ownership interest in a legal person. At a minimum, this includes the following:
(i) identification document of Directors/ Shareholders with equity interest of more than 25% / Partners (certified true copy/duly notarised copies or the latest Form 24 and 49 as prescribed by the Companies Commission of Malaysia or equivalent documents for Labuan companies or foreign incorporations, or any other equivalent documents for other types of legal person are acceptable);
(ii) authorisation for any person to represent the company or business either by means of a letter of authority or directors‟ resolution; and
(iii) relevant documents such as NRIC for Malaysian/permanent resident or passport for foreigner, to identify the identity of the person authorised to represent the company or business in its dealings with the reporting institution;
b. to the extent that there is doubt as to whether the person(s) with the controlling ownership interest is the beneficial owner(s) referred to in (a) above or where no natural person(s) exert control through ownership interests, the identity of the natural person (if any) exercising control of the legal person through other means;
c. where no natural person is identified under Paragraphs 13.4.7(a) or (b) above, the identity of the relevant natural person who holds the position of senior management
When there is doubt,
(a) conduct a basic search or enquiry on the background of such person to ensure that the person has not been or is not in the process of being dissolved or liquidated, or is a bankrupt; and
(b) verify the authenticity of the information provided by such person with the Companies Commission of Malaysia, Labuan Financial Services Authority or any other relevant agencies.
These are excerpts taken from:
Next week we will look at some other areas of the guidelines... stay tuned...
