Page 90 - The Corporate Report Pack

e CIV requirements contained in the existing FIC Act are primarily focused on static information on the client’s identity and physical address, with requirements to verify this information against third- party documentation, such as identity documents and utility bills. Financial institutions o en capture this data in inconsistent formats, across various legacy systems and in di erent business units. As a result of both the static nature of the information obtained as well as the diversi ed process and manner in which the data is gathered, the information does not provide the nancial institution with a holistic view of the client or a view of the client’s behaviour in relation to AML and CFT risks.
e FIC Act also requires nancial institutions to identify and report to the Financial Intelligence Unit (the FIC) any cash transactions over speci c thresholds, suspicious client transactions and activity as well as property associated with parties who are alleged to be involved in terrorism.
or sources of income and wealth, this information o en remains on hard copy application forms or is not captured correctly or consistently. is makes managing the risks of money laundering and terrorist nancing less e ective and the statutory reporting to the FIC more di cult to comply with.
Part II: e new world – introducing the FIC Amendment Bill
e FIC Amendment Bill (yet to be promulgated) seeks to address current gaps in the FIC Act and bring the act in line with international best practice, such as the FATF Recommendations. e main objectives of the FIC Amendment Bill include:
• e CIV requirements that nancial institutions will have to comply with are enhanced. ese requirements are now referred to as ‘customer due diligence’ (CDD) in order to align with terminology contained in the FATF Recommendations.
e CIV requirements contained in the existing FIC Act are primarily focused on static information on the client’s identity and physical address, with requirements to verify this information against third- party documentation, such as identity documents and utility bills.
Many nancial institutions struggle to comply with these reporting requirements, as the information that they hold on clients is o en insu cient to identify transactions that are not in line with regular transactional behaviour (in other words, transactions that may indicate money laundering). Furthermore, using this limited static data to determine whether a nancial institution’s clients are listed on the United Nations and other sanctions-related watch lists o en becomes a cumbersome task. It is not uncommon for nancial institutions to yield thousands of potential matches as a result of bad data quality. ese results have to be manually investigated in order to establish true matches.
Even in cases where nancial institutions have been gathering additional CIV information from clients, such as the client’s occupation, nature of business
• e future CDD requirements include duties to identify the bene cial owner and/or controller of a legal entity as well as understanding the intended nature of the business relationship with a client.
• e requirements further introduce and clarify the concepts of ‘ongoing due diligence’ (ODD) of client records, which means that a client’s information and documentation will have to be updated and refreshed on a regular basis.
• e concept of ‘enhanced due diligence’ (EDD) measures is introduced for clients identi ed as posing a higher money laundering or terrorist nancing risk. is particularly applies to those who are persons who hold prominent public functions or have private sector dealings with government at the time of the nancial institution establishing a business relationship with such clients.
6 The Corporate Report
The importance of data in a compliance driven organisation