AML 9 AML 9 Correspondent Banking, Electronic Fund Transfers and Audit
AML 9.1 AML 9.1 Application
This chapter applies only to an
AML 9.2 AML 9.2 Correspondent Banking
Authorised Firmproposing to have a correspondent banking relationship with a respondent bank must:(a) undertake appropriate Customer Due Diligenceon the respondent bank;(b) as part of (a), gather sufficient information about the respondent bank to understand fully the nature of the business, including making appropriate enquiries on its management, its major business activities and the countries or jurisdictions in which it operates;(c) determine from publicly-available information the reputation of the respondent bank and the quality of supervision, including whether it has been subject to a money laundering or terrorist financing investigation or relevant regulatory action;(d) assess the respondent bank's AML controls and ascertain if they are adequate and effective in light of the FATFRecommendations;(e) ensure that prior approval of the Authorised Firm'ssenior management is obtained before entering into a new correspondent banking relationship;(f) ensure that the respective responsibilities of the parties to the correspondent banking relationship are properly documented; and(g) be satisfied that, in respect of any customers of the respondent bank who have direct access to accounts of the Authorised Firm, the respondent bank:(i) has undertaken Customer Due Diligence(including ongoing Customer Due Diligence) at least equivalent to that in Rule 7.3.1 in respect of each customer; and(ii) is able to provide the relevant Customer Due Diligenceinformation in (i) to the Authorised Firmupon request; and(h) document the basis for its satisfaction that the requirements in (a) to (g) are met.
AML 9.2.2 AML 9.2.2
Authorised Firmmust:(a) not enter into a correspondent banking relationship with a Shell Bank; and(b) take appropriate measures to ensure that it does not enter into, or continue a corresponding banking relationship with, a bank which is known to permit its accounts to be used by Shell BankS.
AML 9.2.2 Guidance
AML Rule 9.2.2 prohibits an
Authorised Firmfrom entering into a correspondent banking relationship with a Shell Bankor a bank which is known to permit its accounts to be used by Shell Banks. See the Guidance after AML Rule 6.1.7 for more information about what constitutes a Shell Bank.
AML 9.3 AML 9.3 Electronic fund transfers
(1) This section applies to an
Authorised Personwhen it sends or transmits funds by electronic means, or when it receives funds (including serial payments and cover payments) by electronic means, on the account of a payer or payee.
(2) This section does not apply to a transfer and settlement between
Financial Institutionsif the Financial Institutionsare acting on their own behalf as the payer and the payee.
In this section:(a) "batch transfer" means a transfer that consists of a number of individual fund transfers that are bundled for transmission, whether the individual fund transfers are intended ultimately for one or more payees;(b) "beneficiary institution" means the
Financial Institutionthat receives the fund transfer from the ordering institution, whether directly or through an intermediary institution, and makes the funds available to the payee;(c) "cover payment" means a fund transfer that combines a payment message sent directly by the ordering institution to the beneficiary institution with the routing of the funding instruction from the ordering institution to the beneficiary institution through one or more intermediary institutions;(d) "cross-border fund transfer" means a fund transfer where the ordering institution and the beneficiary institution are located in different countries and includes any chain of fund transfers in which at least one of the Financial Institutionsinvolved is located in a different country;(e) "customer identification number" means a number that is different from the unique transactionreference number and:(i) uniquely identifies the payer to the ordering institution; and(ii) refers to a record held by the ordering institution that contains at least one of the following: the payer's address, national identity number or date and place of birth;(f) "domestic fund transfer" means a fund transfer where the ordering institution and beneficiary institution are located in the same country and includes any chain of fund transfers that takes place entirely within a country, even if the system used to transfer the payment message is located in another country;(g) "fund transfer" means any transactioncarried out on behalf of a payer through a Financial Institutionby electronic means with a view to making an amount of funds available to a payee at a beneficiary institution, irrespective of whether the payer and the payee are the same person;(h) "intermediary institution" means the Financial Institutionin a serial payment or cover payment chain that receives and transmits a fund transfer on behalf of the ordering institution and the beneficiary institution, or another intermediary institution;(i) "ordering institution" means the Financial Institutionthat transfers the funds upon receiving the request for a fund transfer on behalf of the payer;(j) "payee" means the natural or legal personidentified by the payer as the recipient of the requested fund transfer;(k) "payer" means the account holder who allows the fund transfer from that account or, if there is no account, the natural or legal personthat places the fund transfer order with the ordering institution to perform the fund transfer;(l) "serial payment" means a direct sequential chain of payment where the fund transfer and accompanying payment message travel together from the ordering institution to the beneficiary institution, directly or through one or more intermediary institutions;(m) "straight-through processing" means payment transactionsthat are conducted electronically without the need for manual intervention; and(n) "unique transaction reference number" means a combination of letters, numbers or symbols, determined by the Financial Institutionin accordance with the protocols of the payment and settlement system or messaging system used for the fund transfer, and which permits the traceability of the fund transfer.
Requirements for ordering institution
Before effecting a fund transfer, an
Authorised Personthat is an ordering institution must:(a) identify the payer and verify the identity of the payer if the identity has not previously been identified; and(b) record adequate details of the fund transfer that are sufficient to permit its reconstruction, including but not limited to, the date of the transfer, the payer and payee, and the type and amount of currency transferred and the value date.
For a cross-border fund transfer where the amount to be transferred is $1000 or less, an
Authorised Personthat is an ordering institution must include in the message or payment instruction that accompanies or relates to the fund transfer the following:(a) the name of the payer;(b) the payer's account number (or unique transactionreference number if no account number exists);(c) the name of the payee; and(d) the payee's account number (or unique transactionreference number if no account number exists).
For a cross-border fund transfer where the amount to be transferred is more than $1,000, an
Authorised Personthat is an ordering institution must, in addition to the information required by AML Rule 9.3.4, include in the message or payment instruction that accompanies or relates to the fund transfer any one of the following:(a) the payer's address:(b) the payer's national identity number, such as an identity card number or passport number;(c) the payer's customeridentification number; or(d) the date and place of birth of the payer.
If several individual cross-border fund transfers from a single payer are bundled in a batch file for transmission, then, in complying with AML Rules 9.3.4 and 9.3.5, an
Authorised Personthat is an ordering institution must ensure that:(a) the batch file contains the payer information required under AML Rule 9.3.4 and, if applicable, AML Rule 9.3.5;(b) it has verified the payer information referred to in (a); and(c) the batch file contains the payee information required under AML Rule 9.3.4 for each payee and that information is fully traceable in the payee's country.
AML 9.3.7 AML 9.3.7
For a domestic fund transfer, an
Authorised Personthat is an ordering institution must either:(a) include in the message or payment instruction that accompanies or relates to the fund transfer the following:(i) the name of the payer;(ii) the payer's account number (or unique transaction reference number if no account number exists); and(iii) any one of the following:(A) the payer's address;(B) the payer's national identity number, such as an identity card number or passport number;(C) the payer's customer identification number; or(D) the date and place of birth of the payer; or(b) include only the payer's account number (or unique transactionreference number if no account number exists), provided that:(i) those details will permit the transactionto be traced back to the payer and payee; and(ii) the ordering institution must provide the payer information set out in paragraph (a) within 3 business days of a request for the information by the beneficiary institution or the DFSA or immediately upon request of a law enforcement agency.
Authorised Personthat is an ordering institution must retain a record of payer and payee information it has collected under this section.
Requirements for beneficiary institution
Authorised Personthat is a beneficiary institution must take reasonable measures, including post-event monitoring or real-time monitoring where feasible, to identify cross-border fund transfers that lack the required payer or payee information.
For a cross-border fund transfer, an
Authorised Personthat is a beneficiary institution must identify and verify the identity of the payee if the identity has not been previously verified.
Requirements for intermediary institution
Authorised Personthat is an intermediary institution must retain all the required payer and payee information accompanying the fund transfer.
If technical limitations prevent the required payer or payee information accompanying a cross-border fund transfer from remaining with a related domestic fund transfer, an
Authorised Personthat is a receiving intermediary institution must maintain a record, for at least five years, of all the information received from the ordering institution or another intermediary institution.
Authorised Personthat is an intermediary institution must take reasonable measures, which are consistent with straight-through processing, to identify crossborder fund transfers that lack the required payer or payee information.
Systems and controls concerning fund transfers
AML 9.3.15 AML 9.3.15
Relevant Personmust ensure that its AMLsystems and controls referred to in AML Rule 5.2.1 include risk management policies and procedures specifying the steps to be taken if a fund transfer lacks information required under this section, including when to reject or amend a transfer and any follow-up action that is to be taken.
AML 9.3.15 Guidance
DFSAconsiders that concealing or removing in a fund transfer any of the information required by this section would be a breach of the requirement to ensure that the fund transfer contains accurate payer and payee information.
AML 9.4 AML 9.4 Audit
AML 9.4.1 AML 9.4.1
Authorised Personmust ensure that its audit function, established under GEN Rule 5.3.13, includes regular reviews and assessments of the effectiveness of the Authorised Person's money laundering policies, procedures, systems and controls, and its compliance with its obligations in this AML module.
AML 9.4.1 Guidance1. The review and assessment undertaken for the purposes of Rule 9.4.1 may be undertaken:a. internally by the
Authorised Person'sinternal audit function; orb. by a competent firm of independent auditors or compliance professionals.2. The review and assessment undertaken for the purposes of Rule 9.4.1 should cover at least the following:a. sample testing of compliance with the Authorised Person's CDDarrangements;b. an analysis of all notifications made to the MLROto highlight any area where procedures or training may need to be enhanced; andc. a review of the nature and frequency of the dialogue between the senior management and the MLRO.
AML 9.5 AML 9.5 [Deleted]
AML 9.5.1 [Deleted]Deleted by DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]