AML Compliance – Onboarding new customers during the Pandemic.

Recently imposed restrictions, aimed at protecting us against Covid-19, impacts businesses, individuals and how we interact and conduct commerce.

But there is help! At the onset of the Pandemic in 2020 the CBTT, TTSEC and the FIUTT issued joint guidelines to aid in conducting customer due diligence (CDD)!

The guidelines contain recommendations to minimise customer contact whilst ensuring regulatory customer compliance objectives are being met and are applicable to both face-to-face and non-face to face customer interactions.

Recognising that the Pandemic presents challenges to traditional methods of compliance with customer due diligence obligations and especially, obligations for the verification of identification under the AML/CFT &PF) (anti-money laundering and counter-terrorism financing and proliferation financing) the Authorities pledged their commitment to working with the entities they supervise to minimise disruption to business operations.

Of course, reporting entities are expected to continue complying with customer due diligence and verification of identity requirements and use the risk-based approach for AML conformity in doing so. Here, the joint guidelines refer to Regulations 14(2) and 14(5) of the FOR allowing for flexibility in instances of lower risk and for implementation of simplified due diligence measures.

What does this mean to supervised entities? Well, there are noteworthy recommendations outlined in the guidelines for on-boarding new customers, summarised here:

  1. When on-boarding new customers consider the ML/TF/PF risks on a case-by-case basis, there’s no one-size fits all recommendation to onboarding new customers during the Pandemic.
  2. Utilise Simplified Due Diligence procedures (SDD) where lower risks are identified. An account to facilitate government pandemic relief payments was highlighted as warranting SDD.
  3. Accept:
    1. digital copies of documents temporarily, until the original documents can be physically verified.
    2. Scanned identification via e-mailed PDF, asking for a photograph of the person accompanied by a signed statement declaring “I certify that the photograph is a true likeness of my facial features”.
    3. Recently expired government-issued identification for identity verification.
  4. Where the business relationship is a non-face-to-face payment for example, an insurance renewal, identification can be accepted electronically and verification of documents can be done later, when movements more resemble “business as usual”.
  5. Impose limitations or restrictions on:
    1. Account usage until identity can be verified with original documents.
    2. Wire transfers, loan facilities, or transaction amounts.

While reporting entities are guided authorities to continue gathering sufficient information to form a general understanding of the customer’s identity so that it remains possible to assess the money laundering, terrorism and proliferation financing (“ML/TF/PF”) risks, they are also advised to keep records of approved changes in policies and procedures made due to the COVID-19 pandemic. 

My recommendation is to circulate memos and procedures clearly identified as “temporary measures” – for use during the pandemic. Implementing systems to track and quantify activities performed under these measures along with exceptions on a risk basis, will assist and increase the learning opportunities for organisations.

Lastly, the guideline reminds reporting entities of their obligations to entities are reminded to continue monitoring transactions and pay particular attention to unusual or suspicious patterns in customers’ behaviour and financial flows, and to report suspicious activities and transactions in accordance with Section 55A (1) of the Proceeds of Crime Act, Chap.11:27, Section 22C (3) of the ATA and Regulation 9 (2) of the Economic Sanction Orders, 2018.

Reports must be filed with the FIUTT immediately or within fourteen (14) days from the date the transaction was flagged, however, these reports can now be made to the FIUTT via an on-line portal.

The full guideline is available at the TTSEC, CBTT and FIUTT websites:

https://www.ttsec.org.tt/

https://www.central-bank.org.tt/

https://www.fiu.gov.tt/