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Guideline on Anti-Money Laundering and the Combating of Terrorist Financinginformation should be retained in respect of those customers, or class/category of customers, assessed ascarrying a higher ML or TF risk, or who are seeking a product or service that carries a higher risk of beingused for money laundering or terrorist financing purposes. The financial institution’s policy framework shouldtherefore include a description of the types of customers that are likely to pose a higher than average risk andprocedures for dealing with such applications.12.3 High Risk Customers12.3.1 High-risk customers should be approved by senior management and stringent documentation,verification and transaction monitoring procedures should be established. High risk customers shouldbe subject to enhanced due diligence which should be undertaken at greater frequency than thatapplied for low risk customers. Enhanced due diligence should consider:-a) an evaluation of the principals;b) a review of current financial statements;c) verification of the source of funds;d) verification of source of wealth;e) the conduct of reference checks; andf) checks of electronic databases.12.3.2 Examples of high risk customers that require enhanced due diligence include trust accounts,foundations, executorships accounts, non-profit organizations (NPOs), non face to face customers,introduced business, companies within a conglomerate, professional service providers, privatebanking customers and politically exposed persons (PEPs).12.3.2 (i.) Trust accountsLegal structures such as trusts and foundations, nominee and fiduciary accounts can beused by criminals who wish to mask the origin of funds. The principal means of preventingML or TF through the use of such legal structures is to verify the identity of the provider offunds, such as the settlor and also those who have control over the funds, i.e. trustees,advisors, and any controllers who have the power to remove the trustees/advisors etc. Insome instances, the settlor may also be a sole trustee or a co-trustee of the trust, in whichcase, identification documentation should be obtained for the settlor.Institutions should take reasonable measures to obtain information about the true identityof the persons on whose behalf an account is opened or a transaction is conducted. Thisapplies especially if there are any doubts as to whether or not these clients or customersare acting on their own behalf.Page 19 of 75
Guideline on Anti-Money Laundering and the Combating of Terrorist FinancingWhere an applicant for business is a trustee, nominee or fiduciary customer, the financialinstitution must obtain:-a) Evidence of the appointment of the trustee by means of a certified copy of the Deedof Trust;b) The nature and purpose of the trust; andc) Verification of the identity of the trustee 16 .The financial institution should also obtain the following:a) name of trust 17 ;b) source of funds;c) country of establishment;d) identity of the trustee(s), settlor(s), protector(s)/controller(s) or similar person holdingpower to appoint or remove the trustee and where possible the names or classes ofbeneficiaries;e) identity of person(s) with powers to add beneficiaries, where applicable;f) identity of the person providing the funds, if not the ultimate settler;g) identity of the settlor(s) and for such other person(s) exercising effective control overthe trust which includes an individual who has the power (whether exercisable alone,jointly with another person or with the consent of another person) to:i. dispose of, advance, lend, invest, pay or apply trust property;ii. vary the trust;iii. add or remove a person as a beneficiary or to or from a class of beneficiaries;iv. appoint or remove trustees; andv. direct, withhold consent to or veto the exercise of a power such as is mentionedin subparagraph (i), (ii), (iii) or (iv): andh) in the case of a nominee relationship, the identity of the beneficial owner(s).Institutions are required to verify the identity of any ultimate beneficiary of a legalstructure. Depending on the type or nature of the trust, it may be impractical to obtain allof the above at the onset of the relationship e.g. in the case of unborn beneficiaries. Insuch cases, discretion should be exercised. In all circumstances however, there shouldbe verification of beneficiaries before the first distribution of assets. Further, verification of16 Refer to FOR, Regulation 17.17 Verification of the identity of the trust is satisfied by obtaining a copy of the creating instrument and other amending or supplementinginstruments.Page 20 of 75
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