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Guideline on Anti-Money Laundering and the Combating of Terrorist FinancingPEPs from all jurisdictions, in particular high risk countries, who are seeking to establishbusiness relationships.To mitigate the significant legal and reputational risk exposures that financial institutionsface from establishing and maintaining business relationships with PEPs, the followingenhanced due diligence procedures should be followed prior to the commencement ofsuch relationships:a) have appropriate risk management systems to determine whether the customer isa PEP;b) develop policies, procedures and processes such as the use of electronicdatabases to assess whether a customer is or has become a PEP;c) take reasonable measures to establish the source of wealth and the source offunds of PEPs;d) conduct enhanced ongoing diligence of the business relationship; ande) obtain senior management approval to establish the relationship where a customeris found to be a PEP.The abovementioned procedures should also be followed for the existing client base toensure that all current PEPs have been so identified and remain subject to enhancedcustomer due diligence processes.Financial institutions should not establish business relationships with PEPs if thefinancial institution knows or has reason to suspect that the funds derive from corruptionor misuse of public assets. Senior management with ultimate responsibility for bankingoperations should ensure that the personal circumstances 22 , income sources and wealthof PEPs are known and verified as far as possible, and should also be alert to sources oflegitimate third party information.Whilst it is appreciated that efforts must be made to protect the confidentiality of PEPsand their businesses, these accounts must be available for review by the Central Bank,the FlU, Law Enforcement Authorities where required, the compliance officer and thefinancial institution’s internal and external auditors.12.3.2.(viii.) Private Banking Customers22 This includes information on (i.) estimated net worth, including financial statements; (ii) immediate family members or close associateshaving transaction authority over the account; and (iii.) references or other information to confirm the reputation of the client.Page 29 of 75
Guideline on Anti-Money Laundering and the Combating of Terrorist FinancingInstitutions that offer private banking services for high net worth individuals must ensurethat enhanced due diligence policies and procedures are developed and clearlydocumented in the overall KYC policy to govern this area of operations. Similar to PEPs,senior management with ultimate responsibility for private banking operations shouldensure that the personal circumstances, income sources and wealth of private bankingclients are known and verified as far as possible, and should also be alert to sources oflegitimate third party information. The approval of private banking relationships must beobtained from at least one senior level officer, other than the private bankingofficer/relationship manager.12.3.2.(ix.) Transactions Undertaken by Non-Customers on an Occasional BasisWhere a financial institution undertakes these transactions, satisfactory evidence ofidentity must be obtained failing which, the transaction should be terminated.12.3.2. (x.) Transactions by Non-CustomersFunds deposited into an existing account by persons whose names do not appear on themandate for that account, should be handled with particular care. In cases where suchtransactions are not routine, they should be treated in the same way as transactions withnon-account holders.12.4 High Risk Activities12.4.1 Examples of high risk activities or services include correspondent banking, payable throughaccounts, wire transfers, business relations with persons in high risk jurisdictions, hold mail and incare of addresses, transferred accounts, transactions undertaken by non-customers on anoccasional basis and transactions by non-customers.12.4.1.(i.) Correspondent BankingCorrespondent banking is the provision of banking services by one bank in Trinidad andTobago (“the correspondent bank”) to another bank (“the respondent bank”) in a foreigncountry 23 . Correspondent banking relationships are established between banks tofacilitate, among other things, transactions between banks made on their own behalf;transactions on behalf of their clients; and making services available directly to clients ofother banks.23 Refer to the FOR, Regulation 21.Page 30 of 75
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