MORNBFI Vol. 1 - Planters Development Bank

APP. Q-23-c08.12.312.2 Specific identification issuesThere are a number of more detailedissues relating to customer identificationwhich need to be addressed. Particularcomments are invited on the issuesmentioned in this section. Several of theseare currently under consideration by theFATF as part of a general review of its fortyrecommendations, and the WorkingGroup recognizes the need to beconsistent with the FATF.2.2.1 Trust, nominee and fiduciaryaccounts or client accounts opened byprofessional intermediariesTrust, nominee and fiduciary accountscan be used to avoid customeridentification procedures. While it maybe legitimate under certain circumstancesto provide an extra layer of security toprotect the confidentiality of legitimateprivate quasi-banking customers, it isessential that the true relationship isunderstood. QBs should establish whetherthe customer is acting on behalf of anotherperson as trustee, nominee or professionalintermediary (e.g. a lawyer or anaccountant). If so, a necessary preconditionis receipt of satisfactory evidence of theidentity of any intermediaries and of thepersons upon whose behalf they areacting, as well as details of the nature ofthe trust or other arrangements in place.QBs may hold “pooled’ accounts (e.g.client accounts managed by law firms) oraccounts opened on behalf of pooledentities, such as mutual funds and moneymanagers. In such cases, QBs have todecide, given the circumstances, whetherthe customer is the intermediary, orwhether it would be more appropriate tolook through the intermediary to theultimate beneficial owners. In each case,the identity of the customer that is subjectto due diligence should be clearlyestablished. The beneficial owners shouldbe verified where possible. Where not,the QBs should perform due diligence onthe intermediary and establish to itscomplete satisfaction that the intermediaryhas a sound due diligence process for eachof its clients.Special care needs to be exercised ininitiating business transactions withcompanies that have nomineeshareholders or shares in bearer form.Satisfactory evidence of the identity ofbeneficial owners of all companies needsto be obtained.The above procedures may provedifficult for QBs in some countries tofollow. In the case of professionalintermediaries such as lawyers, theremight exist professional codes of conductpreventing the dissemination ofinformation concerning their clients. TheFATF is currently engaged in a review ofKYC procedures governing accountsopened by lawyers on behalf of clients.The Working Group has therefore nottaken a definitive position on this issue.2.2.2 Introduced businessThe performance of identificationprocedures can be time consuming andthere is a natural desire to limit anyinconvenience for new customers. Insome countries, it has therefore becomecustomary for QBs to rely on theprocedures undertaken by other QBs orintroducers when business is beingreferred. In doing so, QBs risk placingexcessive reliance on the due diligenceprocedures that they expect the introducersto have performed. Relying on duediligence conducted by an introducer,however reputable, does not in any wayremove the ultimate responsibility of therecipient QB to know its customers andtheir business. In particular, QBs should notrely on introducers that are subject to weakerstandards than those governing the QBs’ ownKYC procedures or that are unwilling to sharecopies of due diligence documentation.Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsAppendix Q-23-c - Page 3