MORNBFI Vol. 1 - Planters Development Bank

APP. Q-23-c08.12.31by high-risk customers should beapproved by a senior manager.QBs should have systems in place todetect unusual or suspicious patterns ofactivity. This can be done by establishinglimits for a particular class or category ofaccounts. Particular attention should bepaid to transactions that exceed theselimits. Certain types of transactions shouldalert QBs to the possibility that thecustomer is conducting undesirableactivities. They may include transactionsthat do not make economic or commercialsense, or that involve large amounts of cashdeposits that are not consistent with thenormal and expected transactions of thecustomer. Very high account turnover,inconsistent with the size of the balance,may indicate that funds are being “washed”through the account. A list of suspiciousactivities drawn up by supervisors can bevery helpful to QBs.QB should develop a clear policy andinternal guidelines, procedures andcontrols and remain especially vigilantregarding business relationships withindividuals holding important/prominentpositions, public or private, and high profileindividuals or with persons and companiesthat are clearly related to or associated withthem 1 .4. Risk ManagementEffective KYC procedures embraceroutines for proper management oversight,systems and controls, segregation of duties,training and other related policies. Theboard of directors of the QB should be fullycommitted to an effective KYC programmeby establishing appropriate procedures andensuring their effectiveness. QBs shouldappoint a senior officer with explicitresponsibility for ensuring that the QB’spolicies and procedures are, at a minimum,in accordance with local supervisorypractice. QBs should have clear writtenprocedures, communicated to allpersonnel, for staff to report suspicioustransactions to a specified senior manager.That manager must then assess whetherthe QB’s statutory obligations underrecognized suspicious activity reportingregimes require the transaction to bereported to the appropriate lawenforcement and supervisory authorities.All QBs must have an ongoingemployee-training programme so that QBstaff is adequately trained in KYCprocedures. The timing and content oftraining for various sectors of staff will needto be adapted by the QB for its own needs.Training requirements should have adifferent focus for new staff, front-line staff,compliance staff or staff dealing with newcustomers. New staff should be educatedin the importance of KYC policies and thebasic requirements at the QB. Front-linestaff members who deal directly with thepublic should be trained to verify thecustomer identity for new customers, toexercise due diligence in handlingaccounts of existing customers on anongoing basis and to detect patterns ofsuspicious activity. Regular refreshertraining should be provided to ensure thatstaff is reminded of their responsibilities andis kept informed of new developments. It iscrucial that all relevant staff fully understandthe need for and implement KYC policiesconsistently. A culture within QBs thatpromotes such understanding is the key tosuccessful implementation.1It is unrealistic to expect the QB to know or investigate every distant family, political or business connection of a foreigncustomer. The need to pursue suspicions will depend on the size of the assets or turnover, pattern of transactions,economic background, reputation of the country, plausibility of the customer’s explanations etc. It should however benoted that individuals holding important/prominent positions, public or private (or rather their family members andfriends) would not necessarily present themselves in that capacity, but rather as ordinary (albeit wealthy) businesspeople, masking the fact they owe their high position in a legitimate business corporation only to their privilegedrelation with the holder of the public office.Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsAppendix Q-23-c - Page 5