2.2.4 Ongoing Monitoring

Effective from 15/8/2021

All customers must be subject to ongoing monitoring throughout the business relationship to ensure that transactions are reasonable, and legitimate. Ongoing monitoring is particularly important in the context of business relationships with hawala providers, where the risks these relationships create for the LFI can change significantly based on the hawala provider's business activities. LFIs are required to ensure that the CDD information they hold on all customers is accurate, complete, and up-to-date. LFIs should update CDD for all customers on a risk-based schedule, with CDD on higher-risk customers being updated more frequently. EDD on all customers should involve more frequent CDD updates.

In addition to a review of the customer's CDD file, the LFI should also review the customer's transactions to determine whether they continue to fit the customer's profile and business, and are consistent with the business the customer expected to engage in when the business relationship was established. This type of transaction review is distinct from the ongoing transaction monitoring discussed in 2.3.1 below. The purpose of the review is to complement ongoing transaction monitoring by identifying behaviours, trends, or patterns that are not necessarily subject to transaction monitoring rules. For example:

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Company M, a hawala provider, opens an account with Bank B, an LFI. At onboarding, Company M tells Bank B that it operates as a money transfer service to Country X. A year after the account is opened, Bank B conducts a scheduled CDD review and discovers that, six months after onboarding, Company M began to make and receive periodic transfers to and from Country Y. Bank B makes inquiries and discovers that Company M is now providing money transfer services to Country Y as well. Bank B decides to put a restriction on the account requiring prior authorization to make transfers beyond Country X and Country Y, requires Company M to sign a warrant that it will inform Bank B in advance of any future changes to its business model, and raises the customer risk-rating.

When customers are higher risk, including hawala provider customers, monitoring should be more frequent, intensive, and intrusive. LFIs should review the CDD files of higher risk customers on a frequent basis, such as twice a year. The methods LFIs use to review the account should also be more intense and should not rely solely on information supplied for the customer. For example, LFIs should consider:

	•	Reviewing all transactions on the account, rather than a sample of transactions;
	•	Conducting site visits at the customer's premises and requesting a meeting with the customer;
	•	Conducting searches of public databases, including news and government databases in order to independently identify material changes in a customer's ownership or business activities. Such searches should include adverse media searches of public records and databases, using relevant key words, including but not limited to, allegation, fraud, corruption, laundering.