3.1. Legal Requirements
Effective from 1/8/2022Article 15 of the AML-CFT Decision requires LFIs to carry out specific mandatory due diligence measures on PEPs and Related Customers, in addition to the standard CDD required for all customers under its Section 3 (described in Articles 5-14). In line with FATF standards (Recommendation 12), Article 15 imposes on LFIs different requirements for foreign PEPs as opposed to domestic PEPs and HIOs. For foreign PEPs and Related Customers, LFIs must:
| (a) | Put in place suitable risk management systems to determine whether a Customer or the Beneficial Owner is considered a PEP (i.e. a foreign PEP, or the direct family member or known close associate of a PEP). | |||
| (b) | Obtain senior management approval before establishing a business relationship, or continuing an existing one, with a PEP (i.e. foreign PEP and Related Customers). | |||
| (c) | Take reasonable measures to establish the source of funds and wealth of Customers and Beneficial Owners identified as PEPs (i.e. foreign PEPs and Related Customers). | |||
| (d) | Conduct enhanced ongoing monitoring over such relationship (i.e. the relationship with a foreign PEP or Related Customers). | |||
For domestic PEPs and HIOs and their Related Customers, LFIs must:
| (a) | Take sufficient measures to identify whether the Customer or the Beneficial Owner is considered one of those persons (see section 3.2.4). | |||
| (b) | Take the measures identified in (b), (c), and (d) when there is a high-risk business relationship accompanying such persons. | |||
Like the FATF standards, article 15.2 of the AML-CFT Decision imposes special PEP-related requirements for certain insurance policies, although its requirements apply to a slightly broader range of policies. LFIs must take reasonable measures to determine whether the beneficiary, or the beneficial owner of a beneficiary, of a life insurance policy or of family takaful insurance is a PEP or a Related Customer. If identified as a PEP or Related Customer, LFIs must inform senior management before pay-out of those policies, or prior to the exercise of any rights related to them. LFIs must also thoroughly examine the overall business relationship, and consider filing a suspicious transaction report (STR), a suspicious activity report (SAR) or any other report types with the FIU where applicable (please see section 3.3.2 below).