Customer due diligence updates in SVG

Contributed by the Financial Intelligence Unit

Customer due diligence requirements, which include (but are not restricted to) ensuring satisfactory customer identification, have been in place since 2002, under the Proceeds of Crime (Money Laundering) Prevention Regulations 2002.

These regulations were passed to give guidance to financial entities in relation to certain anti-money laundering obligations, which were introduced into law in St Vincent and the Grenadines (SVG) by the Proceeds of Crime and Money Laundering Act 2001.

Over the past years, this 2001 and 2002 legislation, together with counter financing of terrorism laws, which were enacted in 2002, have been revised to keep abreast of evolving international standards. The last updates to the law relevant to the area of Customer Due Diligence Requirements are contained in the Anti-Money Laundering and Terrorist Financing Regulations, SRO No. 20 of 2014, as amended by SRO No. 24 of 2017 and the Anti-Money Laundering and Terrorist Financing Code, SRO No. 25 of 2017 (the Code).

These enactments outline detailed procedures that must be adopted by service providers in SVG. The procedures outlined therein are consistent with the international standards set by the Financial Action Task Force (FATF) in the form of the Revised Forty Recommendations 2012.

According to Recommendation 10 of the FATF Forty Recommendations, countries are required to implement measures that require financial institutions to undertake customer due diligence measures, including identifying and verifying the identity of their customers when establishing business relations and carrying out occasional transactions. In discharging their duty to obtain customer due diligence information, the FATF stipulates that financial institutions should identify the customer and verify that customer’s identity, using reliable, independent source documents, data or information. These standards should be implemented commensurate with the risk as identified and assessed by the country pursuant to Recommendation 1 of the FATF Recommendations.

Regulation 11 of the Anti-Money Laundering and Terrorist Financing Regulations specifies that a “service provider shall obtain customer due diligence information on every customer, third party and beneficial owner.”

This requirement is further explained in the Code, which stipulates the identification information and the verification information necessary on establishing business relationships or conducting an occasional transaction with a customer (References – paragraphs 8 and 9 respectively).

Paragraph 8 (1) of the Code stipulates that “a service provider shall obtain the following identification with respect to an individual who it is required by the Regulations or this Code to identify: (a) The full legal name of, any former names of and any other names used by the individual; (b) The gender of the individual; (c) The principal residential address of the individual; and (d) The date of birth of the individual” and paragraph 9 (1) states that “A service provider shall: (a) Verify the identity of an individual where required by the Regulations or this Code to do so; and (b) Take reasonable measures to re-verify an aspect of an individual’s identity if it changes after the individual’s identity has been verified.”

The provisions in the Code require that both identification information (paragraph 8) and verification information (paragraph 9) are obtained. In obtaining identification information the financial institution is asked to only accept the best form of identification, which is clearly stated in paragraph 9(1) “The best forms of identification for an individual are: (a) A current national (b) government issued identification card; and (c) A current driving licence.”

Accordingly, a customer conducting an occasional transaction (such as receiving or sending money) must provide identification information (ID card, passport, driver’s licence) which sets out their full name, address etc. The company is required to verify this information by means of another piece of identification, (ID card, passport, driver’s licence). However, the institution may utilize a discretion in cases where a customer does not possess two pieces of identification and may accept one only.

There is also no requirement to identify and verify the customer each time that the customer conducts a transaction, unless there exist circumstances that leads the institution to doubt the accuracy of the information previously provided. The financial institutions are therefore advised to obtain appropriate customer due diligence information on customers when conducting the first transaction with the customer, whether to establish a business relationship or conduct an occasional transaction.

It is underscored that the provisions of the Anti-Money Laundering and Terrorist Financing Regulations were enacted since 2014 and the Code was enacted as of August 4th, 2017. All financial institutions and regulated entities were given the opportunity to comment on these pieces of legislation prior to their enactment. Further, the Financial Intelligence Unit, consistent with its usual practice, has been involved in considerable training of the relevant institutions and providing updates on the new additions in the Code and any changes in the other legislation, which comprise the Anti-Money Laundering Legislative Regime of St Vincent and the Grenadines.

All relevant institutions are urged to continue to mitigate any risk for money laundering and terrorist financing through adopting measures that are commensurate with its risk, in keeping with the directions and guidance provided in the aforementioned Regulations and Code.

It is important that this country meets applicable international standards to avoid any international sanctioning or adverse reputational risk; thus, the Financial Intelligence Unit continues to work with relevant institutions to ensure that requirements of the law, including all revisions of the law, are understood and properly applied.