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The Money Laundering Regulations 2007

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Enhanced customer due diligence and ongoing monitoring

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14.—(1) A relevant person must apply on a risk-sensitive basis enhanced customer due diligence measures and enhanced ongoing monitoring—

(a)in accordance with paragraphs (2) to (4);

(b)in any other situation which by its nature can present a higher risk of money laundering or terrorist financing.

(2) Where the customer has not been physically present for identification purposes, a relevant person must take specific and adequate measures to compensate for the higher risk, for example, by applying one or more of the following measures—

(a)ensuring that the customer’s identity is established by additional documents, data or information;

(b)supplementary measures to verify or certify the documents supplied, or requiring confirmatory certification by a credit or financial institution which is subject to the money laundering directive;

(c)ensuring that the first payment is carried out through an account opened in the customer’s name with a credit institution.

(3) A credit institution (“the correspondent”) which has or proposes to have a correspondent banking relationship with a respondent institution (“the respondent”) from a non-EEA state must—

(a)gather sufficient information about the respondent to understand fully the nature of its business;

(b)determine from publicly-available information the reputation of the respondent and the quality of its supervision;

(c)assess the respondent’s anti-money laundering and anti-terrorist financing controls;

(d)obtain approval from senior management before establishing a new correspondent banking relationship;

(e)document the respective responsibilities of the respondent and correspondent; and

(f)be satisfied that, in respect of those of the respondent’s customers who have direct access to accounts of the correspondent, the respondent—

(i)has verified the identity of, and conducts ongoing monitoring in respect of, such customers; and

(ii)is able to provide to the correspondent, upon request, the documents, data or information obtained when applying customer due diligence measures and ongoing monitoring.

(4) A relevant person who proposes to have a business relationship or carry out an occasional transaction with a politically exposed person must—

(a)have approval from senior management for establishing the business relationship with that person;

(b)take adequate measures to establish the source of wealth and source of funds which are involved in the proposed business relationship or occasional transaction; and

(c)where the business relationship is entered into, conduct enhanced ongoing monitoring of the relationship.

(5) In paragraph (4), “a politically exposed person” means a person who is—

(a)an individual who is or has, at any time in the preceding year, been entrusted with a prominent public function by—

(i)a state other than the United Kingdom;

(ii)a Community institution; or

(iii)an international body,

including a person who falls in any of the categories listed in paragraph 4(1)(a) of Schedule 2;

(b)an immediate family member of a person referred to in sub-paragraph (a), including a person who falls in any of the categories listed in paragraph 4(1)(c) of Schedule 2; or

(c)a known close associate of a person referred to in sub-paragraph (a), including a person who falls in either of the categories listed in paragraph 4(1)(d) of Schedule 2.

(6) For the purpose of deciding whether a person is a known close associate of a person referred to in paragraph (5)(a), a relevant person need only have regard to information which is in his possession or is publicly known.

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