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Should you consider implementing AML/CFT measures within your company?

MEDIA / Articles / Should you consider implementing AML/CFT measures within your company?
One of the key reasons to understand about AML/CFT compliance is for the entities falling within the ambit of the DNFBPS. DNBPS or Designated Non-Financial Businesses and Professions as per the Financial Action Task Force (FATF) include:
  • Real Estate Agents
  • Dealers in Precious Stones and Metals
  • Lawyers, Notaries, other independent legal professionals and Accountants - Refers to sole practitioners, partners or employed professionals within professional firms, and not meant to refer to ‘internal’ professionals/ employees of other types of businesses, nor to the professionals engaged in government agencies, who may already be subject to AML/CFT measures.
  • Trust and Company Service Providers – they are all persons or businesses who are not covered elsewhere under these below recommendations, and which as a business, provide any of the following services to third parties:
  • acting as a company formation agent of legal persons;
  • acting or arranging for another person to act as a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;
  • providing a registered office; business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;
  • acting  or arranging for another person to act as a trustee of an express trust or performing the equivalent function for another form of legal arrangement;
  • acting or arranging for another person to act as a nominee shareholder for another person.
DNFBPs play a significant role as they are keepers of large amount of information and they act on behalf of their clients in numerous transactions. Many of such transactions are exposed to high risks and extremely vulnerable to AML/CFT risks. Such risks can be due to services offered by such entities to the customers.

What must DNFBPs do?
It is very pertinent for DNFBPs to:
  1. Identify
  2. Assess
  3. Understand the risks involved with their business nature and size
All DNFBPs must exhibit their commitment to adopt steps to mitigate risks by developing internal AML/CFT policies, controls, measures and procedures appropriate to the nature and size of their business.

Such policies and procedure must be approved by the senior management of such entities, and if necessary, monitor the implementation of such risk controls, policies and procedures and enhance them from time to time.

Adopting Enhanced CDD measures is a crucial measure to mitigate risks involved in dealing with customer of high risk. Furthermore, DNFBPs should take reasonable measures to identify the source of the funds of the Customer and Beneficial Owner and should increase the degree of ongoing business relationship monitoring and closely examining transactions to identify whether they appear suspicious.

To conclude, DNFBPS must be well-versed with the risks involved with every transactions, if administered without verifying the identity of the client or identifying the source of funds.
Please feel free to contact Freemont Oneworld Group to know more!

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