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The AML & Combating Terrorist policy is considered one of the main basics adopted by the United Bank in the fields of financial control , which is in conformity with FATF (The Financial Action Task Force) standards and recommendation.
According to the 40 recommendations of the group on development of financial action on AML & Combating Terrorist , In addition to Basel recommendations EGYPT founded law # 80/2002 & its implementing regulations to comply with these recommendations and all its amendments.
KYC (Know Your Customer) standards & AML & Combating Terrorist measures involve a customer acceptance policy and customer identification program that involves enhanced due diligence for higher risk accounts and includes account monitoring for suspicious activities.
These standards constitute an essential part of risk management by providing the basis for identifying and controlling risk exposures, which The United Bank protect itself and its genuine customers from the risk arising out of suspicious transactions/risky customers.
The inadequacy or absence of KYC standards & AML & Combating Terrorist measures can subject bank to serious customer and counterparty risk, especially reputation, operational and legal risks.
- Due diligence process is a continuous process all Banks’ representatives must be aware of :
While establishing correspondent relations the bank inquires whether the correspondent follow the AML & Combating Terrorist rules.
KYC objective :
To comply both with the Basel committee on customer due diligence and international money laundering legislation, including the law # 80 issued on 2002 and all its amendments.
To protect the assets and reputation of the United Bank by preventing the bank from either unwittingly facilitating illegal activities or becoming the victim of illegal activities.
To act responsibly in pursuing these objectives, but in a manner that will not disrupt the bank relationship with its customers.
Customer Profile :
All customers’ data must be documented. This relationship profile is used to record all the customers’ data in addition to the KYC form.
In case of companies, all parties’ names and any signatories or intermediaries must be identified & recoded at the relationship profile. Also the customer must clearly identify which of the parties are decision makers at the account.
The customers who have their own business, it is necessary for the C/S Rep. to evidence an understanding of the customer’s business activities.
Determinants Risk Classification :
The level of money laundering risk that The United Bank is exposed to by an investor relationship depends on :
Risks are classified into three types :
International lists of sanction countries :
The Financial Action Task Force (FATF) is a group of countries from around the world whose members have taken steps to establish anti-money laundering programs in their respective countries. FATF provides its members both program guidance & membership obligations.
In June 2000 FATF issued a list of countries or territories determined to be non-cooperative in the international fight against money laundering , This list is annually updated in June & progress reports are issued periodically to update on the status in the country.
All countries listed at this “Non Cooperative” list is considered high-risk marketplace & supervisory analysis will be required for Compliance with the Egyptian laws & regulations. Also, enhanced monitoring actions are required for such countries.
The goal of this process is to reduce the vulnerability of the financial system to money laundering by ensuring that all financial centers adopt & implement measures for the prevention, detection & punishment of money laundering according to internationally recognized standards.
These banks are those who don’t have a physical presence in any country. A physical presence means a place of business that is maintained by a foreign bank located at a fixed address (rather than the electronic address) in a country in which this foreign bank is authorized to conduct banking business.
The United Bank is not dealing with any of these banks.
Where crime is prevalent, the risk of doing business with financial institutions obviously increases through the local banking system. In addition, there may be additional risk for international correspondent banks where the funds are taken offshore if this is done through the international payments system.
Standards of dealing with correspondent banks :
Anonymous Relationships or Accounts :
Under any circumstances The United Bank does not accept Anonymous Relationships for any relationships, for any purpose, in any line of business.
For all banking relationships, accounts & any type of transaction performed beneficial owner information is required at accordance with this Policy & Procedures.
Also, all non-proprietary transactions must be identifiable as relating to a specific customer account.
Preconditions for Effective Supervision :
The main elements that provides a foundation for a system of supervision to be effective are as follows :
Prudential Regulations & Requirements :
AML & Combating Terrorist & KYC policies, suspicious, unusual transaction reporting and currency transaction reporting are considered important tools in assisting banks to prevent or detect involvement of the bank in criminal money laundering activity , These requirements should define minimum standards to provide for prudent risk management.
Compliance officers responsibilities :
Customer Due Diligence – Guiding Principles :
Mandatory controls :
Maximum every 5 years C/S Rep. must review the customers’ files taking into consideration that this period to be reduced to 3 years for high risk customers.. The purpose of this periodic review is to ensure that all the customers’ data at The United Bank is updated certain procedures must be implemented to update the customers’ data base to enhance scrutiny & ensure the existence of anti - money laundering controls.
All prospective customers’ files must be reviewed in accordance with all The United Bank policies establishing a higher standard of accuracy.
The United Bank employees are responsible for checking the negative list before opening accounts or establishing customer’s relationship. For this list relates specifically to proprietary decisions, the list’s contents must not be shared with any person or entity outside The United Bank.
Suspicious Activities or Suspected Violations :
If an employee observes a transaction or activity that appears suspicious or unusual, he/she is required to report it immediately to his/her superior level who’ll recheck the suspected transaction & report it to the Compliance Officer.
All employees must be familiar with the AML & Combating Terrorist Policy to enable them to act promptly & appropriately. They also must consult the Compliance Officer regarding any questions relating to the AML Policy.
A consistent process for activity review must be established for each branch.
The method of monitoring (Either manual or automated) must take place pursuant to written procedures created & distributed locally to all staff.
Branch Compliance Officer must review daily/monthly activity reports for any out of suspicious activity.
Upon detecting out-of-pattern activity, the BCO must contact the C/S Rep. to obtain an explanation on the activity in the account & if necessary establish a going on action plan. The explanation & all follow up must be documented.
Unusual activity Daily / Weekly reports manual & automated ) is reviewed by the Compliance Officer at the Central Dept. & in case of suspecting a transaction the concerned Branch Head is contacted to provide Compliance Officer with proper documents, explanation in addition to his/her opinion concerning the customer’s behavior.
Red flags – Tips for Reviewing Customers’ Activities :
Principals of governance in the UB :
The UB is complying with the following principals :
Compliance Dep. In the UB.:
The compliance job is not limited to the assessment of the impact of changes in the surrounding environment on the Bank's activities, but extends to verify that new products and procedures are complying with the currently applicable legal environment.
Also within the main tasks of the compliance function is to find a proper environment within the Bank ,supporting the compliance culture , And to provide adequate training for employees to familiarize themselves with current and new instructions on an ongoing basis in order to reduce the risk of liability , As well as a focus on the following points :