The Wolfsberg Group has published an update to their original Due Diligence Questionnaire for Correspondent Banking.
The DQQ is designed to enable financial institutions (FIs) to meet an enhanced “reasonable” standard of due diligence rather than minimum due diligence. The updated DDQ will allow FIs to obtain an increased level of understanding of their existing and prospective correspondent banking relationships and it is expected that the DDQ will be satisfactory in most situations, having regard for exceptional cases.
This updated version of the DQQ is a significant enhancement to the previous version, increasing the number of questions to 110 from the original 28. The questionnaire has been expanded to capture information relating to a respondent’s control environment, particularly in areas such as anti-bribery and corruption, measures to tackle terrorism financing, and sanctions controls.
The updated CBDDQ is expected to be fully adopted by the end of 2019. Each financial institution is required to manage the implementation in-line with its own individual risk tolerance and policy management processes.
Fenergo looks forward to discussing the DDQ further in the AML Working Group.
National Beneficiary Registers
The 5th Anti-Money Laundering Directive (5AMLD), which came into effect on July 6th, broadens the scope of the 4th EU AMLD’s mandated establishment of beneficial registers in all EU member states. Article 30 of the 4th AMLD states that the registers must be accessible to all competent authorities, financial investigation units, or in a situation in which a legitimate interest can be demonstrated. Member States have until January 10, 2020, to implement the directive into national law.
Globally, there are currently 23 existing National Registers, 15 ongoing implementations, 8 countries committed to establishing a register, with one country postponing.
The UK introduced the “People with Significant Control” (PSC) register in 2016, requiring all companies to file information relating to individuals who could influence or control a company. The Sanctions and Anti-Money Laundering Bill now obliges all British Overseas Territories to introduce public registers of beneficial ownership by the end of 2020. The requirement does not extend to the Crown Dependencies.
Australia has committed to improving transparency of information in relation to beneficial ownership and control of companies in order to assist authorities in addressing illegal activities of tax evasion, money laundering, corruption, and terrorist financing.
Japan also made commitments to implement G20 Principles on Beneficial Ownership Transparency and set out an action plan to meet these commitments. However, Transparency International issued a report in April criticizing a number of countries, including Japan, for continuing to have “weak” or “average” legal frameworks for transparency. TI also noted that while some G20 countries are behind in their efforts, Afghanistan, Ghana, and Nigeria have been progressing with the implementation of their own public registers.
In the US, the November 2017 draft of the Counter Terrorism and Illicit Finance Act (HR 6068) originally contained provisions in relation to beneficial owners to FinCEN at formation. However, the current draft has eliminated these provisions and, as a result, the AML reform bill stalled in Congress in June 2018.
The Fenergo Regulatory Compliance team has prepared a global overview of the uptake of national beneficial registers.
Among the highlights of Regulatory Forums, in the Global Regulatory Forum, the team presented overviews on the Working Groups for MiFID II, Data Privacy and AML. One of the main regulatory items discussed was an update on Chinese and Mexican Data Privacy. Milestones for the half-year included rolling out compliance functionality for GDPR and FinCEN (both in May).
At the APAC Regulatory Forum, the team presented additional updates on Royal Commission and China Cyber Security Law. In addition, the team outlined the China Banking Regulatory Commission’s (CBRC) recent data governance guidelines which encourage financial institutions to improve their data security frameworks, appoint Chief Data Officers and ensure that boards of directors take responsibility.
Click below to view the regulatory timeline for 2018-19