Press article: Anti-money laundering - a justified industry concernpaperJamDOWNLOAD |
This article presents the main innovations of the ALFI/ABBL/ALCO Practices and Recommendations aimed at reducing the risk of money laundering and terrorist financing.
Considering the fact that "exemption" versus "delegation" of identification is defined under the Luxembourg AML regulations, it has become necessary to define the application of these concepts to international fund distribution by means of setting up a risk-based approach to be consistently applied at both the country and distributor risk level.
The proposed methodology aims at classifying countries into "equivalent", "low risk", "medium risk", "high risk and very high risk" jurisdictions, on one hand, and to distinguish individual distributors by their status of regulation and adherence to equivalent "know your customer" (KYC) requirements, on the other hand.
It was felt very useful by industry participants to rely on the outcome of these risk assessments in order to determine the circumstances under which:
- professionals would be exempted from the identification of final investors and thus be allowed to open omnibus/nominee accounts, or
- the delegation of the material execution of KYC requirements is permissible.
Exemption of identification in this sense means that the process of identification can be waived since the investor is specific. It implies that the professional will not need to seek copies of the identification documents of the subscribing parties provided that the customer is a domestic or a foreign financial institution subject to equivalent identification requirements to those set out under Luxembourg requirements.
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