The Financial Intelligence Analysis Unit (FIAU) is issuing a revised version of the Implementing Procedures Part I (IPs Part I).
The main changes being introduced are as follows:
Amendments to the Definition of Beneficial Owner (Section 4.2.2)
The amendments to Section 4.2.2 concern the definition of beneficial owner, specifically footnote 42 to the sentence stating that “the beneficial owner, where there is one, must always be a natural person.”
Previous versions of the IPs provided for an exception in the context of trusts and similar legal arrangements, whereby if the settlor, protector and/or trustee was not a natural person, the subject person could limit itself to considering that legal person as the beneficial owner. This exception has now been removed to ensure consistency with the definition and requirements set out in Section 4.3.2.5(iii).
Accordingly, subject persons are required to look beyond any legal person or legal arrangement and determine the natural person/s who ultimately qualify as beneficial owner/s.
Amendments to Employee Screening and Record-Keeping Obligations (Sections 7.5, 9.2 and 9.3.6)
The revised IPs Part I introduce amendments to the obligations relating to employee screening and the corresponding record-keeping requirements.
Under earlier versions of the IPs Part I, Section 7.5 of the IPs Part I required subject persons to obtain and retain a copy of a police conduct certificate of their employees as part of the assessment of their conduct and integrity. This requirement applied to those officers and employees who handled relevant activity or relevant financial business, namely employees involved in the delivery of services and products that attract AML/CFT obligations, or those responsible for their oversight and direction.
Section 9.3.6 of the IPs Part I obliged subject persons to retain employees’ police conduct certificates for up to five years following termination of the employment relationship or after the employee was no longer entrusted with carrying out relevant financial business or relevant activity on behalf of the subject person.
The revised provisions now oblige subject persons to periodically assess, both upon recruitment and on an ongoing basis, whether employees are of good repute, honesty and integrity. A risk-based approach must be applied in determining the appropriate screening measures, including whether requesting and reviewing a police conduct certificate is necessary and proportionate in the circumstances.
Therefore, the IPs Part I no longer make it mandatory to obtain and retain police conduct certificates as part of the employee screening program. Subject persons may therefore adopt alternative employee screening measures instead of requesting employees’ police conduct certificates. However, subject persons are obliged to retain a written record of the screening process undertaken and its outcome, including how the assessment was carried out, by whom it was conducted, and the conclusion reached regarding the employee’s integrity.
Minor consequential amendments have also been made to Sections 9.2 and 9.3.6 to ensure that the record-keeping obligations refer to the retention of the written screening record and to clarify the applicable retention period. These amendments ensure that the IPs Part I are aligned with data protection principles.
The revised version of the IPs Part I may be accessed by clicking the button below. Any queries in relation to the above should be addressed to [email protected].