Financial security measures for obliged institutions
Banks, insurance companies, investment funds and investment fund managers, alternative investment companies and their management companies, exchange traders, casino operators, virtual currency traders. These obligated institutions in particular are vulnerable to money laundering and financial terrorism.
Therefore, they must apply financial security measures. Thus, they take measures to minimize the risk of using the obliged institution in money laundering. The scope and intensity of financial security measures should be adapted to the scope of activity of the institution. The security measures to be applied by an accountant running a one-person business will be assessed differently from those to be applied by a bank with branches in several countries.
How to choose the measures to be applied by a given institution?
It is necessary to consider here: the type of client, the geographical area (countries with which the client is connected), the purpose of the bank account established for the transaction, the type of products or services purchased, the purpose, regularity, or duration of business relations with the client in question.
Financial security measures exist for two reasons. First, they help identify the customer and the person benefiting from the customer’s actions. The second purpose is to determine the risks involved in a particular transaction. These measures include:
- identification of the customer and verification of his identity,
- in case of legal persons and organizational units which are not legal persons – determination of ownership and control structure of such entity,
- assessment of previous business relations with a given customer,
- ongoing monitoring of business relations combined with analysis of transactions in terms of money laundering or terrorist financing risk and origin of assets used in the transactions.
When to apply?
Financial security measures according to the recommendations shall be applied during:
- establishment of economic relations,
- carrying out an occasional transaction (transaction not related to any economic relationship with the customer),
- carrying out a transaction over 15,000 euros (whether in a single transaction or some related transactions),
- transfer funds exceeding 1,000 euros,
- placing bets with a value exceeding EUR 2,000 or (in the case of casinos),
- obtaining winnings above EUR 2,000.