Today, the Financial Markets Authority (FMA) has released
its annual anti-money laundering and countering financing of terrorism
monitoring report (AML/CFT Report), stating: “Next year we will be increasing
our desk-based and on-site monitoring, looking for compliance with the Act.”
Here is an overview of the FMA’s key findings:
Governance and management oversight
The FMA warns that if deficiencies are identified in a reporting entity's (RE)
governance and management oversight, there would likely be a stronger
regulatory response. The FMA emphasised the public formal warning issued
this year when a RE’s AML/CFT compliance programme did not contain a cohesive
process for escalating, monitoring and managing AML/CFT issues.
The FMA expects that REs have a documented process for escalating
material matters to senior management or governance committees, and a good
record of any decisions and recommendations (including their rationale).
The FMA emphasised REs’ obligation to ensure staff are trained on
AML/CFT matters. It found that some REs provided training before the
AML/CFT Act came into full effect, but have not continued training or trained
Due diligence on high-risk customers
The FMA carried out a number of targeted visits to REs after the
release of the Panama Papers. It found there was a varying quality of due
diligence on high-risk customers.
The FMA expects that high-risk customers’ CDD and monitoring is
prioritised. It will be looking for written processes which provide for
senior management oversight for on-boarding high-risk customers, and fully
On-going consumer due diligence and account monitoring
Some key issues remain: monitoring systems not fit for purpose, no
written process for investigating alerts, lack of reports on suspicious
transactions, lack of knowledge about existing customers or inadequate plans
for review of existing customers’ identity documentation.
The FMA expects that REs should have a plan to update
documentation of existing customers to current standards, and put in place an
effective transaction monitoring system to alert REs of unusual customer
activity for investigation.
In 2017, the FMA’s particular focus will be on AML/CFT
documentation, and the level of management and board oversight.
We can help with board and staff training, and improved compliance
documentation for your AML/CFT programme.