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ANTI MONEY LAUNDERING Compliance  Level  1 – For Frontline Staff

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Money  laundering’ is the name given to the  process  by which  illegally obtained funds  are given the  appearance  of having been  legitimately obtained.

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What are the illegal  ways of earning  funds?

Illegal ways of earning funds include Drug Trafficking  Terrorism Crime Arms trafficking Bribery and Corruption Pyramid Schemes  Violation of Exchange Control Regulations Violation of the Customs and Excise Laws

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Terrorism is the unlawful use, or threatened use, of force or violence against individuals or property to intimidate or coerce governments or societies, often to achieve political, religious or ideological objectives.

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Terrorist Financing’ refers to carrying out of transactions involving funds or property that are owned or controlled by terrorists or transactions that are linked to terrorist activities

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Laws to  combat   Money Laundering &  Terrorist Financing

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Prevention of Money Laundering Act, No. 5 of 2006 (as amended )  Financial Transactions Reporting Act, No. 6 of 2006

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Convention on the Suppression of Terrorist Financing Act, No. 25 of 2005 (as amended ). Implementation of United Nations Security Council Resolution 1267 (1999) and successor  resolutions.

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A person  who has knowledge or reason to believe that a transaction relates to an Unlawful Activity and extends any assistance to another person from carrying on the Unlawful Activity  commits an offence under the PMLA

What are Unlawful Activities  as per the Prevention of Money Laundering Act (PMLA)  No . 5 of 2006 (as amended ) ?

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What are the Unlawful Activities  defined as  per the PMLA? Drug  Trafficking Terrorism Bribery  Unlawful use of Fire Arms Exchange Control Violations Pyramid Schemes Violations of Customs Regulations Violations of Excise Regulations Crimes against Children Cyber Crime Human trafficking Payment Devices Frauds National Environment Act  Any offence punishable by death or a prison sentence of 5 years or more

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No account should be opened or operated  without  proper identification  . No  anonymous/numbered/fictitious/false  accounts  to be opened.  Identity  to be verified based on official or  other  reliable document  . Address  to be verified based on a  reliable document. Bank  should know the occupation/principal  activity  of the customer.  Conduct  ongoing due diligence on the  business  relationship with the  customer  Conduct  ongoing scrutiny of all transactions

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Understand the profile of the customer in order to determine if a transaction is suspicious.  Understand whether its customers are acting on behalf of others  Understand its customers’ circumstances to guard against the Bank being used for fraud, money laundering or other criminal activity.

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T he  person  in whose  name  a  transaction  is carried out    or  account  is opened ; ( b )  A  signatory  to a  transaction  or  account  ; ( c )  Any  person  to whom a  transaction  has been  assigned  or  transferred  ; ( d )  Any  person who is  authorised   to  conduct  a  transaction  The  definition covers  one-off transactions  as well as  ongoing  Customer relationships

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National Identity Card Valid Passport  Driving License Official Armed Forces Service Card Postal Identity Card/Birth Certificate for minors

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1. Tenancy/Lease Agreement.                                                2. Driving License 3. Statement of other banks 4. Current Utility Bills  5. Employment Contract 6. Letter from public authority 7. Income Tax Receipt/Notice 8. Any other reliable  document

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( i ) purpose of the account; (ii) sources of earning; (iii) expected monthly turnovers; (iv) expected mode of transactions (ex; cash,  cheque , etc.); (v) expected type of counterparties (if applicable ). (vi) If the individual is far away from the account opening Branch , the reason should be valid and justified and also should record it.

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Partnership *All  partners should be identified and the  addresses verified. *The  Details of the business or the principle  activity  should be  recorded. Proprietorship * Business registration. *Identity  and the address of the Proprietor  should  be verified.

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Clubs/Societies/Associations/NGOs/Trust       -	Constitutions       -	Trust Deed       -	Registration Documents       -	Ministry Approval (NGOs)       -	Identity of all Principle office  Bearers/     	Signatories/Administrators/Trustee & their  addresses               should  be  verified.

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Politically Exposed Persons (PEPs) Cash Intensive Business Non Face to Face Customers NGO Accounts Trust and Fiduciary Accounts Charities and Not for Profit Organizations Customers in High Risk Countries Remittance Business

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A PEP is a Politically Exposed Person and will include Individuals in Sri Lanka or abroad who are, or have been, entrusted with prominent public  functions.

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The  position of a PEP within a country or similar public structure, or their association with a political officeholder distinguishes a PEP from other customers of the Bank due to their public position and higher opportunities for bribery, corruption etc. PEPs also pose an increased reputational risk to the Bank.   There is nothing wrong with doing business with PEP, provided that enhanced due diligence is carried out at the time of account opening and on an ongoing basis.

ANTI MONEY LAUNDERING Compliance Level 1 – For Frontline Staff

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