TRINIDAD AND TOBAGO SECURITIES AND

EXCHANGE COMMISSION

GUIDELINES ON ANTI-MONEY LAUNDERING &

COMBATING THE FINANCING OF TERRORISM

Issued in accordance with Section 6(b)

of the Securities Industry Act 1995

November, 2011

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SCOPE AND FOREWORD

The Trinidad and Tobago Securities and Exchange Commission (“the

Commission”) is responsible for creating and promoting conditions for the

orderly growth and development of the securities market. The Commission is

the designated authority for registering and regulating reporting issuers, self-

regulatory organizations and market actors so as to ensure their compliance

with the provisions of the Securities Industry Act, 1995 (“the SIA”) and other

pertinent laws and regulations. To facilitate this function, section 6 (b) of the

SIA empowers the Commission to formulate principles for the guidance of the

securities industry.

These Anti-Money Laundering and Combating the Financing of Terrorism

(“AML-CFT”) Guidelines seek to provide market actors with the necessary

information regarding the implementation of AML-CFT frameworks within

their respective organizations. The Commission’s AML-CFT Policy Paper

outlines the regulatory strategy and underscores the need for market actors to

implement adequate compliance frameworks.

The AML-CFT Guidelines incorporate the mandatory minimum requirements

of the AML-CFT legislation in Trinidad and Tobago as well as international

standards and best practices on AML-CFT. This document defines the

necessary measures that market actors should undertake to minimize the risk

of the securities market being targeted by money launderers and terrorist

financiers.

The AML-CFT Guidelines are primarily based on the “40+9” Financial

Action Task Force (“FATF”) Recommendations, for detecting, preventing and

reporting activities linked to money laundering and terrorist financing.

Additionally, the “Principles on Client Identification and Beneficial

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Ownership for the Securities Industry” issued by the International

Organization of Securities Commissions (“IOSCO”) are incorporated as they

reflect the common principles which underlie international best practice in the

sphere of Customer Due Diligence (“CDD”) and Enhanced Due Diligence

(“EDD”).

Where a market actor is part of a regional or international group, the

Commission recommends that the group policy be followed providing that the

group standards and practices are on par with or higher than those required by

the laws of Trinidad and Tobago. In cases where the standards of the group

are deemed to be wider and deeper, those higher standards ought to be adhered

to.

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LIST OF ACRONYMS

AML Anti-Money Laundering

AML-CFT Anti-Money Laundering and Combating the Financing of

Terrorism

ATA Anti Terrorism Act, 2005 as amended

CDD Customer Due Diligence

CFATF Caribbean Financial Action Task Force

CFT Combating the Financing of Terrorism

EDD Enhanced Due Diligence

FATF Financial Action Task Force

FIU Financial Intelligence Unit

FOR Financial Obligations Regulations, 2010

FOR (CFT) Financial Obligation Regulations (Financing of Terrorism)

Regulations 2011

IMF International Monetary Fund

KYC Know Your Customer

PEP Politically Exposed Person

POCA Proceeds of Crime Act, 2000

POCAA Proceeds of Crime (Amendment) Act, 2009

SAR Suspicious Activity Report

SIA Securities Industry Act, 1995

T&T Trinidad and Tobago

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TABLE OF CONTENTS

PART 1 INTERPRETATION OF AML-CFT GUIDELINES 6

PART 2 INTERNAL POLICIES AND PROCEDURES

Compliance Programme

Designation of Compliance Officer

Functions of Compliance Officer

Know Your Employee (KYE)

Education and Training

Internal and External Audit

12

12

13

14

15

16

17

PART 3 CUSTOMER DUE DILIGENCE (CDD) & KNOW YOUR CUSTOMER (KYC)

KYC Rules for New and Existing Retail and Institutional Customers

KYC for New and Existing Retail Customers

Beneficial Owners

KYC Rules for New and Existing Institutional Customers

On-going Due Diligence

Retroactive Due Diligence (“RDD”)

Enhanced Due Diligence (“EDD”)

Politically Exposed Persons (“PEPs”)

Third Part Reliance, Trust and Nominee Accounts

Cross-Border Relationships

Non Face-to-Face Customers

Wire Transfers

Cross-Border Wire Transfers

Domestic Wire Transfers

Timing and Duration of Identification and Verification

19

19

21

22

23

24

25

25

25

27

28

28

29

29

30

31

PART 4 RECORD KEEPING REQUIREMENTS 32

PART 5 SUSPICIOUS ACTIVITY REPORTING

Tipping off

34

36

APPENDIX Indicators of Suspicious Activity 38

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PART 1: INTERPRETATION OF THE AML-CFT GUIDELINES

1. These Guidelines on Anti-Money Laundering and Combating the Financing

of Terrorism may be cited as the AML-CFT Guidelines.

2. In these AML-CFT Guidelines, unless otherwise stated –

“Beneficial owner” means the person who ultimately owns and controls an

account, or who exercises ultimate control over a legal person or legal

arrangement;

“Beneficial ownership” includes ownership through a trustee, legal

representative, agent or other market actor;

“Broker” means a person engaged in the business of effecting transactions in

securities for the account of others;

“Commission” means the Trinidad and Tobago Securities and Exchange

Commission established under section 4 of the SIA;

“Designated entities” means individuals or entities and their associates

designated as terrorist entities by the Security Council of the United Nations.

“FIU” means the Financial Intelligence Unit of Trinidad and Tobago

established under section 3 of the Financial Intelligence Unit of Trinidad and

Tobago Act, 2009;

“Foreign customer” means a person who resides outside of Trinidad and

Tobago at the time of the transaction.

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“freezing order” refers to an Order of the Court obtained by the Attorney

General under Section 22B of the Anti-Terrorism Act, 2005 (as amended)

“Institutional customer” refers to all customers that are not retail customers;

“Investment adviser” means a person engaging in or holding himself out as

engaging in, the business of advising another with respect to investment in, or

the purchase or sale of securities;

“Issuer” means a person that has securities outstanding or issues, or proposes

to issue, a security to the public;

“Market actor” means a person registered or deemed registered under section

53 of the SIA. Section 53 (1) provides that no person shall carry on business,

or hold himself out, as –

(a) a broker;

(b) an investment adviser;

(c) a dealer in securities;

(d) a trader in securities;

(e) an underwriter of securities;

(f) a securities company,

unless registered as such with the Commission in accordance with the SIA

and, except in the case of an underwriter or an investment adviser, that person

is the holder of a valid licence issued by a self-regulatory organization;

“One-off transaction” means any transaction other than one carried out in the

course of an existing business relationship;

“Politically exposed persons” means individuals who are or have been

entrusted with prominent public functions within or outside the jurisdiction of

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T&T. For example, Heads of State or of Government; senior politicians;

senior government; judicial or military officials; senior executives of state

owned corporations and important political party officials, their immediate

family and closely related persons and entities that they may own or be

affiliated with;

“Retail customer” means an individual investor who buys and sells securities

for his/her personal account, and not for another company or organization;

“Reporting Issuer” means an issuer that has filed a registration statement

under section 64 of the SIA and has not been the subject of an order of the

Commission altering its status as a reporting issuer;

“Securities company” means a company which carries on a business of trading

in securities on behalf of others and, without limiting the generality of the

forgoing, includes a company which carries on business as –

(a) A broker;

(b) A dealer;

(c) An underwriter;

(d) An adviser as to the value of securities or as to investing in

purchasing or selling securities; or

(e) Any combination of two or more of the forgoing;

“Security” includes any document, instrument or writing evidencing

ownership of, or any interest in, the capital, debt, property, profits, earnings or

royalties of any person or enterprise and without limiting the generality of the

foregoing, extends to:

(a) Any bond, debenture, note or other evidence of indebtedness;

(b) Any share, stock, unit, unit certificate, participation certificate, certificate

of share or interest;

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(c) Any document, instrument or writing commonly known as a security;

(d) Any document, instrument or writing evidencing an option, subscription or

other interest in or to a security;

(e) Any investment contract;

(f) Any asset-backed security;

(g) Any document, instrument or writing constituting evidence of any interest

or participation in –

i. A profit sharing arrangement or agreement;

ii. A trust; or

iii. An oil, natural gas or mining lease, claim or royalty or other

mineral rights;

(h) An interest in the whole, or in part of, the net assets of a collective

investment scheme;

(i) Any derivative;

(j) Any right to acquire or dispose of anything specified in paragraph (a) to (i)

But does not include-

(i) Currency;

(ii) A cheque, bill of exchange or bank letter of credit;

(iii) A certificate or document constituting evidence of any interest in a

deposit account with-

a. A financial institution;

b. A credit union within the meaning of the Co-operative

Societies Act;

c. An insurance company; or

(iv) A contract of insurance.

“Senior manager/ senior officer means –

(a) A person employed at a managerial level and includes the chairman or

vice-chairman of the board of directors of a market actor, the managing

director, the chief executive officer, the deputy managing director, the

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president, the vice-president, the corporate secretary, the treasurer, the chief

financial officer, the financial controller, the general manager or the deputy

general manager of a market actor or any other individual who performs

functions for an issuer similar to those normally performed by an individual

occupying any such office; and

(b) Each of the five highest paid employees of a market actor, including

any individual referred to in paragraph (a)

“Terrorist act” means –

(a) An act whether committed in or outside T&T which causes or is likely

to cause –

(i) Loss of human life or serious bodily harm;

(ii) Damage to property; or

(iii)Prejudice to national security or disruption of public safety

including disruption in the provision of emergency services or to

any computer or electronic system or to the provision of services

directly related to banking, communications, infrastructure,

financial services, public utilities, transportation or other essential

infrastructure,

And is intended to –

(i) Compel a government or an international organization to do or

refrain from doing any act; or

(ii) intimidate the public or a section of the public,

for the purpose of advancing political, ideological or a religious cause; or

(b) An offence under any of the Conventions as stipulated in the Anti-

Terrorism Act, Chap. 12:07; or

(c) An offence under Part II, Part III or section 22A of the Anti-Terrorism

Act (as amended by Act No. 2 of 2010 and No. 16 of 2011)

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“Trader” means an individual employed by a broker to participate in any

transactions in securities;

“Underwriter” means a person who –

(a) As principal, agrees to purchase a security for the purpose of a

distribution;

(b) As agent, offers for sale or sells a security in connection with a

distribution; or

(c) Participates directly or indirectly in a distribution described in

paragraphs (a) or (b) for consideration,

But does not include –

A person whose interest in the transaction is limited to receiving the usual and

customary distribution or sales commission payable by an underwriter or

issuer; or

(d) A company that purchases shares of its own issue and resells them.

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PART 2: INTERNAL POLICIES AND PROCEDURES

Compliance Programme

1. Every market actor is required to have a written compliance

programme which will include approved policies and procedures for

the prevention and detection of money laundering and/or terrorist

financing transactions and the reporting of any suspicious activity to

the Financial Intelligence Unit (“FIU”).

2. The compliance program should include policies and procedures for :-

(a) customer identification, documentation and verification and

other customer due diligence measures commensurate with the

level of risk identified;

(b) Identification and internal reporting of suspicious transactions

and activities;

(c) The adoption of a risk-based approach to monitoring financial

activities;

(d) External and independent testing for compliance;

(e) An effective risk based audit function to evaluate the

compliance programmes;

(f) Effective document retention;

(g) The designation of a compliance officer in accordance with

guidelines 7 to 11;

(h) The effective screening of potential and existing employees;

(i) The ongoing training of new and existing employees in AML-

CFT practices.

3. Written compliance programmes must be submitted to the FIU for

approval and a copy filed with the Commission.

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4. The written policies and procedures required by these AML-CFT

Guidelines shall be approved by the Board of Directors or where non-

existent jointly by the relevant senior managers or senior officers and

the Compliance Officer and, shall be subject to review by the

Commission for regulatory oversight and advisory purposes.

5. Any proposed changes to the internal policies and procedures of

market actors shall be submitted to the Commission for approval.

6. A market actor’s written compliance programme should take the form

of a manual which must be made available to all new and existing

employees and should be easily accessible for reference.

Designation of Compliance Officer

7. Each market actor shall designate a manager or official employed at

the managerial level as the Compliance Officer for the purpose of

securing compliance with all AML-CFT laws and regulations and to

address other related issues.

8. Where a market actor employs five persons or fewer, the employee

holding the most senior position shall be appointed the Compliance

Officer. In the case of a market actor who is an individual who does

not employ or act in association with any other person, that market

actor will assume the duties of the Compliance Officer.

9. Market actors shall seek the approval of the Commission for the

appointment of the Compliance Officer.

10. Applications for the approval of compliance officers should be made to

the Commission in a manner to be prescribed by the Commission and

should be accompanied by all requested documents.

11. The identity of the Compliance Officer shall be treated with the

strictest of confidence by the market actor and all members of staff.

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12. Market actors should ensure that Compliance Officers receive the

appropriate training so as to enable them to detect potential money

laundering and terrorist financing activities and perform all other

duties adequately.

Functions of the Compliance Officer

13. The Compliance Officer shall be responsible for :-

(a) the implementation of the market actor’s AML-CFT policies

and procedures in accordance with these guidelines;

(b) the monitoring of the compliance programme to ensure that

these Guidelines and all domestic legislation and regulations

are being observed;

(c) receiving and reviewing reports of suspicious transactions or

activities from members of staff and where necessary

submitting a Suspicious Activity Report (SAR) to the FIU.

(d) maintaining records of reports relative to suspicious

transactions and activities;

(e) acting as the official liaison with the FIU;

(f) recommending disciplinary action against staff for

noncompliance with the internal policies and procedures; and

(g) oversight of staff with respect to suspicious behaviours.

14. In addition to the development of policies and procedures the

Compliance Officer will also be responsible for updating the said

policies and procedures in accordance with domestic and international

developments. An internal review should be undertaken annually or

more frequently if deemed necessary.

15. The Compliance Officer shall disseminate changes to all employees

and assist departments in the implementation of the compliance

programme.

16. The Compliance Officer should be responsible for evaluating new

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products and services of the market actor to ascertain the associated

levels of money laundering and terrorist financing risks.

Know Your Employee (KYE)

17. Market actors must take reasonable measures to screen potential

employees before any appointment is finalized by assessing the

financial history and criminal records of the said persons.

18. The position which is to be held by a prospective employee should

determine how extensive the screening process should be. For higher

risk employment positions, enhanced screening should be

implemented. These screening requirements are in addition to the pre-

employment measures a market actor would normally undertake to

ensure that employees are fit and proper and suitably qualified to hold

the desired position.

19. The market actor’s written policies and procedures should include a

code of ethics which shall serve to guide all employees in the conduct

of their duties.

20. The compliance officer is responsible for ensuring that employees are

following AML-CFT detection and reporting procedures.

21. The compliance program should include the establishment of clear

lines of authority and responsibility, segregation of duties, staff

rotation and monitoring of all activities of staff as these relate to their

employment.

22. Policies and procedures should be applied consistently and at all levels

of staff with sanctions being applied for failing to follow established

procedures.

Education and Training

20 Market actors should establish ongoing AML-CFT training programs

for staff at all levels, both new and existing. Training should be held at

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least once annually and should be geared towards, but not limited to,

KYC and CDD requirements, the recognition and reporting of

suspicious transactions, money laundering typologies, AML-CFT

legislation and AML-CFT Guidelines.

23. Employees should be trained on an ongoing basis in the recognition

and handling of suspicious transactions. Training sessions should

emphasize the market actor’s vulnerability to money launderers and

terrorist financiers in order to make employees properly aware of the

seriousness of the nature of these financial crimes.

24. Employees should be made aware through training of their own

personal statutory obligations and the potential consequences for

failure to report suspicious activities.

25. All employees should be made aware of-:

(a) The company’s controls, policies and procedures with respect

to AML-CFT;

(b) The nature and process of money laundering and terrorist

financing;

(c) The underlying legal obligations and liabilities for AML-CFT

non-compliance by employees and employers under the

relevant AML-CFT laws and regulations; and

(d) The procedures for reporting suspicious activities.

26. Employees of market actors should be made aware of the role of the

Compliance Officer and their duty to file reports of any suspicious

transactions or activity with the Compliance Officer.

27. New employees should undergo an initiation in AML-CFT with the

Compliance Officer and should receive a copy of the market actor’s

approved internal controls, policies and procedures manual.

Internal and External Audit

28. The compliance programmes developed and implemented by market

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actors are to be reviewed on a regular basis by both internal and

external auditors in order to test the systems which have been

developed and implemented.

29. In the event of the failure of a market actor to appoint an auditor, either

internal or external, the Commission shall appoint a competent

professional to carry out the functions listed hereunder with the cost to

be borne by the market actor.

30. The auditors engaged to carry out the internal and external audits must

be specifically trained to carry out their function.

31. In addition to being specifically trained to conduct an internal audit,

the internal auditor shall be a person sufficiently independent of the

development of the compliance program to ensure objectivity.

External Auditor

32. The external auditor shall evaluate compliance with all applicable

legislation and guidelines including POCA, FOR, ATA and these

guidelines.

33. (a) The external auditors shall submit their report to the Commission

and the Board of Directors of the market actor or other suitable person

within four months of the end of the market actor’s financial year.

(b) The audit report shall be accompanied by the curriculum vitae

of the person(s) who supervised or performed the audit, detailing their

training and experience in AML/CFT and the conduct of compliance

audits.

Internal Auditor

34. The internal auditor shall ensure that the policies and procedures are in

compliance with these guidelines and the Financial Obligations

Regulations and that a suitable level of transaction testing is being

carried out in accordance with customer’s risk profile.

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35. The frequency of the internal audit should be determined by the market

actor and would be dependent on the size and risk profile of the

individual market actor.

36. Market actors shall submit to the Commission details regarding the

frequency with which they propose to conduct internal audits.

37. Internal audits should include a review of the internal policies,

procedures and controls with the aim of identifying weaknesses and

recommending corrective action.

38. The internal audit process should also ensure that all recommendations

made by the Commission or the external auditors are adequately

addressed.

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PART 3: CUSTOMER DUE DILIGENCE (CDD) & KNOW YOUR

CUSTOMER (KYC)

Compliance Programme

CDD is an important protection for market actors against fraudulent

customers. It is a basic prudential principle that a market actor should know

the identity of the person that it is transacting business with and the purpose

of the transaction. Customer identification rules are also referred to as KYC

rules and apply to both retail and institutional customers. The following are

the minimum standards of KYC rules which should be implemented by all

market actors in the securities industry.

KYC Rules for New and Existing Retail and Institutional Customers

39. Market actors should undertake CDD measures, including identifying

and verifying the identity of their customers when undertaking a

financial transaction:

(a) During the course of a business relationship;

(b) Pursuant to an agreement to form a business relationship;

(c) As a one-off or occasional transaction of ninety thousand

dollars or more;

(d) As two or more one-off transactions, each of which is less than

ninety thousand dollars but the total value of which combined

is ninety thousand dollars or more and where it appears,

whether at the outset of each transaction or subsequently, that

the transactions are linked;

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(e) As a one-off wire transfer of six thousand dollars or more;

(f) As two or more one-off wire transfer transactions, each of

which is less than six thousand dollars, but the total value

which combined is six thousand dollars or more and where it

appears, whether at the outset of each transaction or

subsequently that the transactions are linked;

(g) where there are reasonable grounds to suspect that the funds

used may be linked to money laundering or terrorist financing;

or

(h) If the market actor has doubts about the veracity or adequacy of

customer identification data which was previously or otherwise

obtained.

40. Notwithstanding these established thresholds, market actors may establish

lower thresholds dependent upon the size and nature of transactions which

are typically conducted.

41. Any customer’s transaction which falls within the parameters identified

above at guidelines 38 and 39 should be accompanied by a Source of

Funds Declaration (“SOFD”) Form.

42. Irrespective of the size of the transaction, any suspicious activity must be

reported to the FIU.

KYC for New and Existing Retail Customers

43. On initiating a business relationship with a retail customer, a market

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actor should identify and verify the customer’s identity using reliable,

independent source documents, data or information.

44. Identification records should be obtained to ascertain:-

(a) Full name of the customer/applicant;

(b) Permanent address and proof thereof;

(c) Date and place of birth;

(d) Nationality;

(e) Nature and place of business/occupation where applicable;

(f) Signature;

(g) Purpose of the proposed business relationship or transaction

and source of funds;

(h) Any other information deemed appropriate by the market actor.

45. A valid passport, national identification card or driver’s licence can be

accepted as proof of identification. Two (2) forms of identification

should be obtained and examined by the market actor.

46. Market actors should consider adopting one or more of the following

measures to verify the names and addresses of potential customers:-

(a) Checking the Register of Electors;

(b) Obtaining an original recent utility bill, tax assessment or bank

statement;

(c) Conducting a home visit.

47. Where certain classes of customers, for example, the elderly, the

disabled or students are not be able to produce the usual types of

identification, some measure of flexibility will be afforded, though not

so much as to compromise the reliability of the CDD process. The

market actor should establish internal policies and procedures to

facilitate the verification of identity in these exceptional circumstances.

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48. In relation to a customer who is a corporation or other business

arrangement, a market actor should obtain satisfactory evidence of

identity in the form of evidence that the entity exists and the identity of

the directors, partners or other persons of like status.

Beneficial Owners

49. Market actors should identify and verify the identity of the beneficial

owners of any accounts held with them. Market actors should also

determine the natural persons who ultimately own or control legal

persons or legal arrangements.

50. Market actors should verify the identity of the customer and beneficial

owner before establishing a business relationship or conducting

transactions for occasional customers.

51. Market actors should identify and verify any person who will be acting

on behalf of a legal person or legal arrangement during the course of

the business relationship with the market actor.

52. Market actors must not keep anonymous accounts or accounts with

fictitious names. If a market actor is unable to verify the identity of a

potential customer or the beneficial owner then it should not engage in

business or undertake any transaction with this person or institution. In

such a case, the market actor should immediately file a SAR with the

FIU.

KYC Measures for New and Existing Institutional Customers

53. Market actors should identify and verify the institutional customer’s

identity, legal status and the nature of its business by requesting the

following certified information:

(a) The name of the business;

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(b) Address of its registered office;

(c) Name and address of local agent or agents, if and where this is

applicable;

(d) The country of incorporation;

(e) Articles of incorporation or continuance;

(f) Certificate of incorporation;

(g) Company by-laws, where applicable;

(h) the previous year’s annual returns;

(i) Partnership deed, where applicable;

(j) Other publicly available documents;

(k) A signed Director’s Statement or a certificate by the

Company’s Secretary outlining the nature of the company’s

business.

54. A market actor should identify and verify the identities of key

functionaries within the business using reliable source

documents. This information would include:

(a) Names of all Directors, Secretary and office bearers;

(b) Copies of identification documents for at least two (2)

Directors, the Company’s Secretary and the authorized

signatories for the account;

55. For new institutional customers, the following should be

identified and verified:

(a) Copies of deeds or instruments of Power of Attorney or

other authorities, affecting the operation of the account

in relation to the business; and

(b) Evidence of the authority to enter into the business

relationship (for example a copy of the Board Resolution

authorizing the account signatories).

56. Verification and documentation of the key functionaries should be

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conducted at least once annually by a market actor.

57. A market actor ought to identify and verify persons with a substantial

interest (10% or more) in the issued and outstanding share capital of

the customer. This is done in order to understand the ownership and

control structure of the customer.

58. Information on the purpose and intended nature of the business

relationship should be obtained by the market actor who should also

conduct ongoing due diligence with respect to the business

relationship.

On-going Due Diligence

59. The market actor should closely monitor the transactions undertaken

through the course of the business relationship to ensure that

transactions are consistent with the market actor’s knowledge of its

customer, business and risk profile including, where necessary, the

customer’s source of funds.

60. If an existing customer can no longer satisfy CDD requirements, the

market actor shall immediately file a SAR with the FIU and seek the

guidance of the FIU as to how they should treat with client’s funds.

61. All evidence of identification requested and obtained from a customer

as part of a market actor’s CDD measures shall be secured and updated

annually or as the need arises dependent upon the risk profile or on the

occurrence of specified events such as changes in name, address,

employment or other critical data.

62. Market actors should pay special attention to any money laundering

and terrorist financing threats that may arise from new or developing

technologies that might favour anonymity and take measures, if

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needed, to prevent their use in money laundering and terrorist

financing schemes. In particular, market actors should have policies

and procedures in place to address any specific risks associated with

non-face to face business relationships or transactions.

Retroactive Due Diligence (“RDD”)

63. Every Market actor shall conduct RDD on all existing accounts within

eighteen (18) months of the issuance of these guidelines.

Enhanced Due Diligence (“EDD”)

64. Certain categories of customers, transaction or business activities may

be deemed to present a higher risk for money laundering or terrorist

financing. This includes PEP’s, foreign customers or in some cases,

customers with significant ties abroad. Where such circumstances

exist, a market actor will be required to conduct EDD in accordance

with these guidelines.

Politically Exposed Persons (“PEPs”)

There is a higher money laundering risk associated with PEPs by virtue of

their position in public life.

65. Market actors should, in relation to PEPs perform EDD. These

measures should be strictly applied to PEPs and would entail a more

detailed examination into their backgrounds, reputations and financial

history. EDD measures together with the monitoring of transactions

for unusual or suspicious patterns are crucial to identify and verify the

source of funds of PEPs. In the case of foreign PEPs, market actors

should consult with the FIU and other sources that identify corrupt or

fraudulent persons in order to determine the risk profile of the PEP.

66. Market actors should gather sufficient information about a PEP to

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understand fully the nature of the PEP’s business interests and to

determine from publicly available information whether the PEP has

been subject to a money laundering or terrorist financing investigation

or regulatory action.

67. EDD requires that in addition to the rules governing potential and

existing customers, market actors must also implement policies and

procedures to:

(a) Ensure that it has appropriate risk management systems to

determine whether the customer is a PEP;

(b) Obtain approval from the Compliance Officer or relevant

senior manager or senior officer to establish business

relationships with PEPs;

(c) Take reasonable measures to establish the source of wealth and

source of funds; and

(d) Conduct ongoing monitoring of business relationships. This

should include greater oversight of PEPs’ accounts and more

stringent KYC measures. Market actors should check PEPs’

identification with listings available from the Office of Foreign

Assets Control (OFAC) Listing, C6 and Dow Jones Watchlist

(formerly Factiva Public Figures & Associates) or any other

appropriate listing, to conclude if there are any red flags a

market actor ought to know in compiling a customer risk

profile for due diligence. Moreover, prior to accepting a PEP

as a customer, a market actor should determine whether a PEP

is carrying out transactions which originate or are primarily

affiliated with business from countries named on FATF’s

Public Statements in relation to non-cooperative countries or

territories.

Third Party Reliance, Trust and Nominee Accounts

68. A market actor that establishes trust and/or nominee accounts on

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behalf of its customers should adhere to all EDD requirements as

previously outlined. Such accounts should only be established after

authorization by the Compliance Officer or relevant senior manager or

senior officer of the market actor.

69. Market actors can rely on other market actors or other third parties to

perform elements of the CDD process or to introduce business

provided that the criteria set out below are met:

(a) A market actor relying upon a third party or other market actor

should immediately obtain the necessary information

concerning the third party’s CDD process. Market actors

should take adequate steps to satisfy themselves that copies of

identification data and other relevant documentation relating to

the CDD requirements will be made available from the third

party upon request and without delay.

(b) The market actor should satisfy itself that the third party is

regulated and supervised and has measures in place to comply

with CDD requirements

(c) Where such reliance is permitted, the ultimate responsibility for

customer identification and verification remains with the

market actor relying on the third party.

(d) In the event that a market actor is unable to acquire copies of

relevant documentation relating to the CDD requirements from

a third party, who may be acting in trust or as a nominee on

behalf of its customer, the market actor shall be responsible for

performing CDD.

Cross-Border Relationships

70. Market actors should, in relation to cross-border correspondent

banking and other similar relationship and in addition to performing its

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normal due diligence measures:

(a) Gather sufficient information about a respondent or

correspondent financial institution to understand fully the

nature of the respondent’s business and to determine from

publicly available information the reputation of the institution

and the quality of supervision, including whether it has been

subject to a money laundering or terrorist financing

investigation or regulatory action.

(b) Assess the respondent institution’s anti-money laundering and

terrorist financing controls.

(c) Obtain approval from the Compliance Officer or relevant

senior manager or senior officer before establishing new

correspondent relationships.

(d) Document the respective responsibilities of each institution.

(e) With respect to “payable-through accounts,” be satisfied that

the respondent bank has verified the identity of and performed

on-going due diligence on the customers having direct access to

accounts of the correspondent bank and that it is able to provide

relevant customer identification data upon request to the

correspondent bank.

71. Market actors should not enter or continue a correspondent banking

relationship with a bank incorporated in a jurisdiction in which it has

no physical presence and which is unaffiliated with a regulated

financial group (i.e. shell banks.)

Non Face-to-Face Customers

72. All guidelines identified above for face-to-face customers shall apply

to non-face-to face customers. However, where it is impractical or

impossible to obtain sight of original documents for identification

purposes, a colour copy can be accepted as suitable evidence of

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identity provided that the copy has been certified by a suitable certifier

such as a recognized notary public as being a true copy of the original

document and the photo is a true likeness of the customer.

73. The market actor shall ensure that the notary public has signed the

copy document (printing his name clearly underneath) and has also

clearly indicated his/her position or capacity, together with appropriate

contact information, including an address and a phone number.

74. In the case of a person from a country that is deemed “high risk” the

market actor should contact appropriate foreign authorities to verify

identification information.

Wire Transfers

75. The following guidelines on wire transfers aim to ensure that basic

information on the originator of wire transfers is immediately

available:

(a) To assist law enforcement and/or prosecutorial authorities in

detecting, investigating, prosecuting terrorists or other

criminals and in tracing the assets of the said terrorists or other

criminals;

(b) To the FIU for analyzing suspicious or unusual activity and

disseminating as necessary; and

(c) To market actors to facilitate the identification and reporting of

suspicious transactions.

Cross-Border Wire Transfers

76. Cross-border wire transfers should be accompanied by accurate and

meaningful originator information. Information accompanying

qualifying cross-border wire transfers must always contain:-

(a) The name and address of the originator of the transfer;

(b) A national identification number or a passport number where

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the address of the originator is not available;

(c) The financial institution where the account exists;

(d) The number of the account and in the absence of an account, a

unique reference number.

77. Market actors should put in place provisions to identify wire transfers

that are not accompanied by complete originator information and

assess whether the transfer or any other linked transaction is suspicious

in nature and requires the filing of an SAR with the FIU.

Domestic Wire Transfers

78. Information accompanying domestic wire transfers must include

originator information as indicated for cross-border wire transfers

unless full originator information can be made available to the

beneficiary market actor and appropriate authorities by other means. In

the latter case, market actors need only include the account number or

a unique identifier provided that this number or identifier will permit

the transaction to be traced back to the originator. The information

must be made available by the ordering market actor within three

business days of receiving the request either from the beneficiary

market actor or from appropriate authorities.

79. These AML-CFT Guidelines on wire transfers are not intended to

cover the following types of payments:

(a) Any transfer that flows from a transaction carried out using a

credit or debit card so long as the credit or debit card number

accompanies all transfers flowing from the transaction.

However, when credit or debit cards are used as a payment

system to effect a money transfer, they are covered by these

AML-CFT Guidelines, and the necessary information should

be included in the message; or

(b) Market actor-to-market actor transfers and settlements where

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both the originator and the beneficiary are market actors acting

on their own behalf.

Timing and Duration of Identification and Verification

80. Customer identification and verification should be conducted prior to

entering into a business relationship and during the course of

conducting transactions for occasional customers.

81. The exception to the above guideline is that a market actor is permitted

to open an account or carry out a significant one-off transaction before

verification can be completed provided that:

(a) The transaction is subject to stringent controls which should

ensure that any funds received are not passed to third parties;

(b) A senior manager or senior officer or Compliance Officer is

made responsible for giving the appropriate authority for

opening the account or for the carrying out of the significant

one-off transaction before verification is confirmed. This

authority should not be delegated to a third party, except in

exceptional circumstances;

(c) The decision to approve the opening of an account or for the

carrying out of a significant one-off transaction before

verification is confirmed should be given in writing; and

(d) Verifications should be conducted as soon as is reasonably

practicable and once begun should be pursued either to a

satisfactory conclusion or to the point of refusal.

(e) At the point of refusal a written report shall be prepared and

market actors should consider filing a SAR with the FIU.

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PART 4 RECORD KEEPING REQUIREMENTS

The following guidelines should be incorporated into a market actor’s

document retention policy which would allow for the provision of information

to auditors and other competent authorities undertaking criminal investigations

and the prosecution of persons charges with criminal offences.

80. Market Actors shall retain records of all domestic and international

transaction and identification data obtained through the CDD process in

either written or electronic form for a minimum period of six (6) years.

81. The requirement of retaining records for six years may be extended by

either the Commission or the FIU.

82. The transaction records shall be kept in a format specified by either the

Commission or the FIU and should contain sufficient detail to permit the

reconstruction of a specific transaction.

83. Records retained by market actors in accordance with these guidelines

shall be made available at the request of the FIU or other competent

authority.

84. Records should contain the following data:-

(a) Details of the transaction including the amount and type of the

currency used; and

(b) A copy of any evidence of identity obtained through the CDD process.

85. With reference to the requirement to maintain records for a period of six

years, this period shall apply:-

(a) In the case of a market actor and a client who have formed a business

relationship, from the date on which that relationship ends; or

(b) In the case of a one-off transaction or a series of such transactions,

from the date of completion of the transaction or the date of the last

transaction in a series.

86. Where there has been a report of a suspicious activity via a SAR or where

there is an ongoing investigation by the FIU or a competent law

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enforcement authority into money laundering and/or terrorist financing,

records relating to the transaction for the investigated parties should be

retained until confirmation is received that the matter has been concluded

or the market actor has otherwise been advised by the FIU or a Court of

competent jurisdiction that it is safe to dispose of these records

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PART 5 SUSPICIOUS ACTIVITY REPORTING

87. The background and purpose of any complex, unusual, or large

transaction and all unusual patterns of transactions, which have no

apparent economic or visible lawful purpose must be given special

attention and such transactions should, as far as possible, be examined,

documented in writing and made available to the FIU by market actors.

88. Staff at all levels must be trained to identify suspicious activity and must

be aware of the proper procedure to be followed when suspicious activity

is detected.

89. All suspicious activity must be reported to the Compliance Officer.

90. If the Compliance Officer knows, suspects or has reasonable grounds to

suspect that a customer’s funds represent proceeds of a criminal activity or

that a transaction or activity appears to be suspicious, he should report his

suspicions as soon as possible or within fourteen days from the date the

transaction was deemed to be suspicious to the FIU via a SAR in

accordance with Part III of the FIU Regulations.

91. If the Compliance Officer knows, suspects or has reasonable grounds to

suspect that a customer’s funds are linked or related to, or are to be used

for terrorism, terrorist acts or the financing of terrorism or belong to

persons or entities that are designated entities he should report his

suspicions to the FIU via a SAR without delay but within fourteen days

from the date the transaction was deemed to be suspicious.

92. In cases where a SAR has been filed with the FIU, market actors should

continue to monitor and report any further suspicious or unusual activity in

relation to that customer’s accounts until otherwise directed by the FIU.

93. In the event that a retail customer is unwilling or unable to provide the

necessary due diligence information and/or documentation in opening an

account or in completing subsequent transactions, the market actor should

terminate or not proceed with establishing the business relationship.

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94. The market actor should keep up to date records of all such customer

transaction terminations and customer disapprovals. For institutional

customers and customers who fall under the EDD category, when a

transaction and/or business relationship is declined or terminated for

failure to provide necessary CDD or EDD information and/or

documentation, a SAR should be immediately filed with the FIU within

fourteen days of the termination or rejection of a business relationship or

transaction.

95. Copies of all reports made to the FIU with respect to suspicious customer

activity should be kept for a minimum of six years. Copies of all

documents released to the FIU pursuant to a court order being served upon

a market actor shall be kept for a minimum of six years from the date of

release or until the original documents are returned, whichever is shorter.

96. Market actors should maintain a register of all enquiries made to them by

the FIU and all subsequent disclosures made to the FIU with respect to the

enquiries. This register should be maintained for a minimum of six years

and should be kept separate from other suspicious activity/transaction

records. The register should contain as a minimum requirement the

following information:

(a) The date and nature of the enquiry;

(b) The details of the account(s) involved;

(c) The name and agency of the enquiring authority; and

(d) The power(s) under which the request was being made.

97. In determining what constitutes a suspicious activity or a suspicious

transaction market actors shall pay special attention to all:-

(a) complex, unusual, large transactions and all unusual patterns of

transactions, which have no apparent economic or visible lawful

purpose and shall follow all guidelines issued by the Commission

including that which is contained in Appendix 1 of this document.

(b) Business transactions between individuals, corporate persons and

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financial institutions in or from other countries which do not comply

with, or who comply insufficiently with the recommendations of the

FATF.

98. Market actors shall also be responsible checking the list of designated

entities and list of entities against which freezing orders have been

obtained, both of which shall be circulated by the FIU in accordance with

Section 22AA(2) of the ATA (as amended).

99. Market actors shall comply with Section 22AB of the ATA (as amended)

by following the procedures listed below upon receipt of the

aforementioned lists from the FIU:-

1) market actors shall immediately inform the FIU of any accounts held

by persons or entities named either list;

2) if a market actor has reasonable grounds to believe that a person or

entity named on either list has funds within Trinidad and Tobago, the

market actor shall inform the FIU immediately;

3) market actors shall obtain the prior approval of the FIU before

continuing a business relationship or completing a transaction with a

person or entity named on either list circulated by the FIU;

4) if a person or entity appearing on either list attempts to enter into a

transaction or continue a business relationship the market actor should

not complete any transactions but should immediately file a SAR with

the FIU.

Tipping Off

100. If an investigation is or is about to be carried out by the FIU or other

competent authority and a person discloses information that is likely to

prejudice the investigation or proposed investigation to a suspected person

or any other person then that person will be guilty of an offence under

section 51 of POCA.

101. A market actor (and/or its employees) shall not disclose to its customer

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that it has reported, or intends to report, any initiated transactions, deposits

etc. to a FIU with regard to money laundering and/or terrorist financing

activities. A customer under suspicion of engaging in, or being

investigated for, money laundering or the financing of terrorism should not

be informed of this.

102. Where it is known or suspected that a SAR has been already disclosed

to the FIU, and it becomes necessary to make further enquiries, great care

should be taken to ensure that the investigated customer does not become

aware that his name has been brought to the attention of the FIU.

103. If the market actor wishes to terminate a relationship with a suspicious

customer, the market actor must first liaise directly with the FIU to

determine whether or not termination will result in “tipping off” the

customer or prejudicing the investigation in any other way.

104. If the market actor wishes to complete a transaction after filing a SAR

with the FIU, it should first seek the approval of the FIU to do so. The

granting of approval to the market actor will not prejudice any final

analysis or judgment by the FIU.

105. The Commission strongly recommends that market actors engage and

seek the opinion or where applicable, the permission of the FIU after

submitting a SAR as to how to proceed with a suspicious customer’s

business transactions and the associated business relationship.

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Appendix 1

Indicators of Suspicious Activity

CDD/KYC

(a) The customer provides the market actor with unusual or suspicious

identification documents that cannot be easily verified or are

inconsistent with other documents or statements provided.

(b) The customer refuses to provide information to complete the CDD/KYC

process.

(c) The customer, either retail or institutional, is reluctant to provide

complete information about the nature or purpose of the customer’s

business, prior financial relationships, anticipated account activity or the

names of directors or other officers of the entity and the business

location.

(d) The customer, either retail or institutional is located in a jurisdiction that

is considered high risk, such as tax havens, jurisdictions which promote

bank secrecy, narcotics producing regions and countries which do not

meet FATF standards.

(e) The customer refuses to identify a legitimate source of funds or provides

the market actor with information which is found to be false, misleading

or substantially incorrect.

(f) The customer has no reason for using the services of the market actor,

that is, there are no ties to the community or the market actor’s location

is substantially out of the way for the customer.

(g) The customer refuses to provide information concerning the beneficial

ownership of an account or entity.

(h) The customer’s address is associated with multiple accounts and do not

appear to be related.

(i) The customer is or is associated with a PEP.

(j) The customer abruptly liquidates all assets in order to remove wealth

from the jurisdiction.

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(k) The customer makes disadvantageous early redemption of an investment

product.

(l) The customer appears to be acting in a fiduciary role but does not

provide information about who he/she is acting for.

(m) The customer is publicly known to have or have had criminal, civil or

regulatory proceedings against him or her for crimes, corruption or

misuse of public funds.

(n) The customer is reluctant to provide information needed to file reports.

(o) The customer elects not to proceed with a transaction when asked for

documentation.

(p) The customer tries to persuade a market actor or employee not to file

required reports or maintain required records.

(q) The customer makes enquires about exceptions to the reporting

requirements.

(r) The customer makes multiple withdrawals or deposits just below the

reporting threshold on the same day.

Funds Transfers and Deposits

(a) Wire transfers are sent to or originate from high risk jurisdictions which

promote secrecy, tax havens or geographic locations linked to narcotics

trade or terrorism without an apparent business reason.

(b) Wire transfers or payments to or from unrelated third parties (foreign or

domestic) or where the name or account number of the beneficiary or

remitter has not been supplied.

(c) Many small, incoming wire transfers or deposits are made, either by the

customer or third parties, using cheques, money orders or cash that are

almost immediately withdrawn or wired out in a manner inconsistent

with customer’s business or history.

(d) Wire transfer activity that is unexplained, repetitive, unusually large or

shows unusual patterns or with no apparent business purpose.

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(e) The securities account is used for payments or outgoing wire transfers

with little or no securities activities (e.g. account appears to be used as a

depository account or a conduit for transfers).

(f) The controlling owner or officer of a public company transfers funds

into his or her personal account or into the account of a private company

that he or she owns or that is listed as an authorised signatory.

(g) Transfer of funds to financial or banking institutions other than those

from where the funds were initially directed, specifically when different

countries are involved.

(h) Transfers/journals (i.e. book entries) between different accounts owned

by the customer with no apparent business purpose.

Unusual Securities Transactions and Account Activity

(a) Transaction where one party purchases securities at a high price and then

sells them to another party at a considerable loss. This may be indicative

of transferring value from one party to another.

(b) A customer’s transactions include a pattern of sustained losses. This may

be indicative of transferring value from one party to another.

(c) The purchase and sale of non-listed securities with a large price

differential within a short period of time. This may be indicative of

transferring value from one party to another.

(d) A company uses cash to pay dividends to investors.

(e) Use of shell companies to purchase public company shares, in particular

if the public company is involved in a cash intensive business.

(f) Transfer of assets without a corresponding movement of funds, such as

through journaling or effecting a change in beneficial ownership.

(g) A dormant account that suddenly becomes active without a plausible

explanation (e.g. large cash deposits that are suddenly wired out).

(h) A customer’s transactions have no apparent economic purpose.

(i) A customer is unfamiliar with a financial product’s performance and

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specifications wants to invest in it nonetheless.

(j) The transactions show the customer is acting on behalf of third parties.

(k) The customer purchases long term investments and shortly thereafter

liquidates the accounts regardless of fees or penalties.

(l) Customer makes a large cash purchase of financial instruments and

mutual funds holdings followed by instant redemption.

Activity that is Inconsistent with the Customer’s Business Objective or Profile

(a) The customer’s transaction patterns suddenly change in a manner that is

inconsistent with the customer’s normal activities or inconsistent with the

customer’s profile.

(b) There are unusual transfers of funds or journaling among accounts without

any apparent business purpose or among apparently unrelated accounts.

(c) The customer maintains multiple accounts, or maintains accounts in the

names of family members or corporate entities with no apparent business or

other purpose.

(d) The customer’s account is not used for its intended purpose (i.e. used as a

depository account).

(e) The customer enters into a financial commitment that appears beyond his

or her means.

(f) The customer engages in extremely complex transactions where his or her

profile would indicate otherwise.

(g) The time zone in customer’s location is not consistent with the times that

the trades were executed, with no apparent business or other purpose, or

there is a sudden change inconsistent with the customer’s typical business

activity.

(h) A foreign based customer that uses domestic accounts to trade on foreign

exchanges.

(i) The customer exhibits a lack of concern about higher than normal

transaction costs.

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Rogue Employees

(a) The employee appears to be enjoying a lavish lifestyle that is

inconsistent with his or her salary or position.

(b) The employee displays a high level of interest in a particular customer

account even though the customer’s account is relatively unimportant

to the organisation.

(c) The employee’s supporting documentation for customers’ accounts or

orders is incomplete or missing.