Sue and Gary highlighted some of the key proposed changes in these initial reforms including:
- Address Verification: The Regulations propose an exemption for address verification (other than where enhanced customer due diligence is required). However, currently there is a requirement for a reporting entity to be satisfied, according to the level of risk involved, that an address is genuine, based on documents, data or information from a reliable source.
- Low Risk Trusts: Cabinet has agreed to exempt low risk trusts from the current requirement to verify information about the source of wealth or source of funds. However, it was noted that the Regulations do not currently define the criteria for trusts to be considered ‘low risk’.
- Additional Measures: There are additional measures for both standard and enhanced customer due diligence (CDD).
- Beneficial Ownership: The definition has been revised. ‘Ultimate’ beneficial owners are formally included.
- Risk Ratings: New customers will need to be risk-rated when undertaking CDD; with a record to be retained. There are also implications for ongoing CDD for all customers regarding customer risk ratings.
The flow-on effects of the Regulations were also discussed as these changes will trigger a review of the Compliance Programme and Risk Assessment. Other impacts included the need for changes to day-to-day processes, forms, potential systems changes and the need to reconsider Compliance Assurance Programmes. Training throughout every affected organisation was also seen as critical to a successful integration of the Regulations.
Sue and Gary encouraged attendees to give careful consideration to the detail in the Regulations. Please reach out to SHIFT if you would like to discuss these changes further.