Synergies between CRS

and AML
IN RELATION TO THE FOURTH AML DIRECTIVE
 Contents
2
Understanding the nature and purpose of an account holder
and monitoring accounts to protect financial integrity
Collection of KYC information
CRS declaration forms to use for AML purposes as well
Monitoring accounts use of existing AML systems for the
purpose of CRS
Knowing the protocol of what makes a beneficial owner under
AML rules
Usage of the central UBO registry
Setting up the beneficial ownership chain
What changes are being made to the disclosure of 29.11.2016
 3
Collection of KYC information in case of a private person#1

Define reliable and acceptable documents.

Check validity of documents first / Check MRZ code.

Check signature from passport & given signatures and passport security
elements (prado.consilium.europa.eu / IdenTT).

Do sanctions check on the person & possibly background check.

Check if person has filled correctly his/her CRS Self certification

form and W8-BEN/W9 form if necessary.
29.11.2016
 4
Collection of KYC information in case of a private person#2

Give customer a questionnaire on nature and source of activity (only

signed questionnaires are valid).

Document all data in a searchable database.

Ask also for customer accessibility data (e-mail/phone).

Make forms as simple as possible the case of paranoid savings

association.

Scan documents received in a database, from which RMs cannot delete.

29.11.2016
 5
Collection of KYC information in case of a non-private person#1

Define reliable and acceptable documents, especially for off-shore

countries.

Check, if the person(s) in front of you is/are authorized to represent

client and if yes, how and why.

Check all persons on sanctions lists and perform negative news

search

Use KYC Questionnaire to determine the nature of business the client

needs from you 29.11.2016
 6
Collection of KYC information in case of a non-private person#2

Check company registry extract also from reliable source if possible

https://en.wikipedia.org/wiki/List_of_company_r
egisters
Ask yourselves: Why now? Why my institution? Is it reasonable for
the client to use my institution or are there other purposes behind?

Double check power of attorneys and Articles of Associations

Document all data in a searchable database

Perform UBO check as described later

29.11.2016
 CRS self-declaration forms as means of AML 7

3 types of CRS self-declaration forms widely used: CRS-E, CRS-CP, CRS-I

All contain personal data & tax residence countries
Does my customer send taxes to the declared country from his/her/its
account?
Are given ID documents in line with the declared countries?
Why is the client a taxpayer in the given countries? (e.g. lives there, has
been born there, has a business there information for background
check)
Are the given tax numbers correct, matching tax ID documents and
company registry extracts / Tax residency certificates?
Does the customer have any other relationship to the given country?
29.11.2016
 8
Monitoring accounts use of existing AML systems for the purpose
of CRS

Define all accounts of tax authorities in your AML system

Define rules on sending / not sending funds to tax authorities
Connect with CRS certification if someone sends funds to a non-
declared authority, or does not send anything to a declared authority it
can be suspicious
Is the turnover on the clients account in line with the sent tax?
Alert and stop transaction if the client tries to send funds to tax authority
with unknown account number, which does not belong to the tax
authority in the given country. 29.11.2016
 Who is the Ultimate Beneficial Owner? 9
25%+1 share 10%+1 share +1 share?
If not possible: senior management
Trusts/foundations: settlor+trustee+protector+beneficiaries+anybody
else controlling the trust
Direct or indirect
Therefore all owners must be known regulators ask for the whole chain
of ownership reliable (official) documents shall be provided.
Still no solution on counting ownership safe side solution: if the 25%
+1 share exists in a chain, everybody is beneficial owner, i.e. the number
of beneficial owners is unlimited.
29.11.2016
10

29.11.2016
 UBO REGISTRY 11
All countries shall create a registry on UBOs, e.g. in company registry.
Institutions may not rely solely (=at all) on the registry.
Institutions might be asked to pay for the registry information new
form of tax can be levied on financial institutions, as they have to get data
from the registry they cannot use.
It must be web based, as timely access shall be granted.
Anybody shall access part of the data, who demonstrates a legitimate
interest impossible to check.
Filling the registry with data new form of taxation on companies.
Most complex structure institutions currently have no information on their
UBOs, due to very complex structures, even UBOs may not know, that
they are UBOs at some companies. 29.11.2016
 12
What changes are being made to the disclosure/collection of information?

No change, just wording in case of tipping off regulations

ESAs (EIOPA, ESMA, EBA) shall receive necessary information

Disclosure ruleset between FIUs are created almost same as if they were
domestic authorities.

Importance of Data Protection will significantly increase with the new EU

DP Regulation (679/2016/EC) disclosure on data breach significant
penalties- 20M / 4% of world turnover

Biometric/genetic data (eyeprint, fingerprint, etc.) is prohibited, special

data collection is adviseable only if prescribed. 29.11.2016
 13

Life, Liberty, and the Pursuit of Happiness... but

only when you pay your taxes? That means your
freedom is rented, leased, & not unalienable.

Steve Maraboli

A penny saved is worth two pennies earned . . .

after taxes.
Randy Thurman

29.11.2016