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Money Laundering and the Financing of Terrorism

Background

The Isle of Man has applied the "Know Your Customer" ("KYC") principle since 1985. More detailed provisions are now in place to determine how customers and clients are adequately identified and their identity verified.

KYC is a convenient term to describe the process of obtaining, retaining and using information about a customer such that his identity and residential address are verified, the source of his funds and wealth are understood, his financial circumstances are understood, and the nature of the transactions he undertakes are understood in the context of his known personal circumstances and activities. Similar concepts apply to corporate, trust and other business, modified accordingly. Increasingly the term "Customer Due Diligence" ("CDD") is being used to represent the same concepts.

Under the Criminal Justice (Money Laundering) Code 2008 every licenceholder must have a Money Laundering Reporting Officer, keep adequate records and have effective staff training in this area. The definition of business caught by the new standards goes much wider than financial services and includes Estate Agents, Bookmakers, Casinos and Local Authorities amongst others. Part 9 of the Financial Services Rule Book 2008 puts further requirements on the Commission’s licenceholders. These include conducting customer due diligence on a risk based approach, specific requirements in respect of dealing with Politically Exposed Persons and ongoing monitoring of business relationships.

The Commission has issued a Handbook of guidance for licenceholders on anti-money laundering and countering the financing of terrorism explaining how the Commission would expect institutions to fulfil their responsibilities under the new legislation. In order to assist licenceholders to fulfil their training obligations under the Code the Commission arranges, from time to time, Anti-Money Laundering and Countering the Financing of Terrorism seminars.