Dhaka, Bangladesh (BBN)- The central bank has asked banks and financial institutions to follow a ‘screening mechanism’ when appointing new employees to avert money laundering and terror finance risks.
“We’ve issued the instructions aiming at ensuring that the banks and non-banking financial institutions (NBFIs) are free from such risks,” a senior official at the Bangladesh Bank (BB) told BBN in Dhaka.
Under the new instructions, the banks and NBFIs will have to maintain the screening mechanism in the appointment process for different levels of staff to minimize these risks.
The BB has already issued a circular in this connection asking the chief executives and managing directors of all scheduled banks and NBFIs to follow the instruction while recruiting their employees.
“The employers may collect information on employees from intelligence agencies as followed by the central bank to check on their previous activities,” the BB official said while explaining the screening mechanism.
The banks and NBFIs will have to maintain a policy manual, which will be prepared on the basis of the existing rules and regulations relating to money laundering and terror financing.
“The banks and NBFIs will have to keep specific provisions for carefully watching the clients’ operations at different levels to avoid money laundering and terror finance risks,” the BB official said.
He added the central bank has also instructed banks and NBFIs to be more careful while opening and maintaining the accounts of the ‘politically exposed persons’ (PEPs).
‘PEP’ refers to “individuals who are or have been entrusted with prominent public functions in a foreign country, for example heads of state or of government, senior politicians, senior government judicial or military officials, senior executives of state owned corporations, important political party officials”. Business relationship with family members or close associates of PEPs also involves reputation-linked risks similar to those with PEP themselves.
The BB has also asked the commercial banks and NBFIs to be careful in operating such accounts to minimize the risks in relation to the PEPs.
The banks should have the risk management system to identify PEPs, obtain senior management approval for establishing business relationship with such customers, take reasonable measures to locate the source of wealth and source of funds and conduct the monitoring of the business relationship.
The banks and NBFIs should comply with all formalities as detailed in the guidelines for foreign exchange transactions, while opening accounts of non-residents, the circular added.
“The instructions will be effective for account holders who have become PEPs or the real beneficiaries of the accounts — who also have turned PEPs,” the BB official noted.
BBN/SS/SI/AD-10March10-9:14 am (BST)
