BB asks banks to be careful about business relations with 'PEPs'
Wednesday, 26 September 2007
Siddique Islam
The central bank has instructed banks and non-banking financial institutions (NBFIs) to be more careful while opening and maintaining the accounts of the 'politically exposed persons' (PEPs), official sources said.
'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 involve reputational risks similar to those with PEP themselves.'
The Bangladesh Bank (BB) also asked the commercial banks and NBFIs to be diligent in operating such accounts to minimise four 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 establish the source of wealth and source of funds and conduct ongoing monitoring of the business relationship.
The central bank issued a circular in this connection Tuesday and asked the chief executives of all scheduled banks and NBFIs to follow the instructions while dealing with the PEPs.
"We have asked the banks and NBFIs to comply with the instructions for operating such accounts to avoid any financial risk," a BB senior official told the FE.
He also said the central bank issued the circular in line with the recommendations of the United Nations Convention against Corruption (UNCAC) and the Financial Action Task Force (FATE).
The FATF is an inter-governmental body whose purpose is the development and promotion of policies, both national and international, to combat money laundering and financing of terrorism. The FATF has already approved 48 recommendations to curb money laundering, the sources added.
"All provisions of Money Laundering Prevention Act, 2002 and directives given with reference to the said Act should be followed properly," the central bank said in its circular.
The banks and NBFIs should observe all formalities as detailed in the guidelines for foreign exchange transactions while opening accounts of non-residents, the circular added.
The central bank has instructed banks and non-banking financial institutions (NBFIs) to be more careful while opening and maintaining the accounts of the 'politically exposed persons' (PEPs), official sources said.
'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 involve reputational risks similar to those with PEP themselves.'
The Bangladesh Bank (BB) also asked the commercial banks and NBFIs to be diligent in operating such accounts to minimise four 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 establish the source of wealth and source of funds and conduct ongoing monitoring of the business relationship.
The central bank issued a circular in this connection Tuesday and asked the chief executives of all scheduled banks and NBFIs to follow the instructions while dealing with the PEPs.
"We have asked the banks and NBFIs to comply with the instructions for operating such accounts to avoid any financial risk," a BB senior official told the FE.
He also said the central bank issued the circular in line with the recommendations of the United Nations Convention against Corruption (UNCAC) and the Financial Action Task Force (FATE).
The FATF is an inter-governmental body whose purpose is the development and promotion of policies, both national and international, to combat money laundering and financing of terrorism. The FATF has already approved 48 recommendations to curb money laundering, the sources added.
"All provisions of Money Laundering Prevention Act, 2002 and directives given with reference to the said Act should be followed properly," the central bank said in its circular.
The banks and NBFIs should observe all formalities as detailed in the guidelines for foreign exchange transactions while opening accounts of non-residents, the circular added.