Explanatory Memorandum to the Anti-Money-Laundering Law of 18 September 2017 - General commentary on cases of enhanced due diligence

In accordance with Directive 2015/849, the risk-based approach implies that obliged entities adapt the due diligence measures they apply to the risk identified once the individual risk assessment is complete. Where they identify the presence of a high risk of ML/TF, the obliged entities must reinforce their due diligence measures.

Without prejudice to the cases of high risk identified by obliged entities as part of their general risk assessment referred to in Article 16 of the draft Law and their individual risk assessment referred to in Article 19, § 2 of the draft Law, there are cases that in particular intrinsically entail a high risk and in which enhanced due diligence measures should be applied in any case. These situations are referred to in this Chapter.

However, it should be underlined that the application of these provisions formulated in this Chapter 2 do not form an obstacle to the risk-based approach which constitutes an essential basis for the general due diligence obligations defined in Chapter 1. On the contrary, the application of the reinforced rules stated hereinafter must be combined with the risk-based approach. As a result, the fact that the verification of the identity of the persons implied in the business relationship is deferred (Article 37) that the customer or his/her beneficial owners are established in high-risk countries (Article 38) that the business relationship or the transaction shows links with tax havens (Article 39) that the business relationship consists of a correspondent banking relationship or similar (Article 40) or involves politically exposed persons (Article 41) does not absolve the obliged entity from proceeding with an individual risk assessment associated with this business relationship or this transaction in accordance with draft Article 19, § 2, first indent. It equally does not absolve them from, in accordance with draft Article 19, § 2, second indent, enhancing the due diligence measures applied and those required by the present chapter, where the entirety of the risk factors identified in the case in question so requires. As an example, where the customer is a politically exposed person referred to in Article 41, if the information collected on this customer or the nature and purpose of the business relationship envisaged moreover reveals higher risks independently of the fact that the client is a PEP, this should be taken into account in this customer’s risk profile and consequently to determine the appropriate degree of the reinforcement of the due diligence measures required by draft Article 41 (especially in terms of the hierarchical level of the manager who has to approve the business relationship, of the intensity of the measures taken to establish the origin of the customer’s assets and of the funds implied in this business relationship, as well as of the intensity of the reinforced oversight of the business relationship). It is the same case where it appears that the same business relationship or transaction simultaneously comes from several high-risk situations listed in the present Chapter 2 (for example the business relationship consists of a correspondent banking relationship with a financial institution established in a high-risk third country or in a tax haven). In a general way, it is reminded that Article 19, third paragraph requires the obliged entity in any case to be able to demonstrate to its supervisory authority that the due diligence measures it applies are appropriate given the ML/TF risk it has identified. This also applies to the measures put in place in application of the present Chapter 2.