Section 7M: Provision Regarding Cross-Border Correspondent Banking Relationship

1) The financial institution shall take the following measures in the course of maintaining and transacting cross-border correspondence banking relations under the prevailing legislation:

(a) The identification and promotion of the financial institution,

(b) To obtain sufficient information regarding the functioning of the respondent financial institution,

(c)To know fully the nature of the business carried on by the respondent financial institution, including the information received under clause (b),

(d) To assess, based on publicly available information, the reputation of the respondent financial institution, including the quality of its supervision and non-compliance with investigations or regulatory actions relating to the laundering of assets and the financing of terrorist acts,

(e) To assess the adequacy of the financial investment control system and its adequacy in the purification of the assets of the respondent financial institution and terrorist activities,

(f) To obtain the approval of the superior officer looking after its management before establishing a corresponding banking relationship,

(g) To be clearly aware of their responsibilities in relation to the prevention of financial investment in asset laundering and terrorist activities,

(h) Whether or not the respondent financial institution has complied with the provisions relating to the identification and verification of the customer under this paragraph in respect of the customer using the Payable Through Account, whether or not such customer has implemented a regular monitoring procedure and whether or not such customer has been able to provide the necessary details to himself at the time of making the request,

Explanation: ¹For the purposes of this section, “payable through account” means a correspondent account used directly by a third party in connection with a transaction.

(i) To establish a commercial relationship with Shell Bank and to ensure that it does not carry on any business activities, and

(j) To ensure that the respondent’s financial institution does not allow any shell bank to use its account.

2) A financial institution shall comply with sub-section (1) provisions in the conduct of business relations or transactions relating to cross-border correspondence banking carried out by itself or on behalf of a customer.

^{1Added by Act, 2080 to amend certain Acts relating to Prevention of Money Laundering and Promotion of Business Environment.}