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Isle Of Man Adds To Know Your Customer Guidance

by Jason Gorringe, Lowtax.net, London
11 July, 2017

The Isle of Man's financial services regulator, the Isle of Man Financial Services Authority, has published new guidance for the island's regulated entities in relation to undertaking customer risk assessments.

The guidance supplements Section 3.3 of the island's Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Handbook.

All regulated entities are required to undertake customer risk assessments for each customer prior to establishing a business relationship or carrying out an occasional transaction. The assessment is designed to estimate the risk that the customer may be engaged in money laundering or terrorist financing.

The new guidance says that when assessing the risk posed by a customer, regulated entities should consider all known risk factors and include these in the customer's risk profile, making sure any mitigating factors are documented.

Examples of risk factors to be taken into account include: the regulated entities' business risk assessment in relation to AML/CFT and their risk appetite; the nature, scale, complexity, and geographical location of the customer's activities; the persons to whom the customer is providing products and services to, and the manner in which they are being provided; and, whether there is any reliance placed on third parties for the customer due diligence process.

The guidance also provides information on how to assess risk for those performing some kind of public function, called "politically exposed persons", who present a higher risk for potential involvement in bribery and corruption by virtue of their position.

The guidance is available on the Authority's website.

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