Anti-Money Laundering and Countering the Financing of Terrorism ("AML/CFT")
The Isle of Man Government and the Isle of Man Financial Services Authority (“the Authority”) are committed to continually reviewing the Island's legislation and regulations against the recognised international standards. For details of the Isle of Man Government’s commitment to combating Money Laundering and the Financing of Terrorism and Proliferation please see the following link and this webpage.
In addition, the Isle of Man Government has published a national strategy in relation to its stance against money laundering and the financing of terrorism. This document sets out priority goals actions identified following a review of existing defences. The document can be found here.
Customer Due Diligence
The Isle of Man has applied the "Know Your Customer" ("KYC") principle since 1985. KYC is a term used to describe the process of obtaining, retaining and using information about a customer to verify that they are who they say they are.
Increasingly, the term Customer Due Diligence “CDD” tends to be more commonly used. CDD encompasses KYC but it goes further than knowing who your customer is. It involves obtaining, documenting and using a broad range of information relating to a customer relationship or an occasional transaction.
Areas to be considered include identity, address, source of funds (and source of wealth where applicable) and expected business or transactional activity. Certain elements of this information must also be verified. The term CDD also incorporates the ongoing monitoring of a business relationship, including reviewing the due diligence information initially obtained, to ensure it remains up to date and that the relationship is operating as expected for that customer. CDD is required for all new or continuing business relationships or occasional transactions. Further detail can be found in the AML/CFT Handbook.
The Anti-Money Laundering and Countering the Financing of Terrorism Code 2019 (“the Code”) sets out the preventative measures relevant businesses must have in place in order to forestall money laundering and financing of terrorism, which includes:
- conducting CDD utilising a risk based approach (including conducting Enhanced Due Diligence “EDD” in high risk scenarios or wherever deemed relevant),
- having a Money Laundering Reporting Officer (and a Deputy in some sectors),
- maintaining appropriate procedures and controls to deal with Politically Exposed Persons,
- conducting ongoing monitoring of business relationships,
- keeping adequate records and;
- ensuring effective staff training is in place.
The definition of businesses caught by the Code (“Relevant Persons”) goes much wider than only financial services businesses and also includes; issuers of Virtual Currencies, Estate Agents, Bookmakers, Accountants and Lawyers (commonly referred to as designated businesses or DNFBPs).
For full details of which businesses are covered by the Code please see Schedules 4 to the Proceeds of Crime Act 2008.