2021 Review of TCSPs Compliance with AMLRs - Sanctions Screening Policies and Procedures (2022-06-17)

Summary

This is a CIMA supervisory circular presenting the findings of a 2021 thematic review of Trust and Corporate Services Providers' (TCSPs) compliance with targeted financial sanctions (TFS) screening obligations under the Anti-Money Laundering Regulations (AMLRs). The review examined 27 TCSPs and 567 client files, assessing compliance with Regulations 5 and 12 of the AMLRs (systems for TFS screening, ongoing monitoring, and due diligence).

While most TCSPs had adequate written policies (63% for onboarding screening, 89% for ongoing monitoring), the Authority found significant implementation gaps: 74% of TCSPs had at least one client file with weaknesses in TFS screening at onboarding or on a periodic basis, including cases of no screening, undocumented screening, late screening, or inadequate periodic review.

The circular does not create new rules but restates existing AMLR obligations and highlights common deficiencies TCSPs must remedy.

• Screening all clients and related parties against applicable TFS lists at onboarding and on an ongoing basis
• Documenting screening results and resolution of hits
• Filing Compliance Reporting Forms and considering suspicious activity reports with the Financial Reporting Authority (FRA) upon true matches
• Conducting timely risk-based periodic reviews
• Providing adequate staff training

The circular warns that non-compliance with the AMLRs or AML Guidance Notes may lead to CIMA enforcement action (including administrative fines) and that failure to comply with TFS obligations is a separate criminal offence enforced by the FRA/Governor, which can also levy civil monetary penalties.

The document applies specifically to TCSPs, but the closing remarks note that all regulated entities should take note of the findings and ensure their own AML/CFT compliance frameworks meet the AMLRs and Guidance Notes standards.

Key obligations

• TCSPs must screen clients, their directors, shareholders, beneficial owners and other related parties against all applicable targeted financial sanctions (TFS) lists at onboarding and on an ongoing basis.
• TCSPs must maintain adequate systems and procedures to identify TFS risk, including tracking updates to applicable TFS lists.
• TCSPs must document and retain evidence of TFS screening performed on client files, including how positive and false-positive hits were resolved.
• Where a true TFS match or suspicion arises, TCSPs must freeze relevant accounts, funds or economic resources and report to the Governor through the Financial Reporting Authority (FRA), including filing a Compliance Reporting Form.
• TCSPs must consider whether to file a suspicious activity report with the FRA and document the rationale for all actions taken to comply with TFS obligations.
• TCSPs must conduct timely, risk-based periodic reviews of client due diligence information to keep it current and relevant, particularly for higher-risk customers.
• TCSPs must provide adequate TFS-related training to staff and periodically assess their AML/CFT compliance programmes for adequacy relative to the nature, size and complexity of the business.
• TCSPs subject to remediation requirements issued by CIMA must remediate identified deficiencies within the prescribed timeframes set by the Authority.

Applies to

Trust and Corporate Services Providers (TCSPs), financial service providers, other financial institutions