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GUIDANCE FOR ECMA LICENSEES ON CUSTOMER DUE DILIGENCE AND REPORTING UNDER AML/CFT
The primary goal of Money Launderers is to make their transactions indistinguishable from legitimate transactions. The specificity of the securities Industry is that it can be used both to launder illicit funds obtained elsewhere and to generate illicit profits within the industry itself through additional fraudulent activities such as market manipulation, insider trading, etc. However, the number of Suspicious Transactions Reports originating in this sector is usually relatively low1 compared to others in the banking and financial industry.
Typical securities-related laundering schemes often involve a series of transactions that do not match the investor's profile and do not appear designed to provide an effective return on investment. This, cumulated with the fact that Money Laundering in the Securities Industry usually occurs at the layering and integration stages, makes the Risk-based Assessment and the KYC Due Diligence even more important when establishing a Business Relationship and later during the monitoring phase.
Therefore, the purpose of this document is to draw Guidelines for licensed CMSP’s and Market Intermediaries regarding their obligations in terms of AML/CFT checks and reporting towards the ECMA when establishing a Business Relationship and during this relation. In addition, it focuses on the AML/CFT Due Diligence obligations for Securities Issuers, which include risk-based assessment principles.
This is done in accordance with the provisions of Proclamation 1248/2021 that establishes ECMA as the Regulator of the ESX, as well as the other Capital Markets Participants2, the FATF's "Guidance for a risk-based approach in the Securities Sector", and IOSCO's 8th Principle "Enforcement of Securities Regulation" which:
- Characterizes Money Laundering as activities and processes intended to obscure the source of illegally obtained money and to create the appearance that it has originated from a legitimate source, and
- States that Capital Markets Regulators should consider the sufficiency of domestic legislation to address the risks of Money Laundering (ML) and
