According to Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) laws in Trinidad and Tobago, each Financial Institution (FI) and Listed Business (LB), must have a Compliance Programme approved by the Board of Directors, to assist the organization and employees with being in compliance with those laws.
The Compliance Programme is meant to encapsulate the provisions of the AML/CFT legislations and regulations by taking a risk based approach to the people, products and places of business, to formulate the policies and procedures of the company to meet those provisions.
To assist FIs and LBs in developing their Compliance Programmes, the Supervisory Authorities (Central Bank of Trinidad and Tobago – CBTT, The Trinidad and Tobago Securities and Exchange Commission – TTSEC, and the Financial Intelligence Unit of Trinidad and Tobago – FIUTT) produced guidelines for their respective groups of supervised entities to apply the legislation and regulations.
However, as we continue to evolve as a society, a country and the world, so too the risks associated people, products and places. It is therefore of necessity that we continuously evaluate the effectiveness and appropriateness of the Compliance Programme in mitigating risks. The Compliance Programme should be responsive to change. We must ensure that the requirements of the Compliance Programme in mitigating the assessed risks are not tantamount to using a sledge hammer to crack pistachios or using scissors to try to cut a steel chain.
Below are two scenarios from my recent observation of banks’ account opening requirements for companies, which highlight why constant review of the Compliance Programme is necessary to remain relevant.
Scenario 1: Recently there have been a few changes in the requirements for filing certain documents at the Companies Registry of the Registrar Department in the Ministry of Legal Affairs. One of these changes is the filing of a Form 45 which captures the beneficial owners of shares in a company or those holding beneficial interest in the shares.
One bank is observed to be requiring Company Account Applicants (CAAs) that have not issued shares to submit a Form 45 as part of the account opening documents. This is likely due to the bank itself being required to identify and verify the ultimate beneficial owners of significant shareholdings in the CAA. The issue with requesting the company to submit a Form 45 is that the Companies Registry does not require shares to be issued in the company when it is incorporated and the filing of Form 45 is for companies with issued shares. Being that the Form 45 captures information of the beneficial shareholders or persons holding beneficial interest in the shares, the CAA is being required by the bank to submit an unregistered Form 45 to be used for an unintended purpose leading to process frustration.
Scenario 2: On a broader scale, most banks, if not all, require CAAs to submit a Notice of Secretary as part of their account opening documents. This document is not required by the Companies Registry at the time of incorporating a company. One bank employee even indicated to a CAA that the document is a requirement of the Financial Obligations Regulations (FOR) and suggested that the CAA quickly file the Notice of Secretary with the Companies Registry and submit a copy to the bank. In this case I would have much rather that the bank employee had been trained to say it is the policy of the bank as the FOR does not specifically require a Notice of Secretary, but that FIs or LBs should verify the identity of the officers of the company. (No appointed Secretary – No Companies Registry filing – No bank requirement).
The Companies Act allows up to one month after commencing the carrying on of business for the appointment of a Secretary. The compulsory requirement of the Notice of Secretary disqualifies newly formed companies that have not yet appointed a Secretary from opening a bank account to conduct transactions in their first month of carrying on of business; adding to process frustration. This can also lead to other undesirables such as unbanked business operations or comingling the business funds in other bank accounts.
FIs and LBs may wish to tailor their Compliance Programmes to consider that Form 45s be requested only if filed with the Companies Registrar Department, and that being, only if filed after the last Annual Return. Also, consideration should be given to companies with less than one month of carrying on of business; to adapt the due diligence requirements by no longer requiring that the Notice of Secretary to be a compulsory document for these companies, but should be requested only (if any) exists. It is important to remember that it is not the objective of the AML/CFT legislation and regulations for FIs and LBs to force persons into such obligatory requirements that they otherwise are not, or are not yet, required to fulfil, but rather to use appropriate reliable and independent source documents and information to identify and verify persons and to understand the persons and their businesses.