COVID-19 Legal Update: Joint Regulatory Guidance for AML/CFT Compliance

The Central Bank of Trinidad and Tobago, the Trinidad and Tobago Securities and Exchange Commission, and the Financial Intelligence Unit of Trinidad and Tobago (collectively the ‘Authorities’) have issued Joint Regulatory Guidance (the ‘Guidance’) on anti-money laundering and counter-terrorism financing and proliferation financing (‘AML/CFT’) obligations in light of the current Covid-19 pandemic. The full text of the Guidance can be found here.

Suggested Adjustments to AML/CFT Procedures

In the Guidance, the Authorities recognise the challenges that the Covid-19 pandemic and consequent restrictions may pose to financial institutions and listed businesses (‘Reporting Entities’) carrying out their usual AML/CFT procedures. While all AML/CFT obligations continue to apply, the Guidance points out the flexibility that exists within the regime of AML/CFT obligations and offers some practical suggestions on how Reporting Entities might meet their AML/CFT obligations at this time.

Some of these suggestions are:

1. 1. 1. The use of simplified due diligence measures where risk is lower e.g. where accounts are being created to facilitate government payments for Covid-19 related economic relief.
      2. Accepting digital copies of documents as an interim measure until Covid-19 related restrictions are relaxed. Reporting Entities could also consider requiring that digital copies are accompanied by a declaration of authenticity.
      3. Accepting recently expired identification documents

Where digital copies of identification documents are used, some suggested additional verification measures are:

1. 1. 1. Video calls to compare the physical likeness of the customer with the digital copies of the identification documents.
      2. Requiring customers to submit a “selfie” that can be compared with the digital copies of the identification documents.
      3. Interviewing customers by video or phone calls to ask questions to ascertain whether the customer is who they claim to be and the nature and purpose of the business relationship.
      4. Conducting independent searches via e.g. the Companies Registry or the Ministry of Works and Transport’s Driver’s Permit Verification System.
      5. Seeking third party verification of information provided by customer or placing reliance on due diligence carried out by others.
      6. Gathering and analysing additional data such as geolocations and IP addresses to verify information provided by the customer.

Where interim measures are used, verification of original documents should be completed as soon as practicably possible after Covid-19 related restrictions are lifted. The Guidance also recommends that agreements include clauses to the effect that where documentation proves to be incorrect/falsified/misrepresented, the contract will be nullified.

The Authorities recognise that temporary amendments to Reporting Entities’ AML/CFT policies and procedures may be needed, but that it may not be possible to make formal amendments at this time. In these circumstances, the Authorities expect that proper records of all such changes made due to the Covid-19 pandemic will be kept.

Specific Risks posed by the Covid-19 Pandemic

The Guidance also reminds Reporting Entities to be vigilant to new and emerging risks due to criminals taking advantage of the Covid-19 pandemic and to report suspicious activities and transactions.

Some of the specific risks that may arise due to the Covid-19 pandemic are:

1. 1. 1. Covid-19 related frauds and medical scams;
      2. fraudulent fundraising;
      3. exploitation of vulnerabilities due to remote working arrangements to bypass usual due diligence controls;
      4. phishing schemes that prey on Covid-19 related fears;
      5. setting up of companies and non-profit organisations to fraudulently receive government social assistance or economic relief funds; and
      6. the use of legitimate businesses to fraudulently obtain and subsequently launder government economic stimulus funds.

Reporting Entities should also take appropriate measures to establish the legitimate origin of unexpected financial flows e.g. from companies that maintain the same level of financial flows as pre-Covid-19, despite being in sectors affected by restrictions on non-essential services.