Reporting Entity
Who is a Reporting Entity?
According to Section 2 of the AML/CFT Act 2009, a Reporting Entity is defined as any person whose regular occupation or business involves:
- Engaging in any activity listed in the First Schedule of the Act; or
- Engaging in any other activity designated by the Minister responsible for Finance through an order published in the Gazette amending the First Schedule.
Dealers in Precious Metals (also referred to as Licensed Gold Dealers) are expressly designated as Reporting Entities (REs) and categorized as a Designated Non-Financial Business or Profession (DNFBP) under the First and Fourth Schedules of the AML/CFT Act 2009. This designation applies, among other circumstances, when such dealers engage in cash transactions with customers amounting to two million dollars or more, or such lesser amount as may be prescribed by the Minister responsible for Finance.
Consequently, all Licensed Gold Dealers are legally obligated to comply with the requirements set out in Sections 15, 16, 17, 18, 19, 68A, 68B, 68C, 68D, 68E, 68F, 68G, 68H, 75A and 75B and all other reporting entity obligations under the AML/CFT Act 2009 (as amended).
What are the Legal Obligations of Reporting Entities?
In addition to the obligation of dealers in precious metals to submit reports to the Financial Intelligence Unit (FIU), the AML/CFT Act 2009 imposes a number of additional obligations on dealers in their capacity as Reporting Entities (REs).
These other obligations include:
- Carrying out an assessment of the money laundering and terrorist financing risk the entity may reasonably expect to face including:
- ongoing risk assessment and risk management and risk mitigation programmes, including risk assessment for new products, business practices and delivery mechanisms; and
- keeping update-to-date with new or developing technologies for new and pre-existing products or
services.
- Appointing an AML/CFT compliance officer or designating a person to carry out the entity’s compliance function.
- Designing, implementing, and maintaining an AML/CFT/CPF compliance programme that sets out procedures, policies, and internal controls for, among other things:
- carrying out due diligence on customers (CDD), including customer identification and verification;
- undertaking monitoring and enhanced due diligence for high-risk customers;
- reporting suspicious transactions (STRs);
- submission of terrorist property reports (TPRs);
- effective record-keeping;
- screening persons before hiring them as employees;
- Ensuring independent audits and reviews of the entity’s Risk Assessment and AML/CFT/CPF Programme are conducted.
- Ensuring that AML/CFT/CPF related training is provided to all persons involved in the management of the entity as well as key staff on an ongoing basis.
- Maintaining record of verification of identity of customers; record of customers transactions; as well as a register of ML/TF enquires by the FIU, the Special Organised Crime Unit or other competent authority.
Sanctions for Non-Compliance
Section 23 of the AML/CFT Act 2009 empowers the Supervisory Authority to impose one or more sanctions and/or supervisory measures on a Reporting Entity (RE) to ensure compliance with its obligations under the Act, including but not limited to:
- Written warnings;
- Order to comply with specific instructions;
- Order regular reports from the reporting entity on the measures it is taking;
- Prohibit convicted persons from employment in the sector
- Recommend to the appropriate licensing authority of reporting that the reporting entity’s licence be suspended, restricted or withdrawn;
- Directors or senior managers responsible for compliance breaches can be removed from their positions, and the entity fined $5M–$15M.
- Supervisory authorities may suspend, cancel, or revoke licences or other authorisations.
- Reporting Entities may receive a written notice and be fined up to $3M (individuals) or $7M (corporates).
- For repeated violations, the authority may recommend revocation of the business’s registration.
