On 15 April 2010, the National Parliament of the Solomon Islands
passed the Money Laundering and Proceeds of Crime (Amendment)
Act (Amendment Act) which amends the
Money Laundering and Proceeds of Crime Act 2002
(MLPCA). The Amendment Act brings Solomon
Island's legislation in line with the Financial Action Task
Force recommendations to combat money laundering and terrorist
financing (FATF Recommendations).
These amendments may affect financial institutions
(FI), cash dealers (CD), legal
practitioners (LP) or other persons carrying on
business in the Solomon Islands generally. Specifically, the
Amendment Act now applies to LPs. The definitions of CD and FI have
also been extended to cover a wider range of people than under the
MLPCA previously. In addition, the Amendment Act imposes more
onerous obligations on CDs and FIs. It is an offence not to comply
with the requirements under the MLPCA, as amended.
The Amendment Act extends the MLPCA to a broader range of
transactions and the identification and verification process
standards. Provisions have been made, applicable to FIs, CDs and
LPs, imposing obligations of identification and verification of the
identity of a person in circumstances when the person:
opens an account;
engages the services of the FI, CD or LP for the purposes of
providing one or more of their services;
enters into a business relationship with one of them; or
conducts or attempts to conduct a transaction.
There is an express requirement that FIs and CDs identify and
verify the identity of a customer carrying out a funds transfer
other than electronically, when they reasonably suspect that the
customer may be involved in money laundering, financing of
terrorism or in the commission of a serious offence.
Verification of the identity of occasional customers is also
strengthened under the Amendment Act. The definition of beneficial
owner now fully meets the FATF Recommendations.
The Amendment Act imposes an obligation on FIs, CDs and LPs to
verify any persons acting on behalf of customers. The Amendment Act
introduces the requirement to obtain information on the purpose and
intended nature of the business relationship and if the customer is
a politically exposed person, there are further obligations.
If an FI carries out cross border banking services or similar,
it must gather further details in addition to those already
The reliance on third parties or intermediaries for customer due
diligence was not contemplated under the MLPCA however this is now
contemplated under the Amendment Act. It is the responsibility of
the FIs, CDs or LPs to ensure the third party carries out the
obligations as necessary and the third party must provide copies of
all information and documentation they gather pursuant to their
responsibilities under the Amendment Act.
If the FI, CD or LP is not satisfied with any of the information
provided, they must prepare a suspicious transaction report of any
transactions attempted by the person and provide this report to the
Unit. They must not proceed any further with the transaction.
Under the Amendment Act, there is an explicit requirement that
FIs, CDs and LPs prepare a report if they have a reasonable
suspicion that a transaction may be related to money laundering or
terrorist financing and in circumstances where FIs, CDs and LPS
have doubts about the adequacy of previously obtained customer
FIs, CDs and LPs must conduct ongoing due diligence on its
relationship with each of its customers and conduct ongoing
scrutiny of transactions by its customers.
Where the transactions appear to be complex, unusually large and
unusual with no apparent economic or lawful purpose, there is a
duty to report this transaction or attempted transaction under
section 14B (1) of the Amendment Act. This was not previously
required under the MLPCA.
FIs, CDs and LPs must retain all evidence of identification of
the person and any correspondence between the identified person and
the FI, CD or LP for 6 years. Previously, there was ambiguity on
this retention period which appeared to be only 5 years. It is also
necessary to keep records of suspicious transactions etc.
If you carry on business in the Solomon Islands, you need to be
aware of the changes that may affect you when attempting to carry
out specific financial transactions as well as the obligations that
have been introduced in respect of FIs, CDs and of course LPs.
Please contact us if you would like further information on any of
the issues raised above.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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