Lately throughout the world, it has been stressed more and more that legal entities called “gatekeepers” (which include banks and other obliged entities, also crowdfunding platforms) apply measures to prevent money laundering and terrorist financing. Traceability of financial information has an important deterrent effect.
The European Union adopted the first anti-money laundering Directive back in 1990 in order to prevent the misuse of the financial system for the purpose of money laundering. It provides that obliged entities shall apply customer due diligence requirements when entering into a business relationship (i.e. identify and verify the identity of clients, monitor transactions and report suspicious transactions). This legislation has been constantly revised in order to mitigate risks relating to money laundering and terrorist financing.
The European Fifth Anti-Money Laundering Directive (AMLD V) from 2018 has recognised the possibilities of developing technologies that can ensure secure ways of remote electronic identity verification in its point (22) of Recitals, stating that accurate identification and ver
ification of data of natural and legal persons are essential for fighting money laundering or terrorist financing.
One of the pillars of the European Union's legislation to combat money laundering and terrorist financing is Directive (EU) 2015/849 (The Fourth Anti-Money Laundering Directive (AMLD IV). According to this Directive, banks and other gatekeepers are required to apply enhanced vigilance in business relationships and transactions involving high-risk third countries.
CREDON is a company registered in the European Union’s member state, Republic of Croatia, and performs its business activities in a strong compliance with legal enactments of the Republic of Croatia, including the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing (AML Law).
The request for identity verification is established in the Article 14 of the AMLD IV and transposed in the national legislation, in Article 11-13 of the AML Law, providing that the subjects of the law should carry on verification of the customer before business relationship is established and before transactions are being carried out.
In July 2018, the Fifth Anti-Money Laundering Directive (AMLD V) was approved with an amendment related to electronic verification, as the financial services environment has flourished with many new online services and businesses, directing the changes in existing regulations. Subsequent amendments were adopted also in the ALM Law (Article 23).
The corresponding legal provisions provide that we are obligate to take adequate steps ensuring the identification of the customers:
1) obtain additional documents or information attesting to the customer's identity;
2) carry out verification of the additionally submitted documents or obtain confirmation of another credit institution or financial institution registered in the Member State attesting that the customer has a business relationship with this credit institution or financial institution, and the credit institution or financial institution has carried out the onsite customer identification;
3) ensure that the first payment within the scope of the business relationship is carried out through the account which has been opened in the customer's name at the credit institution to which the requirements for the prevention of money laundering and terrorism and proliferation financing requirements arising from this Law and the legal acts of the European Union apply;
4) request personal presence of the customer in the execution of the first transaction;
5) if the customer is a natural person - resident -, obtain information attesting to the customer's identity from the document which the customer has signed with a secure electronic signature. In accordance with the AML Law, CREDON is obliged to prevent any possible risk of money laundering and terrorism and proliferation financing, and identify and report unusual and suspicious transactions.
In our operation we follow Policy Guidance and Guidelines on Anti-Money Laundering, Countering Terrorism Financing and Enforcement of Sanctions approved by the Council of the Finance Association, thus ensuring that all the requirements are met, to provide uninterrupted service to out clients, at the same time evading unnecessary inquiries. We use risk-based approach to ensure compliance, which is in the best interest of each individual investor as well as society in general.