Azərbaycan Respublikası Mərkəzi Bankı Banklara Nəzarət Departamenti

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Supervision Department - AML/CFT Training 
CIP - High Risk Customers and PEPs - New Accounts
- Ensuring files contain a customer overview 
covering risk assessment, documentation, 
verification, expected account activity, profile of 
customer or business relationship and ultimate 
beneficial owner.   
- Clear processes for escalating the approval of high 
risk and all PEP customer relationships to senior 
management or committees which consider AML 
risk and give appropriate challenge to RMs and the 
- Using, where available, local knowledge and open 
source internet checks to supplement commercially 
available databases when researching potential high 
risk customers including PEPs.   
- Having clear risk-based policies and procedures 
setting out the EDD required for higher risk and 
PEP customers, particularly in relation to source of 
- Effective challenge of RMs and business units by 
banks‘ AML and compliance teams, and senior 
- Reward structures for RMs which take into 
account good AML/compliance practice rather than 
simply the amount of profit generated.   
- Clearly establishing and documenting PEP and 
other high-risk customers‘ source of wealth.   
- Where money laundering risk is very high, 
supplementing CDD with independent intelligence 
reports and fully exploring and reviewing any 
credible allegations of criminal conduct by the 
- Failing to give due consideration to certain 
political connections which fall outside the Money 
Laundering Regulations definition of a PEP (eg 
wider family) which might mean that certain 
customers still need to be treated as high risk and 
subject to enhanced due diligence.   
Poor quality, incomplete or inconsistent CDD. 
- Relying on Group introductions where overseas 
standards are not equivalent or where CDD is 
inaccessible due to legal constraints.   
- Inadequate analysis and challenge of information 
found in documents gathered for CDD purposes.   
- Lacking evidence of formal sign-off and approval 
by senior management of high-risk and PEP 
customers and failure to document appropriately 
why the customer was within AML risk appetite.   
- Failing to record adequately face-to-face meetings 
that form part of CDD.   
- Failing to carry out EDD for high risk/PEP 
- Failing to conduct adequate CDD before customer 
relationships are approved.   
- Over-reliance on undocumented ‗staff knowledge‘ 
during the CDD process.   
- Granting waivers from establishing a customer‘s 
source of funds, source of wealth and other CDD 
without good reason.   
- Discouraging business units from carrying out 
adequate CDD, for example by charging them for 
intelligence reports.   
Examples of GOOD Practice
Examples of POOR practice

Supervision Department - AML/CFT Training 
CIP - High Risk Customers and PEPs - New Accounts
- Understanding and documenting ownership 
structures complex or opaque ownership and   
corporate structures and the reasons for them.   
- Face-to-face meetings and discussions with 
high-risk and PEP prospects before accepting 
them as a customer.   
- Making clear judgements on money-
laundering risk which are not compromised by 
the potential profitability of new or existing 
- Recognizing and mitigating the risk arising 
from risk managers becoming too close to 
customers and conflicts of interest arising from 
RMs‘ remuneration structures.   
- Failing to carry out CDD on customers because 
they were referred by senior managers.   
- Failing to ensure CDD for high-risk and PEP 
customers is kept up-to-date in line with current 
- Allowing ‗cultural difficulties‘ to get in the way of 
proper questioning to establish required CDD 
- Holding information about customers of their   
operations in foreign countries with banking secrecy 
laws if, as a result the financial institution‘s ability 
access or share CDD is restricted.   
- Allowing accounts to be used for purposes 
inconsistent with the expected activity on the 
account (e.g. personal accounts being used for 
business) without enquiry.   
- Insufficient information on source of wealth with 
little or no evidence to verify that the wealth is not 
linked to crime or corruption.   
- Failing to distinguish between source of funds and 
source of wealth.   

Relying exclusively on commercially-available 
PEP databases and failure to make use of available 
open source information on a risk-based approach.   
- Failing to understand the reasons for complex and 
opaque offshore company structures.   
- Failing to ensure papers considered by approval 
committees present a balanced view of money 
laundering risk.   
Examples of GOOD Practice
Examples of POOR practice

Supervision Department - AML/CFT Training 
CIP - High Risk Customers and PEPs - New Accounts
- No formal procedure for escalating prospective 
customers to committees and senior 
management on a risk based approach.   
- Failing to take account of credible allegations 
of criminal activity from reputable sources.   
- Concluding that adverse allegations against 
customers can be disregarded simply because 
they hold an investment visa.   
- Accepting regulatory and/or reputation risk 
where there is a high risk of money laundering.   
Examples of GOOD Practice
Examples of POOR practice

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