May 22, 2020 / Regulatory Compliance
On April 23 of this year, the National Banking and Securities Commission (hereinafter, the “CNBV“) issued the “Guide to develop the annual training and dissemination program in Prevention of Transactions with Illegally-Obtained Funds and Terrorism Financing matters” (hereinafter, the “Guide“) which responds to the 18 recommendation of the Financial Action Task Force (hereinafter, the “FATF“) and its interpretative note. In addition, the Guide establishes, including without limitation, the guidelines, elements, and criteria to be considered by financial institutions when designing and developing the training program in Anti-Money Laundering and Terrorism Financing matters (hereinafter, the “AML/TF“).
It also establishes that financial institutions must consider the characteristics of their operation and the sector to which the relevant institution belongs in order to implement the Guide. Similarly, it is necessary to specify that the content of the Guide may be adopted by financial institutions according to the risk to which each financial institution is exposed or they may take different measures, if applicable.
Therefore, the most important points of the Guide will be highlighted below.
I. To which Financial Institutions is the Guide addressed to?
The Guide is addressed to the following Financial Institutions (hereinafter, the “Entities“):
- General warehouses
- Investment advisors
- Brokerage firms
- Money exchange houses
- Exchange centers
- National Financial Institution for Livestock, Rural, Forestry, and Fishery Development
- Credit Institutions
- Financial technology institutions
- Corporations authorized to operate with novel models
- Investment Fund Management Companies
- Investment fund stock distribution corporations
- Financial cooperative associations
- Community financial corporations with operation levels from I to IV
- Rural financial integration entities
- Savings and loan cooperative corporations with levels of operation I to IV
- Multiple Purpose Financial Institutions
- Money transmitters
- Credit unions
II. Why is it that important to keep the personnel of the Entities trained?
It is mentioned that personnel who constantly increase their knowledge, skills, and abilities through AML/FT training, generate an extremely important impact since it allows the Entities to make their available resources more efficient, focusing them on the most vulnerable areas of the risks detected after the risk assessment, and helping to reduce such risks considerably.
III. Who must provide training to the personnel of the Entities?
The Guide recommends that training should be conducted by a person with the necessary knowledge and experience in AML/FT matters. Considering that the training may be provided online, the Guide mentions that it is desirable that the material be developed by or under the supervision of an AML/FT specialist, who must have the necessary knowledge and experience.
In both cases, it is important that trainers have national or international certifications in this matter.
IV. Who must be trained in AML/FT matters?
Members of the board of directors or managers, the sole administrator or manager, directors, partners or managing partners, members of the Committee, the Compliance Officer, the Interim compliance officer or Representative, attorneys-in-fact, officers, and employees, including those employees working in customer service or resource management areas.
V. Why is it important to consider to whom the training and dissemination will be addressed in the development of the annual program?
Knowing the functions and activities performed by the personnel who will take the training will help to focus the training topics accordingly. It will strengthen its execution and keep the personnel updated in the daily development of their work. Additionally, the Guide recommends that the compliance officer, the interim compliance officer or the representative, and, if applicable, the members of the Communication and Control Committee receive more training hours, including international AML/FT issues.
VI. What must the Entities consider to develop the content of the annual training and dissemination program?
To start with, the Entities must consider their needs, target personnel, and their functions or activities, as well as the risk assessment methodology results for the good development of the training and dissemination program.
The content of this program must detail the duration, frequency, and modality (whether face-to-face, online, or mixed), as well as consider effective evaluation indicators that show the extent to which the personnel is achieving the expected knowledge or skills. The foregoing, considering at least the following elements:
- Name of the course or courses;
- Minimum hours of duration;
- Topics to be covered;
- Target personnel.
- Specify whether the course is linked to any prior training program or subsequent to the one to be provided, if applicable.
Additionally, the program may also include reference to the training received by the Entities from the associations to which the Institutions belong, as well as from educational institutions and professionals in the matters, whether individuals or legal entities.
VII. How often must AML/FT training be provided?
In accordance with the provisions applicable to each sector, the training must be provided at least once a year. However, the Guide suggests that the Entities consider that the training content of their program is distributed throughout the year. The foregoing, so that the learning process is continuous. It is also important that the Entities consider courses aimed at new or recently hired personnel.
VIII. What is the benefit of developing targeted training programs and in which cases is their development deemed useful?
The Entities may establish targeted training programs, which may serve as control mechanisms to mitigate the risks to which the Entities are exposed. Such programs must focus on strengthening the knowledge, skills, and/or processes derived from the deficiencies detected through an audit or any other control mechanism regarding its AML/FT preventive regime.
IX. What is the minimum content to be included in the training agenda?
- The applicable general provisions, as well as their relevant amendments.
- Guidelines, best practices, criteria, directives, resolutions, guides, and other provisions issued by the Ministry of Finance and Public Credit or CNBV for proper compliance with the applicable provisions.
- Information regarding techniques, methods, conducts, and national and international trends to prevent, detect, and report transactions that could update the assumptions provided in the Federal Criminal Code, Articles 139 Quáter or 400 Bis.
- The content of the compliance manual, as well as the policies, criteria, measures, internal procedures, and other information contained in different documents that the Supervised Institution has developed to comply with the applicable provisions.
- The activities, transactions, products, and services offered by the Entities.
- The risks to which the Entities are exposed.
X. What are the complementary topics that may be included in the training agenda?
- Criminal offenses of transactions with illegally-obtained funds and terrorism financing.
- International Bodies.
- Basic knowledge regarding the international and intergovernmental AML/FT organizations, as well as the documents issued by them.
- The recommendations, guides, and other documents issued by FATF.
- National authorities involved in AML/FT.
- Regulatory framework in financial matters applicable to the Entities.
- Federal Law on the Prevention and Identification of Transactions with Illegally-Obtained Funds.
- Typologies issued by the Financial Intelligence Unit.
- National Risk Assessment.
- Risk assessment methodology of the Entity.
XI. What should the program consider for the proper dissemination of AML/FT information?
The Guide suggests that the program includes the means or channels that the Institution will contemplate for the proper dissemination of information in AML/FT matters. Such dissemination may be carried out through e-mails; educational tools and materials; intranet links; or any other means or channel of dissemination that the Entity establishes in its compliance manual or any other document or manual prepared by the Entity.
XII. What information is recommended to be included in the training of personnel involved in the identification process of Know Your Customer ( hereinafter, the “KYC“)?
Due to the impact of the activities performed by such personnel, it is recommended that at least the following be included in the training course agendas: i) the real owner concept; ii) how important its identification is; iii) the benefits that such identification represent for the Entity, iv) the relevance and proper application of KYC policies; and v) the importance of their participation in the integrating process of the relevant identification file, among others.
XIII. How will the Entities be able to prove that their personnel is trained?
Having evaluations deriving from the AML/FT training, as well as certificates issued by the personnel hired to provide such training. Such evaluations must have numerical results or indicate pass or fail, if applicable.