Instruction No. 257 on Customer Due Diligence

1
Registered in the Ministry of Justice of the Republic of Tajikistan on "8" September 2023, No. 1254 Approved by the ruling of the Board of the National Bank of Tajikistan dated "2" August 2023, No. 85 Instruction No. 257 on Customer Due Diligence

Instruction No. 257 on Customer Due Diligence (hereinafter – the Instruction) is developed in accordance with part 7 of Article 9 and Article 15 of the Law of the Republic of Tajikistan "On Countering the Legalization (Money Laundering) of Proceeds Obtained by Criminal Means, Terrorism Financing and Proliferation Financing" (hereinafter – the Law), and establishes the procedure for conducting customer due diligence by accountable entities, as well as the conditions for using intermediaries or other third parties to conduct such due diligence.

1. GENERAL PROVISIONS
2. The following main terms are used in this Instruction:

• authorized body – the authority for countering the legalization (money laundering) of proceeds obtained by criminal means, terrorism financing and proliferation financing;
• customer identification – a set of measures to determine the identification data of the customer (customer's representative);
• remote customer identification – a set of measures for conducting customer identification using information and communication technologies in the manner provided by this Instruction for making low-risk transactions;
• customer – an individual or legal entity, as well as a foreign legal formation, that is serviced by the accountable entity;
• protector – an individual or legal entity endowed in accordance with the legislation of a foreign country (territory), on the basis of a contract or personal law of a foreign legal formation, with the authority to exercise control over the actions of the manager (trustee) of a foreign legal formation or participating in its activities;
• customer due diligence – a set of measures for identifying and verifying the identity of the customer, beneficial owner, and customer's representative to obtain information on the purpose and expected nature of relations, conducting ongoing analysis of relations with them, including verification of transactions and operations with them, updating documents and data obtained during these measures, carried out in the manner established by the Law and this Instruction;
• foreign legal formation – a system of legal relations (trusts and other similar structures) created by an individual (founder of a foreign legal formation) in accordance with the legislation of a foreign country, under which its property (funds) is transferred to the control and management of another individual (manager or trustee) in order to derive income (profit) from this property (funds) for the benefit of the beneficiary or for a specific purpose, provided that the manager or trustee, in their actions regarding the use and disposal of this property (funds), is guided by instructions and requirements established for them under the legislation of the foreign country;
• accountable entities – entities specified in Article 6 of the Law;
• risk – a set of threats, vulnerabilities to money laundering, terrorism financing and proliferation financing, and related consequences for the state, state bodies and/or accountable entities.

2. Accountable entities conduct customer due diligence in the following cases:

• upon establishing business relations;
• when carrying out any single or several related transactions and operations with an amount equal to or exceeding 350 calculation indicators, or equal to or exceeding the foreign currency equivalent of 350 calculation indicators, except for cases provided by paragraphs 3-7 of this Instruction;
• when carrying out a single transfer of electronic money with an amount equal to or exceeding 20 calculation indicators, or equal to or exceeding the foreign currency equivalent of 20 calculation indicators, except for cases provided by paragraphs 6 and 7 of this Instruction;
• in case of suspicion of money laundering, terrorism financing or proliferation financing, regardless of the transaction amount or any other exceptions;
• in case the accountable entity has doubts about the accuracy or sufficiency of previously obtained customer identification information.

3. Persons professionally carrying out real estate transactions conduct customer due diligence if they carry out purchase and sale of real estate operations for their clients.

4. Organizations and other entities containing totalizators and bookmakers, as well as conducting lotto, lottery and other games, including in electronic form, where the prize fund is formed from attracted funds of their participants upon receipt by the client (client's representative) or another individual of winnings from betting, gambling, and lotteries, including in electronic form, with an amount ranging from 20 to 350 calculation indicators or a foreign currency equivalent of 20 to 350 calculation indicators, establish the identity of the client – an individual based on a document confirming identity.

5. When carrying out any single or several related foreign currency cash exchange operations (purchase and sale of foreign currency for national currency, as well as exchange of one foreign currency for another), customer due diligence is conducted if their amount is equal to or exceeds 1750 calculation indicators, or equals or exceeds the foreign currency equivalent of 1750 calculation indicators. When carrying out any single or several related foreign currency cash exchange operations with an amount ranging from 350 to 1750 calculation indicators, or a foreign currency equivalent of 350 to 1750 calculation indicators, the identity of the client is established based on a document confirming identity.

6. When carrying out any single or several related transfer operations without opening bank accounts, customer due diligence is conducted if their amount is equal to or exceeds 150 calculation indicators, or equals or exceeds the foreign currency equivalent of 150 calculation indicators. When carrying out transfer operations without opening bank accounts with an amount up to 150 calculation indicators, or a foreign currency equivalent of up to 150 calculation indicators, the identity of the client is established based on a document confirming identity.

7. Transfer of electronic money is carried out taking into account the requirements of part 21 of Article 9 of the Law of the Republic of Tajikistan "On Payment Services and Payment System". In case customer due diligence has not been conducted for the owner of an electronic wallet – an individual, deposited funds may be used only for payment of goods and services within the Republic of Tajikistan.

8. If a transaction with monetary funds or other property is carried out in foreign currency (currency type must be specified), its size in national currency is determined according to the official exchange rate of the National Bank of Tajikistan, effective on the date of such transaction.

9. Customer due diligence measures established by the Law and this Instruction are applied to new and existing clients of the accountable entity, taking into account previously conducted customer due diligence and the client's risk level.

10. Accountable entities, within internal control programs, are obliged to determine internal procedures and rules for conducting customer due diligence. Such procedures and rules must include the order of identification and verification (verification) of client identity, identification and establishment of beneficial owner, as well as taking other customer due diligence measures established by the Law and this Instruction. Accountable entities, within internal control programs, may also provide in their internal procedures and rules for customer due diligence other provisions not contradicting the Law and this Instruction.

11. Accountable entities are obliged, in compliance with the requirements of Article 7 of the Law, to classify their clients according to risk criteria (high, medium, and low). The authorized body may establish and send typical high and low risk criteria to accountable entities.

12. Enhanced customer due diligence measures established in paragraph 36 of this Instruction are applied to individuals or legal entities from countries and territories with an elevated risk level.

13. PROCEDURE FOR IDENTIFICATION AND VERIFICATION OF CLIENT AND BENEFICIAL OWNER IDENTITY

14. Accountable entities are obliged to identify and verify the identity of the client and beneficial owner before or during the establishment of business relations or carrying out single transactions.

15. For the purpose of identifying the client and beneficial owner, accountable entities collect the following necessary information based on identity documents and other valid, reliable documents specified in Appendix 1 to this Instruction:

1. regarding clients – individuals and beneficial owners:

• surname, first name, and patronymic (if available);
• date of birth;
• place of birth (if indicated in the identity document);
• nationality (if indicated in the identity document);
• citizenship;
• gender;
• place of residence (registration) or place of stay (if indicated in the identity document, or as stated by the client);
• marital status (if indicated in the identity document, or as stated by the client);
• taxpayer identification number (if available);
• details of the identity document: name, series (if available) and number, date of issue, issuing authority, department code (if available), details of the document confirming the right of a foreign citizen or stateless person to stay (reside) in the Republic of Tajikistan: name, series (if available) and number, date of commencement of the period of stay (residence), and date of expiry of the period of stay (residence), including migration card details (card number, start and end dates of stay) – if the presence of such documents is mandatory in accordance with the legislation of the Republic of Tajikistan or international treaties;
• contact details: telephone number (home, work, or mobile), email address, postal address (as stated by the client);

2. regarding legal entities and foreign legal formations:

• full, as well as (if available) abbreviated name and name in a foreign language;
• organizational-legal form;
• taxpayer identification number – for residents;
• taxpayer identification number or foreign organization code – for non-residents (if available);
• state registration details: registration date, unified identification number (for residents) or registration number at the place of establishment and registration (for non-residents), name of the registering authority, place of registration;
• location address and postal address;
• license details for the right to conduct activities (if available): type, number, date of issue, issuing authority, validity period, list of licensed activities;
• banking identification code – for commercial bank residents;
• details on the legal entity's bodies (structure and personal composition of management bodies);
• details on the amount of registered and paid-up charter (contributed) capital or size of charter fund, property;
• details on the presence or absence at their location of the legal entity, its permanent management body, other bodies or persons who have the right to act on behalf of the legal entity without a power of attorney;
• contact details: telephone number (home, work, or mobile), email address, postal address (as stated by the client);

3. regarding individual entrepreneurs:

• information specified in sub-item 1) of paragraph 14 of this Instruction;
• registration details as an individual entrepreneur: registration date, state registration number, name of the registering authority, place of registration;
• license details for activities subject to licensing: type, number, date of issue; issuing authority; validity period; licensed activity type.

15. In case a client's representative or authorized person acts on behalf of the client, accountable entities are obliged to identify and verify the identity of the representing person, as well as their corresponding authority. If a representative of a client – legal entity is not the sole executive body, accountable entities also identify the sole executive body of such legal entity.
16. Accountable entities, when identifying client representatives, establish the information specified in paragraph 14 of this Instruction.
17. Accountable entities are obliged to verify the accuracy of information obtained during client and representative identification based on identity documents and other valid, reliable documents specified in Appendix 1 to this Instruction.
18. Accountable entities are obliged to take reasonable measures to verify the identity of the beneficial owner, based on identity documents and other valid, reliable documents specified in Appendix 1 to this Instruction. The beneficial owner of a client – an individual is considered that person, except in cases where there are reasonable grounds to believe that another individual is the beneficial owner.
19. Verification of the identity of a beneficial owner who is a legal entity is conducted based on the following information:

• identification data of the physical person(s) who directly or indirectly (through third parties, including through a ownership chain) owns/own the controlling share of participation (has/have predominant participation in capital) of the legal entity;
• identification data of the physical person(s) who exercises/controls control over the legal entity on other grounds – in cases where there are doubts as to whether the person(s) with controlling share is/are the beneficial owner(s), or if no physical person exercises control through ownership share;
• if the physical person(s) specified in the first and second paragraphs of this paragraph are not identified, the accountable entity is obliged to identify and take reasonable measures to verify the identity of the corresponding physical person holding a senior management position in the legal entity.

20. Verification of the identity of beneficial owners of foreign legal formations is conducted based on the following information:

• for trusts: personal data of the trust founder, manager or trustee, protector (if any), beneficiary(ies), and any other physical person who directly or indirectly (through third parties, including through a control or ownership chain) exercises actual control over the trust;
• for other types of foreign legal formations: personal data of persons holding equivalent or similar positions.

21. Identification and verification of the identity of beneficial owners is not conducted in case of accepting for service the following clients:

• state or local government bodies of the Republic of Tajikistan, other state bodies, as well as institutions under their jurisdiction;
• international intergovernmental organizations, foreign states, or administrative-territorial units of foreign countries possessing independent legal capacity.

22. All documents enabling identification of the client and beneficial owner must be valid on the date of their presentation. Documents provided by the client, prepared fully or in part in a foreign language, must be translated into the state language and duly notarized.

23. Accountable entities accept documents issued by foreign state authorities confirming the status of legal entity non-residents, provided they have been legalized in the established manner (such documents may be submitted without legalization in cases provided by international treaties of the Republic of Tajikistan).

24. All documents must be provided by clients to accountable entities in original or duly notarized copy. In case only part of a document is relevant to client or beneficial owner identification, a certified extract from it may be provided.

25. Accountable entities, when verifying the client and beneficial owner, may also use additional (auxiliary) information obtained from reliable sources.

26. ADDITIONAL CUSTOMER DUE DILIGENCE MEASURES APPLIED TO INDIVIDUALS

27. Regarding public officials, their close relatives (wife, husband, children, father and mother, brothers, sisters, adoptive parents, adopted persons, as well as other persons who permanently cohabit and share a household with the public official), and persons acting on behalf of public officials, accountable entities are obliged to apply additional customer due diligence measures provided by Article 13 of the Law.

28. Accountable entities are also obliged to utilize risk management systems to identify among clients and their beneficial owners, who are serviced or being accepted for service, persons with whom public officials maintain close relations (their business partners, official representatives, other close connections), and in case of identifying such persons, take the following additional customer due diligence measures regarding them:

• accept them for service or continue their service only with written permission of the head of the accountable entity or his deputy, as well as the head of a separate subdivision to whom corresponding authority has been delegated by the head;
• take reasonable and accessible measures to identify the source of their funds or other property;
• conduct enhanced ongoing monitoring of relations with them.

28. Regarding life insurance contracts (policies) and other investment-linked insurance contracts (policies), accountable entities are obliged, in addition to customer due diligence measures provided by Article 9 of the Law and this Instruction, to apply the following customer due diligence measures regarding the beneficiary of these contracts (policies):

• identification of the beneficiary(ies) – in case the beneficiary is specifically established as a physical (persons) or legal (entities), or foreign (legal formations);
• obtaining sufficient information about the beneficiary, enabling identification and verification of the beneficiary's identity at the time of insurance payout – in case the beneficiary(ies) are determined by characteristics, class (groups), or other means.

29. Accountable entities are obliged to verify the identity of the beneficiary identified in accordance with paragraph 28 of this Instruction at the time of insurance payout, document and store the obtained information in accordance with Article 16 of the Law and paragraphs 43-49 of this Instruction.

30. Accountable entities are obliged to apply enhanced customer due diligence measures regarding the beneficiary of life insurance contracts or other investment-linked insurance contracts, provided by this Instruction, if the beneficiary, being a legal entity or foreign legal formation, presents an elevated risk of money laundering, terrorism financing and proliferation financing. Upon the occurrence of an insurance event and determination of elevated risk, enhanced customer due diligence measures regarding the beneficiary's beneficial owner are taken before the payout of insurance benefits under life and other investment-linked insurance contracts.

31. No later than the moment of payout of insurance benefits under life insurance contracts or other investment-linked insurance contracts, accountable entities are obliged to take reasonable measures to determine whether the beneficiary or the beneficiary's beneficial owner is a public official. In case of identifying elevated risk of money laundering, terrorism financing and proliferation financing related to life or other investment-linked insurance contracts, accountable entities are obliged to notify the head of the accountable entity or his deputy, or the head of a separate subdivision to whom corresponding authority has been delegated by the head before payout, and take enhanced customer due diligence measures regarding the client, insurance policy holder, beneficiary, and their beneficial owners, as well as consider the necessity of submitting to the authorized body a report on suspicious transaction and operation in the manner established by the Law.

32. In case of impossibility to apply enhanced customer due diligence measures regarding the beneficiary, accountable entities consider the necessity of submitting to the authorized body a report on suspicious transaction and operation regarding the client in the manner established by the Law.

33. SIMPLIFIED AND ENHANCED CUSTOMER DUE DILIGENCE MEASURES

34. Accountable entities, when conducting customer due diligence, are obliged to consider the application of standard, enhanced, or simplified customer due diligence measures, using a risk-based approach.

35. In case of establishing a low risk level, simplified measures are applied.