Brunei – Know Your Customer (KYC) Rules

 

 

Brunei is not a regional financial center and does not have free trade zones. Brunei has a small offshore financial center and its proximity to high crime regions, along with its large foreign worker population and limited anti-money laundering/counter-terrorist financing (AML/CFT) institutional capacity, make it vulnerable to cross-border criminal activity. Domestically, Brunei is a low threat country for money laundering and terrorist financing. Proceeds of crime generally originate in fraud, gambling, the drug trade, and fuel smuggling. Brunei has experienced an increase in cybercrime and financial fraud such as pyramid schemes and e-mail scams.

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KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: NO
    • Domestic PEP: NO

Brunei – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Brunei Law:

    • Domestic and offshore banks
    • Insurance companies
    • Finance companies
    • Money exchanges and remitters
    • Securities broker/dealers

Brunei – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

The following is a list of STR covered entities covered by Brunei Law:

    • Domestic and offshore banks
    • Insurance companies
    • Finance companies
    • Money exchanges and remitters
    • Securities broker/dealers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: Not available
Convictions: Not available

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

While Brunei has strengthened AML/CFT controls, law enforcement and prosecutors are hampered by a lack of capacity and gaps in the legal framework. The Government of Brunei (GOB) committed to strengthening its AML/CFT regime by approving an amendment order in July 2010 that includes stronger KYC rules. Since this order does not address designated non-financial businesses and professions (DNFBPs), the GOB should draft notices to cover DNFBPs as well. Additionally, only money changer and remittance companies are obliged to report cash transactions above B$5,000 (approximately $3,850). New reporting procedures for banks have been proposed but not yet adopted. The GOB has developed an action plan to address its deficiencies by adequately criminalizing money laundering and terrorist financing; enhancing measures to confiscate assets and freeze terrorist funds; expanding the suspicious transactions reporting regime; and improving the mutual legal assistance authorities.

Brunei‘s criminalization of money laundering is deficient and limited to predicate offenses that have an imprisonment term of not less than five years. This high threshold results in the exclusion of many offenses as money laundering predicate offenses. Brunei should expand the scope of the money laundering offense to cover the widest range of predicate offenses in order to meet the international standards.

The GOB issued a notice to banks to conduct enhanced due diligence on politically exposed persons (PEPs) and issued a new Anti-Terror Order (ATO), which came into force in July 2011. The ATO extends financial entities‘ STR obligations to include transactions suspected to involve terrorist financing and expands the definition of offenses punishable in Brunei to include terrorists‘ financial collaborators. However, the ATO covers only the financing of terrorist acts and does not cover sole financing of a terrorist organization or of an individual terrorist.

Brunei also promulgated new regulations to monitor cross-border currency and bearer instruments, although both domestic and cross-border wire transfers are not comprehensively monitored.

Brunei should strengthen its actions against investment fraud and illegal deposit taking. Intellectual property theft generates significant proceeds but is not a priority for authorities. The GOB should ensure intellectual property crimes are fully criminalized, and effective controls are in place to prevent theft and prosecute offenders.