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14 October 2005
The Bank of Portugal recently announced the entry into force of its Banking Deposit Regulation (11/2005) on the opening and operation of bank accounts. The regulation is applicable to credit institutions which are incorporated in Portugal or have a branch established there. It aims to update the preceding Banking Deposit Regulation 1996 following the enactment of the Money Laundering Act 2004 and the Bank of Portugal's related Instruction 26/2005.
The regulation became binding on credit institutions on October 11 2005. The existing internal information registries held by credit institutions in relation to accounts opened before that date will have to be updated accordingly. Credit institutions have a particular responsibility to carry out prompt updates of their accounts which, based on an assessment of the risks, are especially susceptible targets for money laundering.
The regulation, as applied and construed in conjunction with the legislative regimes mentioned above, requires credit institutions to:
In addition to measures focused directly on money laundering, the regulation also aims to (i) facilitate the remote opening of accounts and (ii) require credit institutions to inform their customers of the standard clauses of these account agreements before an account is opened.
The credit institutions must ensure that certain information is provided by:
Individuals must provide the institutions with their:
Legal entities must provide:
The information above must be confirmed by original versions or certified copies of certain documents. For individuals, these are:
Legal entities must provide:
Compliance with these procedures is a precondition for opening and using a bank account.
Exceptions to these obligations apply to:
Credit institutions are obliged to retain copies of the documents provided by their customers, either on paper or in other permanent form. They must be able to provide a full and accurate record for a period of 10 years from the processing date and for five years after the closing of the account. Institutions must (i) ask their customers to update the information required at least every five years for as long as the account agreement is valid, and (ii) record the transactions carried out by their customers, keeping original paperwork, copies or other versions admissible in court for a minimum of 10 years from the transaction date.
Account agreements must include a clause whereby the holder authorizes the credit institutions to collect and process the required information and undertakes to provide the institutions with updates. Should a customer refuse to provide the information requested, the institution must consider the possibility of reporting this to the Bank of Portugal. The decision taken must be based on a well-supported opinion, presented in writing, and must be recorded in the files of the institution concerned for a minimum of five years.
The employees of a credit institution who collect information and supporting documentary evidence from account holders must state their identity and the date in the internal registries relating to the account agreements.
Credit institutions must prepare a record indicating the main risk factors of each client in light of the information obtained. They must monitor the transactions carried out by the account holder in order to detect significant modifications in the use of the bank account or any incongruities between the information provided by the client and the type of transactions actually carried out by the client.
A third party depositing or transferring over €12,500 will be subject to the same identification reporting requirements as an individual or legal entity opening an account, with the exception of the information relating to the party's address, occupation and public position. Credit institutions are under the same obligation to collect information and supporting documents.
Credit institutions must not enter into any transaction which they suspect may be connected to money laundering; they must inform the attorney general of their suspicions immediately, offering a written statement of the reasons for their refusal and informing the authorities of the details of the transaction. The annex to Instruction 26/2005 sets out guidelines for identifying suspicious transactions.
However, credit institutions are allowed to enter into suspicious transactions in cases where they are under an obligation to do so, or where the attorney general is aware that an investigation into money laundering might be affected by the institution's refusal to enter into such a transaction. All institutions must appoint an individual responsible for the coordination of internal money-laundering control procedures and the centralization of information relating to suspicious transactions.
For further information on this topic please contact António Rocha Alves or André Fernandes Bento at AM Pereira, Saragga Leal, Oliveira Martins, Judice e Associados by telephone (+351 21 319 7300) or by fax (+351 21 319 7400) or by email (email@example.com or firstname.lastname@example.org).
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António Rocha Alves