Article 39 Prohibition of correspondent relationships with shell institutions

This article establishes a hard prohibition on correspondent relationships with shell institutions, extending the controls on correspondent banking introduced in Article 36 by setting an absolute boundary that cannot be managed through enhanced due diligence alone.

Credit institutions and financial institutions are barred from entering into or continuing any correspondent relationship with a shell institution, and must also take appropriate measures to ensure they are not indirectly connected to shell institutions through intermediary firms that are known to allow shell institutions to use their accounts.

The article then extends a parallel obligation to crypto-asset service providers, requiring them to have internal policies, procedures and controls in place to prevent their accounts from being used to provide unregulated crypto-asset services.

Important points:

• Do not enter into or continue any correspondent relationship with a shell institution, and take appropriate measures to avoid indirect exposure through intermediaries known to facilitate shell institutions.
• The prohibition covers not just direct relationships but also correspondent relationships with entities known to allow shell institutions access to their accounts.
• Crypto-asset service providers must implement internal policies, procedures and controls specifically designed to detect and prevent attempts to use their accounts for the provision of unregulated crypto-asset services.