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Relationships between certain institutions and shell banks
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31. The Act of 2010 is amended by the substitution of the following section for section 59:
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“59. (1) A credit institution or financial institution shall not enter into a correspondent relationship with a shell bank.
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(2) A credit institution or financial institution that has entered into a correspondent relationship with a shell bank before the commencement of this section shall not continue that relationship.
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(3) A credit institution or financial institution shall not engage in or continue a correspondent relationship with a bank that the institution knows permits its accounts to be used by a shell bank.
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(4) A credit institution or financial institution shall apply appropriate measures to ensure that it does not enter into or continue a correspondent relationship that permits its accounts to be used by a shell bank.
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(5) A credit institution or financial institution that fails to comply with this section commits an offence and is liable—
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(a) on summary conviction, to a class A fine or imprisonment for a term not exceeding 12 months (or both), or
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(b) on conviction on indictment, to a fine or imprisonment for a term not exceeding 5 years (or both).
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(6) In this section, ‘shell bank’ means a credit institution or financial institution (or a body corporate that is engaged in activities equivalent to those of a credit institution or financial institution) that—
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(a) does not have a physical presence, involving meaningful decision-making and management, in the jurisdiction in which it is incorporated,
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(b) is not authorised to operate, and is not subject to supervision, as a credit institution, or as a financial institution, (or equivalent) in the jurisdiction in which it is incorporated, and
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(c) is not affiliated with another body corporate that—
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(i) has a physical presence, involving meaningful decision-making and management, in the jurisdiction in which it is incorporated, and
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(ii) is authorised to operate, and is subject to supervision, as a credit institution, a financial institution or an insurance undertaking, in the jurisdiction in which it is incorporated.”.
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