Apart from the fact that the publications in the Sarawak Report http://www.sarawakreport.org/2016/07/caught-red-handed-by-the-fbi-pm-najib-razak-malaysian-official-number-1-is-fingered-by-the-doj/ will likely have a political impact there's a few more observations that we can make.
First and foremost: FIs need to do their homework and ensure that they know their clients, the case once more proves the risks of dealing with PEPs loud and clear.
Secondly: where smoke is, is fire... In other words: a CDD analyst needs to develop some 'fingerspitzengefuhl', a 6th sense to 'smell' if a client can be trusted and accepted as a client or not.
Both imply that every FI should have a working (! that means not just on paper...) risk based approach to onboard new clients and assess existing clients. Moreover, CDD, Customer Due Diligence, analysis can be taught, but knowledge alone doesn't make a good analyst. An inquisitive mind and an attitude to truly help the FI to understand its clients are crucial.
Thursday 21 July 2016
Tuesday 12 July 2016
Following a breakfast meeting hosted by Accuity on Trade Based Money Laundering let me share a few observations from the presentations and the panel discussion:
1. Accuity is leading the way in technological improvements – e.g. to detect dual purpose goods or detect over- or under-invoicing. However, technology can only do so much and has its limitations
2. Regulators will continue to raise the bar. The fact that TBML is in the news so much is largely because the financial services industry has made traditional ML harder than before so other ways are sought. Regulators will increase their focus on TBML – as one panelist cited a comment from a regulator: “we know it’s hard and we don’t care“
3. Lawyers and consultants can support financial institutions to interpret regulations and share best practices, but their added value is limited to (theoretical and high-level) advise
That leaves many institutions with the challenge to – with or without help from the above mentioned parties – define a risk based approach, which covers the front-office and trade finance operations alike.
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