Supervision Department - AML/CFT
Training
CIP - High Risk Customers and PEPs - New Accounts
- Ensuring files contain a customer overview
covering risk assessment, documentation,
verification, expected account activity, profile of
customer or business relationship and ultimate
beneficial owner.
- Clear processes for escalating the approval of high
risk and all PEP customer
relationships to senior
management or committees which consider AML
risk and give appropriate challenge to RMs and the
business.
- Using, where available, local knowledge and open
source internet checks to supplement commercially
available databases when researching potential high
risk customers including PEPs.
- Having clear risk-based policies and procedures
setting out the EDD required for higher risk and
PEP customers, particularly in relation to source of
wealth.
- Effective challenge of RMs
and business units by
banks‘ AML and compliance teams, and senior
management.
- Reward structures for RMs which take into
account good AML/compliance practice rather than
simply the amount of profit generated.
- Clearly establishing and documenting PEP and
other high-risk customers‘ source of wealth.
- Where money laundering risk is very high,
supplementing CDD with independent intelligence
reports and fully exploring and reviewing any
credible allegations of criminal conduct by the
customer.
- Failing to give due consideration to certain
political connections
which fall outside the Money
Laundering Regulations definition of a PEP (eg
wider family) which might mean that certain
customers still need to be treated as high risk and
subject to enhanced due diligence.
-
Poor quality, incomplete or inconsistent CDD.
- Relying on Group introductions where overseas
standards are not equivalent or where CDD is
inaccessible due to legal constraints.
- Inadequate analysis and challenge of information
found in documents gathered for CDD purposes.
- Lacking evidence of formal sign-off and approval
by senior management of high-risk
and PEP
customers and failure to document appropriately
why the customer was within AML risk appetite.
- Failing to record adequately face-to-face meetings
that form part of CDD.
- Failing to carry out EDD for high risk/PEP
customers.
- Failing to conduct adequate
CDD before customer
relationships are approved.
- Over-reliance on undocumented ‗staff knowledge‘
during the CDD process.
- Granting waivers from establishing a customer‘s
source of funds, source of wealth and other CDD
without good reason.
- Discouraging business units from carrying out
adequate CDD, for example by charging them for
intelligence reports.
Examples of GOOD Practice
2
Examples of POOR practice
Supervision Department - AML/CFT Training
CIP - High Risk Customers and PEPs - New Accounts
- Understanding and documenting ownership
structures complex or opaque ownership and
corporate structures and the reasons for them.
- Face-to-face meetings and
discussions with
high-risk and PEP prospects before accepting
them as a customer.
- Making clear judgements on money-
laundering risk which are not compromised by
the potential profitability of new or existing
relationships.
- Recognizing and mitigating the risk arising
from risk managers becoming too close to
customers and conflicts of interest arising from
RMs‘ remuneration structures.
- Failing to carry out CDD on customers because
they were referred by senior managers.
- Failing to ensure CDD for high-risk and PEP
customers is kept up-to-date in line with current
standards.
- Allowing ‗cultural difficulties‘ to get in the way of
proper questioning to establish required CDD
records.
- Holding information about customers of their
operations in foreign countries with banking secrecy
laws if, as a result the financial institution‘s ability
to
access or share CDD is restricted.
- Allowing accounts to be used for purposes
inconsistent with the expected activity on the
account (e.g. personal
accounts being used for
business) without enquiry.
- Insufficient information on source of wealth with
little or no evidence to verify that the wealth is not
linked to crime or corruption.
- Failing to distinguish between source of funds and
source of wealth.
-
Relying exclusively on commercially-available
PEP databases and failure to make use of available
open source information on a risk-based approach.
- Failing to understand the reasons for complex and
opaque offshore company structures.
- Failing to ensure papers considered by approval
committees present a balanced view of money
laundering risk.
Examples of GOOD Practice
2
Examples of POOR practice