Anti-Money Laundering Checklist, your Clients’​ Funds

In my previous article I outlined the most common money laundering-related red flagswhile dealing with clients, here, I am going to write about the source of their wealth.

  • Funds not proportionate according to the client’s profile. It’s a rather basic KYC principle; knowing your client annual incomes helps defining unusual transactions. We all know that ‘much’ or ‘little’ is a very relative concept while talking about money, that’s why you should always know your customers. (e.g. a 1M transaction made by somebody covering 20,000€ per year should definitely be considered suspicious),
  • Unjustified financial transactions. Whenever important financial transactions are requested by newly incorporated companies without a clear purpose or such transactions are not justified by an organization’s business activities, well, you got a red flag… Particular attention should be paid in case of payments made by public/government entities (make sure they are paying for a product/service actually delivered), 
  • Frequent overseas transactions. Repeated transactions with foreign entities (especially if based in high risk countries) without a business scope,
  • Use of cash. There is nothing wrong with it, however, corporate assets are unlikely to be paid with cash,
  • Debts. Loans provided by natural persons rather than credit institutions, especially if repaid after a (relatively) short turnaround should make you think. One asks for a loan to repay the debt within a given timeframe; an unusually short repayment period should be further investigated. 

Eventually, you should also use your soft skills to try to understand the client’s real purposes; did he hire you notwithstanding your lack of experience or expertise?

For instance, this may happen to a lawyer in order to deal with real estate transactions, hedge funds, et similia. 

Eventually, be very careful if your client is willing/offers to pay higher professional fees than usual. 

Last but not least, as pointed out in my other article as well;

I suggest you always trust your feelings; if you believe something doesn’t add up it’s probably true

 

Michele La Neve is a Managing Partner at Whitecotton Law International. He advises corporate clients on Anti-Bribery, Anti-Money Laundering and Data Protection issues. Michele provides training on these Compliance topics to global organizations operating in the pharmaceutical, engineering and financial industries. He speaks English, Spanish, Italian and French. His articles about Compliance are regularly published by the leading online resource “Anti-Corruption Digest.” Michele holds a J.D. (summa cum laude) from Università di Bari, an L.L.M. from the Universidad de Cordoba and a Master in Business Management from the University of Monaco. He can be reached via info@laneve.me or at +44 20 3287 55 21

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