Tighter scrutiny needed on AML, advisers told

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Financial advisers needed to be particularly alert to the risk of money laundering at present, the founder of an anti-money laundering software company says.

Wednesday, April 22nd 2020, 8:53PM 2 Comments

Jenine Colmore-Williams

Jenine Colmore-Williams said money laundering activity increased during times of economic crisis, and that was an extra threat now because many businesses were working from home without all of their normal systems and processes available to them.

She said anyone who had not paid attention to how they were meeting their obligations needed to do so quickly to protect their businesses.

It's a view shared by the Financial Markets Authority, which has warned that criminals could try to target financial products and services in a "challenging" environment.

Any new or existing clients who were behaving oddly should raise questions, Colmore-Williams said, even though more unusual behaviour of all kinds was likely during disruption such as the world is experiencing as a result of Covid-19.

Financial advisers should question any significant shifts of money. "Is someone sending money to the UK to make sure their daughter who is out of work is okay or are they a money mule?"

People who were under financial stress would do things they otherwise might not, she said.

The experience of the global financial crisis showed that money launderers were able to spot their opportunities to take advantage of loopholes that appeared in a crisis, she said.

If a financial advice business did not have technology to monitor compliance, systems needed to be used to make sure that every transaction was assessed consistently "to manage risk in a proactive not a reactive way".

Colmore-Williams said it would be a mistake for advisers to approach their AML obligations in the same way they always had. "They've got to look at things in a much more detailed way."

"When in doubt, investigate and escalate."

The Financial Markets Authority has issued advice for reporting entities functioning in lockdown, when it was harder to complete processes with clients.

For existing clients, they could apply a risk-based approach. "This may mean, for example, that reporting entities accept scanned copies of documents as an interim measure, with the originals to be sighted at a reasonable later time."

For new clients, if identity could not be verified face-to-face, advisers could opt for delayed verification. "Supervisors expect reporting entities that are continuing to operate and establish new business relationships would implement transaction limitations, ie limited transfers or withdrawals until verification requirements were completed."

Electronic verification was an option provided there were additional measures in place, such as requiring the first deposit from a new investor to come from a bank account in their name. 

Tags: AML FMA

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