scholarly journals Implementing Customer Due Diligence Principle on Financial Services Corporation in Order to Prevent and Eliminate Money Laundering

2018 ◽  
Author(s):  
. Sunarmi ◽  
Detania Sukarja ◽  
T. M. Lubis
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Due Diligence ◽  
Customer Due Diligence

scholarly journals CUSTOMER DUE DILIGENCE DALAM MENCEGAH TINDAK PIDANA PENCUCIAN UANG MELALUI LEMBAGA PERBANKAN

Law Review ◽  
2019 ◽  
Vol 19 (1) ◽  
pp. 77
Author(s):  
Eko Prakoso Johannes
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Research Method ◽  
Due Diligence ◽  
Legal Research ◽  
Financial Transaction ◽  
Analysis Center ◽  
Profile Characteristics ◽  
Customer Due Diligence

<p><em>The ease of conducting a banking transactions makes it vulnerable to become a vehicle for money laundering. The purpose of this article is to understand the existence and procedure of Customer Due Diligence (CDD) principles in banking to prevend money laundering that is based on the Financial Services Authority Regulation Number 12/POJK.01/2017. The research method used is normative juridical legal research using a statute approach. The result of the study show that the Bank as a Financial Services Provider is required to implement a Customer Due Diligence (CDD) principle to ensure that every banking transactions are in accordance with the profile, characteristics and/or transaction patterns of prospective customers, customers or walk in customers (WIC). Banks are required to report suspicious banking transactions to Financial Transaction Reports and Analysis Center (PPATK). </em></p>

China’s dirty laundry – international organizations posing a risk to China’s AML systems

2018 ◽  
Vol 21 (2) ◽  
pp. 189-202 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Risk Assessment ◽  
Money Laundering ◽  
International Organizations ◽  
Banking Sector ◽  
Due Diligence ◽  
International Banking ◽  
Content Type ◽  
International Money ◽  
Customer Due Diligence ◽  
Chinese Banking

PurposeThis paper aims to review some of the current challenges that international money laundering schemes are posing in the Chinese banking sector. Anti-money laundering (AML) systems in China are relatively new, and customer due diligence checks and other AML systems are underdeveloped in some areas.Design/methodology/approachThe paper considers a particular case example of a multi-company organization that has known links to China. This company has been the target of both European and US investigations for suspected embezzlement and money laundering, and yet is still in operation.FindingsThe paper considers the complexities of this organization and how a seemly innocent link to a used clothing charity can fund an international organization spanning several countries. The paper offers a list of basic indicators of risk that could be applied to a risk-based system used within the Chinese banking context by using this group as an example.Originality/valueThe paper uses empirical and academic studies from other authors working in this region and supports many of the findings of the need to develop stronger risk-based, as opposed to rules-based, systems for managing AML risk assessment. Previous work by the author and suggestions from other authors are both used to suggest a basic framework for AML risk assessment. The paper concludes by reiterating the fact that China, like all other countries, is now operating in an international banking context, in much the same way that international organized crime is also operating at a global level.

FIFA – highlighting the links between global banking and international money laundering

2018 ◽  
Vol 21 (4) ◽  
pp. 498-512 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Banking Sector ◽  
Due Diligence ◽  
Content Type ◽  
Services Sector ◽  
Financial Services Sector ◽  
Global Banking ◽  
Beneficial Ownership ◽  
The Impact

PurposeThis paper uses the recent (August 2015) FIFA arrests to provide an example of how illicit financial flows are occurring through the formal banking and financial services sector. The purpose of this paper is to explore which elements of anti-money laundering (AML) compliance need to be addressed to strengthen the banking response and reduce the impact of IFFs within the banking sector.Design/methodology/approachThe paper is based on the indictment document currently prepared for the FIFA arrests and the District Court case of Chuck Blazer the FIFA Whistleblower. It uses the banking examples identified in the indictment as typologies of money laundering and wire fraud. Corresponding industry reports on AML compliance are included to determine where the major weaknesses and gaps are across the financial service.FindingsThe main findings from the analysis are that banks still have weak areas within AML compliance. Even recognised red flag areas such as off shore havens, large wire transfers and front companies are still being used. The largest gaps still appear to be due diligence and beneficial ownership information.Research limitations/implicationsThe research topic is very new and emerging topic; therefore, analysis papers and other academic writing on this topic are limited.Practical implicationsThe research paper has identified a number of implications for the banking sector, addressing AML deficiencies, especially the need to consider the source of funds and the need for further enhanced due diligence systems for politically exposed and influential people and the importance of beneficial ownership information.Social implicationsThis paper has implications for the international development and the global banking sector. It will also influence approaches to AML regulation, risk assessment and audit within the broader financial services sector.Originality/valueThe originality of this paper is the link between the emerging issues associated with allegations of bribery and corruption within FIFA and the illicit financial flow implications across the banking sector.

Selected challenges associated with the reliance on customer due diligence measures to curb money laundering in South African banks and related financial institutions

2021 ◽  
Vol 8 (1) ◽  
pp. 42-66
Author(s):  
Howard Chitimira ◽  
Sharon Munedzi
Keyword(s):  
South Africa ◽  
South African ◽  
Money Laundering ◽  
Financial Institutions ◽  
Financial Institution ◽  
Financial Sector ◽  
Due Diligence ◽  
Role Players ◽  
Customer Due Diligence ◽  
Combat Money Laundering

Customer due diligence is a means of ensuring that financial institutions know their customers well through know-your-customer (KYC) tools and related measures. Notably, customer due diligence measures include the identification and verification of customer identity, keeping records of transactions concluded between a customer and the financial institution, ongoing monitoring of customer account activities, reporting unusual and suspicious transactions, and risk assessment programmes. Accordingly, financial institutions should ensure that their customers are risk assessed before concluding any transactions with them. The regulation of money laundering is crucial to the economic growth of many countries, including South Africa. However, there are still numerous challenges affecting the banks and other role players’ reliance on customer due diligence measures to combat money laundering in South Africa. Therefore, a qualitative research methodology is employed in this article to unpack such challenges. The challenges include the failure to meet the identification and verification requirements by some South African citizens, onerous documentation requirements giving rise to other persons being denied access to the formal financial sector, and the lack of express provisions to regulate the informal financial sector in South Africa. Given this background, the article discusses the challenges associated with the regulation and implementation of customer due diligence measures to enhance the combating of money laundering in South African banks and related financial institutions. It is hoped that the recommendations provided in this article will be utilised by the relevant authorities to enhance customer due diligence and effectively combat money laundering activities in South African banks and related financial institutions.

Challenges in customer due diligence for banks in the UAE

2020 ◽  
Vol 23 (2) ◽  
pp. 527-539
Author(s):  
Dina ElYacoubi
Keyword(s):  
Money Laundering ◽  
Task Force ◽  
Business Environment ◽  
Law Firms ◽  
Due Diligence ◽  
Remedial Action ◽  
Content Type ◽  
Narcotics Control ◽  
Financing Of Terrorism ◽  
Customer Due Diligence

Purpose The purpose of this paper is to unpack the customer due diligence (CDD) vulnerabilities and to examine and analyze the UAE specific dynamics that make the country exposed to these threats. This research also intends to put on the table suitable solutions and remedial action steps that the UAE government, regulators and financial institutions (FIs) can adopt. Design/methodology/approach This study is qualitative in nature. Findings Despite the impressive regulatory framework and the satisfactory practices by FIs, there still remains some UAE specific challenges that make it difficult to undertake CDD for certain customers. The challenges that were identified include difficulties in Arabic names, complications in identifying the beneficial owners, impediments in establishing the source of wealth/funds, concerns with politically exposed persons, the increasing cost of compliance that resulted in a pattern of de-risking within FIs. Research limitations/implications The international bodies whose mandate is to formulate the necessary anti-money laundering and combating the financing of terrorism policies and regulations for global implementation together with Association of Certified Anti-Money Laundering Specialists (ACAMS) have published sufficient studies on CDD-related issues in the UAE. Yet on the other hand, very limited literature was found by independent scholars. This paper will, therefore, largely reference publications by Financial Action Task Force, the International Narcotics Control Strategy Report and ACAMS. It will also include works by respected law firms that have operations in the UAE, local publications, government documents, academic papers by the International Monetary Fund and the World Bank, legal journals and others. Originality/value Illicit actors exploit the UAE’s relatively open business environment, a multitude of global banks and exchange houses and global transportation links to undertake illicit financial activity […] the UAE does not have any major anti-money laundering (AML) deficiencies. However, the monitoring of FIs for AML purposes, particularly in the area of CDD, could be improved. This paper unpacks the CDD vulnerabilities and analyzes the UAE specific dynamics that make the country exposed to these threats. This research also puts on the table suitable remedial action steps that the UAE government, regulators and FIs can adopt.

Fincen requires financial institutions to obtain beneficial ownership information for legal entity customers

2016 ◽  
Vol 17 (4) ◽  
pp. 34-44
Author(s):  
Ignacio Sandoval ◽  
Charles Horn ◽  
Melissa Hall
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Due Diligence ◽  
Legal Entity ◽  
Content Type ◽  
Financial Crimes ◽  
The Us ◽  
Beneficial Ownership ◽  
To Come ◽  
Customer Due Diligence

Purpose To provide an overview of the legal entity customer due diligence rule recently adopted by the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury. Design/methodology/approach This paper provides an overview of the requirements of the legal entity customer due diligence rule as well as some observations regarding the scope of the rule, its interplay with other regulatory requirements, and some of the rule’s ambiguities. Findings While the preamble to the new rule suggests that FinCEN was attempting to accommodate industry concerns, the literal terms of the rule may have the opposite effect. Practical implications Although financial institutions will have until May 2018 to come into compliance with the rule’s requirements, they should begin developing the infrastructure to support compliance with the rule as soon as possible. Originality/value Practical insights into issues that financial institutions may encounter when implementing the rule’s requirements from experienced financial services lawyers.

Interaction effects of professional commitment, customer risk, independent pressure and money laundering risk judgment among bank analysts

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zuraidah Mohd-Sanusi ◽  
Yusarina Mat-Isa ◽  
Ahmad Haziq Ahmad-Bakhtiar ◽  
Yusri Huzaimi Mat-Jusoh ◽  
Tarjo Tarjo
Keyword(s):  
Money Laundering ◽  
Interaction Effects ◽  
Situational Factors ◽  
Primary Data ◽  
Professional Commitment ◽  
Due Diligence ◽  
Content Type ◽  
Risk Judgment ◽  
Banking Institutions ◽  
Customer Due Diligence

Purpose This study aims to examine the direct and indirect effects of professional commitment, customer risk and independence pressure on money laundering risk judgment among bank analysts. Design/methodology/approach This study uses a within-subjects experimental research design and collects primary data via a questionnaire distributed to bank analysts in banking institutions in Malaysia. Findings Results show that professional commitment, customer risk and independence pressure significantly influence money laundering risk judgment (i.e. customer due diligence and money laundering reporting). The results also show significant interaction effects between customer risk and independence pressure in influencing money laundering risk judgment. Practical implications Professional commitment and situational factors are crucial in putting pressure on bank analysts responsible for performing a thorough check and due diligence to minimize money laundering risk to the bank. Social implications As money laundering is lifeblood of crimes, understanding the factors influencing money laundering risk judgment would assist the affected institutions to manage the risk better and contribute towards the fight against crimes. Originality/value This study focuses on money laundering risk judgment. It contributes to understanding the competency of the gatekeepers, such as bank analysts, in practicing professional commitment and dealing with situational factors.

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