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Batch 28

Mechanistic VS Risk-Based Approach

Adopting a risk-based approach to customer screening means being responsive to risk throughout the screening process.

Example of a mechanistic (non risk-based) approach to KYC

Step 1 – Initial screening reveals that a potential customer is a PEP

Step 2 – You flag this information on the customer’s record and fill in the appropriate documentation

Step 3 – You move on to the next customer

Example of a Risk Baed Approach to KYC
Step 1- Initial screening reveals that a potential customer is a PEP

Step 2- You flag this information on the customer's record and fill in the appropriate documentation
Step 3- You conduct an advser media search and find that the potential customer is involved in awarding state contracts
Step 4- You ensure that the customer is rescreened on a quarterly basis. You advise that their suitability as a customer be kept subject to regular review and that any unusual behaviour be flagged for investigation
Step 5- You document the searches and analysis you carried out, and why it led you to your chosen course of action

Source: RiskScreen, 2017 (Adopting a Risk-Based Approach to KYC). #FCA #Job #jobsearch #KYC #AML #business #tradefinance #financialcrime #academy #Business #kyc #aml #JMLSG #FCA #job #jobsearch #jobinterview
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Did you know that the total value of global trade is $72 trillion, almost equal to global GDP. International trade value is forecast to double by 2020. Trade finance revenues forecast to increase by 68% by 2020 with revenue from open account doubling.
The international trade system is clearly subject to a wide range of risks and vulnerabilities that can be exploited by criminal organisations and terrorist financiers. In part, these arise from the enormous volume of trade flows, which obscures individual transactions; the complexities associated with the use of multiple foreign exchange transactions and diverse trade financing arrangements; the commingling of legitimate and illicit funds; and the limited resources that most customs agencies have available to detect suspicious trade transactions.

Trade-Based Money Laundering: FATF
#tradefinance #financialcrime #academy #Business #kyc #aml #JMLSG #FCA #job #jobsearch #jobinterview
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Is source of wealth and source of funds the same? ‘Source of wealth’ describes how a customer or beneficial owner acquired their total wealth. ‘Source of funds’ refers to the origin of the funds. It refers to the activity that generated the funds, for example salary payments or sale proceeds, as well as the means through which the customer’s or beneficial owner’s funds were transferred.

How it works?
Banks need to validate the source of funds for: - All Customers - All identified Ultimate Beneficial Owners of: Customers with a Risk Rating of medium and high Risk

Customers categorised as Specially Designated National

Customers where a Politically Exposed Person (PEP) has been identified as a beneficial owner, SDN designation or closely related or associated with.
Sample of acceptable means of Source of Wealth/funds are:
Proceeds from Initial public offering
Funding and investments
Equity from the business or entity owners.

Source of wealth / funds narrative is captured in the customer CDD profile, at the end of the screening process.

By Harish Krovvidi
#financialcrime #academy #Business #kyc #aml #JMLSG #FCA #job #jobsearch #jobinterview
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GnB Foundation Trade Finance KYC/AML workshop. #London #Feb2018 #Foundation. #Business #JMLSG #Economics #Sanctions #financialcrimes #job #jobsearch #jobinterview
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EU Ambassadors confirmed in December 2017 that an agreement had been reached between the European Parliament, European Council and European Commission regarding the latest amendments to the Fifth Money Laundering Directive (5MLD). The amended 5MLD is expected to contain extended provisions regarding both the implementation and the structure of Ultimate Beneficiary Ownership registers within the EU.
tradefinance #financialcrime #academy #Business #kyc #aml #JMLSG #FCA #job #jobsearch #jobinterview
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#Tbt Dec2017. Financial Regulatory and compliance workshop. #London. tradefinance #financialcrime #academy #Business #kyc #aml #JMLSG #FCA #job #jobsearch #jobinterview
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Tbt 2016. GnB batch #JMLSG #FATF #FCA #Bafin #BSA #regulatory and compliance. #Financial Crime. #Newcastle. #job #jobsearch #jobinterview
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