Tick box attitude defeats the purpose of the law as it opens the flood gates for money launderers.
By: Stephane Apitha
In most jurisdictions, the legislators have laws to restrain the problem of money laundering. In addition to that nowadays most Off Shore Management companies “OMC’s” are equipped to carry out compliance checks.
In order to understand what money is laundering we have to look at the definition of same; however, as at date there is no definition that will enable someone to understand money laundering, the definition is based on a case to case basis. However, money laundering could be described as any transaction that defeats the purpose of the law.
The code of conduct stipulates that there is need to know customers in order to prevent money laundering. Customer Due Diligence (CDD) is the key element hence CDD is essential when establishing a business relationship with an applicant for business.
Hence based on the above OMC’s should at least do the following:
- Identifying and verifying the identity of the applicant for business using reliable, independent source documents, data or information;
- Identifying and verifying the of the beneficial owner;
- Obtaining information on the purpose and intended nature of the business relationship; and
- Conducting ongoing due diligence on the business relationship and scrutiny of transactions throughout the course of the business relationship.
In addition to the abovementioned, most jurisdictions have regulatory bodies which have guide lines to avoid money laundering to happen and they even carry random check. This is one of the various ways to stop money laundering and the financing terrorism.
However; if the document produced are: Valid at face value and it complies with the guideline set by higher management; the compliance officer will not question the document the transaction may continue.
