AML PROFILE

The AML Profile! Define your clients’ AML/CTF risk…

IDENTIFICATION AND NAMECHECK

AML PROFILE

In our last white paper, we spoke about the first steps in this process which are the customer identification and the screening of the names against the different sanctions and PEP (Politically Exposed Persons) lists.

The second step is identifying and managing the money laundering/terrorist financing risks your clients may be exposed to, and developing the appropriate measures to mitigate these risks.

You as professionals are obliged to apply due diligence with respect of your clients. This is called the Customer Due Diligence (CDD) or Know-Your-Customer (KYC) Process!

AML PROFILE

The Risk Based Approach is a continuous process based on a number of predefined risks common to customers in general.

These risks can be summarised as follows:

• Geographical RiskCustomer’s nationality; country of residence; countries where the customer’s activity takes place; ...(subject to criteria used, countries will be classified as high, medium or low risk)

• Activity RiskCustomer’s main activity; and if applicable, secondary activity(according to the vulnerability of each activity for favouring an act of money laundering or terrorist financing such as diamond and art dealers; persons active in the trade of sensitive materials; traders and dealers in financial institutions; cash generating businesses; charities; ...)

In order to establish a risk profile on your customers, you will use the Risk Based Approach (RBA).

AML PROFILE

• Behaviour RiskCustomer’s behaviour may be an indication of a criminal activity(f.ex. customer refuses to provide information; provides false information; wants to use company accounts for personal transactions; customer’s company structure is abnormally and unnecessarily complicated;...)

• Risk linked to the relationship setupHow was the relationship set up?(f.ex. remote relationship; there is no direct contact with the customer; the relationship was set up via a referral agent; is the referral agent well known; does he have KYC procedures in place;...)Note: Generally the risk is lowest when a relationship is set up face-to-face with the customer!

• Documentary RiskAdequate and up-to-date documentation to be maintained in the customer’s KYC file(such as passport; ID card; declaration of beneficial ownership; articles of incorporation; extract of business register;...)

ry activity;...

AML PROFILE

• Services RiskServices that are not subscribed with you may prove difficult to monitor and may therefore potentially increase the risk of money laundering due to lack of control.

Depending on your line of business and the risks inherent thereto, additional risks may apply, suchas Product Risk, Transaction Risk, Risks pertaining to relationships with correspondent banks in non-GAFI countries,…

Note: It is necessary to reassess your ML/FT risks each time a change within your business occurs i.e. the development of new business practices; new products; the use of new technologies; etc.

The final AML profile of your customer will be the combination of the outcome of both the name screening (as per our previous white paper) and the Risk Based Approach.

Your client files will have to be reviewed on a regular basis and in accordance with the risk that has been allocated to each individual client => for example, a high risk customer may have to be reviewed on a quarterly basis whereas a low risk client may well be reviewed annually.

• The riskier your client, the more frequent the review!

In addition, you must apply continuous vigilance when dealing with customers and be able to prove that the measures taken are appropriate in view of the ML/FT risks as defined.

• Continuous vigilance includes a.o. to monitor the risk evolution; to ensure update and relevance of documents, data, and information; to continuously scrutinise customer behaviour and transactions; ...

AML PROFILE

Subject to the risk profile allocated to your customer, a regular file review will be conducted.

AML PROFILE

Keeping track of the contents of your clients’ AML/KYC files will be time consuming and may prove difficult to warrant, and will certainly be a burden.

What you need is a powerful automated global AML system that will help you monitor your clients, keep track of required documentation and keep you posted on the regular follow-ups you need to make.

We have the solution…

Conclusion

CDDS MAKES YOU COMPLIANT WITH YOUR AML/CTFOBLIGATIONS

AMLspotter, an all-in-one solution thatprovides you:

AML risk management

Dynamic KYC / KYT

AML Risk Classification

Manual & Automated name screening

Recurrent monitoring

AML risk dashboard

Detailed reporting

If you require more information on the subject or would like to discuss this with us,please call us on +352 20 21 16 20 or e-mail us on helpdesk@cdds.lu