AML & KYC Compliance
Enhanced due diligence for Anti-Money Laundering or AML compliance basically has to do with ascertaining an individual or corporate entity’s source of income and ensuring that there are no links between that entity and any money laundering-related activities. While legislation such as FCPA tends to be limited in jurisdictional focus with only entities with ties to the United States focusing on EDD for FCPA compliance, AML Compliance is a widespread practice around the world.
Conducting AML-related investigations in developed countries tends to be a much easier process than in developing markets such as those of sub-Saharan Africa, for various reasons. The primary reason is the fact that regulations in developed markets and documented transactions make it easy to trace financial transactions and resolve links to any suspicious activity that might require further investigation.
In several sub-Saharan jurisdictions however, regulations are lax and a large number of financial transactions occur outside the banking system. It is also not unusual for customers to deposit large sums of money in cash into bank accounts making it easy to conceal the origin of funds, whereas such transactions would raise red flags in developed nations. In such jurisdictions therefore it is essential to employ investigative resources that can look beyond the “hard-to-follow” money trail and determine from traditional on-ground investigations and discrete source interviews as well as alternate avenues of inquiry whether causes for red flag concern with regards to money laundering activity exist regarding a specific entity or group of entities.
KYC or Know Your Customer is a critical aspect of AML compliance which requires an institution to both ascertain the identity of their new customers and determine the level of risk a business relationship with such a customer will expose them to. In the case of sub-Saharan African entities ample local intelligence is required to determine the level of risk exposure a client might bring to any business arrangement or relationship. Red flag associations might not be evident in cursory checks and require additional investigation through on-ground resources to complete the due diligence process.