AML Compliance Puzzle

Click on the words above for an explanation of each term and why they are important to your Anti Money Laundering Compliance Strategy.

 

 

 

 

Politically Exposed Person (PEP)

A PEP is someone who has acted in the political arena of a country, and so creates a potential risk of reputation to regulated bodies. The Financial Action Task Force describes PEPs as being more than just politicians; PEPs can include senior officials working in the judiciary, military and legislative and administrative area. Any family members or close associates may also be designated as PEPs because of their relationship.

192.com hold a list of current Politically Exposed People, which currently stands at approximately 16,000 records, however this changes dependant upon the regular updates made to the list.

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Electronic Verification

The JMLSG guidance notes endorse electronic verification checks with the following conditions:

Section 5.3.29 - Evidence of identity can be in documentary or electronic form

(a) Electronic ID checks must “Provide firms with a composite and comprehensive level of electronic verification through a single interface.

(b) Electronic ID checks “must use data from multiple sources, and across time.

(c) If identity is verified electronically, this should be by the firm, using as its basis the customer’s full Name, Address and Date of Birth.

Electronic Verification from 192 uses a range of id check tools and databases sourced from reputable primary data sources.

 

Timing

Section 5.2.2: Timing of verification

The verification of the identity of the customer and where applicable, the beneficial owner must take place before the establishment of a business relationship.

Ideally verification should take place at the point or the account or relationship creation. Using 192 you can archive all ID checks with a date and time stamp to ensure compliance. Even better, using our XML service, you can integrate our checks into your website or CRM system for ease of use.

 

Risk

It is recommended that a risk based approach is taken to complying with Anti Money Laundering regulations. Higher risk situations requiring further verification might include:

1) Where the customer has not been physically present for identification purposes.

(2) An individual meeting the definition of a PEP.

(3) A high risk jurisdiction.

Our AML solutions comprise a variety of tools and databases and our clients can use as few or as many ID check tools and databases as they wish based on their reading of the risk.

 

JMLSG: The Joint Money Laundering Steering Group

The Joint Money Laundering Steering Group consists of the leading Trade Associations in the UK Financial Services Industry. Included in the JMLSG is the British Banking association, the Building Societies Association, the Council of Mortgage Lenders as well as the Finance and Leasing Association

The latest version of the JMLSG guidelines was approved by FSA and HM Treasury on December 18 2007. 192 have produced a guide to interpreting these, available here.

 

CDD: Client Due Diligence

Section 5 of the Money Laundering regulations describes Client Due Diligence as:

• “identifying the customer and verifying the customer's identity”
• Using “documents, data or information”
• From “a reliable and independent source

192 can help verify identity documents, as well as providing other data and information sources to check against. We only source our data from trusted suppliers, and all data is held under strict licensing agreements. We are registered with the Information Commissioner’s Office and have been managing sensitive customer data for over 10 years.

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Identity

The cornerstone of AML CDD and KYC is identity verification. Firms must both:

Identify the customer and verify the customer’s identity.

192’s multiple data sources for electronic evidence of identity:
The current and historical Electoral Roll
The Directory Enquiries database
Companies House Data
Credit Reference Agency Data
Mortality
Passport
Driving Licence
Known Fraudsters& Money Launderers
Terrorist &Sanctions Files
Politically Exposed People (PEPs) Data

 

Two Plus Two

Two plus two related to the minimum matches that must be gained before an AML identity check is deemed satisfactory.

The first two matches must be:

One match on an individual’s full name and current address

With a further two matches consisting of:

A second match on an individual’s full name and either current address or date of birth.

Because 192 use a range of data sources, we are able to provide high match rates, ensuring you can meet the two plus two minimum requirement.

 

SDN: Specially Designated Nationals

The SDN list is published by OFAC and consists of both individuals and organizations who are prohibited from conducting business with United States citizens.

Our sanctions database comprises of the Bank of England Financial Sanctions lists, Office of Foreign Assets Control List (OFAC) and the EU Economic Sanctions list.

 

OFAC: The Office of Foreign Assets Control

OFAC is an agency of the United States Department of the Treasury and comes under the control of the Under Secretary of the Treasury for Terrorism and Financial Intelligence. OFAC administers and enforces the SDN list, a list of individuals and business that are barred from conducting business with US citizens. 192 maintain an up to date version of OFAC’s Control List, which includes the SDN list, to ensure that you do not conduct business with anyone who may be a security/reputational risk.

 

Beneficial Owner

Identity checks for AML purposes need to be carried out on anyone who is deemed to be a ‘Beneficial Owner’. A beneficial owner can be a person, a trust, or a body corporate. Section 6 of the AML Regulations states that a beneficial owner can be:

(a) A body corporate.
(b) Any individual who owns or controls more than 25% of the share or voting rights in the body.
(c) Exercises control over the management of the body.

To ensure you are compliant, 192 enables searches to verify the details of business organisations such as their company name, address and registration number, as well as the details of the directors of the company or organisation.

 

Negative Data

Identity Verification isn’t just about a positive match to confirm identity, It is also important to check against negative data lists. 192 holds negative data lists such as the Politically Exposed Persons (PEP) list, the OFAC SDN list, Bank of England Financial Sanctions list as well as the mortality database of deceased individuals. This ensures that AML compliance is achieved and protects your professional reputation.

 

Sanctions

Our sanctions database comprises of the Bank of England Financial Sanctions lists, Office of Foreign Assets Control List (OFAC) and the EU Economic Sanctions list. By checking an individual does not show up on any of these databases you can be confident you are not transacting with terrorists and you are complying with the Money Laundering Regulations 2007 and JMLSG guidelines.

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