Conozca a su cliente

The past decade has seen a marked increase in effort from the international community to combat money laundering. As new opportunities to launder money have arisen, aided by technology and globalisation, new regulations have sought to keep pace with these developments and counter the threat.

Bodies such as the Organisation for Cooperation and Development (OECD), the G-7 and the European Union (EU) have been at the forefront of this fight. They have asked all jurisdictions under their auspices to adopt high standards of accountancy and transparency when it comes to the assessment of financial transactions. The EU’s Moneyval institution holds all EU member states to account on anti-money laundering practices, while the G-7’s Financial Action Task Force (FATF) does a similar job with its members.

Alongside this supranational activity, we have also seen many jurisdictions revamp and tighten their own domestic legislation around money laundering. As the illegitimate funding of terrorism has increased the profile of money laundering, it has also trained a spotlight on those jurisdictions that haven’t taken it seriously enough (e.g. Panama Papers). This increased negative press has encouraged many countries, particularly smaller international business centres, to improve their image. Malta, for example, has its own dedicated Financial Intelligence Analysis Unit and several laws dedicated solely to anti-money laundering.

All of this extra focus on the prevention of money laundering has thrown a lot of responsibility on third party corporate service providers and other professionals, such as lawyers and accountants. The new legislation is designed to make everyone involved in money-laundering, even indirectly, culpable. There is an onus on clients to voluntarily divulge information such assource of funds or beneficial ownership, but this shouldn’t be relied upon. The same is true of due diligence done by a third party outside your own business.

Know Your Customer (KYC) regulations can be onerous, but they must be complied with. This means understanding client businesses intimately, including any holding structures. It also means identifying beneficial owners, analysing business transactions and identifying financing and source of funds. Having the resolve to question a client’s motives and business practices is paramount, even if that means losing business. Many jurisdictions are adopting a risk-based approach to KYC, allowing them to set parameters for the level of scrutiny that certain transactions require. Meeting these criteria is essential, but it is also advisable to set the bar higher, imagining a worst case scenario and planning for that. The advent of things like digital banking and cryptocurrencies has made it much harder to maintain transparency in any given transaction. Maintaining high levels of scrutiny, even for established clients, is less likely to mean that professionals offering corporate services have to risk their own reputations by facilitating money laundering.

In the following pages you will find jurisdiction- specific advice from several professionals about the changing landscape of anti-money
laundering. They will provide an update on the legislation in their jurisdiction, and offer tips on the best practice KYC techniques to use when seeking information on companies and individuals in their countries. They will also assess some common business scenarios, looking at which might be higher risk than others and which could require enhanced due diligence measures.

Asesores colaboradores

  • Nicholas V. Chen
    Mergers & Acquisitions in China and Mergers & Acquisitions in Taiwan

    Nicholas V. Chen

    goldNicholas V. is a gold member
    MOTY 2014Nicholas V. was Member of the Year winner in 2014
    Partner, Pamir Law Group
  • Dunstan Magro
    Business Advisory Services and Corporate Law in Malta

    Dunstan Magro

    silverDunstan is a silver member
    Managing Partner, WDM International
  • Luis G. Santine Jr.
    Fiduciary and Custodial Services in Curacao

    Luis G. Santine Jr.

    silverLuis G. is a silver member
  • Jessica Staheli
    Management Due Diligence in California

    Jessica Staheli

    bronzeJessica is a bronze member
    Exec. Vice President, Scherzer International