Combatting financial crime 1/5: Account opening and maintenance


When opening new client accounts, banks need to examine the intrinsic nature of the business and assess the risks involved.

Know Your Customer ‘KYC': is the initial gathering of information to verify identity on the basis of independent information, and understand the nature of the underlying business.

Customer Due Diligence ‘CDD': is the ongoing assessment.

Subsequent transaction monitoring techniques should be established to identify and avoid potential money laundering transactions.

Enhanced KYC / CDD

It may be that a certain transaction displays higher risks than that normally associated with the customer. In these cases, one or more of the following additional checks may be considered:

  • make enquiries, as appropriate, into the ownership and background of the other parties to the transaction e.g., the beneficiary, agents, carriers, and taking any further steps to verify information or the identity of key individuals as the case demands;
  • seek information from the instructing party about the frequency of trade and the quality of the business relationships existing between the parties to the transaction. This should be documented to assist future due diligence;
  • refer the transaction to external agencies specialising in search and validation services in respect of bills of lading, shipping services and commodity prices, for example, the International Maritime Bureau;
  • check details of the source of goods;
  • check public source information for prices of goods such as commodities - where the contractprice is significantly different from the market [say 25%] then consider further investigation;
  • attend and record relationship meetings with the instructing party, visit them by arrangement;
  • for export letters of credit, refer details to other internal or group resources on the ground in the countryof origin, to seek corroboration; or
  • verification of shipments after the UCP process is concluded, drawn at randomfrom a sample of transactions, across a cross section of the bank's trade finance clients. Thismay help to identify spurious transactions where buyers and sellers act in collusion.



A more detailed analysis of financial crime, together with specific examples, can be found within the Financial Crime module at

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