A step too far – a warning for Private Prosecutors
On 2 July 2012, the Financial Action Task Force (FATF) published a report on specific risk factors in laundering the proceeds of corruption.
The report aims to assist reporting institutions (financial and non-financial) to better analyse and understand specific risk factors that may help them to identify situations that pose a heightened risk of corruption-related money laundering risk.
The report seeks to answer the question: are there specific types of business relationships, customers, or products which should lead a reporting institution to pay particular attention to the risk of corruption-related money laundering?
In particular, the report considers the following:
The report concludes that corruption-related money laundering can use many of the same techniques as other types of money laundering, particularly the use of corporate vehicles and trusts, gatekeepers, nominees and family members and cash. Identifiers include transactions that are unusual for the particular client, that appear to lack a legitimate business purpose, or that are by their very nature higher risk. Activity which conceals identification information or structures which are overly complex to no advantage should be cause for further investigation.
FATF considers business relationships with foreign PEPs to be inherently high risk, and should be subject to enhanced scrutiny. Officials who have a role in public office with access to public funds or companies or persons doing business with those countries or economic sectors judged to pose a higher risk of corruption, should be considered higher risk.
Not surprisingly, the report finds that certain characteristics - customer types, countries and regions, and product/services - when taken together and in the context of what is understood about corruption-related money laundering, should also be considered higher risk.
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