Customer Due Diligence (“CDD”) process can be time-consuming and costly if the CDD program to perform an AML/CFT compliance task is disorganised or performing without an AML/CFT Policy or AML/CFT Operation Manual.

In practice, Compliance Officers may not have the complete knowledge of the customer or the transaction in question.  In Chapter 8.5.4, Mafia, Triads and Secret Societies, First Edition, Money Laundering, A Handbook for CDD Compliance defines Organised Crime and enlightens, following the suppression against mafia and triad around the world, criminal organisations have diverted illicit monies to legitimate businesses and investments.  Today, a customer can provide the type of document to satisfy the identity, beneficial ownership and source of funds test.  Does this mean the process of CDD Compliance requirement satisfied and completed?  Unfortunately, that is not the end of it.  Compliance Officer may have to consider to adopt some form of the Applied Psychology approach to understanding the “mens rea” of the customer.  The reasons are:

  • Not all mafia or triad members have criminal records.
  • Politician, PEP and Dragon Head of a criminal organisation does not surface or appear personally in a business transaction.
  • Human beings do tell lies at some point in time. Liars are either born or belong to the “narcissist’ group; intending to nominate the situation or transaction; do not wish to be transparent; obliging a request; attempting to gain or secure trust; to support a team member; or deception.

Compliance Officers when confronting a customer on a face-to-face interview, have the advantages of raising questions for the customer to answer.  The psychology technique calls for the observation of the following:

  • The eye movement of the customer.
  • The face appearance of the customer.
  • The type of smile the customer responded.
  • The customer’s behaviour reacted.
  • Evaluate the customer’s statement and identify inconsistency statements.

If there is any adverse outcome from the interview, the Compliance Officer must stop the transaction or even terminate the business relationship with the customer.  Unless the suspicion arises supported with fact, no reporting to the Financial Intelligence Unit (“FIU”) required: FATF Recommendation 20 – Reporting of Suspicious Transactions.

When does Suspicious Transaction start?  The suspicion starts the moment Compliance Officer is in contact with the customer whether at a time face to face meeting or by a transaction by electronic mail: FATF Recommendation 20: Reporting  Suspicious Transactions

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Categories: UNODC, UNCAC, FATF, AML/CFT Compliance, Money Laundering, Suspicious Transaction, Psychology