The doctrine of Sovereignty is an essential matter in determining whether a person is in a position to attract bribery.  See Chapter 8.3, Sovereignty, Power and Money, First Edition, Money Laundering, A Handbook for CDD Compliance and the Politician Impact matter discussed in Chapter 8.7 with The Politician Impact Diagram 21.

In Chapter 7, Politically Exposed Person (“PEP”), First Edition, Money Laundering, A Handbook for CDD Compliance revealed a brief story of “South Sudan: Country of Dreams.”  The story of South Sudan demonstrates the power of Sovereignty and the abuse of Sovereignty which can destroy a nation.  It also warns the psychology behaviour of people potentially making false promises and lies told to dominate a situation to convince and deceive another for personal gains.  That act gives rise to potential corruption which is a significant concern to the United Nations and the United Nations Convention against Corruption (“UNCAC”) or the Merida Convention under United Nations General Assembly Resolution 58/4 deals with corruption matters.

Where the illicit cash goes?  Before 1989 the birth of FATF, it is likely that PEPs will have the illicit monies deposited into a bank account.  Later on 31 October 2003, came Articles 52 to 55 and Article 57 of UNCAC that provides measures for the prevention, detection, recovery and disposal of assets of criminals.  Assets tracing and recovery was successful.  See Chapter 5.4, UNCAC and Anti-Corruption, First Edition, Money Laundering, A Handbook for CDD Compliance.   Where the illicit money goes after 31 October 2003?

FATF Recommendation 10 – Customer Due Diligence (FAFT 22 – DNFBPs: Customer Due Diligence) requires Compliance Officer to exercise enhanced CDD.  See Chapter 10.3, Risk-Based Approach and MER Comparison and The RBA application Diagram 27.  Beside necessary KYC procedures, the suggested significant CDD approach is:

  • Face to face meeting
  • Adopts a psychology approach to detect a lie
  • Nationality and residency of the customer. Mandatory enhanced CDD for higher risk country: FATF Recommendation 19 – Higher-Risk Countries
  • Nature of the business, transaction or opening a bank account check
  • Evidence to support the source of funds
  • Background investigation
  • PEP Self-Certification
  • Tax Residency Self Declaration
  • Asset Self-Declaration

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

The CDD compliance task is challenging.  Is the CDD approach adopted by the Compliance Officer to detect suspicious transactions could satisfy FATF Recommendation 10?

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Categories: UNODC, UNCAC, FATF, AML/CFT Compliance, Money Laundering, PEP, Corruption and Bribery