Risk-Based Approach â Guidance for Money Service Businesses

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Risk-Based Approach – Guidance for Money Service Businesses - July 2009In many of these scenarios the customer‟s activity may be apparent both during point-of-saleinteraction and during back-end transaction monitoring.b) Transactions received:The domestic wire transfers received by an MSB company of EUR/USD 1 000 or more should beaccompanied, within the message or payment form, by the originator‟s account number or aunique identification number. Cross-border wire transfers of EUR/USD 1 000 or more shouldinclude full originator information (name of the originator, the originator‟s account number or aunique reference number, the originator‟s address or national identity number or customeridentification number or date and place of birth). Therefore MSBs should pay special attention: To transactions that are not accompanied by the complete originator information required. When additional information has been requested to an ordering MSB, but is still lacking.Customer receives transactions in a pattern consistent with criminal proceeds, e.g. from elderlypeople in a wide geographic area, in amounts consistent with a lottery scam.Customer receives transfers in seasonal patterns consistent with criminal proceeds; e.g. marijuanagrowing season, illegal immigration.Large number of transactions received at once or over a certain period of time which do not seemto match the recipient‟s usual needs or receiving pattern.Agents Risk114. An overall risk assessment should analyze specific factors which arise from the use of certainagents 13 to facilitate the delivery of MSBs products and services. In some cases these agents may also usethe products and services themselves. Assessing agent risk is more complex for those MSBs with aninternational presence due to varying jurisdictional requirements and the logistics of agent oversight. Thisagent risk analysis should include such factors as the following based on the reasonableness andappropriateness of the factor within the MSB‟s business model, systems and controls:Agents conducting an usually high number of transactions with another agent location,particularly with an agent in a geographic area of concern.The transaction volume of the agent, either overall or relative to typical past transaction volume.Agents that have been referred by other departments of the MSB.Agents that have been the subject of negative attention from credible media or law enforcementinquiries.Agents that are not in compliance with internal policies and external regulation, such ascompliance programme requirements, monitoring, reporting, or Know Your Customer practices.13FATF Glossary gives the following definition to agent: “for the purpose of SRVI, an agent is any personwho provides money or value transfer service under the direction of or by contract with a legally registeredor licensed remitter (for example, licencees, franchisees, concessionaires).32 - © 2009 FATF/OECD
Risk-Based Approach – Guidance for Money Service Businesses - July 2009 Agents that are unwilling to follow compliance program review recommendations, and thereforesubject to probation, suspension or termination.Agents who fail to provide required originator information upon request.Agents whose data collection is lax, sloppy or inconsistent.Agents willing to accept false identification.Agents willing to enter identification into records that contains false information, non-existentaddresses that would be known to be non-existent to a person in that area, or phone numbers thatare used as fillers.Agents with a send-to-receive ratio that is not consistent with other agents in the locale or isconsistent with participation in a criminal transaction corridor.Agents whose seasonal business fluctuation is not consistent with other agents in the locale or isconsistent with participation in a criminal transaction corridor.Agents whose ratio of questionable or anomalous customers to customers who are not in suchgroups is out of the norm for comparable locations.Agents whose ratio of questionable or anomalous transactions to transactions that are not in suchsets is out of the norm for comparable locations.Variables That May Impact Risk115. A MSB‟s risk-based approach methodology may take into account risk variables specific tocertain categories of customers or transactions. These variables may increase or decrease the perceived riskposed by a particular customer or transaction and may include:The purpose of the transaction: transactions conducted primarily to facilitate traditional, lowdenominated consumer transactions may pose a lower risk than transactions conducted tofacilitate the movement of large quantities of cash.The type of transaction: a transaction sent by an individual for a commercial bill payment maypose a lower risk than a retail transaction conducted between two individuals.The method of sending or receiving the transaction: a non face-to-face transaction may pose ahigher risk than a transaction conducted in a face-to-face environment.The type of customer: a walk-in customer may pose a higher risk than a known customer withestablished transaction history and a long-standing relationship with the MSB and/or the agentlocation.The level of cooperation from the customer when asked to provide personal information relatingto the nature of the transaction: customers who are forthcoming and readily provide credibleinformation regarding the nature of the transaction when asked may pose a lower risk thancustomers who become irate or defensive or are unaware of information that they would beexpected to know in the circumstances as they present them (such as the phone number of theperson to whom they are sending thousands of dollars).© 2009 FATF/OECD - 33
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Risk-Based Approach â Guidance for Money Service Businesses