Keep Money Laundering and Fraud out - TONBELLER® AG

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Watch list Management Whitepaper | Keep Money Laundering and Fraud out - Know your Customer (KYC) Identity fraud, crimes and terrorist activities are on the rise since a couple of years and becoming increasingly sophisticated. More than ever it is important to keep business free from criminals that could damage the organization’s reputation However challenging, it is imperative to get the sanctions program right as the fines for violations compliance can be substantial – both in terms of monetary penalties and reputational damage. Therefore organisations such as the “Office of Foreign Assets Control (OFAC)” an agency of the “United States Department of the Treasury” have published official and non-commercial sanction lists that include entries of restricted individuals and entities that banks should keep away from their products, channels and services. Similar lists like the EU-list, Her Majesties Treasury (HMT) watch list are available and provide a set of different entries of criminal persons and entities. All of these lists can be uploaded to Siron ® KYC in order to screen the initial customer data against those lists. Siron ® KYC uses enhanced search abilities (as described in the following chapter: Technical specification for PEP screening & watch list management). After screening the initial KYC data against the lists Siron ® KYC indicates the match strength of the customer data with the list entries and enables the customer acceptance officer to examine if the potential customer poses a serious threat to the bank Technical specification for PEP screening & watch list management Siron ® KYC comes with a fuzzy search engine allowing a wider search ability to identify high risk individuals who may attempt to disguise their identity beyond the known aliases. This fuzzy search not only detects name components that have been altered but also abbreviations, substitutions, modified writing patterns, deletions, acronyms or foreign translations. All actions at the decision level (for example the decision if the screened customer is a PEP or not) can be taken according to the principle of dual control. This will provide the decision-making process with a broader basis. The financial institute can decide to active the dual-control within the settings of Siron ® KYC. While the dual control functionality is active the first decision triggers a message to the second analyst who is in charge to confirm or reject the decision of his colleague. Siron ® KYC provides the users with retraceable, audit-proof information of the user’s screening results and decisions to satisfy compliance and audit requirements. 2-24
2.2.1.4 Beneficial owner Whitepaper | Keep Money Laundering and Fraud out - Know your Customer (KYC) One of the key provisions in the e.g. 3 rd EU Directive is the requirement to identify beneficial owners and to verify the identity of those persons. According to a survey undertaken by the FATF, which formed the basis of the typology report, the most significant feature of the misuse of corporate vehicles [is] the hiding of the true beneficial ownership 1 . The typology report identified three sub-categories for the misuse of corporate vehicles: multi-jurisdictional structures of corporate entities and trusts, specialised intermediaries and professionals, nominees and shell companies. These corporate vehicles are ‘often’ used to primarily hide the origin and identity of the beneficial owner as well as the origin of the funds. Within the context of money laundering and fraud the identification and verification of beneficial ownership is a key concern for external auditors. The content below gives an overview of the beneficial owner definition and explains how Siron ® KYC can help you in the verification and documentation process of beneficial owners: Beneficial Owner (General definition/US) � The individual who enjoys the benefits of owning a security or property, regardless of whose name the title is in (US) Beneficial Owner (EU Definition) � In case of corporate entities natural person who � Ultimately owns/controls a legal entity through direct/indirect ownership/control over a sufficient percentage a shares/voting rights…a percentage of 25% +1 share shall be deemed sufficient � Otherwise exercises control over the management � In case of legal entities (e.g. foundations) and legal arrangements (e.g. trusts) administering/distributing funds � Natural person(s) who is the beneficiary of at least 25% of the property (determined) � Class of person(s) in whose main interest the legal arrangement/entity is set up (not yet determined) � Natural person(s) who exercises control over at least 25% of the property Identification / verification of beneficial owner � When establishing a business relationship � During ongoing business relationship at regular intervals � If suspicious transaction occur � When doubt about veracity /relevance of previously obtained information 1 FATF Typology Report; the Misuse of Corporate Vehicles, Including Trust and Company Service Providers, 13 October 2006, FATF/OECD, Paris, 2006, p. 2. 2-25
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Keep Money Laundering and Fraud out - TONBELLER® AG

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