Nowadays, in the banks much attention is being paid to the management of the risk. People are now more aware of using bank as their medium of sending money from one place to another. In this regard, the risks of the money laundering are increasing, and this issue requires proper attention. Several guidelines have been provided in every country in order to properly manage the risk associated with the money laundering so that the activities that finance terrorism can be combated. The prudential management of the risk along with the effectual supervision plays an important role in the protection of the safety of banks and in maintaining the integrity and good will of the financial institution. In order to control the money laundering the banks are designing policies in order to handle the services of the clients and procedures of the money laundering.
The banks and their subsidiaries in this case are required to comply with then ascertainment of the customer identity while entering into the long term relationship with the business, and while performing any deal or transaction such as accepting the cash, transferring the funds. The banks are also required to establish the purpose of the relationship of the business, and identify the ultimate beneficiary. It is necessary that the banks should identify the ultimate beneficial person that is controlling the customers or the assets of the customer or on whose behalf business relationship is formed.
Furthermore, the banks are also ensuring the permanent monitoring of the customer’s client for detecting any suspicious or unusual transaction. Further, the banks should ensure that the monitoring is done by utilizing adequate systems and the processes (Demetis, 2010). However, special attention should be paid and necessary security measures should be implemented for the corresponding banking business. The banks should try not to adopt the practice of the payable through the accounts and through relationship, and in case it is adopted special attention should be paid to prevent the money laundering. The banks should report the suspicious transactions and circumstances to the competent authorities in accordance with the local law.
The anti-money laundering group should be intimated about the suspicious activities, if they are not prohibited by the law. The banks should try their best for employing the staff that deemed to be reliable. In order to ensure anti-money laundering controls the responsible officer ensure by the business and customer-related controls that the anti-money laundering requirements are followed and the security measures are functioning in proper manner. All the employees including temporary employees and trainees are responsible for establishing the business relationships that should undergo proper training regarding anti-money laundering. The banks should ensure that proper training is provided to the staff that makes them aware of the money laundering techniques and the ways to prevent money laundering.
Furthermore, the banks should also take proper measures for making the employees aware of the laws relating to the money laundering and the terrorist financing activities (Gurule, 2010). Training should be provided to the employees that help them to recognize and deal with the transaction that they consider related to the terrorist financing and the money laundering. The banks should try to form a system for accessing the level of the risk exposure by considering the risk of the client and product, and driving the suitable measures relating to the security from the analysis.
Moreover, the the regulations related to the money laundering emphasize that the banks are also required to establish suitable risk sensitive procedures and the policies for preventing the activities that are related to the money maundering and the financing of the terrorist activities. The banks should identify and scrutinize the unusual, complex, and large transactions. They should analyze the unusual transaction patterns that are having no lawful and evident economic purpose. The banks should also prevent the use of products that favor anonymity. They should determine that the client is PEP, i.e., politically exposed person or not, because the risk of money laundering is high if the person is politically exposed (Gray, 2010).
Furthermore, it is necessary to carry of CDD, i.e., customer due diligence, which is a procedure that is designed for acquiring knowledge about the client, and the probable client (Jun & Ai, 2009). It also includes verifying the identity and monitoring the business transactions and the relationships. The banks should ensure record keeping that include the details of the customer due diligence and the supporting evidence of the establishment of the business relationships, the record should be maintained for a period of the five years, even if the relationship is ended the record should be kept for a period of the five years. Additionally, the banks should ensure the internal control, proper monitoring of the compliance, risk management, proper communication, and risk assessment. For ensuring that the compliance is management properly, the business should ensure adequate oversight of the senior management, and should ensure proper systems in order to monitor compliance with the methods and procedure of communicating the procedures and other personnel information.
References
Demetis, Dionysios S. (2010). Technology and Anti-money Laundering: A Systems Theory and Risk-based Approach. Edward Elgar Publishing, Massachusetts
Gray, Larissa. (2010). Politically Exposed Persons: Preventive Measures for the Banking Sector. World Bank Publications
Gurule, Jimmy. (2010). Unfunding Terror: The Legal Response to the Financing of Global Terrorism. Edward Elgar Publishing, Massachusetts
Jun, Tang., & Ai, Lishan. (2009). The International Standards of Customer Due Diligence and Chinese practice. Journal of Money Laundering Control, 12(4), 406 – 416
