Handbook of Anti-Money Laundering.

CHAPTER 22ONGOING MONITORING

22.1 THE IMPORTANCE OF ONGOING MONITORING

In Chapter 13 we discussed the Know Your Customer obligations which are one of the main money-laundering-deterrence measures that every firm is required to implement. Such due diligence enables a firm to really understand its clients and therefore potentially to identify that they are undertaking inappropriate activity. Such an identification requirement should apply regardless of locally implemented regulation. It serves not only to ensure that the firm meets the regulatory requirements, but also to ensure that the reputation of the firm is not impacted by involvement with individuals or organisations which are found to be inappropriate.

Undertaking primary investigation into the business intentions and credibility of a customer is fundamental when distinguishing between a legitimate business interest and a business that is, in fact, a facade used for furthering criminal intentions. However, initial identification work is only the starting point in the money-laundering and terrorist-financing monitoring process that a regulated firm is required to implement. The initial due diligence conducted needs subsequently and continually to be supplemented by appropriate and sensible ongoing continuous customer and transaction monitoring.

Any money launderer or terrorist financer will obviously have expected initial customer due diligence to have been carried out by a firm. Indeed, they would be aware if the nature ...