Looking Through the Financial Crime Risk Glass

Intention - From a financial crime risk lenses

Although financial crime risk practitioners are not always legally trained or having received professional psychological training, understanding Intent, is a necessary crime-fighting ingredient. The state of “guilty mind” or Mens Rea, is the mental element of a person’s intention to commit a crime and is indeed, a necessary element of many crimes. At the first instance, this may sound like some criminal law-related contents but wait a minute, one does not need to be a financial crimes lawyer and/or a criminal psychologist to appreciate why a decent understanding of Intent is imperative. Specifically, it refers to Customer’s Intent. While we are familiar with the tenets of the Customer Due Diligence (“CDD”) and Know Your Customer (“KYC”) regime, how sensitive bankers are with respect to the customer’s intention where transactions are concerned. Do we have always understand the customer’s intention behind the trades? Have we make unnecessary assumptions or have we taken something for granted?

Take the following as a simple illustration: -

In the arena of trade finance crimes risk management, do bankers and/or compliance risk practitioners consider why certain shipment routes (vis-à-vis the origin of goods) were contemplated? For instance, do the designated ports of loading really matter or would it be the case that as long as there exist no apparent sanctions compliance nexuses, on the face of documentary examination, it should be fine? After all, if we don’t know, the safe harbor argument may kick-in. Understanding customer’s Intent, should be contemplated during the account opening and/or credit availment process, such that any inherent and potentially hidden risks are assessed at the outset and more importantly, to be reconciled against the transactions on post mortem basis. In other words the Bank’s understanding of the customer’s modus operandi matches the actual trade transactions.

Do you truly understand the customer’s Intent? Think thrice… …