Prevention of money laundering in a financial institution : Customer due diligence
Kauppinen, Keijo (2013)
Kauppinen, Keijo
Tampereen ammattikorkeakoulu
2013
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2013121521255
https://urn.fi/URN:NBN:fi:amk-2013121521255
Tiivistelmä
Money laundering – emphasis on customer due diligence – as a final thesis topic was developed during my practical training as a banking advisor at Nordea Bank Finland. The topic was a current issue at work especially due to tightening legal obligations but also due to sanctions given to Nordea Group in Sweden for neglecting proper customer due diligence procedures. Not only was the topic current and important to the commissioner but also very interesting when connected to international business studies. The goal of the thesis was study the interrelationship of the parties involved: Finnish Act on money laundering and customer due diligence; party subject to the law; the customers of the party. How the law obliges the party to know its customers more thoroughly; how the party obtains information from the customer; how the customers react and experience the thorough interviewing when opening a new customer relationship.
The Finnish Act is very strict concerning customer due diligence. If it cannot be properly followed, a new customer relationship cannot be opened nor a transaction executed. There are numerous different money laundering methods and the scale of it represents an OECD 2009 study, where the amount of illicit money laundered globally in 2009 was evaluated to be 2.7% of the global GDP. Major issues facing financial institutions are: Identifying the origin of the funds; how a company’s account will be used (what kind of traffic will be expected); and transparency of ownership. While the studies showed that major situations that caused suspicion was connected to incoming funds and money transfers, a survey conducted in the Nordea corporate branch among the employees supported this study. The major question in the survey was what kind of questions generated avoidance among customers and the most common answer was origin of the funds and future account traffic. The other survey was conducted in order to gain knowledge about customers’ experience in the Nordea corporate branch. It is generally considered that the numerous questions in the interviewing might be irritating to the customers, but the survey results indicate contrary opinions.
In order for the interviewing to be smooth and comfortable, a conversational approach could be used. Customer service skills are highlighted in how the questions are asked. The main focus in obtaining information should be in knowing how the banking services/products will be used and where the funds are originating. This enables the detection of suspicious activity on both transparent and non-transparent companies.
The Finnish Act is very strict concerning customer due diligence. If it cannot be properly followed, a new customer relationship cannot be opened nor a transaction executed. There are numerous different money laundering methods and the scale of it represents an OECD 2009 study, where the amount of illicit money laundered globally in 2009 was evaluated to be 2.7% of the global GDP. Major issues facing financial institutions are: Identifying the origin of the funds; how a company’s account will be used (what kind of traffic will be expected); and transparency of ownership. While the studies showed that major situations that caused suspicion was connected to incoming funds and money transfers, a survey conducted in the Nordea corporate branch among the employees supported this study. The major question in the survey was what kind of questions generated avoidance among customers and the most common answer was origin of the funds and future account traffic. The other survey was conducted in order to gain knowledge about customers’ experience in the Nordea corporate branch. It is generally considered that the numerous questions in the interviewing might be irritating to the customers, but the survey results indicate contrary opinions.
In order for the interviewing to be smooth and comfortable, a conversational approach could be used. Customer service skills are highlighted in how the questions are asked. The main focus in obtaining information should be in knowing how the banking services/products will be used and where the funds are originating. This enables the detection of suspicious activity on both transparent and non-transparent companies.