Description:

Involves 3rd parties of a client (in the supply chain) in jurisdictions with higher money laundering or corruption risks.

Appears in:

• Acquisition Leveraged Finance
• Borrowing Base Facility
• Certificate of Deposit (Broker Acting as Principal)
• Certificate of Deposit (Broker Acting on Behalf of Client)
• Certificate of Deposit (Direct Interaction with Clients)
• Constant Proportion Portfolio Insurance (CPPI)
• Credit Facility
• Credit Linked Deposit
• Credit Linked Note
• Deposit
• Deposit (Direct with Client)
• Deposit (via Broker)
• Discounting of Receivables With or Without Recourse
• Documentary Collections (Export)
• Documentary Collections (Import)
• Dual Currency Deposit (DCD)
• Equity Linked Note
• Exchange Traded Funds (ETFs) (Counterparty to Counterparty)
• Exchange Traded Funds (ETFs) (Exchange Traded)
• Export Credit Agency Cover
• FX Prime Brokerage (Continuous Linked Settlement)
• FX Prime Brokerage (Non-Continuous Linked Settlement)
• Import Guarantee (Standby Letter of Credit)
• International Services
• Letter of Credit and Guarantee Syndication
• Liquidity Support Facility
• Multi-Product Facility
• Overdraft Facility
• Performance Bond
• Revolving Credit Facility (Bilateral Agreement)
• Revolving Credit Facility (Syndicated)
• Standby Facility
• Structured Deposit
• Traditional Hawala

Addressed by:

• Approval to Make 3rd Party Payment: Compliance approval is required for 3rd party payment and monitoring.
• Bank to Bank Transfers (Low Risk Jurisdictions): Payment can only be made via bank-to-bank transfers from countries with strong AML controls (typically low-risk jurisdictions).
• Early Termination Clause: Legally binding agreements relevant to the service include an early termination clause for high-risk clients or sanctions breaches.
• Gifts and Entertainment: Monitoring of inducements or gifts, and entertainment.
• Know Your Business (KYB): Includes taking steps to gain an understanding of a customer's business activities, including the nature of the business to be taken with a bank and the anticipated volume and value of the business.
• Limits on 3rd Party Payments: Restricted capacity to make 3rd party payments.
• Low Risk Multi-Banked Customer: The customer must establish more than one relationship with a firm or another official body (e.g., a regulator) in a low-risk jurisdiction.
• SWIFT Confirmation: Requires confirmation via SWIFT that payment will be used solely for agreed purposes pre-release and post-payment
• Transactional Due Diligence (TDD): Conducts a detailed examination of specific transactions identified as being higher risk.