DIFFERENT ANGLE by Kenneth Rijock
The question was raised by a compliance officer at an insurance company: why do I need a comprehensive due diligence database like World-Check? Having once served on the staff of a compliance department in a non-bank financial institution that sold insurance investment products, I can tell you from experience. Financial criminals routinely target any financial services firm that sells insurance, because the investment's prestige is of such a calibre that it is deemed extremely desirable. If you don't use a comprehensive due diligence database to vet your clients, financial criminals will be knocking on your door on a daily basis, using a wide variety of dodges and subterfuges to gain entry. How does one keep them out? A good due diligence programme that includes World-Check will go a long way to ensuring that you reduce the risk of money launderers successfully penetrating your firm.
- Money launderers know that a cheque from one of the world's largest insurance companies is generally readily accepted at financial institutions, regardless of its amount. Most bankers assume, erroneously, that massive amounts of compliance have, of course, been performed before the investment was approved. The usually assume such cheques are either life insurance proceeds, meaning a family member, or a settlement cheque to cover some documented and approved monetary loss. Either way, they take such cheques without question.
- Compliance and customer identification procedures are often below banking best practices standards, meaning that altered, forged or bogus forms of identification are easier to pass, that due diligence checks are rare or superficial, and that source of funds is often neglected by compliance.
- Beneficiaries or payees on insurance investments can often be transferred, and the new beneficiary or payee is generally not subject to any enquiry. This allows "straw-men," or fronts to purchase the investment, and thereafter transfer their interest to one who might not be approved.
We had Russian organised crime groups, South American drug kingpins, bearer-share tax haven companies,
front men, career money launderers, and all sorts of "colourful" characters who could not show source of funds, attempting to place their money into insurance products. Only with a comprehensive due diligence database can these individuals, and their associates, be identified on a real-time basis, and their investment declined before they get a chance to deposit funds. Remember, your cheque back to them, even though a refund, may masquerade as insurance proceeds when deposited on the other side of the world.
So long as insurance company compliance departments do not avail themselves of such products as
World-Check, the financial criminals will be at the door, trying to look legitimate. Only when armed with
a detailed Profile on your money launderer can you learn about his prior global activities, and decline their dirty money.
The facts and opinions stated in this article are those of the author and not those of World-Check. World-Check does not warrant the accuracy of any facts and opinions stated in this article, does not endorse them, and accepts no responsibility for them.
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