Step 2: Customer Profiling and Verification
A customer profile includes an overview of their present business status. Entities are defined in banks by their accounts and transactions, but from an AML perspective you must also take into account their physical addresses and Business Registry Information. These are usually the first markers to identifying potential money launderers.
For example, a PO Box address for a logistics company is likely to raise a red flag as it is inconceivable that such a company can operate purely through the postal service.
- Account Title
- Address on File
- Additional Address
- Business Registry Information
- Business Status and Date Checked
This information is gathered from the internal database and used to compare with any new details that may come to light during the course of the review.
- Business Entity’s Name
- Business Entity’s Address
- Business EIN
- Business Registration/Incorporation Date
In this section, the investigator identifies any changes in the information supplied to the financial institution. These changes are discovered after collating and processing information from a number of sources.
For example, an additional business address can be verified easily by trawling the entity’s website. However, there might arise a situation that requires a deeper look into other sources. A business entity’s name change can be identified across a number of references such as LexisNexis, Transactional Data, SOS and even a generic Internet Search.
Additionally, a change need not necessarily be a new piece of information. It could simply be a change in state such as a suspension of the EIN by an agency. The investigator is only required to make a note of the discrepancy and raise the question to the entity; he needn’t conduct a thorough investigation as to the causes.
Resources & Findings
This is the first discovery section and offers institutions the chance to get to know whether there is a change in the status quo with respect to their clients. Using a variety of sources, investigators can analyse and collate pertinent information regarding the customer profile. Red flags raised in this section could lead to further investigations, a simple questionnaire or serve as a note for future reference.