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4th EU AML Directive – 2015/849 of 20 May 15
- Annex 1 - Risk variables considered to determine extent of customer due
diligence:
– Purpose of relationship – Level of Assets or Size of transactions – Regularity or duration of business relationship
- Annex 2 – Potential low risk factors:
– Customer (Publicly listed Cos, Public admins or Cos, Clients living in low risk areas) – Service (Services posing low ML risk) – Geographical (EU, 3rd countries with effective AML/CTF systems, low corruption and FATF ratings)
- Annex 3 – Potential high risk factors:
– Customer (Unusual circumstances, Living in high risk countries, Asset holding vehicles, Nominees or Bearer shares, Cash transactions, Complex structure) – Service (Services that favour anonymity, Non face to face clients, Unknown source of receipt of funds, New services, Use of new tech) – Geographical (Countries identified by credible sources (e.g FATF) as not having effective AML/CTF systems, having corruption, Sanctions, embargos by EU and UN, Terrorist activity support)
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KYC & KYE Know Your Client (KYC)
AML policies and procedures used to determine the true identity of a customer and the type of activity that is “normal and expected,” and to detect activity that is “unusual” for a particular customer. Many experts believe that a sound KYC program is one of the best tools in an effective anti-money laundering program.
Know Your Employee (KYE)
AML policies and procedures for acquiring a better knowledge and understanding of the employees of an institution for the purpose of detecting conflicts of interests, money laundering, past criminal activity and suspicious activity. KYE is a key tool in detecting suspicious activity because employees can be accomplices of money launderers. ACAMS
