Question

(a) You are a member of the AML team of a regulated firm in a jurisdiction of your choice.

You are currently conducting a file review of clients.

Analyse the following scenarios from the perspective of AML/CTF risk, in particular with regard to customer due diligence issues:

i) Hubert, an existing high-net worth client of the firm, has been requested to produce updated information relating to his business activities. Hubert responds that he is too busy to deal with the queries, has been a customer of the firm for over 10 years and is well known to the firm's managing director and as such should not be subject to such requests. He insists that if the firm does not take a more reasonable approach he will move his business elsewhere.

ii) Alexis is a former judge who worked in Zimbabwe until two years ago. Since moving his accounts and associated substantial wealth to the bank in your jurisdiction, there has been a further significant flow of funds to his accounts from South Africa and surrounding regions. There is a scarcity of due diligence information on his files as he indicated that much of the information is in Zimbabwe, which he was required to leave in a hurry.

iii) The account opening division of the firm has been requested to establish a business relationship with a newly incorporated client, BCD Ltd. In attempting to determine ultimate beneficial ownership of BCD Ltd, the research team have met with a complex structure of offshore corporate ownership. The team have been unsuccessful in determining the true owners because of complex subsidiary holdings often incorporated via offshore corporate service providers and share ownership held in trust structures.

(b) Evaluate the issues faced by those conducting customer due diligence on a client in respect of determining 'source of wealtnand 'source of funds'.

Explain the impact that Unexplained Wealth Orders proposed in the UK Criminal Finances Bill (2016-17) are likely to have in assisting with due diligence issues.