By Sachin Kumar
DOHA: Know-your-customer (KYC) check of a customer by banks should be an ongoing process and not just one time exercise, said Gary Collyer, Managing Director, Collyer Consulting Global -a banking consultancy firm speaking at a workshop in banking. KYC is the process, used in many industries including banking, of a business verifying the identity of its clients.
International Chamber of Commerce (ICC), Qatar Chapter yesterday organised a workshop on ‘Documentary Credits in Today’s Challenging Environment’.
Addressing the participants, Collyer shed light on confirmation and amendment of documents, issuance, letters of credit, documentary credit financing and document management by banks.
Speaking about the impact of financial crime and anti-money laundering, he said there are a number of techniques that are used by money launderers to achieve their goal of defrauding one or more banks. These include over-invoicing, under-invoicing, multiple-invoicing, short-shipping, over-shipping, phantom-shipping and deliberate ambiguity in describing (or hiding) the intended type of goods.
Under the over-invoicing, money launderers fraudulently increase the price of goods, services or performance while in under-invoicing they attempt to reduce applicable tariffs or taxes, he said.
Multiple-invoicing has aim of receiving multiple payments. In case of short-shipping, the shipping is less than the stated on the invoice while in over-shipping, shipping is more than invoiced to avoid tariffs or taxes. Under phantom shipping, false documentation with no actual underlying shipment is done. In case of deliberate ambiguity in describing the intended type of goods, money launderers disguise information in order to hide the true nature of the goods, added Collyer.
He said that there are three distinct phases to the act of money laundering- placement, layering and integration. Placement is the initial entry of the ‘dirty’ money or proceeds of crime into the financial system, exchanging for clean money. Layering is electronic movement of funds in multiple constant transaction in order to obscure the audit trail and cut the link with original crime. In Integration, funds are invested or merged in legitimate non-criminal activities and subsequently re-redirected back to the criminal as clean.
The Peninsula
