Banks guarding against crime — so don’t feel harassed

2009-06-25 00:00

BANKS are required to maintain processes to guard against being used for the purposes of market abuse and financial fraud, including insider trading, market manipulation and money laundering.

Who the banks watch out for:

Banks strive to ensure that they do not retain or transact with undesirable customers that include specially designated global terrorists, specially designated nationals, specially designated narcotics trafficker kingpins and certain politically exposed people. Names of these undesirables are recorded on sanction lists. Banks automatically screen their customer database for matches to the lists.


Swift stands for Society for Worldwide Interbank Financial Telecommunication and it operates a worldwide financial messaging network where messages, including payment instructions, are securely exchanged between financial institutions. The same automated procedure mentioned above is used by the banks to screen Swift payments against the sanction lists. Swift payments from or to entities that match the lists are withheld.


Identified potential matches in respect of new or existing customers and Swift payments are investigated manually by trained anti-money laundering specialists. “Exact” matches in respect of customers and Swift payments are reported to regulators who deal with them accordingly. New customers that match are not accepted as clients.

Know your customer

The quality of the screening is affected by the quality of data contained in the banks’ customer databases and therefore banks are continuously updating the customer information to address this issue. Banks manage this through a know your customer (KYC) programme, which is not only a legal requirement, but also provides banks with the first opportunity to contain the risk of becoming involved in a crime.

Where banks do not have adequate processes in place to identify and assess matches to the sanction lists, they could suffer serious consequences, including criminal prosecution, action by regulators, and reputational and financial loss.

Therefore banks play an important part in assisting in the fight against crime by ensuring that KYC details in respect of their customers are up to date. This is not just simply the banks trying to harass their clients!

George Bruce, manager in KPMG Forensic, specialising in anti-money laundering. Contact 031 327 6000.

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