BONA FIDE DUE DILIGENCE IS DETOURED BY TOP SECRETS

FROM THE - JOURNALS of Monte Friesner – Criminal & Intelligence Analyst and Consulaire for WANTED SA ~ Contributed & Written by Kenneth Rijock 

LACK OF ACCESS TO CLASSIFIED INFORMATION CAN HURT YOUR ENHANCED DUE DILIGENCE INVESTIGATION OF POTENTIAL CFT ISSUES

 This week's story, about how Bob Graham, a former  member of the 9-11 Commission (and a retired US Senator and Florida Governor) has filed an affidavit stating that the FBI concealed information about a prominent Saudi adviser who fled the United States just before 9-11, and who was associated with the World Trade Centre Al-Qaeda attacks, reminds us of an important point; when we conduct enhanced due diligence investigations of high-risk clients, you, as a non-law enforcement person, do not have access to information that has been classified by agencies of the US Government, and which may be relevant to your investigation.

The problem for compliance research is, that when it comes to terrorist financing issues, not only are the details of ongoing criminal investigations unavailable to you, but even the identities of associates, counter-parties, financial institutions where they have operated, names of their front businesses, and even names of close relatives, are all classified, and the information restricted.

Those investigations, which can drag on literally for years, can impact your bank, because you have no knowledge that an active organization that is funneling money back to the Middle East or Asia, using local financial resources, including yours.

Of course, any enhanced due diligence that you perform on a prospective customer whose company is engaged in volume business with countries located on the Middle East should, frankly, be the subject of enhanced due diligence in advance of account opening, due to terrorist financing issues, especially those who trade with entities in Lebanon, Iraq and the UAE. That's just prudent risk management.

The problem is, the fact that your client is a target of law enforcement, or a suspect believed to be involved in providing financial assistance to a specially designated global terrorist organisation, is not available to you as a compliance officer.

Some banks engage outside investigative firms that contain retired law enforcement, military and intelligence officers, who have current contacts in their former agencies, and who are able to get some sort of unofficial word on your client's background.

Others rely upon business intelligence sources that are located in the client's home country, but either of these avenues can be expensive, and such expenditures are only justified when the projected revenue generated by the client's business is deemed to be substantial.

Whichever solution you choose, remember that whilst you should be guided by risk management and cost management considerations, if you are not comfortable with the quality of the results, make your concerns known to your decision-makers to decline the client. You do not want to accept a new client who could be sending funds to designated terrorist organizations.

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