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Principles for Recognizing Unusual and Suspicious Transactions

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KYC procedures are the underlying principles for recognizing unusual and suspicious transactions or instructions. These transactions or instructions would be inconsistent with a normal customer's transactions or attitudes.

Describe what constitutes "suspicious activity" for a bank customer and a corporate customer.
Describe a real-life money laundering scheme that involved layering, placement, and integration.
Describe what those terms mean and how they are used in money laundering. How was the money launderer caught?
Describe the red flags.
Could the launderer have been caught before most of the crime was committed?

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MONEY LAUNDERING

Money Laundering is a crime whereby the proceeds of an unlawful activity are transacted or attempted to be transacted to make them appear to have originated from legitimate sources (http://www.amlc.gov.ph/amla.html). In a simple term, money laundering may be considered as cleaning dirty money.

To avoid being an instrument of this illegal activity, a bank or a corporation must apply the highest level of due diligence to the following suspicious activities as indicated by the AMLC (Anti -money Laundering Commission): http://www.amlc.gov.ph/amla.html
1. Single transactions in cash or other equivalent monetary instrument involving a total amount in excess of a certain amount identified in the AMLA (Five Hundred Thousand (P500, 000) Pesos or equivalent currency in another country) within one (1) banking day.
2. Suspicious transactions or transactions with covered institutions, regardless of the amounts involved, where any of the following circumstances exists:

- there is no underlying legal/trade obligation, purpose or economic justification and the client is not properly identified;
- the amount involved is not commensurate with the business or financial capacity of the client;
- the transaction is structured to avoid being the subject of reporting ...

Solution provided by:
Elisa Valdez, PhD
Education
  • Bachelor of Science in Business Administration, University of the Philippines
  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
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