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KYC, Corruption and Queue Jumpers


 By Sam Sheen, Financial Crime Expert Adviser, Efficient Frontiers International (EFI) 



One thing I learnt as a child of British parents were the rules about queuing (or “waiting in line” as we would say in North America). Any place where you must wait and there are 2 or more people present, you are expected to form a line. And there are strict rules about how the line works. One of the major rule violations is to “jump the queue” (or again, as we say in North America, “not waiting your turn”) in order to bypass others ahead of you in line.

Sam Sheen

Sam Sheen

The rules about lines apply whether it is standing at a bus stop or waiting at the passport office. Sometimes, you are even given a number in case you forget your place in line. Here in the UK, people generally frown upon others receiving an unfair advantage, allowing them to bypass the inconvenience of having to wait in a line. Others will do their utmost to not play by the rules in order to get to the front of the line or even avoid having to wait in line altogether.

The queuing rules also apply to certain regulatory requirements. Obtaining a licence, authorisation or even an exemption from a government agency often involves an administrative process that is very similar to waiting in line. Sometimes, there are exemptions or expedited processes that can be accessed, but rules about accessing these are usually prescribed under the applicable regulation.

And there are still people who would prefer to either jump the queue or avoid going through these administrative processes altogether. They are even willing to pay others to help them to do so. A financial crime case I recently read is a good illustration of this practice, which also involves a tactic commonly used in trade-based money laundering.

Trade-Based Money Laundering and Invoicing

For those less familiar with this form of illicit activity, trade-based money laundering (“TBML”) is defined by the Financial Action Task Force (“FATF”) as the “process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimise their illicit origins”. John Cassara, author a book on the subject[i], explains that in its primary form, TBML revolves around invoice fraud and associated manipulation of supporting documents.

One of the key tactics used in TBML is to “over-invoice”. This involves charging a value for goods or services above what they are worth. This tactic is used when one party owes money to another. The party who raises the invoice (seller) is owed money by the party paying the invoice (purchaser) for some sort of illicit activity.


So, for the sake of simplicity, imagine that Mary is a drug dealer and works for a distributor. The proceeds she raises from drug sales need to be given to the distributor. But Mary knows that going to the bank with cash could cause bank staff to ask questions. So, Mary needs a way to pay her distributor without raising red flags at the bank.

Let’s say that Mary needs to pay to her distributor £1000. The distributor operates, as one of his side business activities, a vegetable nursery. Mary also has a “side” business, or a front company that she has set-up to help her move drugs sales’ proceeds. She has told the bank when she opened a bank account for the company that it was as a small grocery store.

Mary tells her distributor that she has £1000 and deposits the money into the grocery store bank account. The distributor raises an invoice for vegetables that have allegedly been sold to Mary’s grocery store. In the ordinary course, the vegetables would be sold at a price of £20. However, to facilitate the payment of the £1000 drug proceeds, the distributor makes the invoice out for £1020.

When the invoice is paid by Mary from the grocery store account via bank transfer to the distributor’s nursery account, the drug proceeds are effectively transferred, with no direct exchange of cash involved between the distributor and Mary.

There has been a good deal of discussion amongst financial crime prevention professionals about how to detect TBML over-invoicing. But when the activities involve services (i.e. not goods such as vegetables), detection of this can prove to be more challenging.  While the average person might find it odd for a vegetable nursery to charge £1020 for a crate to cabbages, it might not be as easy to determine whether the fees charged for some professional services are reasonable and within market expectations.

The following case is an illustration of how a company offered services allowing customers to “jump the queue” to circumvent regulatory requirements, which were paid for using over-invoicing.

Case Snapshot

In this case a company, P, made illicit payments on behalf of customers that allowed them to circumvent customs and immigration requirements in several different jurisdictions. The scheme involved the payment of bribes totalling over $USD49 million. The company and several of its executives were sanctioned by the US authorities for this illicit activity.

Nature and Purpose of P’s Business

P and its subsidiaries essentially offered an end to end service for customers seeking to import and export goods around the world.

P provided intercontinental air and ocean freight forwarding and logistics and supply chain management solutions. The company was a member of a larger group of companies (“Group”). Overall, P provided these services to over 160 jurisdictions worldwide through several its subsidiaries that were in Nigeria, Angola, Brazil, Azerbaijan, Nigeria, Kazakhstan, Russia and Turkmenistan.

The services provided by P’s subsidiaries included customs clearance and ground shipment services. Representatives of a subsidiary office would often interact directly with local customs officials and arrange for the payment of customs duties, fines and other related fees levied on shipped goods, on behalf of P’s customers.

Nature of Customer’s Activities

P’s customer base was broadly divided across several different industries. They operated in the oil and gas, healthcare technology, retail, telecommunications and chemical sectors. Their engagement of P required that the company essentially act as their agent and broker and ensure that their goods were shipped in a timely manner to the intended destination.

The Queuing Problem and P’s Solution

Some of P’s customers often faced delays in the shipment of their goods. Reasons for these delays included delayed departures from the point of origin or transfer, insufficient or incorrect documentation, the nature of the goods themselves or local officials who refused to provide customs and clearing services without first receiving an illicit payment (i.e. bribe). These problems appeared to have arisen more frequently in specific jurisdictions.

The services provided by P assisted in mitigating some of the causes for these delays but did not eliminate all of them. Some of P’s customers wanted to find a way to “jump the queue”, avoid any delays and have their goods shipped to the intended destination as quickly as possible.

How the Scheme Worked

P agreed to implement a scheme to try and solve the delay problem for their customers. So, think of this as waiting to gain entry to a popular nightclub – you could wait in the queue with everyone else or you can jump the queue by paying the doormen a “tip” to let you to go in to the club and not wait in line. In the P case, the company paid this “tip”, on behalf of its customer to customs and immigration officials in various jurisdictions.

The scheme worked as follows: P would arrange for its subsidiary office in the relevant jurisdiction to pay a cash bribe to customs officials. In exchange, those officials would allow goods to pass customers sidestepping normal administrative processing delays or to accept falsified documentation that would allow more questionable goods easier passage through the inspection process.

Now as the saying goes, there is no such thing as a free lunch and so P’s customers needed to reimburse the company the bribe payments its subsidiaries had made. But this needed to be done so that it was not apparent that the payment was linked to the bribed paid.


So, to be reimbursed for the bribe payments, along with the legitimate services provided, P adjusted the invoices issued to its customers to incorporate the amount paid for the bribe.

P and its subsidiaries used a wide variety of terminology in the invoices to describe the portion of the invoiced amount that related to the bribes. In total, P used approximately 160 different terms to falsely describe the bribes it paid on behalf of its customers. These included “CPC Processing,” “Customs Intervention,” “Evacuations,” “Export Formalities,” “Local Handling,” “Manifest,” “Operational Expenses,” “Pre-releases,” “Special Handling,” “TI Bond Assessment,” and “TI Bond Cancellation.”

In addition to customs arrangements, P also facilitated bribe payments to Angolan immigration officials on behalf of some of its customers. These bribes were paid to circumvent visa and immigration requirements. The bribes allowed the customers avoid fines or deportation of their employees who had overstayed their visas.  Bribes were also paid to permit customers to use Angolan military cargo aircraft so that their goods could be transported more quickly to their end destination goods.

P’s subsidiaries who facilitated the bribe payments would raise an invoice combining both fees for legitimate activities and the bribes paid. This invoice would be delivered to the Group’s billing affiliate.  The affiliate would then invoice the customer for the total amount, and use the terminology noted above in the line item related to the bribe payment.

Relevance to Customer Due Diligence (“CDD”)

Gone are the days when simply verifying the name and address of a company’s directors will suffice. Financial institutions are now expected to clearly understand the “nature and purpose” of a customer’s business and its expected use of the products and services provided to it. (See paragraphs 4.46- 48 of the Joint Money Laundering Steering Group Guidance – Part I)

The above case provides a useful example of the importance of establishing a clear risk profile about a customer’s business activities, how they are undertaken, and the chain of parties relied upon in delivering its products and services.

Concluding Thoughts

If I were to identify one key take-away from this case it would be this: Sometimes CDD procedures must be customised to properly assess the potential financial crime risks of a business relationship. Without doing so, a business could be exposed to the risk of undertaking business with a customer who is indifferent to financial crime risks or considers the complying with regulations designed to mitigate those risks to be someone else’s problem.

And at the end of the day, customers who are inclined jumping the queue are often more trouble than they are worth.

[i]Cassara, J. (2015) Trade-Based Money Laundering: The Next Frontier in International Money Laundering Enforcement (Wiley and SAS Business Series) [Hardcover].


Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector

Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector 1

‘The State Of Decision-Making’ report from Board, reveals business decisions made in silos without modern planning tools

A third (33%) of Banking & Finance decision-makers believe decisions made in silos, despite majority (63%) of decisions being implemented worldwide

More than half (57%) of Banking & Finance decision-makers rely on spreadsheets for decision-making despite modern planning tools now available

The #1 decision-making platform, has today released ‘The State Of Decision-Making’ report focussing on how UK organisations make their important business decisions.

Based on a survey of 500 senior decision-makers, across industries including, Banking & Financial Services, Consumer Goods, Manufacturing, Pharmaceutical, Professional Services, Retail, and Transport & Logistics,  ‘The State Of Decision-Making’ report from Board shows that today’s business decision-making process is increasingly complex, with multiple departments and seniority levels all responsible for some form of decision-making, leading to a lack of cohesion between units and a waste of business resources.

The State Of Decision-Making’ research found that while a clear majority of respondents (63%) working within the banking and finance sector say the important decisions they are responsible for get implemented globally, the decision-making process itself is not joined-up across the business, with one third (33%) also saying that crucial business decisions are made in departmental silos.

The research, conducted on behalf of Board International by independent research organisation 3GEM, also asked respondents the tools they use to make decisions and, while almost every action within an organisation today will lead to the creation of new data, it seems many businesses are not using the crucial insights which data can provide to make important decisions.

More than half (55%) of respondents in the banking and finance industry said they were making business decisions based on data and insights, but ‘gut feeling’ decisions are still made by up to 44% of companies. What’s more over half (57%) of the sector’s companies still rely on spreadsheets to aid their decision-making, despite more modern and reliable tools now available.

“In today’s fast-paced, data rich and evolving business environment, making quick and effective decisions is critical to both compete and survive,” explains Gavin Fallon, Managing Director for UK, Nordics & South Africa at Board International. “Important decisions are being made at any one time across multiple business functions, but all too often, important decision-making is disconnected, modular or fragmented.”

The research also asked respondents about the challenges banking and finance decision-makers face at their organisation,  with nearly a third (29%) citing a lack of available data and insights and one quarter (25%) citing the fact there are too many people in the decision-making process as their biggest frustrations. However, industry decision-makers believe that the process can be improved with the introduction of new technology, with the majority (57%) of respondents saying this would make their decision-making better, while 41% also felt increased use of data and insights would help.

“Businesses have to plan every day for a far more uncertain future and set themselves up to prepare for change and keep changing against the backdrop of a more volatile and uncertain marketplace than ever,” continues Fallon. “A bad decision can have wide-ranging impact across the whole organisation and no business can afford to waste time and resources on bets that may or may not come off.  As the business environment increases in complexity, the ability to not just react, but predict, in real-time, becomes more important than ever.”

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Reinventing Your Digital Marketing Strategy Post-Covid

Reinventing Your Digital Marketing Strategy Post-Covid 2

By Paige Arnof-Fenn, Founder & CEO Mavens & Moguls

I started a global branding and marketing firm 19 years ago. Marketing is a term that means different things to different people so it helps to clarify whether you are talking about market research, PR, social media, advertising, promotions, guerrilla marketing, strategy, analytics, SEO, SEM, B2B, B2C, content, etc. There are so many tools in the marketing toolkit today but I think it is redundant to say digital marketing because truly everything has a digital element since everyone is accessing and interacting with your brand online, through their phone or via the website at some point. In the old days there was print, TV, radio, direct mail and outdoor those were your only options but today technology runs our lives so everything is digital eventually. If digital is not part of your strategy then you would not be relevant so digital marketing is marketing in 2020.

As far as digital goes I am a big fan of SEO, social media especially LinkedIn and Content Marketing. Because we are always online now 24/7 it is easy to get sucked into it but you do not have to let it run your life!  My advice is to pick a few things you enjoy doing and do them really well.  You cannot be everywhere all the time so choose high impact activities that work for you and play to your strengths.  It does not matter which platform you choose just pick one or 2 that are authentic to you. It should look and sound like you and the brand you have built.  Whether yours is polished or more informal, chatty or academic, humorous or snarky, it is a way for your personality to come through.  Everyone is not going to like you or hire you but for the ones who would be a great fit for you make sure they feel and keep a connection and give them a reason to remember you so that when they need your help they think of you first.

There have been a lot of changes in the past few months due to the virus crisis but one thing that has not changed is that smart technology still runs our lives today and it is hard to stay on top of the latest tools and platforms to take advantage of current trends so you may feel lost, confused or frustrated by all the options and noise in the market today.  There will be new tools and technologies coming for sure but here are some digital strategies to include in your plans to grow your audience:

*  Smart speakers and voice search are growing in importance so being able to optimize for voice search will be key to maximize the marketing and advertising opportunities on Siri, Alexa, Google Home, etc. I predict that the brands that perfect the “branded skill” with more customer-friendly, less invasive ads are going to win big. Are you prepared when customers ask your specific brand for help like “Alexa ask Nestle for an oatmeal cookie recipe” or “What is the best Mexican restaurant in Boston?” if not you are missing a big opportunity!

*  Live video grabs attention – live streaming is available on every major social media platform and it is only getting bigger to hook in users with short attention spans, in a mobile first world, you have less time to grab people, attention spans are shorter than ever so video will be used even more, show don’t tell for maximum impact, rich content drives engagement.

*  Interactive marketing makes it stickier — brands will drive engagement even more with polls, surveys, quizzes, contests, interactive videos, etc. to grab audience attention even quicker

*  AI-powered chatbots cut costs and convert visitors into leads by encouraging themed content to answer FAQs with voice search-friendly semantic keyword phrases, is your content strategy ready?

*  More confidence in trusted content, friends and influencers than advertising – the world has been moving this way for years with people seeking their friends’ and influencers’ opinions and advice online on what to buy, where to go, and what to do more than a paid ad or fancily packaged content. Customers are savvy today they are happy to buy what they want and need but they do not like to be sold things. Curated content and ideas from a trusted source beat paid content every time. Partnering and building relationships with the right influencers with content that is co-created helps brands scale and grow faster and amplify and boost their message.

* Authentic relationships beat marketing automation — technology runs our lives more than ever but it is relationships that drive business and commerce so people will find more ways to connect in-person to build trust and strengthen connections. Make sure you offer several ways to talk with them and get to know them. Algorithms can only tell you so much about a customer, transactions are driven by relationships. Use automation where you can but do not ignore the power of the personal touch.

*  Big data is getting bigger but customer conversations are key to best insights for content. Talking directly to your customers to get first-hand in real-time their experience and knowledge will be a priority and competitive advantage to get the messages right.

*  Content will match the buyer’s journey and understanding that journey will inform how to attract, engage and convert customers and which keywords and topics are used.

*  Influencers will continue to rise in prominence so partnering and building relationships with the right influencers with content that is co-created helps brands scale and grow faster and amplify and boost their message.

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Banking beyond the office

Banking beyond the office 3

By Tim Hood is the Associate Vice President for Hyland in EMEA.


Following months of unprecedented challenges, the global financial community is beginning to get a sense of COVID’s long-term legacy. And while the current situation still has some way to run, the prospect of a rapid bounce back to the old normality looks doubtful.

Over the last six months, a wholesale review and reinvention of a raft of working practices has taken place.

Fortunately, the financial sector was able to adapt relatively quickly to this altered reality because compared to some, it was well down the path to digital transformation.

And as the work-around solutions using technology that was never intended or designed for remote working have been refined or replaced, many firms are finding that these new ways of working are actually working well.

That’s evidenced by the fact that ‘return to office’ dates keep rolling back, with a number of institutions not expecting staff to return to the office until the beginning of 2021, at the earliest.

However, the social distancing measures that remain in place will undoubtedly continue to have a major impact on the traditional office space. With almost half of British workers now working from home according to the Office for National Statistics, how many will want to return to the office, having been free of their daily commute for the last six months? In a recent survey by the Centre for Economics and Business Research (CEBR), one-third said they wanted to continue working from home.

And as homeworking protocols become ever more embedded, that could see many functions where remote oversight is possible, never return permanently or totally to a central office.

So, with homeworking seemingly here to stay, for a large number of organisations the new norm is likely to be a blend of remote and office-based working.

In uncertain times, one of the most critical business skills is the ability to adapt. Just because we have always done things that way is no longer a valid line of thinking. So, when it comes to matters like remote working, it’s time for a more flexible mindset.

Some banking leaders are beginning to acknowledge the changing reality. Barclays CEO Jes Staley said that corporate offices “may be a thing of the past.” JPMorgan, Goldman Sachs and Morgan Stanley are also proving to be trend-setters in the reassessing the future shape of offices and flexible working.

Of course, effective remote working depends on people having access to accurate, up-to-date information.

That may require reprioritising investment to ensure more appropriate technology solutions are in place. Believe me when I say that accelerating digital transformation is no mere nicety, but a prerequisite for corporate survival over the coming months and years.

Tim Hood

Tim Hood

Of course, every organisation is different and will have to review its existing systems and procedures before implementing any major technological changes. But I would say that there are several core components required to help ensure future resilience.

As a minimum, there should be the establishment of a content services hub to centralise document storage and workflows in a single location, with a user interface that’s consistent – whether you are logging on from your dining table at home or at your office desk.

This will remove potential information silos where data gets stuck, and also prevent the creation of multiple document versions that inevitably follows.

Next, look to introduce intelligent automation where you can, to accelerate improvements in document storage and workflows.

Then, look at shutting down any redundant or unnecessary systems and applications. This is an opportunity to streamline operations by ensuring business-critical information, which may be spread over several dozen apps in some corporate organisations, is uniformly updated and easily accessible. When staff have to search for important documents across multiple locations, they end up frustrated and prone to making mistakes that result in delays and poor customer service.

Though the immediate response to COVID-19 may have had a short-term adverse effect on many in the financial sector, longer-term it can be the catalyst that enables the creation of a truly digital workplace that seamlessly melds together a flexible, distributed workforce with a much streamlined corporate space.

Achieving that will require organisations to carefully chose the correct technology solutions. If they can do that, then our brave new world may not be so scary after all. 

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