THE FUTURE OF ENTITY DUE DILIGENCE

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THE FUTURE OF ENTITY DUE DILIGENCE

The world has gone through an incredible amount of technological transformation over the past ten years.  While it may seem hard to imagine that change will continue at this pace, it’s not only likely to continue, but it will accelerate. There are various functional areas within institutions that support global commerce, but some have been laggards in adopting new technology for a plethora of reasons.

Structural market trends will force organizations to innovate or they will be subject to consolidation, reduction of market share, and, in some circumstances, complete liquidation.  Future proofing the entity due diligence process is one key functional area that should be part of an organization's overall innovation road map because of the impacts of trends such as: rising regulatory expectations, disruptive deregulation initiatives, emergence of novel risks, explosion of data, quantifiable successes in artificial intelligence (AI), and changing consumer expectations.

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MERCHANT-BASED MONEY LAUNDERING PART 3: THE MEDIUM IS THE METHOD

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MERCHANT-BASED MONEY LAUNDERING PART 3: THE MEDIUM IS THE METHOD

The previous editions of this series on merchant-based explored the many manifestations of the dark side of the terminal, including suspicious transactions merchants may see that could be tied to fraud groups and the risks tied to both closed loop and open loop prepaid cards.

To read the first story, covering “phantom shipments,” please click here. To read the second story on “prepaid gift card smurfing,” please click here. 

Merchants can be involved with phantom shipments to move value across borders and cash can be anonymously loaded on prepaid gift cards through smurfing operations and used at US merchants to make sales revenue appear legitimate. 

The rules and actions of the payment sector have direct implications on bank anti-money laundering programs.

How? Because while banks are technically not liable for the illicit actions of their customers’ customers – the customers of a merchant or payment processor – the bank is on the hook for properly inquiring about the risk of that customer base and compliance procedures, if any, of the merchants.

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