Fraud is Predicate Crime for Money Laundering
Fraud is the intentional manipulation of the truth for financial or personal gain. It can be a person or a 'thing' that intends to deceive others, typically by unjustifiably claiming or being credited with accomplishments or qualities.
Fraud perpetrators target businesses, governments and individuals.
REMEMBER: When there is fraud, there is money laundering.
Common Techniques of Fraudsters
Taking physical information, relying on social engineering or data breaches.
Tech is great and implementing smart solutions to support your AML compliance has been essential. BUT tech solutions can be exploited for fraudsters gain if they are not implemented and managed correctly.
REMEMBER: Protect yourself, be curious and always ask questions.
Internal Control Weaknesses Contribute to Fraud
Smaller organisations are more likely to lack the internal controls, however, larger ones are more likely to have their internal controls overridden.
Code of Conduct: Make sure that your expectations for AML compliance are clear, documented and your team are fully trained.
Internal Audits: Regularly check that the systems you have in place are fit for purpose. Do not rely only on your external audit.
Regular Management Reviews: A 'poor tone at the top' prevents the smooth running of an anti-fraud and anti-money laundering regime. Management must enforce a culture of compliance and support the compliance officer.
Be careful to avoid creating or re-enforcing a culture of 'exceptions'. It is important to have documented exceptions procedures and registers BUT overriding of your AML controls on a regular basis increases both your risk and your clients risk of becoming victims of fraud. Also, be mindful and commit to your ongoing customer due diligence requirements. This protects your businesses as well as your clients from identity theft and fraud.
REMEMBER: Stay alert, monitor and report any suspicions.
Effective Record Keeping and Reporting Mechanisms
The historical division between AML and anti-fraud has evolved into a cultural and mindset split creating disconnects and data silos.
AML know-your-customer procedures and documentation of customer's expected activity can serve as an important fraud tool.
The breaking down of silos within your organisation can lead to better identification of fraud and money laundering schemes that cross channels, products, and lines of business. This will also allow for greater visibility for management through aggregated data reporting, providing a more holistic business-wide view.
You don't have to be a reporting entity to file a suspicion with the FIU.
You can also get in touch via goAML@police.govt.nz
BUT - if you think that a criminal offence has taken place then you should report it to your local police station or online at 105.police.govt.nz