Know your customer is an important part of deterring and protecting yourself and the company of being used to launder money. There are basic controls any company (financial or non-financial) can apply:
- Meet the customer in person: at least once in your life. Sometimes criminals use other people to make operations on behalf of them (known as “figurehead”) or identity theft. Therefore knowing your customer in person helps by verifying he really exists and asking for an ID helps to corroborate his identity. Of course meeting a customer depends on the activity the company has. Prioritize those customers with the most representative revenues and analyze how they behave. Do they buy something and afterwards ask for a reimbursement? Does the explanation make sense?
Be cautious of any other person who performs operations or transactions on behalf of them (lawyers, representatives, relatives). Does it make sense to be represented and not doing the operation by themselves?
- Observe nonverbal language. Is that person nervous? If you ask for information, does that person need to consult the answer with someone else? Does he maintain eye contact? Remember that the eyes are the window of the soul… so looking to someone at the eyes when talking means transparency, or nothing to hide. Does his voice tremble? Does he contradict himself?
- Investigate; apply these 4 basic questions:
a) Who is that customer; a person or a company?
b) Where are they located and where do they do business?
c) What do they do for a living?
d) Which products or services will they use from us?
Obtain the documentation support for every answer; this is evidence.
With money laundering growing so fast worldwide, invest time to know your customer. You do not want to be used by the organized crime!
By Mónica Ramírez Chimal, Partner of Asserto RSC, Mexico City
Know Your Customer will be a topic at
Audit Masters 2017 – The 5th Annual Internal Audit Forum