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GRC Professional : GRC Spring 2012
15 identify and monitor their customers and to manage the risk of the business being used for money laundering and terrorism financing. Illustrating the scale of the task of uncovering the activities of organised crime, in 2009-10 AUSTRAC received 21 million of these reports. A year later that had doubled to 45 million reports. The figure is expected to have reached about 60 million in 2011-12. Liz Atkins, AUSTRAC's executive general manager, intelligence says that by meeting their AML/CTF obligations, Australian businesses are not only "helping to catch crooks" but also taking steps to protect themselves against fraud and the reputational risk of their business being used for illicit purposes. Whatever way you look at it, sighting a copy of a customer's passport and a couple of utility bills is no longer enough to verify identity. "We've moved now to an environment which demands customer due diligence where you really do need to understand why the relationship exists," says Platt. Know your customer As the acronym for the online community Platt established suggests, the key principle is "know your customer". "I conduct a lot of investigations on behalf of different regulators around the world," he says. "The most important question I'll ask is, 'What did you understand to be the legitimate com mercial rationale for the relation ship you were in with this customer? Why is this customer in this relationship with your bank, or your trust company or your investment brokerage, and why is it they str uctured that relationship in that way?' "If you understand the commercial rationale and you're comfortable that it is legitimate, then you are 99 per cent of the way to protecting yourself against abuse. "Obviously it's incu mbent on you to then monitor the relationship to ensure that the activity that you see within it is consistent with what you expect, but I think that crucial question initially -- 'Why?' -- is one that's often missed." With higher-risk customers, that means asking even more questions. "You have to be more penetrative in your treatment of that relationship," Platt says. David Wildman, the Singapore-based managing director of Kroll Advisory Solutions Southeast Asia, and a former senior officer with the Australian Federal Police, also considers the know-your-customer principle is cornerstone. "It sometimes extends to know your customer's customer," Wildman says. "Don't stop questioning a nd don't accept the superficial answer. "If a business structure is too complex, too opaque, you have to ask what the legitimate reason is for it being so complex." X $US2 trillion the best guess at the money laundered worldwide, annually: United Nations Office on Drugs and Crime $US 400 billion the estimated value of global drug trafficking: Norton Cybercrime Report $15 billion the annual cost of serious and organised crime in Australia: Australian Crime Commission 800, 000 the number of people trafficked across international borders each year: US State Department 225, 000 the number of reports lodged each day under Australia's anti-money- laundering laws: AUSTRAC
GRC Winter 2012
GRC Summer 2013