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[ STAFF NOTES ]
In both cases, AML compliance in the bank needed to go beyond the traditional transaction surveillance tools and work with its underlying transaction data. However, for data analytics to be effective and meaningful, data must be complete and accurate.
Good data
The relevant data for data analytics is primarily the cross-border wire remit- tances sent or received by the bank. The challenge is that the wire remittances are usually incomplete.
Complete originator information
Financial Action Task Force Recommendation 16 states that financial institutions (FIs) must include required and accurate originator information, and required beneficiary information, on wire transfers and related messages. Information accompanying all qualifying wire transfers should always contain the following elements:
• Name of the originator
• The originator account number (i.e.,
when the account is used to
process the transaction)
• The originator’s address, national
identity number, customer identification number or date and place of birth1
The name of the originator is usually the name of the account holder on the orderer bank’s records. If the originator is a numbered account or pseudonym, then the intermediary and beneficiary banks should inquire about the name of the person beyond the name of the account holder. However, the orderer bank will usually confirm the name of the account holder.
So, while the intermediary or beneficiary bank ought to reject a payment from a numbered account, it may not be possible for pseudonyms. For example, is “Purple Rain” a pseudonym or is there a
person with that name? In such cases, the remittance may be processed but the intermediary or beneficiary bank should pick up these remittances as a post-processing transaction monitoring (TM) alert (e.g., large transaction, pass-through) and inquire if the originator is a pseudonym or a fictitious name.
Although four options are given, intermediary banks are increasingly requesting the origina- tor’s address for their TM and data analytics. The address gives information on whether the originator is based in a high-risk geography (including a tax haven). The address also informs whether the originator is an operating company or a probable personal investment company. The address of an operating company may provide further information on its line of business and scale of operations or if it is actually a shell company (e.g., a brass plate company set up and managed by trust and corporate service providers).
Complete beneficiary information
Complete beneficiary information should include the name of the beneficiary and the beneficiary account number where such an account is used to process the transaction. While the beneficiary address is not required, most SWIFT MT103s do include an address. However, the address may not always be complete.
Case study 1: Detect and report potential CSAE
On September 9, 2020, the Egmont Group of Financial Intelligence Units released a report titled, “Combatting Child Sexual Abuse and Exploitation Through Financial Intelligence.”2 The report examines the role of financial intelligence in global efforts to fight CSAE and includes a public bulletin,3 which provides the following insights.
Typology of operations
There are three main categories according to the scale of operation. There are individual operations, which are run from private homes, internet cafes or a “Pisonet” (computers that will provide internet access for five minutes for every PhP1.00); family-run operations, which are common in very crowded or poor neighborhoods where children are coerced by parents and other family members; and large-scale operations, which may involve whole neighbor- hoods and wherein many of the traffickers are relatives and friends of the trafficked person. The children involved in online sexual abuse are also commonly involved in street prostitution.
94 [ JUNE–AUGUST 2021 ]
For data analytics to be effective and meaningful, data must be complete and accurate