FINANCIAL Action Task Force (FATF) considers business relationship between a politically exposed person (PEP) in a country with foreign PEPs to be inherently high risk from the standpoint of laundering corruption proceeds.

In a Paper captioned ‘Specific Risk Factors in the Laundering of Proceeds of Corruption- Assistance to Reporting Institutions', FATF says: “any accounts beneficially owned or controlled by foreign PIP should be considered to be subject enhanced scrutiny under its anti-money laundering (AML) and countering the financing of terrorism (CFT) recommendations.

FATF says entities such as banks that are required to file reports under AML/CFT framework must be capable of detecting and investigating a wide-range of potentially suspicious transactions. “They must be able to do so regardless of whether a party to the transaction has been identified as PEP.”

Corruption-related money laundering can use many of the same techniques as other types of money laundering, particularly the use of corporate vehicles and trusts, gatekeepers, nominees and family members and cash.

Reporting entities must be on the lookout for those patterns present in typical money laundering: transactions that vary from those the clients would be expected to make, that appear to be lack a legitimate business purpose, or are by their very nature higher risk, the paper says.

Any transaction which appears to be overly and uselessly complex, with an unclear economic purpose, involving multiple parties or tools – such as multiple corporate vehicles or transactions involving multiple jurisdictions for no apparent economic purpose - should be probed further, it adds.