AML/CFT Fundamentals for Frontline Staff

About this module

This module introduces frontline staff, including tellers, customer service officers, relationship staff and agent supervisors, to the essentials of anti-money laundering and countering the financing of terrorism (AML/CFT). It is a general training resource. It supports, but does not replace, each bank's own policies and procedures, which staff must follow.

Learning objectives

By the end of this module, participants should be able to:

• explain what money laundering and terrorist financing are, and why banks are targeted;
• describe the purpose and main elements of customer due diligence;
• recognise when enhanced due diligence is required, including for politically exposed persons;
• identify common red flags in customer behaviour and transactions;
• report a suspicion internally, correctly and promptly; and
• understand the prohibition on tipping off and the importance of record keeping.

1. The legal framework

The Anti-Money Laundering and Combating of Terrorist Financing Act 2012 sets out the obligations of financial institutions in The Gambia, including customer due diligence, record keeping and the reporting of suspicious transactions to the Financial Intelligence Unit (FIU). The framework reflects international AML/CFT standards. Failure to comply can expose both the bank and individual members of staff to serious consequences.

2. Understanding the risks

Money laundering is the process of disguising the proceeds of crime so that they appear legitimate. It typically involves placement (introducing funds into the financial system), layering (moving funds through transactions to obscure their origin) and integration (using the funds in apparently legitimate activity). Terrorist financing is the provision of funds for terrorist acts or organisations. The funds may come from legitimate as well as criminal sources, and the amounts involved may be small. Frontline staff are often the first, and sometimes the only, people to see the customer and the transaction together.

3. Customer due diligence

Customer due diligence (CDD) means knowing who your customer is and understanding the relationship. Its main elements are:

1. Identifying the customer and verifying their identity using reliable, independent documents or data.
2. Identifying the beneficial owner, meaning the natural person who ultimately owns or controls a customer that is a company or other entity, and taking reasonable steps to verify their identity.
3. Understanding the purpose and intended nature of the relationship, including the expected source of funds and pattern of activity.
4. Monitoring the relationship on an ongoing basis, so that transactions remain consistent with what the bank knows about the customer, and keeping customer information up to date.

Where CDD cannot be completed, staff should not open the account or carry out the transaction, and should consider whether an internal report is needed.

4. Enhanced due diligence

Higher-risk customers and situations require additional measures, such as obtaining further information on the source of funds and source of wealth, senior management approval of the relationship and closer monitoring. Situations that may call for enhanced due diligence include complex or unusual ownership structures, connections with higher-risk jurisdictions, cash-intensive businesses and non-face-to-face relationships where risks are not otherwise mitigated. Each bank's risk assessment determines when enhanced measures apply.

5. Politically exposed persons

A politically exposed person (PEP) is an individual who holds or has held a prominent public function, such as a senior government, judicial, military or political role, or a senior position in a state-owned enterprise or international organisation. Their family members and close associates are also covered. Being a PEP is not an indication of wrongdoing, but such positions can be abused for corruption. PEP relationships require senior management approval, establishment of the source of wealth and funds, and enhanced ongoing monitoring, in line with the bank's procedures.

6. Red flags

• Reluctance to provide identification or information, or information that is inconsistent or cannot be verified.
• Transactions that do not match the customer's known profile, occupation or business.
• Structuring: splitting cash deposits or withdrawals to avoid monitoring or reporting thresholds.
• Rapid movement of funds into and out of an account with no clear purpose.
• Use of third parties to make deposits, or many unrelated people paying into one account.
• Unexplained transfers to or from higher-risk jurisdictions.
• Unusual interest in the bank's reporting requirements or controls.
• Payments to or from persons or entities subject to sanctions.

A single red flag is not proof of wrongdoing. Consider the whole picture and, if in doubt, consult your supervisor or compliance officer.

7. Reporting suspicion

If you know or suspect, or have reasonable grounds to suspect, that a transaction or activity involves the proceeds of crime or terrorist financing, you must report it internally without delay, following your bank's procedure, normally to the money laundering reporting officer (MLRO) or compliance officer. The MLRO assesses the report and, where appropriate, files a suspicious transaction report with the Financial Intelligence Unit. Frontline staff should not investigate the matter themselves; their responsibility is to report promptly.

8. Tipping off

You must not tell the customer, or anyone else not authorised to know, that a report has been made or is being considered, or that an investigation may be under way. Tipping off can prejudice an investigation and may constitute an offence. If a customer asks why a transaction is delayed, follow your bank's guidance on what may be said.

9. Record keeping

Banks must keep records of customer identification, account files, correspondence and transactions for the period required by law, in a form that allows transactions to be reconstructed and information to be provided promptly to the competent authorities. Frontline staff contribute by capturing information accurately and completely at onboarding and at the point of each transaction.

Check your understanding

1. What are the four main elements of customer due diligence?
2. Give three examples of situations that may require enhanced due diligence.
3. To whom should you report a suspicion in your bank?
4. A customer asks whether the bank has reported them. How should you respond?