In terms of Regulation 21 of the Regulations, a bank must obtain certain additional information whenever this information may reasonably be required to identify:
| • | a business relationship or single transaction that poses a particularly high risk of facilitating money laundering activities; or |
| • | the proceeds of unlawful activity or money laundering activities. |
In most instances it is a combination of factors, not any one factor that will lead to a conclusion that a transaction or relationship poses a money laundering risk. All circumstances surrounding a business relationship or transaction should be reviewed.
The risk factors referred to in paragraph 3, above, may be helpful to banks in assessing when additional information may be required in order to enhance the institution's profile of a particular client. In addition there are a number of further factors that may indicate that a business relationship or single transaction poses a high risk of facilitating money laundering activities, or the presence of the proceeds of unlawful activity such as the following:
| • | a client appears to have accounts with several banks in one geographical area; |
| • | a client makes cash deposits to a general account of a foreign correspondent bank; |
| • | a client wishes to have credit and debit cards sent to destinations other than his or her address; |
| • | a client has numerous accounts and makes or receives cash deposits in each of them amounting to a large aggregated amount; |
| • | a client frequently exchanges currencies; |
| • | a client wishes to have unusual access to safe deposit facilities; |
| • | a client's accounts show virtually no normal business related activities, but are used to receive or disburse large sums; |
| • | a client has accounts that have a large volume of deposits in bank cheques, postal orders or electronic funds transfers; |
| • | a client is reluctant to provide complete information regarding the client's activities; |
| • | a client's financial statements differ noticeably from those of similar businesses; |
| • | a business client's representatives avoid contact with the branch; |
| • | a client's deposits to, or withdrawals from, a corporate account are primarily in cash, rather than in the form of debit and credit normally associated with commercial operations; |
| • | a client maintains a number of trustee accounts or client subaccounts; |
| • | a client makes a large volume of seemingly unrelated deposits to several accounts and frequently transfers a major portion of the balances to a single account at the same bank or elsewhere; |
| • | a client makes a large volume of cash deposits from a business that is not normally cash intensive; |
| • | a small business in one location makes deposits on the same day at different branches; |
| • | there is a remarkable transaction volume and a significant change in a client‘s account balance; |
| • | a client’s accounts show substantial increase in deposits of cash or negotiable instruments by a company offering professional advisory services; |
| • | a client‘s accounts show a sudden and inconsistent change in transactions or patterns. |
The circumstances referred to above may be legitimate features of certain categories of businesses, or may make business sense if viewed in the context of the client‘s business activities. However, it is equally possible that these features would be unexpected in relation to certain categories of businesses, or would have no apparent business purpose, given a particular client’s business activities. The purpose of obtaining additional information concerning certain clients in these circumstances is to assist the bank to more accurately identify truly suspicious behavior or relationships and transactions that pose a risk of money laundering, on the basis of a broader profile of the client than the mere client identification particulars.
The information that a bank must obtain in the circumstances referred to above must be adequate to reasonably enable the bank to determine whether transactions involving a client are consistent with the bank’s knowledge of that client and that client’s business activities and must include particulars concerning:
| • | the source of that client's income; and |
| • | the source of the funds that the particular client expects to use in concluding the single transaction or transactions in the course of the business relationship. |
