“Is the person who he claims to be?” old fashion due diligence may give the correct answer!

Author:George Demetriades
Position:Department of Law, Neapolis University, Paphos, Cyprus
Pages:79-91
SUMMARY

Purpose - This paper aims to critically examine the impact of the evolution of technology regarding customer due diligence (CDD) measures and highlight potential weaknesses in the areas of business emerged from third parties, politically exposed persons and international clients. The paper explores whether the use of old-fashioned CDD measures can aid relevant... (see full summary)

 
FREE EXCERPT
“Is the person who he claims to
be?” old fashion due diligence
may give the correct answer!
George Demetriades
Neapolis University, Cyprus
Abstract
Purpose – This paper aims to critically examine the impact of the evolution of technology regarding
customer due diligence (CDD) measures and highlight potential weaknesses in the areas of business
emerged from third parties, politically exposed persons and international clients. The paper explores
whether the use of old-fashioned CDD measures can aid relevant professionals to examine whether the
(potential) client is who he claims to be.
Design/methodology/approach The paper is focused primarily on the use of important
evaluation reports, in Cyprus and the UK, to identify potential aws regarding CDD measures and the
legal framework in ghting economic crime. Interviews from professionals were carried out to provide
rst-hand experience on relevant issues.
Findings – The view, that nowadays due to the evolution of technology, CDD is more efcient than
ever, is based on solid ground. However, taking in consideration relevant reviews and reports, the paper
concludes that there are signicant problems and difculties in gathering and assessing client’s
information. Therefore, the use of old-fashioned due diligence measures, in appropriate circumstances,
might provide a more adequate investigation for high-risk customers.
Practical implications – The paper, in contrast with a professional’s recorded opinions, uses high
prole reports to prove that there is a loophole in current legal framework relating to CDD measures.
Originality/value – The paper uses two important reports from Cyprus and the UK to prove the
weaknesses of current application of CDD measures. The analysis provided in the paper can be used to
persuade professionals that there is space for the use of old-fashioned CDD.
Keywords Economic crime, Cyprus, Money laundering, Due diligence
Paper type Research paper
The ght against economic crime – united we stand!
The ght against economic crime continues to intensify signicantly in recent years,
and the governments around the globe seem more willingly than ever to cooperate and
devote resources in dealing with evolving corruption. Of course, it is acknowledged that
despite the fact that there is a continued recognition of the importance of anti-money
laundering (AML), as a result of the nancial crisis, many professionals and especially
banking leaders have been focused on capital, liquidity and credit issues and possibly
the survival of their institutions (KPMG, 2011).
It is clear that the global nancial crisis uncovered deciencies of the nancial
system that can not only be attributed to the failure and inadequacy of banks’ ofcials
(Tomasic and Akinbami, 2011). It would be dangerous to consider otherwise, as
measures taken will not target all possible causes.
There are not many examples where cooperation and coordination between so many
countries and organisations has been achieved. The failure to prevent economic crime or
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
Old-fashion
due diligence
79
Journalof Money Laundering
Control
Vol.19 No. 1, 2016
pp.79-91
©Emerald Group Publishing Limited
1368-5201
DOI 10.1108/JMLC-11-2014-0041

To continue reading

REQUEST YOUR TRIAL