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Monday 25 January, 2021

Indicators Related to the Banking Sector

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Client Related Indicators
  1. The client does not show any interest in the transaction's amount or commission.
  2. Understanding the reason why the client chose this bank to conduct his transactions.
  3. An unexpected or frequent change of the actual beneficiary.
  4. An unexpected or unjustified change of the bank.
  5. An unexpected or frequent change to the method of contacting the client.
  6. The client uses the same address; changes the names associated with him; refuses to receive any documents from the bank, or gives contact details that do not match the address.
  7. The client provides false information or refrains from providing the information along with documents showing the business relationship, activity and source of funds.
  8. The client evades or refuses the bank's application of the "Know Your Client" model.
  9. The client is accompanied by people who do not have a clear role but show an influential role in shaping the business relationship.
  10. The client requests freedom of action that goes beyond the usual scope.
  11. A client, acknowledges, speaks of, or is known to be associated with criminal activities.
  12. The client demonstrates strong curiosity regarding systems, control mechanisms, internal policies and monitoring.
  13. The client is tense in a way unproportionate with the nature of the transaction.
  14. The client attempts to build close relationships with the bank's employees.
  15. The client uses aliases and a group of similar addresses.
  16. The client offers money or rewards to secure services that appear suspicious.
  17. The client is unemployed and often makes huge transactions or high account activity.
  18. The client maintains high balances on his credit card.
  19. The client is considered a foreign national who does not have regular business dealings in the Kingdom of Bahrain and who obtains professional or financial services.
  20. The client is a politically exposed person or a prominent political figure or is associated with one.
  21. The client performs transactions that do not match his age, and this is especially true for underage clients (minors).
  22. The client conducts financial activities and transactions that do not fit the "Know Your Client" model.
  23. The income disclosed by the client is not compatible with his assets, transactions, or lifestyle.
  24. The client provides copies of his recent personal documents without the original documents, or they do not contain important details, such as the phone number, or he requests to be identified based on other than his personal documents.
  25. The client was significantly late in submitting the company's documents.
  26. Submitting all documents in a foreign language or they cannot be verified.
  27. The client is uncooperative in identifying the actual beneficiary pursuant to Resolution No. (83) of 2020 regarding criteria, controls and rules for determining the ultimate beneficiary.
  28. The client offers banknotes that are folded or wrapped in a way he never used to do before.
  29. The client attempts to make transfers to another bank without providing all the details about the beneficiary.
  30. Conducting multiple transactions on the same day at the same branch or different branches with a clear attempt to go to different employees.
  31. The absence of clear relationships between the client and third parties in the transaction on the one hand, and the country in which the bank is located on the other hand.
  32. The commercial relations with juridical entities are not included in the public records or official databases, and it is not possible to obtain official certificates about them.
  33. Describing a juridical person as practicing a commercial activity, but this cannot be found on the Internet or social media sites, or the presence of persons authorized to sign the accounts of the juridical person without justification.
  34. Registration of the juridical person under a name that does not indicate the actual activity, or indicates that the person carries out activities or services that are not available, or a name of a person similar to the name of another legal person.
  35. Using an informal email address, such as Yahoo, Gmail, or Hotmail.
  36. Registering a juridical person in an address that does not match its file, or under an address that cannot be identified on online mapping programs, or an address that has been used by many juridical persons.
  37. The account has no balance despite the frequent incoming and outgoing transactions.
  38. Limited knowledge of commercial activity despite the existence of interests among juridical persons.
  39. Asking for the expedited implementation of transactions without concern for the risks or additional costs that may entail.
  40. Asset sales are inflated between entities controlled by the same beneficiary.
  41. The inclusion of family members who do not have any role or participation in running the business as beneficial owners of juridical persons or legal arrangements.
  42. The resignation and replacement of the directors or the main shareholders shortly after the incorporation, or the frequent change of the work site without justification.
  43. Complex institutional structures that legally do not require this level of complexity or do not have commercial sense.
Transaction Related Indicators
  1. The sudden return of activity to the account without any logical explanation (for example: large cash deposits are suddenly transferred abroad).
  2. The financial transactions are illogical, and are incompatible with the client’s bank history and the goal of the business relationship, or do not match the client’s current situation.
  3. A transaction appears outside the normal commercial practices framework of the concerned sector, or is economically feasible for the client, or is complex without justification.
  4. The transactions related to a large project, whose main financing is secured by unidentified investors according to the client’s testimony. 
  5. The client requests receipts for cash withdrawals or deliveries of securities that did not take place at all, or a request to implement payment orders with wrong details about the transfer party, or a request to transfer some payments through other accounts belonging to him and not from his personal accounts.
  6. There are indications that the client has performed actions punishable by law in the Kingdom of Bahrain.
  7. Excessive justification of the transaction or the exaggeration in providing documents proving its authenticity, or expressing his desire to send debit and credit cards to local addresses other than his address.
  8. The client strangely visits his safety deposit box directly before making any cash deposits.
  9. The client is registered to acquire and liquidate many assets quickly and without reason, or burdening them with various mortgages without an economic explanation.
  10. The existence of transactions for a client who owns many licenses issued to his companies.
  11. The client makes frequent cash transactions, or requests them to be executed in large amounts that are not consistent with transactions executed in the past.
  12. The client uses banknotes in denominations that differ from what he preferred to deal with in the past, while the standards for cash dealings in the sector he works in are much larger or much smaller denominations.
  13. The profession occupied by the client, according to what he reported, does not appear to be compatible with the level or type of activity, (for example: a student or an unemployed person who makes cash deposits / withdrawals in a number of branches in a large geographical area).
  14. The client withdraws large sums of cash without making deposits in the same period, or depositing in the account of another person who is not associated with him.
  15. The client requests to transfer an amount abroad without a clear logical reason.
  16. Transactions that involve withdrawing assets shortly after being deposited, or have recurring deposits that are justified as proceeds from selling unknown assets.
  17. Third parties deposit cash or checks into the client's credit card account.
  18. The client does multiple fund transfers outside the country where he is the beneficiary.
  19. The relationship between the transaction parties raises doubts whereby the client cannot find an adequate explanation for it.
  20. The transaction is considered a commercial transaction that takes place between one or more parties from the same family without a clear economic justification.
  21. One of the account’s authorized dealers executes the transactions with large or recurring amounts, but he does not own any stakes or assets in the company.
  22. Exploiting the company’s account to carry out personal transactions such as financing personal purchases, including the purchase of assets or entertainment activities that are not compatible with the company’s profile.
  23. Using many large cash payments to pay off a loan or mortgage ahead of time while bearing the loss, or buying high valued items in cash.
  24. The client submits forged records or forges them.
  25. Conducting a large number of transactions with a small number of beneficiaries, or a small number of high valued transactions with a small number of beneficiaries.
  26. Conducting regular transactions with international companies without sufficient justification for the cooperation or trade with these companies.
  27. The juridical person’s records show the absence of activity for a long period after its establishment, followed by a sudden and unexplained increase in financial activities.
  28. The client has many accounts and deposits cash in each of them, amounting to a huge sum, or frequent transfers of large sums abroad.
  29. Accepting transfers from other banks without knowing the transferor.
  30. Depositing funds in multiple accounts that unite into one account and are transferred outside the country.
Indicators Related to the Product / Service / Channels Used
  1. Opening accounts in the names of other people to use as an interface, or names very close to the names of commercial establishments, or false names.
  2. The actual activity significantly exceeds the expected activity upon opening the account.
  3. Executing the transaction from the company’s account using large amounts of cash, through either deposits or withdraws which is not compatible with the company's activity. The incoming and outgoing operations are similar in size and are sent to / received from the same accounts, indicating that the issued funds are returned with a partial loss.
  4. Creating multiple accounts without a logical need for that, or accounts with a large number of deposits of small sums and few withdrawals of large sums.
  5. Using loan facilities in a manner that may appear normal during international trade operations but is not compatible with the client's business activities.
  6. The structure of the client's commercial relationship with banks is not economically logical.
  7. Third parties that are not closely related to the client provide the guarantee
  8. A large number of different people making different deposits in one account, or using the account for temporary deposits.
  9. Using the name of another party to conduct commercial transactions for commercial or industrial projects.
  10. Closing accounts and opening new accounts in the name of the client or in the name of other persons close to him, or the client requests opening multiple accounts without justification.
  11. Cash deposits followed shortly by electronic transfers, particularly to high-risk countries.
  12. The accumulation of huge assets that are incompatible with the commercial activity of the institution owned by the client, and transfers or loans to foreign companies or accounts outside the country.
  13. Large deposits or transactions from a vague source provided that they are sent or guaranteed by an external bank (offshore).
  14. Using guarantee letters and other means of commercial financing to transfer funds between countries while the commercial activity does not match that of the client.
  15. The client purchases foreign currencies or other negotiable instruments through cash payment, while this appears uncommon to the normal activities of the client.
  16. The client receives checks for large sums that is incompatible with the nature of his work, or exchanges a large amount of small banknotes denominations for large denominations.

Geographical Location Related Indicators

  1. Loans linked to commitments from external banks (offshore), with the difficulty of verifying the truth of these liabilities.
  2. The transaction is related to a country known for its banking secrecy and weak legal frameworks for the work of companies, or it takes place in several countries without an economic or financial justification.
  3. Transactions related to a country known for its high crime rate (such as: rampant corruption, terrorism, and massive drug production), or are considered high-risk countries in terms of money laundering or terrorist financing.
  4. The client has accounts in different financial institutions in one geographical area without a clear economic need, or an account in a region other than the customer’s residence.
Other Indicators
  • Shell Companies
  1. Informal owners, such as children, spouses, relatives or partners who do not appear to be involved in running the companies.
  2. Not performing any actual commercial activities.
  3. The absence of operating expenses (rents, salaries, value of goods) for the juridical person, employees, or one person as an employee.
  4. Using the company’s account as a temporary deposit station, and to funnel funds in order to hide the actual beneficiary.