Defendants

Defendants plead guilty of allegations in Medicare Fraud in U.S. District Court

Two defendants, Jessica Jones from Colorado, and Elizabeth Putulin from Florida pleaded guilty to healthcare fraud allegations. Senior Judge, George A. O’Toole at the U.S. district course, proposed the sentencing for May 19, 2021. 

Jones and Putulin were found guilty of partnering with Juan Camilo Perz to bag $109 million in false claims for medical equipment, including knee, shoulder, arm, and back braces. Last year in October, Perz paid kickbacks after declaring himself responsible for a fraud scheme in the federal healthcare program in the US, Medicare. The offender is to be sentenced on March 4, 2021.     

The two women confessed to helping Perz submit bogus and false Medicare claims through shell companies spanning over a dozen states in the States. Perz hired Jones and Putulin to provide fictitious names and act as corporate directors to present their shell company as a Durable Medical Equipment (DME) service provider. They acquired foreign and domestic patient records from different call centers, targeting an older group of patients. 

Moreover, they also used the call centers to ask medicare beneficiaries for offers regarding arm, shoulder, and knee braces at a very cheap price. Later, Perz tendered the Medicare claims on behalf of those patients without their consent or a prescriber’s recommendation. This gave a notion that the braces were medically necessary.     

Also, the offenders were charged with filing insurance claims of the deceased, and the same people repeatedly. Perz failed to provide convincing evidence for DME offerings of more than $7.5 million. This was because when he provided DME to patients, they were charged 12 times more than the actual price of the equipment.  

The court ended the proceedings by sentencing the fraudsters to 10 years in prison with a fine of $250,000. The sentence penalty was decided in light of the standard U.S. Sentencing Guidelines.  

Ginma

FINMA Penalizes Swiss Bank over Money Laundering of $78 Million

The Swiss regulatory authority, FINMA, initiated a lawsuit against the senior management at Julius Baer, a Switzerland-based private banking group. The prosecution was filed against two former CEOs of the bank on Thursday, keeping their identity confidential. The allegations possibly point towards Boris Collardi and Bernhard Holder, which are now partners with Pictet – an independent wealth management group – since they confirmed receiving written notices. 

The Swiss regulator, in a statement on previous executives, asserted, “Although mistakes were made in the case of the two reprimanded managers, there are not sufficient indications of direct, causal responsibility for the serious violation of supervisory law.

FINMA, according to its more rigorous sanction, can ban an entity or individual from working in the financial sector for a time of five years. Last year, Julius Baer faced the music for widespread failings in their corporate financial system. The regulator alleged former executives of laundering more than $78 million to a Venenzualen customer in 2014. 

Being the third-largest bank in the country, criticism from FINMA took a toll on its global repute and market value. FINMA appointed an external auditor to look into the company affairs, and ensure Anti Moey Laundering requirements are met. 

Apart from the former CEOs, FINMA indicated potential proceedings in the future against other personnel at Julius Baer as well. A spokesperson from the bank stated that the problem coincides with previous employees of the organization who are not here anymore. The Swiss bank contributed $80 million to make up for penalties and fines resulting in the agreement on the  FIFA corruption case. On February 1, 2021, Julius Baer will update FINMA on the improvements it has made in its annual report. 

 A Julius Baer official shared his concerns about the former CEO, “We have full confidence in his work at Pictet.” Collardi in a statement said, “I accept the reprimand that has been issued. The key is that this decision now brings this matter to a close for me.”

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President Biden Takes the Reins with Halting Digital Assets’ Rule Making

Regulatory proposal regarding digital assets has been frozen by President Joe Biden. Biden took his presidential oath yesterday, January 20th, and one of the first steps in his office is to halt all the regulatory processes including the proposed rules by Financial Crimes Enforcement Network (FinCEN). The regulatory proposals by FinCEN include the regulations regarding the self-hosted crypto wallet.

The verdict is not only limited to the crypto wallets but extends to general regulatory rulemaking. This will be effective for 60 days from the date of the memorandum. Crypto firms have lauded this action.  

General Council Jake Chervinsky stated; “We fought hard & earned the right to take a breath & reset. Janet Yellen isn’t Steve Mnuchin. I’m optimistic.”

The proposal for self-hosted wallet was provided by FinCEN on 18th December. It was proposed by Mnuchin, the former US Treasury Secretary. If the proposal is passed, the banks will be obligated to keep records and verify the identity of all their customers of cryptocurrency wallets.

Jake Chervinsky said, “First, anyone is better than Secretary Mnuchin, who decided long ago that he hated everything about crypto. Second, although Dr Yellen may not be a fan now, I expect she’ll be open to learning & listening, & will follow regular order in deciding on new regulations. That’s good.”

The proposal was dismissed by the crypto industry and argued that the name and address should not be collected for cryptocurrency. Some even believed that it would be impossible to regulate with the compliances because names and address information is not contained in smart contracts. Biden has appointed Janet Yellen as Secretary of the US Treasury and she has already voiced her opinion regarding the cryptocurrency by declaring that it is used for illicit financing. 

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Legal Challenges Against TikTok for Breaching Child Privacy Policy

TikTok, the most trending social media application in the present times is facing legal actions for violating the UK’s child protection policies. They have been sued by a 12-year old girl from the UK. The girl, whose identity remains anonymous, has been given Anee Longfeild’s support, who is England’s commissioner for child protection. According to the commissioner, the app violates the UK and EU laws.  

The girl has been granted anonymity by the court to avoid cyberbullying by the influencers or users of the app. BBC reports that it is hoped the case will be taken to the court which will result in improved data privacy policies of the minor by the app. The case will require the deleting of the application’s data of the minors.

 TikTok collects data for the purpose of advertisement. However, the majority of the user base of the app is of teenagers. According to a report by The New York Times, one-third of the TikTok users are 14-year-old minors. This is not the first time the app has been penalized for violating data protection policy. In 2019, FTC fined $5.7 million for violating the privacy laws of the USA regarding minor protection. After this lawsuit, the app was forced to take down the videos of children under the age of 13. A separate section was created for the use of minors only. 

TikTok has been under strict scrutiny by the US and a ban has been proposed by the presidential body which is yet to materialize. TikTok’s privacy policy states that they only ask for limited information like name, username, password, and birthday. However, the rest of the data can be collected from the device including the IP address, country-level location, ID, and app activity etc. 

The app’s privacy policy has changed in January 2020 which states in detail how the user data will be shared. Enza Iannopollo, privacy analyst at Forrester said, “When you have a child accessing a digital tool, there are unique concerns for the data to be actually stored and tracked, different regions might define children’s age differently. Some countries will say 16, others will say 13.”

She also added that whatever the age of the child is, parental or guardian consent must be required to use the application.

data security

Data Security at Risk Due to the Fake Lending Apps

Gained network access, pictures, and contact information are at threat due to the fake lending apps that is now an increasing cause of stolen data. Government, as well as regulators, have cracked down on fake digital lending apps and have discovered Chinese nationals behind their operations. They are still working on to discover the amount of data stolen. 

Data protection law is required to stop the apps to get away with tons of stolen data and personal information. This has led to a number of suicides as the app operators have blackmailed and harassed people. The borrowers were asked to repay the loan many times even after they have paid it. The operators of the app blackmailed the users by contacting their family or friends and posted stories and private information on social media. 

These applications did not require KYC- Know Your Customer information from the users as the legitimate sites ask their customers of the proof identity. They just took basic contact information from the users, copies of their government-issued identity documents and then used their application to enable access to their smartphones. The data breach by this fake application has become one of the biggest data breach schemes. 

Banks and police officials are working towards tracing the money that these applications have stolen through data breach, blackmailing and identity theft. 

Co-convenor of Cashless Consumer states that “From these 1,000 apps, in the last ten days 118 apps have been removed and in total 450 apps are no longer available on the Play Store, but some of them operate from abroad. The legitimate apps authorised to lend in the database would be around 200 when it comes to the links between these apps and actors sitting abroad. So it is not a case of the data being transferred abroad but that it was collected abroad.” 

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Illicit Betting Report by the UK’s Gambling Industry Misguided the Regulators

UK’s Gambling Firms are being accused of exaggerating the numbers on the black market betting report to influence the decision regarding the regulations. According to a recent report, 200,000 people in the UK participate in the black market sites annually. The report claims that up to £1.4bn is spent on these black market sites. The report warns that if the regulations remain strict, more people could end up with unscrupulous operators. 

Neil McArthur, Gambling Commission’s chief executive, has declared the report to be inconsistent with the real picture and it is vague about distinguishing real customers and the bots using the black market sites. He states that according to the regulators’ own investigation, the impact of the illegal market has proven to be exaggerated. 

McArthur said, “black market concerns should be kept in proportion, despite … reports from consultants paid for by the industry, and should not distract from the need to continue to drive up standards and make gambling safer in the regulated market”.

This criticism can be a blow for the Betting and Gaming Council (BGC), which has referred to the report to back their arguments against the regulations. The government is considering carrying out measures including limiting the stakes on virtual slot machines or forcing the web-based casinos to keep detailed affordability checks on customers depositing a certain amount monthly. The regulators have dismissed the suggestions by the gambling industry that these measures could increase the illicit betting. 

The Labour MP Carolyn Harris said: “The online gambling industry talks up the threat of the black market in an attempt to resist regulation and protect its profits, but trying to hijack the debate by manufacturing dodgy dossiers of information to further their own ends is an incredibly transparent tactic and will not be any kind of excuse to hold down standards.”

However, the gambling firms and BGC, who has revealed the report, have refused to provide a copy of the report. The final version of the report seems to have removed the involvement of three firms that commissioned the report. 

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Four Biggest Irish Banks Join Forces for Enhanced Security Measures

Four biggest banks in Ireland, AIB, Bank of Ireland, PTSB, and KBC, have collaborated on the measures against cybercrimes and financial crimes. They are working on app-based immediate money transfers to fight against money laundering and enhancing their cybersecurity measures. 

The Sunday Times report that the application will be interbank and is being developed through a collaborated venture including AIB, Bank of Ireland, Permanent TSB, and KBC Bank. Another bank, Ulster Bank, whose future in the Irish market has been under the doubt might also join the venture. If NatWest, Ulster Bank’s UK parent bank, decides to stay in Ireland then the bank might also be the part of this Synch. 

The joint project includes the sharing of identity checks on all potential customers. This would eliminate the need to require the proof of identity along with the proof of address every time an account is opened or the banking activity is being done. This joint venture will also aim at the improved cybersecurity. 

Ireland’s Banking and Payment Federation has confirmed that this collaborated programme, also known as Synch, is linked with the “multi-banking payment app that will enable Irish users to send and make payments in real-time”.

According to the BPFI,This is now a matter for the CCPC and we await their determination on the application.”

Competition and Consumer Protection Commission (CCPC) has been provided notification by Synch and they have launched an investigation into this new programme to ensure its compliance with the Synch rules. 

The traditional way of banking has proved to be a target of financial crimes. The banks have been facing risks regarding credit and payment. Conventional banks in Europe are working on digital payment and banking applications as well.

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Capital One Penalized $390M for ‘Willful’ Violation of the Bank Secrecy Act

Financial Crimes Enforcement Network (FinCEN) has imposed $390 million as penalty on Capital One for violating both “willful and negligent violations of the Bank Secrecy Act (BSA) and its implementing regulations.”

The Bank has agreed that it has purposely failed to come up with an effective strategy to comply with the Anti-Money Laundering program. The bank has also admitted to deliberately turning a blind eye on the thousands of suspicious transactions. 

The regulators believe that the violations have been occurring since 2008 and are linked with the Check Cashing Group of Capital One. 

Domenick Pucillo, Genovese’s crime family’s associate has been using the bank for money laundering but the bank has failed to report these suspicious transactions and has deliberately neglected the occurrence of such crime. Even after being aware of Pucillo’s association with the illegal activity, Capital One still enabled over 20,000 transactions worth $160 million.

Director of FinCEN, Kenneth Blanco, has declared the violation to be “egregious” and has expressed his views that the bank’s behaviour has put the people of the country at risk for violating law enforcement guidelines. 

FinCEN has assessed over $390 million worth fines but under the settlement, they have agreed to give the bank credit for a $100 million penalty. This was paid to the Office of Comptroller. Financial institutions and banks are required to comply with the Bank Secrecy Act to prevent financial crimes. 

The Bank Secrecy Act requires banks and financial institutions to identify their potential customers and record their basic information to verify their identity. The transactions of funds of more than $10,000 must be investigated. Any suspicious activity regarding the transactions must be reported to the concerned authorities and failing to do so can result in penalties. Capital one has failed to comply with all these regulations and has allowed money laundering to be done through their platforms.

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A Three-fold Rise in AML Penalties in China in 2020

China’s banks and financial institutions have faced an increase in penalties in the year 2020 due to the lack of customer identity verification and suspicious transactions.

The People’s Bank of China (PBOC) has disclosed a report that states a total of USD 97 million have been fined for AML non-compliance. This fine is three times more than the fines that were given in the year 2019. A PWC report states that CNY 608 million have been fined to the institutions and the remaining CNY 20 million of the penalties were fined to the individuals.

Fines total to the number of 733 which is 25% more than the prior year. The penalties include 417 firms with their staff across the 30 provinces. The total number of fines banks faced is 598, which worth to the amount of CNY 330 million and accounts for 52% of the total fines. 

In 2020, financial institutions faced a rise in penalties. CNY 263 million of penalties have been issued to the payment institutions which include two large fines of CNY 100 million and CNY 60 million. 

Most reasons for the penalties were the failure of customer identity verification and due diligence. This accounts to the 203 fines worth CNY 96.4 million. Another failure including the large-value transactions was followed by these penalties which accounts to the total fine of 79 worth CNY 69.

In 2020, a total of 20 large penalties were fined exceeding the amount of CNY 50 million. A criminal law amendment will be implemented from March 2021 which will further enforce the AML regulations on these financial institutions. Draft rules have been issued by PBOC which enhanced the obligations for financial institutions to strengthen the AML and CFT systems. 

Fincen

FinCEN Extends the Comment Period of Virtual Currency Regulations

FinCEN– Financial Crimes Enforcement has finally agreed to reopen the comment period of regulating the digital currency. After the criticism from the firms dealing with the virtual asset, FinCEN has extended the comment period for the regulations that were proposed earlier. These regulations were related to Legal Tender Status, and Convertible Virtual Currency (CVC). 

Notice of Proposed Rulemaking (NPRM) required the banks and money service businesses to keep records, submit reports, and carry out identity verification of each customer regarding the transactions involving Convertible Virtual Currency and Legal tender status.

The recent notice has identified the Anti-Money Laundering Act of 2020 and provides additional information related to reporting form and the extension of the comment period. An additional 15 days of the extension has been assigned by FinCEN for the comment period on the reporting requirements related to information on LTDA or CVC transactions. The Proposed rule requires the reporting of transactions more than $10,000 or totalling to more than $10,000 including the unhosted wallets or even wallets that are hosted in FinCEN identified jurisdictions. FinCEN has extended the comment period to additional 45 days that require banks and money service business to report information in regards to counterparties to transactions by the customer’s of their hosted wallets and proposed recordkeeping requirements.  

FinCEN has received a robust response from the commenters and has received more than 7,500 comments during the initial comment period. FinCEN is looking forward to receiving more comments in this additional comment period and hopes to continue actively engaging with the cryptocurrency to make sure that innovation comes with proper compliance with anti-money laundering regulations and national security risks. 

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European Central Bank’s President Calls for Strict Bitcoin Regulations

The president of the European Central Bank, Christine Lagarde, says that bitcoin is a “funny business” and it must be regulated globally because it can lead to money laundering and other financial crimes

Lagarde was not shy in voicing her criticism, For those who had assumed it might turn into a currency — terribly sorry, but this is a highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money-laundering activity. There has to be regulation. This has to be applied and agreed upon . . . at a global level because if there is an escape, that escape will be used.”

Bitcoin’s value has increased recently. Regulators get extra cautious when there is a peak and they start to warn about the possibility of the crackdown. This week, FCA, UK’s Financial Conduct Authority has warned the authorities about the possibility of loss if they keep on investing in crypto assets.

Treasury is conducting consultations for the regulation regarding the stable coins and other crypto assets. Economic Secretary of the Treasury, John Glen states that they, “could pose a range of risks to consumers and, depending on their uptake, to the stability of the financial system”.

However, the government is more focused on the innovations and the opportunities these innovations bring. Central Bank Europe’s President, Ms. Lagarde, spoke to Reuters about the possibility of money laundering crimes and how these digital assets have proven to be a source of illegal activities. She says an investigation is to be carried out to look into these illegal activities related to crypto-assets. Earlier this week, the German police have taken down a dark web market that was allowing the trade of cryptocurrency with drugs. Half a million people participated in such trade. 

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“Online Trading Platforms to Become a New Hub for Investment Scams” Warns FCA

FCA warns that investment scams are increasing in the UK via online means of trading platforms and social media sites. People, as well as business entities, are being increasingly targeted by fraudsters who are offering foreign exchange trade and crypto-assets contracts like bitcoin. These fraudulent offers are mostly promoted by social media platforms.

Fraudsters manipulate people by offering high profits and use fake and enticing visual aids to get people to invest in their scams. Their advertisement seems like professional-looking sites leaving the impression of legitimacy and people end up investing.  Investment is done through managed accounts where trade is done on their behalf or it can be done through the firm’s platform. They even create private relations with the victims to guide them about investment opportunities.

Sometimes these fraudulent firms return some amount of money to make it look like profits and to show that the trading was successful. Through this, victims are encouraged to invest more and even publicize this with their friends and families who end up investing as well. After a while, when the victim has invested enough money, the return stops and the victim’s account is suspended. 

Many fraudulent firms are located in the UK and they claim to be authorized by the financial regulatory authorities like FCA. This gives the impression of legitimacy and the victim does not try to take more precautionary measures.

These types of scams have become quite a concern for FCA. However, FCA cannot control social media companies to remove such scams. FCA has spread awareness about these scams among people as well as businesses to remain vigilant. If anyone finds such scams on social media, they are required to immediately report to the authorities so FCA can take action against such fraud. Social media platforms can play a huge role by having proper business verifications to identify such fraudulent firms. 

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Global Banks Slapped with a Total of $14.21 Billion Fines in 2020

Finbold released a report on the global banks that were fined in 2020. According to the report, a total of US $14.21 billion has been fined collectively to the banks. The US banks have been ranked on the top accounting for the total fine of $11.11 billion making 73.4 percent of total fines from 12 cases.

Australia has ranked on the second number with a total of $981.06 million fines from 3 cases across the country. Israel has fallen on the third number with a total fine of $902.59 million for money laundering and tax evasion cases.

Sweden has ranked on number four with a total fine of $539.66M and five banks from Germany have accounted for $215.91M of fines.

Finbold’s chief editor Oliver Scott commented: “Fines on financial institutions are projected to grow in the coming years, as the U.S. and other countries reform existing regulations while increasing sanctions with anti-money laundering regulations remaining a key enforcement priority. However, banks are spending more on conforming to changing regulatory requirements. Overall, new and complex regulations are proving to be a challenge for the compliance departments of many lenders.”

However, the largest fine was imposed on the Goldman Sache of $3.90 billion, financial institutions in the U.S. Wells Fargo, a bank in the U.S has been fined around $3 billion, becoming the second-highest fine on an institution.

These organizations have been fined for various violations however but most fines have been due to the failure to comply with the anti-money laundering regulations. The report has been based on the US Treasury Department’s intelligence unit, the Financial Crime Enforcement Network, documents, reports, and investigations.

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Deutsche Bank Pays $130M to Avoid Corrupt Payment Charges

Deutsche Bank, a German investment bank, has agreed to pay the fine of $130 million to settle the charges of hiding corrupt payments and bribes.

Since 2009, the bank has been involved in years of misconduct according to the prosecutors. The bank funneled millions of dollars in bribes and millions related to business development consultants. The German bank has tampered with its record-keeping to misrepresent these expenses. The scheme included the prominent executive members of the banks who conspired to hide the false payments fully knowingly. The U.S act that forbids corrupt foreign practices has regulated the companies from paying bribes overseas. Due to the Deutsche Bank’s violation of the U.S laws, Saudia Arabia, Abu Dhabi, Italy, and China have been spanned.

Last year, a FinCEN investigation revealed that Deutsche Bank has moved millions of dollars for a Ukrainian oligarch who is now charged with the fraud cases. From a report around the world, Deutsche was one of the banks found profited from powerful global players

Other than the charges of bribery, prosecutors have disclosed that Deutsche Bank has committed fraud in tampering with the prices of metals over a long time. The bank has pleaded guilty in the settlement and agreed to pay the fine to avert both bribery and fraud allegations.

Dan Hunter, a Deutsche Bank spokesman said, “We take responsibility for these past actions, which took place between 2008 and 2017, and the bank is determined to put these matters firmly in the past.”

The agreement in the settlement requires the bank to fix the system that eliminates bribery and other wrongdoings. Recently, such types of agreements have become a way to stop banks from being involved in such misconducts. Deutsche Bank has previously been charged with anti-money laundering charges

TF

Money Remittance in Singapore at the Highest Risk of TF

The money remittance sector and banking sector in Singapore has become the highest target for criminals to exploit for terrorism financing. 

Monetary Authority of Singapore, MAS released a report on Terrorism Financing National Risk Assessment 2020 in Singapore and highlighted the major terrorism financing threats. 

The risk assessment discovered that the country is exposed to both regional and international terrorist groups’ threats. The money remittance is at the highest risk of being used by terrorists due to the cross-border flow of high volume funds to the countries that are more exposed to terrorism financing and terrorism groups. This added with the incompetent ability to imply CTF policies. 

MAS said, While banks’ TF risk awareness and AML/CFT control measures are generally well developed, it is important to continue engaging the banks. This will enable them to keep abreast of the latest TF risks and typologies, and adopt relevant risk mitigation measures.”

MAS has urged the sector to further strengthen its policies to adhere to AML/CFT compliances. There has been an improvement in the country’s anti-money laundering regulation and risk awareness regarding digital assets. The banking sector and money remittance must strengthen terrorism financing risk awareness. 

The banking sector was highlighted as the second-highest risk of being manipulated for terrorist financing. This was due to Singapore’s exposure to the flow of money internationally. The country’s geographical location exposes it to countries with high terrorism actvities. Additionally, the banking sector has faced challenges in identifying the TF transactions as these transactions are usually in the form of small funds passed through in a form of salaries or savings.  

MAS will examine the banks’ risk management process and analyze their abilities in regard to detecting the flow of funds connected to terrorist activities. The Risk Assessment review also highlighted that non-profit organizations, digital payments tokens, cross-border cash flow, etc. also face the risk of terrorism financing. 

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UK’s Regulatory Agencies not Coming Slow Against Money Laundering

HM Revenue & Customs carried out an extensive investigation on the UK’s real-estate agencies to discover several breaches in the country’s anti-money laundering regulations

A list by the agency has been disclosed that includes the name of Landmark Sales & Lettings Limited in Reading which has failed to carry out due diligence protocols and timings of customer verification. Due to these breaches, the company was fined £5,250 as a penalty. Another agency in Wimbledon in London, Robert Holmes, was fined £6,591  for failing to have proper policies, procedures, controls, and due diligence. Before that, a money transfer business MR Global was also fined £23m

Deputy director at HMRC’s fraud investigation, Nick Sharp, said, “Money laundering is not a victimless crime. Criminals use laundered cash to fund serious organized crime, from drug importation to child sexual exploitation, human trafficking, and even terrorism. We’re here to help businesses protect themselves from those who would prey on their services. That includes taking action against the minority who fail to meet their legal obligations under the regulations as this record fine clearly shows.”

The HMRC’s list only made the names of four companies and two agents public. Guild Property Professionals say that this is a warning that the industry must strengthen its anti-money laundering strategies and no matter what the size of the business is, the firms must know every single customer they deal with in order to avoid any financial damage or reputational damage. 

The firms must ensure their policies even if they are using electronic means of compliance. They still have to have a business risk assessment and train their teams with risk management. Guild Property Professionals also says that the firms still need to have a process for ongoing customer due diligence – and for every single seller or buyer they must be able to demonstrate they have completed a risk assessment; completed verification checks, checked on PEP and Financial Sanctions status – all before a business relationship commences”

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