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Investigating the origin of a customer's funds
Pursuant to Section 3(2d) of the Wwft, the service provider should be able to monitor the business relationships and the transactions effected during their existence based on its CDD. This may require an investigation into the origin of the funds used in the business relation or transactions.
The consultation version of DNB’s Guidance on the Anti-Money Laundering and Counter-Terrorist Financing Act and the Sanctions Act states the following:
“Customer due diligence requires an institution to investigate the origin of the funds used in a business relationship or transaction if necessary. It must include statements and evidence in the customer file and make additional enquiries where needed. The fact that the funds originate from a regulated institution does not mean that the institution itself is exempted from performing a due diligence review. To determine the plausibility that the funds originate from a legal source, the institution should identify specific indicators which determine the depth of the review. Here the institution may think of combinations of indicators such as the amount concerned, the stated explanation for the origin of the funds, the age and occupation or business activities of the customer, country of origin or destination of the funds and the product or service provided.
Specifically in case of high risk, it is appropriate to determine and record the plausibility of the origin of the funds using independent and reliable sources.
It may also be necessary to gain an understanding of the customer's asset position. Where customers spread their assets, it is also necessary for the institution to be aware of the other assets in order to be able to define a correct risk profile. The institution should document its review of the origin of funds.”
- Crypto service providers