The Remittance Desk and the Repeat Sender
A small Auckland money remittance business sends funds to the Pacific. Its compliance officer reviews a week of transactions and notices that one customer, a NZ-resident sole trader, has sent 34 transfers in five weeks, each between NZ$900 and NZ$1,950, to 12 different recipients in two countries. The customer's CDD file contains a driver's licence and a proof of address, dated three years ago, and a stated occupation of 'market trader'. The business's written AML/CFT programme is a two-page document from 2019 that references the Act but contains no risk assessment, no monitoring methodology, and no record-keeping or reporting procedures. Staff have had no AML training. The owner says 'we know our customers, it's a small community'.
1. Identify the programme deficiencies and explain why 'we know our customers' is not an adequate AML/CFT programme.
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Programme deficiencies:
- No risk assessment: the business has not assessed its ML/TF risks by customer, product, delivery channel, and country.
- No monitoring methodology: there is no documented basis for detecting unusual activity, which is exactly what the pattern above shows.
- No reporting procedures: staff have no documented process for identifying and reporting suspicious or prescribed transactions.
- No record-keeping procedures: the Act requires records to be kept; the programme is silent.
- No training: staff have had none, so they cannot recognise red flags.
- Stale CDD: the customer file is three years old and has not been reviewed.
Why 'we know our customers' fails: the Act requires a written, documented, risk-based programme with specified components. Personal familiarity is not a substitute: it is undocumented, unverifiable, and can blind staff to risk (the 'trusted local' bias). A programme must be capable of being audited and evidenced - 'we know them' leaves no trail. The business must also appoint and maintain a designated compliance officer and ensure the programme is reviewed and updated.
2. Analyse the transaction pattern and state what the compliance officer should do about CDD, monitoring, and reporting.
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Pattern analysis:
- 34 transfers in five weeks, each $900–$1,950, to 12 recipients in two countries - high frequency, multiple beneficiaries, and amounts that sit below the NZ$1,000 international transfer PTR threshold in many cases. That sub-threshold sizing is a structuring indicator.
- Stated occupation ('market trader') does not obviously explain the volume or the spread of recipients.
- Stale CDD (three years) with no review.
Actions:
- Refresh CDD: verify identity and address with current documents, and obtain source of funds/wealth for the remittance activity.
- Enhanced monitoring: review the 12 recipients and the purpose of the transfers; look for a pattern of splitting to avoid the NZ$1,000 threshold.
- Reporting: the sub-threshold structuring and the unexplained volume are strong indicators of suspicious activity - file a SAR. Also assess PTRs for any individual international transfers at or above NZ$1,000 and for linked transactions.
- Remediate the programme: commission a written risk assessment, monitoring methodology, reporting and record-keeping procedures, and staff training, and document the review.
- Tipping off: do not alert the customer to the SAR.