The Importance of Relevant Adverse Information
If you work in the financial sector, chances are that you are familiar with the concept of ‘Know Your Customer’, or ‘KYC’. This philosophy, which simply entails the verification of your customers’ identity in order to make sure that they are who they say they are, is pivotal for the prevention of financial crime. Most financial institutions are now required to complete KYC policies, and many of them must even take part in KYC due diligence. However, it is important to note that there are many aspects of KYC procedures that are vital in regards to tracking down criminals. One of the main concepts that every individual should have an understanding of is ‘relevant adverse information’.
Relevant adverse information is simply any information that may cause officials to suspect an individual of being involved in a financial crime. This information many include proof of previous crimes, such as drug smuggling, embezzlement, fraud, and theft, or proof that a person is currently involved in [Money Laundering|money laundering]], terrorist financing, of tax evasion. Even if the information does not appear to be directly related to the scheme or suspect that is under evaluation, it can still certainly be relevant adverse information. Relevant adverse information does not need to necessarily be proven true, and it can include suspicions.
All relevant adverse information must be taken into consideration by financial institutions and governments when they are trying to track down financial crime and those who are responsible for it. While one piece of information may not seem as important as another, it can still wind up being the key for arresting money launderers and terrorist financers. Because of this fact, many financial institutions that are heavily regulated by KYC policies are required to constantly be on the look out for relevant adverse information in order to discover any hints or tip offs that may aid their investigations.
Relevant adverse information can be acquired from any source. Although one source may appear to be more valid than another, all pieces of information may be looked at. Common sources include the Internet, the media, and other assorted databases. Specific individuals may even provide authorities with relevant adverse information.
One of the most common types of relevant adverse information is the past criminal activity of an individual. If it is suspected that a person may be involved in financial crime, and authorities discover that that person has been previously caught for committing another crime, this gives authorities even more reason to suspect that individual to be involved. In contrast, if a person has no criminal history and is not known for associating with individuals who do, they are then at a much lower risk of being involved in something such as a money laundering scheme.
Another type of relevant adverse information that individuals oftentimes look at is if a person is on a sanction watch list or not. If he or she is, chances are that it is not for a good reason, and that authorities should be on the lookout for them being involved in any financial crime.