Financial Crime

Question 1

Who is the highest risk of fraud?

Answer 1

Intermediate as they can experience misrepresentation as asset finance providers do not have contact with the client before the deal is signed.

Question 2

What are the other risk factors for direct funders using intermediary/broker?

Answer 2

Broker can mislead the customer by verbal misrepresentation and the direct funder is unaware
Responsibility of the broker to agree terms with the customer and the customer may sign something different
Might be collusion between the broker to mislead the customer to inflate the price of the asset to get cash back
Customer may be fraudulent and broker unaware

Question 3

How to avoid issues with intermediary?

Answer 3

Vet the intermediary partner before entering into a relationship
Trading agreement, performance standard reviews

Question 4

How to mitigate financial crime in asset finance?

Answer 4

Identifying the customers
Understanding your relationship with them
Monitoring the way they use your services to identify anything suspicious

Question 5

What can a firm do to mitigate financial crime?

Answer 5

• Have a thorough understanding of their specific financial risks and apply proiportionate systems and controls
• Organisationsal structure that promotes coordination and information sharing across the business
  Appropriate up to date policies and procedures
• Employ staff that are skilled
• Review employees competence and take action to ensure they stay competent
• Manage the risk of staff being rewarded for financial crime risks
• Able to demonstrate that its adequate systems and controls prevent risk