Monday, December 24, 2012


Reports that China has banned lavish and expensive events for its military leadership, both at home and abroad, has certainly been noticed by the country's wealthy elite, which includes many Politically Exposed Persons (PEPs). A close look at the activities of the country's governmental leaders, including relatives and business associates, is anticipated. Garish displays of wealth that exceed their reported salaries are now hazardous to your survival in China. This new initiative, though a positive step, has made our job, as compliance officers, more difficult; Here's why.

Since the proper identification of PEPs represent one of the principal risks compliance officers encounter, the risk level have just gone up for corrupt Chinese PEPs. The odds are that you will not be seeing as many Chinese nationals toting Hermés Birkin handbags, and wearing designer clothing, lest their hidden wealth be observed overseas, and reported. They will come in to open a new account, and probably want to make an initial substantial deposit of currency, in Pounds, Dollars or Euros. Their apparel may not match their wealth, which could provide a clue to who they really are.

Four wives, ten children
As you know, a smart PEP will conceal the fact that he or she is related to a senior government officials who is taking bribes and kickbacks; they will claim to be successful in private business. Your task will be to vet them and their allegedly successful business.

Watch for these techniques:

(1) Expect Chinese PEPs to reach out further than they have been, to heretofore untried schemes. in their attempts to place dirty money in your bank. Watch for brand-new NGOs and charitable organisations with no history, and with no tax exemption of record in your jurisdiction. They are bogus.

(2) Is the prospective new customer represented by local blue-chip/white shoe lawyers and law firms who are known to handle upscale clients ? If they can afford to engage the best, the cheap clothing is but a charade.

(3) Does the new customer have a part-time residence in your country, which serves as the mailing address for his statements ? Check out how much he paid for it in the county public records library online.

Beware the individual whose profile contains inconsistencies; he may just be a low-key PEP, pretending to be a Chinese businessman, and suitably dressed down, with a cheap watch.

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