A review of the different due diligence processes in the fight against financial crime

Abstract

This dissertation focuses on the prevention of financial crime with regards to the use of customer due diligence and compliance checks. This research study primarily reviews existing literature in order to define financial crime and establish a comparative overview of what measures stakeholders in the financial industry take to prevent it from happening. Said literature points out the most notable crimes (frauds, money laundering, and terrorist financing) that are operated through the financial industry and how these crimes are fought by conducting due diligence as recommended by both international and national institutions. It describes the main types of financial crimes, distinguishes the perpetrators and identifies which due diligence process is the most suitable for Anti-Money Laundering and Combating Financing of Terrorism. A qualitative approach entailing semi-structured interviews with professionals who work in the financial industry is the chosen research method for this study as it provided honest and accurate information regarding the different due diligence processes used to prevent financial crime. Said research led to various conclusions. Customer due diligence is the main process used to prevent such crime. However, this does not suffice on its own, but it should be compiled with ongoing monitoring to maximise efficiency and effectiveness. Further studies may be conducted on the implementation of the FATF Recommendations and the European Union 5th AML Directive along the involvement of organised crime in the financial industry and the strategies used to infiltrate the system.