• Corporate Finance and Private Equity

    Some services provided by corporate financiers, private equity firms and venture capitalists are attractive to criminals wanting to launder the proceeds of crime and to finance terrorism.

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Corporate Finance and Private Equity

What are the ML/TF Risks?

Corporate finance includes the sources of funding used to shape the capital structure of organisations, where corporate financiers can take actions to allocate financial resources and increase the value of organisations to shareholders.

Corporate financiers are also involved in leading acquisitions or divestment in organisations to other legal entities or high net worth individuals.

Private equity is capital that is not noted on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity.

The Money Laundering and Terrorism Financing (ML/TF) risks associated with corporate finance, private equity and venture capitalists include:

  • Funds (incoming and outgoing) handled by a third party, such as a custodian or an administrator;
  • Unexpected inflows/outflows of funds or assets;
  • Transactions by customers involving third parties;
  • Use of offshore trusts and companies as investment vehicles by customers;
  • Acquisitions or sales of companies and/or other assets to individuals or corporate entities in other jurisdictions;
  • Customers that are or are associated with PEPs; and
  • Customers from higher risk jurisdictions.

Corporate financiers and private equity/venture capital firms must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures as a critical first step in complying with AML/CFT laws.

What are the AML/CFT obligations?

In developing responses to obligations under AML/CFT laws and regulations the following steps must be undertaken:

  • Conduct a Money Laundering and Terrorism Financing Risk Assessment;
  • Develop an AML Program that is proportionate to ML/TF Risks;
  • Establish effective Board and Senior Management oversight of the AML/CFT Program;
  • Appoint an AML Compliance Officer;
  • Establish a Customer Due Diligence (CDD) Program including collection and verification of know your customer (KYC) information including Enhanced and Ongoing CDD controls;
  • Implement a ML/TF Risk Awareness Training Program for staff;
  • Implement a monitoring program to identify unusual and possibly suspicious customer activity, transactions and behaviour;
  • Establish a process to report suspicions and other activity specified by AML/CFT law and regulation;
  • Establish Record-keeping controls; and
  • Maintain the ML/TF Risk Assessment and the AML Program as the business and risks change.

How can AML Accelerate help?

AML Accelerate, drawing on unparalleled expertise and real-world experience, has developed an AML/CFT Program Manual for corporate finance, private equity firms and venture capitalists.

Our solutions deliver all the foundational AML/CFT materials including a ML/TF Risk Assessment, an AML/CFT Program, CDD Standards, and an AML Operating Manual, which you can tailor to your specific needs, ensuring your AML/CFT controls are commensurate with your business.

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