Office Compliance Measures on Proper Customer Due Diligence

These are specific obligations that our legal and business office must carry out before even attempting to receive any payment over a certain amount by any legal and/or business client.

a)      Proper Identification of the Legal Client and/or Business Customer;

In here identification need not to be only a subjective one, but the aim of this office is to look at the objective factors of each and every client and/or business customer.

Subjective analysis – Looking at his identification documents ourselves and basing our analysis solely on what the client ‘says’ is WRONG.

Objective analysis – Delving into a proper study on what the client really does by referring to independent persons and/or entities to ascertain that the client, especially when he is a business foreign client really does what he is saying is extremely important. This exercise can be exerted by seeking an independent reference on the client to see whether he is a reputable person in the business or not, and whether he carries out in reality what he says that he does, on a regular basis or not.

N.B. – Always keep in mind that there are special entities today that carry out Due Diligence measures and in today’s arena, having this factual reality in front of us, places more pressure to exercise proper due diligence beyond our own limits.

b)      Proper Identification of the needs of the Client and/or Business Customer to see whether a given task from our side, can be achieved legitimately without any slight pressure;

Under this measure, our office has to focus purely on his abilities. In certain given tasks, we cannot do everything on our own steam and we must refer to other core professionals to help us out even if we can still manage to do a given task on our own motion.

Example: If we are legally assisting in an international fuel transaction or in any other transaction relating with foreign customers, we need to define our assistance in the first place with our client and/or customer. Secondly, once we have focused on our abilities in terms of services and facilities, we must serve the client by directing and making him aware that in using our services and facilities he is to abide with Maltese Law.

We have to place in front of him ‘the cardinal rule’ that using a legal and/or business firm in Malta, that is operated by a professional, is not to be undermined and underestimated. Malta has a specific regulation that is supplemented with governmental polices that impose implementing measures on each and every professional to respect.

Therefore, we cannot leave the client to pull the rope of our operations.

This office has an internal policy that internet business and or consultancy is strictly not acceptable and preferably the most important rule, is that the client is met in person before we accept to provide him services and/or facilities.

Secondly, this office provides professional legal services and facilities, so the importance of signing a Retainer Agreement, the importance of having a proper POA i.e. Power of Attorney when needed and also the importance of having a deposit secured to start off operations after that a proper KYC is done is also a necessity.

c)      Funds and/or payments….the sources of such;

We have to understand that our services and facilities are to be respected for the real value that they purport to serve. In this analytical approach, we do not put ‘the element of risk’ in the formula.

Example: In international business affairs, serving a legal task is very sensitive and quite intensive. Besides the fact of the must of having all documents in file and keeping proper records about each and every transaction or communication, we need to ascertain that the real players in the field are highly reputed in the field and that their funds are generated from legitimate and genuine matters.

A legal office working also in the field of international fuel trading consultancy normally is found as an internal compartment of a fuel trading entity. Our office has the expertise of giving legal consultancy in such field but we are not incorporated into an entity although we look at international trading on a regular basis.

We need to be very careful and we need to ascertain at all times from any client, that he is highly knowledgeable in this business or else we would fall into the den of the lions that are there to harm genuine players in this arena.

I would recommend here, that our office as it currently stands acts as a monitoring body sometimes, behind the client’s back, to make sure that the client is not being used and abused of, and if otherwise, the office must strictly act upon it, even by reporting the issue immediately in line with the fact of instructing the client.

Fuel like any other commodity that is speculated at a profit, at all times. The money surrounding such deals is huge, and the risk of falling into a trap is major.

Presumably by us, each and every transaction has its own uncertainties unless proven otherwise, and unfortunately in this kind of business the greed or the crave to make money is always above the regular standards that are to be respected and honored at all times. People in this sphere of activity are always driven by the motivation of money, and our office is there to balance out the need of earning funds with the obligations of doing transactions the right way.

Substance and Procedure are the rule of law and fortunately they are also the rule of each and every business activity existing in the world. Therefore, this office has the necessary legal platform to guide, assist and monitor in a comprehensive manner these kind of transactions. However, our recognition in getting properly paid for our services and facilities in this field, comes out of high-quality work and operations that we need to do also in the compliance field.

d)     The ultimate aim of keeping a proper documented record of what is really going on;

Maturity, professionalism and respect in the perfection of our operations is not to be underestimated.

We all know, that a file never contains all that happens in the real making of a given operation.

Our office cannot afford this lack of proper documentation in the record keeping of what really goes on.

Example: People have this habit of writing few lines and speaking in the light of a never ending story. Unfortunately, in each and every sector of life, this happens to be the rule of nowadays.

It is a must that the office has a smooth running of constant documentation showing what is happening even in between i.e. in between an official document and another. These happenings if documented, will provide a proper grasp of the given task that the office does for a client or for a business customer.

Always remember that the real truth never lies at all times in documents, and with this attitude the office will be constantly developing not only a good relationship with the client but also a proper familiarization with the given task itself.

Sometimes, things that happen to be purely genuine in the beginning are found to be disastrous in the very end. Therefore, this is a precautionary attitude that will safeguard the office from falling into traps beside the fact of developing compliance procedural measures at the highest standards along the way.

e)      The must of having a person who serves as a Money Laundering Reporting Officer;  

The real need in today’s world that each and every office offering legal and commercial services and facilities, has a responsible person that carries out proper due diligence moves in line with the need of having a proper structure of people who are trained to do the job of proper CDD i.e. Customer Due Diligence.

Our office when dealing with foreign clients, before even delving into any potential assistance has an internal mechanism that provides for proper know your client techniques. Among these techniques, one finds the must to enter into a strict interview, wherein the client is analysed, on each and every aspect that he requests.

Moreover, our office exercises full discretion when dealing with clients abroad, and as a general rule, the need of having clients on a face to face meeting basis instead of dealing solely via electronic means is also a principle that applies in the majority of cases.

The know-how on CDD, always develops through time, but even in this scenario, the same as the law, being a perfection of reason to achieve justice, our office places fundametal attention to the fact of proper due diligence being a perfection to assist business in being clean and legitimate at all times.

f)  Annual Compliance Reports

Our office provides a detailed annual compliance report to ensure the prevention of any money laundering activities and funds emanating from terrorism affairs as required by the law.

In furtherance than what is required, our office and thus our employees carry out the diligent task of creating an ad hoc research and studies to certify that each client and thus transaction is in accordance with the said law.

Dr. Johann Debono B.A., LL.D.                    

LexMalta                

Senior Advocate and Office Principal