The bank must know the true identity of a a customer, including the beneficial owner, requesting any of its services. Identification must be verified to prevent establishment of accounts for fictitious beneficiaries. The purpose of the account should be noted. The bank should develop a sense of the types of transactions in which the customer normally engages. When opening a client account, bank personnel should know whether the client may be included in a high-risk category, indicating the need for enhanced monitoring.
Suspicious activity includes transactions for which no legitimate activity can be ascertained.
It also may include transactions that fall outside the parameters that the bank establishes. What is important to note is that, given the huge number of transactions banks process each day, banks cannot monitor every single transaction. Banks must therefore assess the risk inherent in doing business with a specific type of account, with a specific geographic area, and with a specific type of transaction. Additionally, significant increases in activity should be monitored. A bank should set thresholds and change them from time to time to check whether they remain adequate.