Keystone acts for many legitimate clients with connections to China and other jurisdictions that maintain exchange control restrictions. The existence of such a connection does not, by itself, indicate elevated financial crime risk. However, exchange control restrictions and international transfer limitations can result in payment arrangements that obscure the true origin, ownership or movement of funds.
When considering funds originating from jurisdictions subject to exchange controls or restrictions on international transfers, lawyers should focus on identifying the true beneficial owner of the funds and understanding how the value has ultimately moved into the transaction.
Particular care should be exercised where:
The paying account is not necessarily the source of funds. Lawyers should therefore seek to understand:
The lawyer should also consider whether the movement of funds involved any evasion of applicable exchange controls, false descriptions, artificial splitting, informal value transfer, deception of a financial institution or other unlawful activity in any relevant jurisdiction. Where necessary, the client should obtain advice from an appropriately qualified lawyer in the jurisdiction concerned.
Lawyers should also remain alert to the possibility of informal value transfer systems, underground banking arrangements, circular payment structures and other mechanisms which may result in the person providing the funds being different from the person whose wealth or assets are ultimately involved.
The presence of multiple remitters or third-party payments does not necessarily indicate wrongdoing. However, where such arrangements exist, the lawyer should be able to explain:
Where exchange control restrictions, multiple remitters, third-party payments or other unusual international payment arrangements are present, lawyers should ensure that their file records clearly explain:
The objective is not simply to identify the account from which funds are received, but to understand the true origin of the value being introduced into the transaction.
If you know or suspect that underground banking, organised criminals, false documentation, undisclosed offsetting arrangements or deception of the banking system has been used, you must not accept or apply the funds or proceed independently. Contact the MLRO immediately and follow the Firm's escalation and reporting procedures.
Where this cannot be explained satisfactorily, guidance should be sought from the MLRO before funds are received, transferred or applied.