What is the appropriate way to reject a new customer in the case of financial crime suspicion?

The appropriate way to reject a new customer in the case of financial crime suspicion involves documenting the reasons for the rejection and filing the necessary reports. This approach is critical for a few reasons.

Firstly, proper documentation creates a record that can be useful for audits and compliance reviews. It ensures that the organization adheres to legal and regulatory obligations while providing transparency about the decision-making process. Recording the specific reasons for rejecting the customer is essential in understanding trends or recurring issues that may need to be addressed within the organization’s risk assessment framework.

Additionally, filing the necessary reports - such as suspicious activity reports (SARs) - is crucial for compliance with anti-money laundering (AML) regulations. These reports are often required by regulatory bodies to track potential criminal activities, and timely submission is important for the overall integrity of the financial system.

Moreover, rejecting a customer under suspicion of financial crime without proper documentation could expose the organization to legal and regulatory risks. It may also hinder follow-up actions that may be necessary as part of a broader AML strategy.

Engaging openly with the customer or tipping them off about the rejection could lead to complications, including the potential for the customer to take actions that further conceal illicit activities.