So, any unknown person Mr. X opens a bank account, and they pass the KYC process with flying colors, and no transaction from them or too them is alerted, all is fine as in most cases. Yet Mr. X has added as a beneficiary to his account another individual Ms. Y, which “passes” the limited additional KYC done on her “just to tick the box”, yet international transactions don’t see or screen the additional beneficiaries just the parties to the transaction. So, Ms. Y a known a sanctioned individual has a working bank account to receive and send illicit funds.
The UK COP and the new SWIFT BAV are in fact by accident forcing the receiving bank to inform prior to receiving the funds of all account beneficiaries. The idea of COP or BAV is to ensure that the receiving party is the intended one, as statics have shown about 8% of banking transactions are delivered to the wrong account. This fact causes a huge operational cost to find the funds and return them to the rightful owner, reputational damage, and dissatisfaction of clients.
Yet, these new banking policies are actually closing a huge loophole as banks must inform of the beneficiaries of the account, which of course if additional beneficiaries “suddenly appear” they too can be vetted, and thus strongly supporting the AML fight.
