Phoenix Compliance Essentials #14
Today’s focus: ML/FT-P-C risks in the yachting sector
An attractive industry, high-value transactions and international stakeholders: the yachting sector is particularly exposed to ML/FT-P-C risks.
➡️ A structurally exposed sector:
In Monaco, the yachting sector is subject to AML/CFT-P-C obligations. Several factors explain its increased exposure to ML/FT-P-C risks:
– The high value of transactions;
– The use of complex legal structures;
– The specific and international profile of its clientele.
The AMSF guides (formerly SICCFIN) illustrate several typologies specific to the yachting sector.
➡️ Examples of ML/FT-P-C cases in the yachting sector:
👉 Case No. 1: inconsistent wire transfers
Context:
– Company A, an import-export business, receives several wire transfers over a short period.
– These transfers originate from Mr Z, whereas the invoice for the sale of a yacht is issued in the name of Company B.
– There is no apparent link between Mr Z and Company B.
Red flags:
– Inconsistency between the originator of the funds and the invoiced party;
– Multiple transfers made within a short period, with no economic justification;
– Originator presenting an increased risk due to former PEP status;
– Adverse media suggesting a potential ML/FT-P-C risk.
Identified risk:
An opaque transaction potentially concealing the true origin of the funds and presenting a risk of misappropriation of public funds linked to Mr Z’s former PEP status.
Source: Practical Guide on AML/CFT – Yachting, SICCFIN
👉 Case No. 2: disproportionate acquisition and insufficient KYC
Context:
– Mr X commissions the construction of a USD 380 million superyacht from Company A.
– Company A accepts the transaction without carrying out adequate AML/CFT-P-C due diligence.
– Mr X is in fact a member of the family of a senior public official suspected of misappropriating public funds.
– Mr X’s expenditure appears disproportionate to his declared income.
Red flags:
– PEP association risk;
– Potentially illicit funds;
– Clear financial inconsistency.
Identified risk:
Misappropriation of public funds through financial flows designed to conceal their origin.
Source: Practical Guide on AML/CFT – Yachting, SICCFIN
➡️ Key takeaways:
– Clearly identify all parties involved in each transaction and understand the links between them;
– Ensure that the transaction is consistent with the customer’s profile;
– Analyse financial flows and report suspicious transactions.
