A loan label does not establish the source
A loan agreement describes an obligation to repay money. It does not by itself establish where the lender obtained that money.
AUSTRAC identifies unusual repayment parties, unexplained early payouts and activity inconsistent with the customer profile as lending indicators. A legitimate loan can also have unusual features.
Source: AUSTRAC: Money laundering indicators.
Read the agreement and payment record together
A useful review compares the stated lender, borrower, purpose and repayment terms with actual payments. Identify any person who pays on another person’s behalf.
A third-party payment may reflect a guarantee, family support or a business arrangement. The explanation needs assessment against the available evidence.
An early repayment alone does not prove laundering. Consider its source and consistency with the customer’s circumstances.
Source: AUSTRAC: Money laundering indicators; Actions and controls.
- Agreement
Identify the stated lender, borrower and terms.
- Payment
Identify the actual payer and funds.
- Difference
Record the explanation and supporting evidence.
Compare the promise with the payment
A difference calls for assessment. It does not establish that the loan or payment is unlawful.
Connected concepts. Lines do not show ownership or a reporting hierarchy.
A different company repays the loan
A fictional borrower says sales income will fund monthly repayments. A different company then offers to repay the full balance.
The reviewer records the change and seeks the relationship and funding explanation. The file distinguishes the contractual borrower from the actual payer.
If the evidence supports the arrangement, the reviewer records why. If a material conflict remains, the reviewer follows the escalation process and considers the reporting test.
Source: AUSTRAC: Money laundering indicators.
Keep separate decisions visible
Credit risk asks whether the debt will be repaid. AML review also asks about the money, parties and purpose. Successful repayment does not answer every AML question.
Source-of-funds checks and any SMR decision have their own conditions. This example does not require rejection of every third-party repayment.
Source: AUSTRAC: Money laundering indicators; Suspicious matter reporting.