“In today’s regulatory environment “knowing your customer” is absolutely essential. Even a novice banker can rattle off the myriad compliance reasons why failing to know your customer may mean trouble, particularly from the perspective of the Bank Secrecy Act and the Anti-Money Laundering laws.
Accordingly, bankers routinely gather background information and conduct site visits where appropriate, in order to minimize the incidence of doing business with high-risk customers—and to keep the regulators in check. Much of the due diligence, however, takes place at the front end of a relationship and the bulk of regular monitoring usually relates to a customer’s use of its deposit accounts, related wire transfer activity, and potentially suspicious activity that comes to the attention of bank personnel.”
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