Paraguay's ousted president charged after collapse of digital lender Ueno Bank

Why it matters to AML professionals

When a bank fails and senior officials are accused of abusing their position, AML professionals at correspondent banks and other counterparties often have to review exposure to the people and companies involved. Cases like this show why politically exposed persons (PEPs) with financial ties to a bank, such as loans or shareholdings, need ongoing enhanced due diligence. Allegations against a PEP are a trigger to refresh the customer's risk rating, not proof of wrongdoing.

Red flags in this case

• Public or state-controlled funds moved in large amounts into one privately owned bank without a clear commercial reason
• Loans from a bank to its own owners, directors or companies linked to them on terms better than other customers receive
• A politically exposed person holding loans or shares in a bank that their government also deposits money with
• A bank's reported capital falling quickly below regulatory minimums after accounts are corrected

If this landed in your queue

1. Screen customers, counterparties and beneficial owners for links to the failed bank, its owners and the officials named in the case
2. Re-rate any PEP customer who is the subject of a criminal charge and document the review
3. Review recent incoming and outgoing transfers involving the failed bank or connected companies for unusual size, speed or routing
4. Escalate and consider a suspicious activity report if activity appears to move funds away from frozen or disputed accounts

Key terms

Politically exposed person (PEP)

Someone who holds or has held a prominent public role, such as a head of state, who carries a higher risk of involvement in corruption and needs extra checks.

Breach of trust

A crime in many legal systems where someone entrusted with managing money or assets is accused of misusing them.

Bank intervention

When a regulator takes control of a bank, often freezing accounts, because the bank can no longer meet legal requirements.

Interview angle

A long-standing PEP customer has just been charged with crimes linked to a bank failure. What do you do?

Explain that a charge is an allegation, then walk through refreshing enhanced due diligence: re-screen the customer and related parties, review recent activity and source of funds, update the risk rating, escalate to senior management for a decision on the relationship, and file a suspicious activity report if the activity supports it.