How it relates to AML
Introduction
This course guides participants how to learn to understand, analyze and critically assess the content of financial statements of a company to identify abnormalities and indications of unusual/suspicious events. It covers the main elements, concepts, and ratios of financial accounting information, and how to use them for AML purposes.
Participants will acquire knowledge on evaluating balance sheets, income statements, and cash flow statements. Also, participants will gain insight into how to read the story behind the numbers presented and identify suspicious signals that may occur within a company and detect whether there is creative accounting (“cooking the books”). Examples are overestimating revenues (fictitious transactions), lowering depreciation charges, and delaying expenses. Other common examples include underestimating potential liabilities, undervaluing pension obligations, and manipulating inventory. This allows you to ask critical questions and take possible next steps in the risk assessment of your customer.
Some businesses also draft their financial reports to look good (mislead) to the Bank/investors and get loans. Their objective is to make a company appear as successful and profitable as they can, and they may achieve this by distorting reality. It also provides a legal way to avoid certain tax liabilities. Banks/Investors should always be wary and thoroughly examine financial accounts for any indications of fraud.
