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What is a Financial Institutions responsibility with respect to transactions it engages in with investment banking and commercial banking clients?

April 26, 2017Banking clients Commercial engages financial institution Investment respect responsibility transactions

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What is a Financial Institutions responsibility with respect to transactions it engages in with investment banking and commercial banking clients?

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In addition to knowing the customer, a Financial Institution should understand the structure of a proposed transaction and its purpose, and should determine whether the purpose of the transaction is consistent with its structure and whether the transaction makes economic sense. In the event that the Financial Institution cannot make these determinations, it should either obtain more information so that it can do so satisfactorily or not proceed with the transaction.(14) If unusual or suspicious activity is encountered in making these determinations, the matter should be escalated in accordance with the Financial Institution’s procedures.