Purpose and Intended Nature of Business Relationship

Identifying a customer is not enough to judge risk. The firm must also know what the customer plans to do: receive a salary, run a shop, hold investment funds, trade across borders. At onboarding staff ask about the products wanted, expected volumes and values, usual counterparties and countries, and sources of funds. The answers are recorded and feed the customer risk rating and activity profile. Higher-risk customers are asked for more detail and supporting proof, such as contracts or invoices. The information is revisited at periodic reviews. Its main value is later: monitoring systems and analysts compare real behaviour with the stated purpose, and a mismatch is a reason to ask questions. Investigators of suspicious accounts often start by laying actual activity beside the purpose recorded at opening.

A company opens an account stating it will import textiles from two countries and pay suppliers monthly, with turnover of about 500,000 a year. Six months on, the account receives payments from dozens of unrelated individuals and sends funds to a country it never mentioned. The mismatch with the stated purpose prompts the bank to open a review.