Ho-ho-ho and CDD

I am assuming that one or two of you might be at work today, so let us turn our AML minds to an important seasonal matter: conducting CDD on Father Christmas.  For this particular individual even the most basic identity checks are difficult, as he goes by almost ninety different aliases around the world – including Father Christmas, Santa Claus, Sinterklaas, St Nicholas, Joulupukki, Pascuero Viejo and Grandfather Frost.  Some of these names suggest a link to an organised religion, while others are determinedly secular.  His age is all but impossible to ascertain – he appeared regularly in Victorian publications and even then was shown in pictorial ID as an elderly gentleman with white hair and beard, and now it’s nearly two centuries later.

His residential address is equally concerning.  According to hearsay, he stays at home for 364 days a year and then spends one single night traversing the globe – seemingly with no interference from border guards or customs officers.  Children tell me that putting just “Father Christmas” on the envelope is sufficient, so perhaps enquiries could be made of your local postal service to ascertain the address they hold on file for this individual.  Legend suggests that he resides in Lapland, but Lapland covers nearly forty thousand square miles, and ascertaining the location and ownership of any grotto or similar place of seasonal residence or business would be tricky: the 2019 FATF mutual evaluation of Finland warned that “the ability of competent authorities to establish the beneficiary ownership of legal persons in a timely manner is limited [as] the public registries are not fully reliable and relevant remedies to ensure that registers are kept up-to-date are not available”.

We must also consider whether he is a PEP and therefore subject to enhanced due diligence.  In my AML training I encourage people to all but ignore job titles (which are often nonsense – Kim Jong-un of North Korea styles himself “The Genius Among Others” and “The Brilliant Comrade”) and instead to remember why we are concerned about PEPs in the first place: they have access to public influence and to public money.  FC scores highly – very highly – on the first measure: there cannot be a head of state or senior politician, judge, military leader or police officer whom he has not met, and many of them boast of having entertained him in their own homes, even plying him with food and drink in exchange for his company and good wishes (which could be interpreted as an emolument approaching corruption).  As for the second measure of PEPitude, well, now you’re asking.  There are 2.2 billion children in the world.  Even if 1% of them have been naughty rather than nice, that still leaves a requirement for 2.178 billion presents.  So we’re looking at the purchase of raw materials and then the wages of manufacturing elves, admin staff (checking the naughty/nice lists and matching presents to children), distribution managers – and a vet for the reindeer. All of this costs money, and we have no idea of FC’s source of wealth or source of funds.

So how to proceed?  Well, I’m not given to turning a blind eye when it comes to CDD but perhaps, just this once, that would be my recommendation.  Turn off your computer, lock your office door and remember to leave out the port and Stilton for your overnight visitor [my father said with great conviction that by the time Father Christmas reached our house he would have had his fill of milk and cookies].  Merry Christmas, one and all!

Parts of this appeared initially in the most recent issue of Money Laundering Bulletin – many thanks to the editor, and it’s a recommended read!