Common Excuses from Clients in ML Cases

Introduction

When confronted with suspicious transactions or asked to provide compliance documentation, clients involved in potential money laundering (ML) often give excuses to delay, divert, or avoid scrutiny. For compliance officers, auditors, and DNFBPs in the UAE, recognizing these excuses and stalling tactics is crucial to strengthening AML frameworks and ensuring regulatory compliance.

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1. Documentation-Related Excuses

Clients often avoid providing proper KYC/UBO documents or supporting evidence. Common excuses include:

• “We’ll provide the documents later, it’s not urgent.”

• “These are confidential, our lawyer advised us not to share.”

• “We are waiting for approvals from another office or partner.”

• “The owner is abroad and cannot sign right now.”

🔎 Risk: Delay tactics may indicate an attempt to hide the ultimate beneficial owner (UBO) or the true source of funds.

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2. Source of Funds / Source of Wealth Excuses

When asked to explain where money comes from, typical responses include:

• “It’s family money, we don’t have the papers anymore.”

• “We are a cash-based business, no formal records.”

• “The funds are from personal savings, no documents needed.”

• “We borrowed from friends and relatives, so no contracts exist.”

🔎 Risk: Lack of transparency on funds could mean reliance on unverifiable or illicit origins.

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3. Transactional Excuses

For unusual cross-border or high-value transactions, clients may say:

• “It was an emergency; we didn’t have time to document it.”

• “We use different accounts for convenience.”

• “This is just a temporary arrangement until the final deal.”

• “We didn’t know reporting requirements apply to this transaction.”

🔎 Risk: Clients may be deliberately structuring transactions to avoid reporting thresholds or disguising beneficial ownership.

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4. Business Activity Excuses

When the company’s operations don’t align with financial activity, common claims include:

• “We’re still a start-up, that’s why things don’t match.”

• “It’s a general trading company, so we can deal in anything.”

• “Our records are not yet updated.”

• “We outsource everything, so we don’t have in-house data.”

🔎 Risk: Businesses may be shell companies with no economic substance.

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5. Behavioural Excuses

Suspicious clients may also try to use behaviour to justify secrecy:

• “We’ve worked with other firms and no one asked these questions.”

• “Why are you making this so difficult? Others don’t require this.”

• “Our transactions are urgent; compliance is slowing business.”

• “We’ll move to another provider if this continues.”

🔎 Risk: Such behaviour indicates resistance to AML oversight and a preference for less regulated environments.

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6. Sector-Specific Examples in the UAE

• Real Estate: “The buyer is a relative; no need for paperwork.”

• Jewellery/Gold Trade: “We don’t keep receipts for cash buyers.”

• Professional Services: “The client insists on confidentiality and won’t reveal ownership.”

• Virtual Assets: “Crypto transactions don’t need verification; it’s decentralized.”

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7. Mitigation Measures for DNFBPs & Compliance Teams

• Insist on complete KYC/CDD documentation before onboarding.

• Apply Enhanced Due Diligence (EDD) for high-risk clients or sectors.

• Use transaction monitoring systems to spot unusual activity.

• Escalate unresolved excuses by filing a Suspicious Activity Report (SAR) via goAML.

• Provide continuous staff training to recognize these excuses and respond firmly.

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✅ Conclusion

Excuses are one of the first signs that a client may be attempting to hide suspicious activity. By recognizing these patterns early, UAE businesses, DNFBPs, and financial institutions can protect themselves from being exploited for money laundering, avoid regulatory penalties, and maintain strong reputational standing.

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📌 About Us

At Sheikh Anwar Accounting & Auditing LLC, we assist clients in AML compliance, suspicious activity monitoring, UBO verification, and outsourced MLRO services. Our experience across high-risk industries enables us to quickly detect red flags and ensure compliance with UAE AML/CFT regulations.

📧 Email: info@sa-auditors.com

🌐 Website: www.sa-auditors.com