Money Laundering : A Bankers Guide to Avoiding Problems   What Bankers Should Look For

 

Money laundering schemes come in a wide variety of forms. Methods of money laundering are becoming more sophisticated, with more complicated financial relationships and more circuitous paths through financial institutions worldwide.

 

The following situations may indicate money laundering. These lists are not all-inclusive, but can help bankers recognize ways launderers may approach them.

 

Ø      Beware of Activity Not Consistent With the Customers Business

 

Ø      Beware of Unusual Characteristics or Activities

 

Ø      Beware of Attempts to Avoid Reporting or Record keeping Requirements

 

Ø      Beware of Certain Funds Transfer Activities

 

Ø      Beware of A Customer Who Provides Insufficient or Suspicious Information

 

Ø      Beware of Certain Bank Employees

 

Ø      Beware of Changes in Bank Transactions

 

Transactions like those mentioned above may warrant attention. Just because a transaction appears on the list does not mean that it involves illicit activity. It only means that the transaction requires closer scrutiny. Many of these activities are suspicious only because they are inconsistent with the normal customer behaviour. Many such transactions will be found, upon closer examination, to result from legitimate business activity. Similarly, other transactions not mentioned may be suspicious if they are inconsistent with the normal activity of a particular customer.

 

 

Beware of Activity Not Consistent With the Customers Business

 

v        Corporate account(s) where deposits or withdrawals are primarily in cash rather than checks.

 

v        A customer who operates a retail business and provides check cashing service and does not make large draws of cash against checks deposited. This may indicate the customer has another source of cash.

 

v        Unusual cash purchases of money orders and cashiers checks.

 

v        Accounts with a large volume of deposits in cashiers checks, money orders, and/or wire transfers, when the nature of the accountholders business does not justify such activity.

 

v        Accounts that show frequent large bill transactions (i.e., deposits, withdrawals, monetary instrument purchases) without a business reason.

 

v        Accounts that show frequent large bill transactions for a business that generally does not deal in large amounts of cash.

 

v        A single, substantial cash deposit composed of many $50 and $100 bills.

 

v        Frequent exchanges of small bills for large bills or vice versa.

 

v        Retail deposits of numerous checks but rare withdrawals for daily operations.

 

v        Sudden and inconsistent change in currency transactions or patterns.

 

v        A business owner (e.g., a one-location store owner) who makes several deposits on the same day at different bank branches.

 

v        An account that shows unusually large deposits of U.S. food stamps (often used as currency in exchange for narcotics).

 

v        An account that sends and receives wire transfers (especially to/from bank-haven countries), without an apparent business reason or when inconsistent with the customers business or history.

 

v        An account that receives many small incoming wire transfers or makes deposits using checks and money orders, and almost immediately wire transfers all but a token amount to another city or country, when such activity is not consistent with the customers business or history.

 

 

Beware of Unusual Characteristics or Activities

 

v        An account for a customer at an address outside the banks service area. Pay special attention to accounts with mailing addresses outside the United States.

 

v        A loan collateralised by a certificate of deposit or other investment vehicle.

 

v        A customer who often visits the safety deposit box area immediately before making cash deposits just under a reportable threshold.

 

v        An account or customer that has frequent deposits of large amounts of currency wrapped in currency straps that have been stamped by other banks.

 

v        An account or customer that has frequent deposits of musty or extremely dirty bills.

 

v        A customer who suddenly pays down a large problem loan with no reasonable explanation of the source of funds.

 

v        A depositor who purchases cashiers checks, money orders, etc., with large amounts of cash.

 

v        Client or in-house company accounts, such as trust accounts, escrow accounts, etc., that show substantial cash deposits.

 

v        An account opened in the name of a casa de cambio (money exchange house), that receives wire transfers and/or structured deposits.

 

v        A request for loans to an offshore company, especially one located in a haven country, or for a loan secured by obligations of an offshore bank.

 

v        A customer who purchases a number of cashiers checks, money orders, or travellers checks for large amounts just under a specified threshold or without apparent reason.

 

v        An account to which money orders carrying unusual symbols or stamps are deposited by mail.

 

 

Beware of Attempts to Avoid Reporting or Record keeping Requirements

 

v        A trade, business, or new customer that asks to be placed on the banks list of customers exempt from currency transaction reporting requirements.

 

v        A customer who frequently requests increases in exemption limits.

 

v        A customer who is urgent in requesting inclusion on the banks exemption list.

 

v        A customer who is reluctant to provide the information needed for a mandatory report, to have the report filed, or to proceed with a transaction after being informed that the report must be filed.

 

v        Any individual or group that coerces or attempts to coerce a bank employee to not file any required record Keeping or reporting forms.

 

v        An account that shows several deposits below a specified threshold made at automatic teller machines.

 

v        Beware of Certain Funds Transfer Activities

 

v        Sending or receiving frequent or large volumes of wire transfers to and from offshore institutions.

 

v        Depositing funds into several accounts, usually in amounts below a reportable threshold, and then consolidating into a master account and transferring them outside of the country.

 

v        Instructing the bank to transfer funds abroad and to expect an equal incoming wire transfer from other sources.

 

v        Regularly depositing or withdrawing large amounts by wire transfers to, from, or through countries that are known sources of narcotics or whose bank secrecy laws facilitate the laundering of money.

 

v        Regularly depositing or withdrawing large amounts by wire transfers to, from, or through countries that are known sources of narcotics or whose bank secrecy laws facilitate the laundering or money.

 

v        Wiring cash or proceeds of a cash deposit to another country without changing the form of currency.

 

v        Receiving wire transfers and immediately purchasing monetary instruments prepared for payment to a third party.

 

 

Beware of A Customer Who Provides Insufficient or Suspicious Information

 

v        A business that is reluctant to provide complete information regarding: the purpose of the business, prior banking relationships, officers or directors, or its location.

 

v        A business that refuses to provide information to qualify customers for credit or other banking services.

 

v        A customer who is unwilling to provide personal background information when opening an account or purchasing monetary instruments above a specified threshold.

 

v        A customer who opens an account without references, a local address, or identification (passport, alien registration card, drivers license, or social security card), or who refuses to provide any other information the bank requires to open an account.

 

v        A customer who presents unusual or suspicious identification documents that the bank cannot readily verify.

 

v        A customer whose home phone is disconnected.

 

v        A customer who includes no record of past or present employment on a loan application.

 

v        A customer who has no record of past or present employment but makes frequent large transactions.

 

v        A business that is reluctant to reveal details about its activities or to provide financial statements.

 

v        A business that presents financial statements noticeably different from those of similar businesses.

 

 

Beware of Certain Bank Employees

 

v        An employee whose lavish lifestyle cannot be supported by his or her salary.

 

v        An employee who is reluctant to take a vacation.

 

v        An employee who is associated with mysterious disappearances or unexplained shortages of significant amounts of bank funds.

 

 

Beware of Changes in Bank Transactions

 

v        Significant changes in currency shipment patterns between correspondent banks.

 

v        An increase in the amount of cash handled without a corresponding increase in the number of currency transaction reports filed.

 

v        Deposits with the Federal Reserve Bank or its branches that differ from previous volume or the volumes of similarly sized depository institutions.

 

v        Significant turnover in large denomination bills, uncharacteristic for the banks location.

 

v        A large increase in small denomination bills and a corresponding decrease in large denomination bills, with no currency transaction report filings.

 

v        Rapid increase in size and frequency of cash deposits, without any corresponding increase in non-cash deposits.