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New account applications from customers from suspect jurisdictions. Countries such as Vanuatu, Antigua , Nauru and The Philippines are major centres for money laundering activity, due to lax banking regulations…the presence of organized crime…drug trafficking, etc. Prospective customers from these jurisdictions should be scrutinized with extra care.
For a full list of suspect jurisdictions, visit the Web site of the Financial Action Task Force (FATF) at www. oecd.org/fatf. The FATF is a 29-country organization based in Paris that monitors and promotes policies to control money-laundering.
Numerous cash transactions for amounts just under the legal threshold for reporting. In the US, any bank transactions of $10,000 or more must be reported by the financial institution. Other countries have similar reporting requirements.
Making transactions for amounts just under the limit is one of the most widely known laundering tactics, but it continues to be extensively used by money launderers, worldwide.
Large numbers of cash transfers to and/or from offshore banks or companies.
Frequent or unusually large cash receipts or payments by a customer whose business is normally conducted primarily with cheques or other non-cash instruments.
Fine Tuning the Process
Caution: Don't rely exclusively on this list of red flags. While they are common in many cases, each business has its own unique operating procedures. One or more of your company's particular procedures may make you vulnerable to money-laundering that can't be detected by simply using the above list to monitor financial transactions.
Ideally, you should retain an experienced money-laundering expert to assess your organization's unique vulnerabilities and tailor the list of red flags to your specific operation.
If Your Suspicions do Prove Warranted…
There should be a trained senior person in your organization with full responsibility for money laundering reporting and control. This individual should have the authority to take action on cases where money laundering activity is suspected.
You must then have a policy in place for involving the proper law enforcement and/or regulatory officials at the appropriate time.
A version of this article appeared in the August 2001 edition of "White-Collar Crime Fighter" www.wccfighter.com
ProximalConsulting.com Selected Links
White Paper 1: What is Money Laundering
White Paper 2: Procedures & Controls to Stop Money Laundering
White Paper 10: Money Laundering & Organized Crime, an Overview
White Paper 11: Money Laundering, the Scale of the Problem
White Paper 20: FAQs on Money Laundering
What is Money Laundering
Money Laundering & Terrorism
External Links
'Money Laundering: a Bankers Guide to Avoiding Problems' (OCC)
The Met Police: 'Fraud Alert - Money Laundering Fraud'
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