MONEY LAUNDERER by Kenneth Rijock
I accepted the offer of a compliance position at the investment firm, with the understanding that I would be in the office daily for at least four hours. Though originally anticipated as a part-time position, I found that the heavy workload soon made it a full-time task. I made it my business to be in the office every day at 7 AM, so that enquiries from Europe and the Middle East would find me at my desk, and ready to respond on a real-time basis. I was responsible for the difficult customer identification files, from high-risk jurisdictions, or high-volume investors, or clients using corporations from tax-haven jurisdictions. I also got the ones that my associates could not find sufficient information on, and ones where the information was suspect, inconsistent, or otherwise found to be of a suspicious nature. For the first time, I learned about the direct and indirect pressures compliance officers face daily; first, there's the obvious pressure from New Accounts sales staff to complete and forward the files. Then, there's the pressure from your associates on a file, simply because they couldn't find sufficient information to accept or decline a file, or have a problem and need assistance. Finally, there's the pressure from senior management when Sales has a big one who is a bit dodgy, and the party who stands to make the most from approval of the client goes up the chain of command until he finds someone willing to seek to intimidate me into passing it.
My initial impressions of the job:
- I found the highly-structured nature of the work a bit confining, but not overly so. Lawyers are pretty much masters of their own work schedule, and can juggle tasks, but I soon realised that compliance duties were pretty much straight-line; you plugged away at each open file until you either approved or declined it, and documented everything, whether a telephone call to a European human resources department to verify job status, or Internet entries verifying the client's proffered information.
- Coming from a somewhat unique background, I found myself as much at the desks of the senior sales staff as in my chair, for the most successful staff asked my opinion as to exactly what compliance would require from a specific high-volume new customer as soon as his documents and funds were received. The top producers generally had many more international high net worth clients, many of whom were using corporate vehicles for investment, so I was more often working on their matters, rather than those of the domestic new accounts staff.
- Soon after I arrived, I noticed that many of the compliance staff would come to me with specific research issues. Problems that they had not been able to solve on their own. Unfortunately, many entry-level compliance jobs are sink or swim, on-the-job-training, and younger staff were clearly either not sufficiently experienced to perform at an intermediate or advanced level, or they simply hadn't been adequately trained. I took it upon myself to pass along some of the better short-cuts, Internet sites, investigative tricks, and techniques.
There were no end of interesting assignments. Let me just examine two major clients that I found to be unacceptable risks:
- First, there was a "dot.com" millionaire, who had reportedly made his money during the heyday of the late 1990s, and gotten out before the crash of the Internet stock-market. He was from Salt Lake City, and he passed my examination with flying colours. I was a bit suspicious of the lack of detail regarding the origin of his cyber-fortune, so I ramped up my search to enhanced due diligence. When I do that, I also check out the professionals who surround the target - lawyers, accountants, corporate service providers - looking for problems one step removed from the investor. I noted that his attorney was from Las Vegas, which was a red flag, because high net-worth investors generally like to have their lawyers working close to them, and not in another state. When investigating the lawyer, I learned that he was facing a money laundering charge in Tennessee, and was a self-styled offshore "expert," and I declined to approve the investment. Just to show you that money launderers, when denied direct access, try the back door, the side door, or any door available to place the funds, the lawyer's son showed up three months later. He had formed a corporation in the State of Idaho, allegedly selling bottled water and attempted to place the funds. I caught him, too. Money launderers are nothing if they are not persistent and insistent.
- The second one was an Anglo-Uruguayan from Montevideo, who owned a financial services company, and was investing (or so he said) his own money. I found nothing wrong with him, except that he had literally no Internet footprint. Most people of means show up somewhere, either in business, socially, in newspaper articles, or stories about their wealth or possessions, or otherwise. I could find nothing and that is a major red flag. I then searched newspaper archives globally, going back to the dawn of the Internet, and did find something disturbing. The client had offered to put up, as collateral for a bond for a Mexican narcotics fugitive arrested in Australia, a multi-million dollar home he owned in Sydney. How does a Uruguayan own a home Down Under? in I declined the client, and he called up to complain. Although wise compliance officers never tell a client why they refused him, due to the possibility of litigation, or even threats to your safety, I was confident enough that I had caught a money launderer, to tell him that I could not accept a close associate of a narcotics trafficker. he did not argue with me, but said to me what I would have requested, had the roles been reversed. He asked, "Can I get my money back?"
Next week: More tales from my compliance days.
The facts and opinions stated in this article are those of the author and not those of World-Check. World-Check does not warrant the accuracy of any facts and opinions stated in this article, does not endorse them, and accepts no responsibility for them.
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