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CONFESSIONS OF A
MONEY LAUNDERER by Kenneth Rijock
MONEY LAUNDERER by Kenneth Rijock
Financial Crime Consultant, for World-Check
Confessions of a Money Launderer - Part 88
9 March 2009
After settling in my job as a compliance officer specialising in enhanced due diligence investigations, I did my best to diffuse the already-existing adversarial relationship between compliance and new accounts staff. Most of the top producers were quietly critical of compliance, especially when they declined a major piece of new business that they were proffering, on behalf of what appeared to be a high net-worth new client. Whilst most did not engage in open trickery, there were a few who skirted the edge of "information management" in crafting their prospective clients' personal information for compliance review. However, I believe that they had no part in the serious efforts of top-flight money launderers to place dirty money with us. Well-constructed profiles, if created by experienced money launderers, generally pass muster with new accounts staff, who never dig beneath the surface, mainly because they do not want to see any warts on their new clients.
We return to more examples of tricks that the laundrymen attempted to play on me. Here's one:
Remember also to safeguard your compliance department's internal policies, which includes keeping operational details from even staff members at your own bank, as they may use your own procedures against you. For example, when I was a compliance officer, a corporation that was a new client had to identify all shareholders owning 10% of more of the company's stock, so that we could perform due diligence upon them. Some of the new accounts staff learned of thus, and we started seeing companies coming in with 9% shareholders. I then reduced the ceiling to only 5%, knowing that most money launderers could no rustle up 25 shareholders for each company they formed.
Your compliance policies and procedures manual should be locked up, and never sent out to anyone who requests it, save government regulators, or in response to a valid court subpoena that your outside counsel has reviewed, and given you a green light to send. Money launderers, if they learn your policies, can devise effective responses.
- The new client, I was advised, was truly one of the original "dot-com" millionaires, those bright individuals who rode the Internet boom of the late nineteen-nineties to fame and wealth, amassing a fortune along the way through the use of an IPO, or initial public offering of stock in his start-up company. This one, who was from Salt Lake City, owned huge tracts of real estate in the Western United States. He wanted to invest with us, according to his financial adviser, also from the State of Utah. In performing enhanced diligence upon him, I was struck by the paucity of information available on this individual, but as some wealthy people are more private than others, it only prompted me to turn my microscope on his professional advisers, for legitimate individuals who hold licenses try not to get involved with financial criminals, lest their license to practise their profession be revoked by the authorities for misconduct.
- Always remember that a new client's professional advisers have a lot to lose by facilitating his crimes. Wealthy clients, I learned from my time as a lawyer, like to keep their lawyers close, for impromptu meetings and consultations. Once, at a law firm where I worked, a major client forced one of the partners to fly back to Miami from London, on an emergency basis, for a meeting, because the client threatened to take his business elsewhere if that lawyer was not present. What I learned about this new client's lawyer was disturbing; his office was in faraway Las Vegas. This was inconsistent with the norm, so I commenced an enhanced due diligence investigation of the lawyer.
- You all know that a felony conviction is good cause for the loss of a license to practise law. The operative word here is conviction. What if the lawyer has not been convicted, but charged, for a financial crime that would disqualify him (and his client) from being a client? in this case, the attorney has been indicted in the State of Tennessee for money laundering, but the case had been delayed a number of times. I then found a legal article written by the lawyer, singing the praises of offshore tax havens. What would you have done?
- Of course, I rejected the client, but that's not the end of the story. Remember my money launderer's maxim: if you cannot get into a bank through the front door, try the back door, then the trap door, whatever it takes to place illicit funds in an institution you want access to. A couple of months later, the lawyer's son formed a company in Sun Valley, Idaho, that purported to bottle spring water, and attempted to place the same exact amount in his own name. This is a "back door" attempt, using a front to place funds. A trap door effort uses an existing customer who is well known to the bank, who places the money in his or her, or the company's own name.
Remember also to safeguard your compliance department's internal policies, which includes keeping operational details from even staff members at your own bank, as they may use your own procedures against you. For example, when I was a compliance officer, a corporation that was a new client had to identify all shareholders owning 10% of more of the company's stock, so that we could perform due diligence upon them. Some of the new accounts staff learned of thus, and we started seeing companies coming in with 9% shareholders. I then reduced the ceiling to only 5%, knowing that most money launderers could no rustle up 25 shareholders for each company they formed.
Your compliance policies and procedures manual should be locked up, and never sent out to anyone who requests it, save government regulators, or in response to a valid court subpoena that your outside counsel has reviewed, and given you a green light to send. Money launderers, if they learn your policies, can devise effective responses.
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.
Read more in this exciting series
8 March 2010
8 February 2010
24 January 2010
6 December 2009
27 September 2009
9 August 2009
3 August 2009
30 March 2009
9 March 2009
2 March 2009
22 February 2009
18 February 2009
26 January 2009
18 January 2009
11 January 2009
5 January 2009
29 November 2008
24 November 2008
17 November 2008
8 November 2008
3 November 2008
27 October 2008
20 October 2008
13 October 2008
4 October 2008
28 September 2008
20 September 2008
15 September 2008
15 June 2008
8 June 2008
1 June 2008
26 May 2008
19 May 2008
12 May 2008
4 May 2008
27 April 2008
20 April 2008
13 April 2008
31 March 2008
18 March 2008
4 March 2008
25 February 2008
16 February 2008
10 February 2008
3 February 2008
27 January 2008
20 January 2008
14 January 2008
6 January 2008
16 December 2007
9 December 2007
1 December 2007
25 November 2007
18 November 2007
11 November 2007
3 November 2007
27 October 2007
21 October 2007
14 October 2007
7 October 2007
1 October 2007
23 September 2007
16 September 2007
3 June 2007
27 May 2007
21 May 2007
6 May 2007
30 April 2007
22 April 2007
15 April 2007
8 April 2007
2 April 2007
24 March 2007
19 March 2007
12 March 2007
5 March 2007
25 February 2007
19 February 2007
12 February 2007
4 February 2007
28 January 2007
22 January 2007
15 January 2007
7 January 2007
2 January 2007
16 December 2006
10 December 2006
3 December 2006
27 November 2006
19 November 2006
11 November 2006
5 November 2006
29 October 2006
22 October 2006
16 October 2006
9 October 2006
2 October 2006
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