photo by Jace Grandinetti
Suspicious Activity: Any Activity Inconsistent with Your Business
This is the fifth part in our series revealing exactly what banks are looking for when they are combatting money laundering.
Money launderers sometimes try to fool banks by providing convincing evidence of their honesty when they open their account. Then when the account is running, they change their operations into money laundering mode.
A business’s pattern of currency transaction patterns shows a sudden change inconsistent with its normal activities.
For example, you operate an import-export business that receives £100,000 spread among ten customers. Then, over the course of a few months, you ramp up the deposits to £300,000 spread among several hundred customers. This is a clear change in the way you do business and would elicit an investigation. The bank would also find it suspicious if suddenly one customer paid you an unusually large amount.
Money Laundering by depositing a large volume of cashier’s checks, money orders, or funds transfers deposited into or purchased through, your account when the nature of your business would not appear to justify such activity.
This is an extension of the previous pattern but extends to domestic business and physical payments are also important.
Money Laundering through a retail business with dramatically different currency deposits from similar businesses in the same area.
Perhaps a drug gang purchases a restaurant to launder money. Similar restaurants in the neighborhood receive practically all of their payments through credit and debit cards. On the other hand, the gang’s restaurant’s receipts are almost all cash. This discrepancy will alert the bank inspectors. Because they inspect the banks, they are aware of the activity of all the banks in the neighborhood. Furthermore, this activity will alert bank software that keeps track of patterns for similar businesses, local and national.
Clients effect unusual fund transfers among related accounts or among accounts that involve the same or related principals.
The owner of either a retail business and a cheque-cashing service does not ask for currency when depositing checks. He may have another source of currency.
Retail businesses in the 21st century frequently need to request currency because of a large number of credit card and debit card transactions. And, of course, a cheque cashing business that had no requirement for cash would be odd, indeed. If they don’t require currency from time to time, this is an item to be investigated.
Goods or services purchased by a business do not match the customer’s stated line of business.
A client layers transactions to launder money. For example, a fast-food restaurant assembles payments from street-corner drug dealers. Then the restaurant pays invoices for car parts to a gang-owned auto parts dealer. The dealer assembles the payments from several restaurants and passes them up the chain to a diamond wholesaler. A fast-food restaurant buying auto parts? An auto parts retailer buying diamonds? The bank sees these transactions and checks for money laundering.
A client pays for goods or services with checks, money orders, or bank drafts not drawn from the account of the entity that made the purchase.
Businesses should never pay on behalf of other businesses or individuals. Third-party transactions can mask illegal payments. Accountants will discourage such payments. Banks will suspect them.