E-gold and e-Bullion have long been demeaned as the currency of choice for those seeking to evade the scrutiny of the banking system’s anti-money laundering screening. But FBI terrorist financing expert Ari Papadacos warns that mobile banking and stored value cards may be the next currency of choice for financing terrorism operations. Law enforcement is scrambling to catch up with the technology.
“One of the toughest things is it’s all new technology,” Papadacos told attendees at U.S. Bank’s annual AML and BSA conference Wednesday. “We’re dealing with a whole bunch of different issues here.” Mobile banking rollouts that use phone-based browsers are only slightly riskier than other bank delivery channels when it comes to money laundering, says Carol Van Cleef, partner at the international law firm Bryan, Cave, and an expert in BSA and AML compliance.
The increased risk comes from the increased mobility that mobile banking gives customers. But considerably riskier are the peer-to-peer payment schemes that are developing outside the banking system, Van Cleef says. Though these are technically subject to regulation by FinCEN and potentially state licensure, many aren’t complying with these rules.
Banks should worry about these alternative mobile payment systems both because they can cause disintermediation by attracting the legitimate customers who like the same alternative payment schemes as the money launderers, and because even dirty money eventually finds its way to the banking system, Van Cleef says.
