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The Department of Justice is looking into whether the two dozen banks that facilitated bribes allegedly paid to FIFA officials knew they were doing so. The case is also a test of how much liability banks have over illegal payments they allow.
May 28 -
Hacker groups like Anonymous have announced plans to target banks that are helping to finance ISIS and other terrorist organizations. But it is governments, banks and regulators that need to work harder at rooting out the sources of ISIS's funding.
January 23 -
A bill scheduled for a House vote Tuesday afternoon, designed to help Somali-Americans send money home, highlights the longstanding tension between anti-money laundering regulations and global financial inclusion.
May 6 -
More and more legal businesses are finding themselves shut out of the banking system. But there are a number of possible solutions-including passing a law that would require banks to maintain accounts for businesses able to meet some standard of due diligence.
April 20
An estimated 21 million people are victims of human trafficking worldwide. Banks have the opportunity to combat this fast-growing illegal enterprise by partnering with law enforcement agencies.
It's very difficult to identify and help victims of human trafficking, since criminals frequently threaten, brainwash and lie to them in order to ensure their silence. Traffickers are also very skilled in camouflaging their activity as a legitimate business. Businesses that operate with large volumes of cash for instance, massage parlors, employers of domestic servants, and hospitality and agriculture companies are common money-laundering fronts for human traffickers. One of the best ways to detect these companies and reveal their true intent is through financial monitoring.
Today, law enforcement agencies are working directly with financial institutions to help them recognize and detect the financial red flags indicating potential human trafficking and smuggling. In September 2014, the Financial Crimes Enforcement Network released special guidance to financial institutions to help them identify suspicious behaviors and relay information about potential fraudulent activity to the authorities.
The collaboration works both ways. Because financial institutions are on the front lines of the financial system, they can also offer early indicators of new trends in methods being used by criminals. Compliance and front-office departments are sharing their knowledge and providing law enforcement with information on trends and vulnerabilities that they see on a daily basis. This allows law enforcement to have more eyes monitoring transactions, stay up to date about criminal tactics and potential vulnerabilities, and react quickly when a compliance department reports suspicious activity. The valuable information supplied by compliance departments has helped law enforcement agencies form new typologies to detect human trafficking.
Financial institutions are now being trained to monitor accounts for suspicious activity, including spotting so-called funnel accounts, through which illicit money is deposited in one city and withdrawn quickly from another location. This tactic is sometimes used by individuals paying debts, for example, to the source organization responsible for the transportation of trafficking victims.
Banks should also keep an eye out for a few important red flags, including high-volume deposits through funnel accounts and immediate withdrawals from border towns; ongoing ATM and credit card transactions in even amounts between 10 p.m. and 6 a.m.; credit card payments to online escort services for advertising; sudden changes in activity in business accounts outside the customer's expected profile; use of anonymous monetary instruments to pay bills instead of personal checks; and structured cash deposits at multiple bank branch locations.
Financial forensics represents one of the most effective means of identifying and providing evidence to convict criminals profiteering from human trafficking around the globe. It is imperative that financial institutions continue to enhance their anti-money laundering efforts and work closely with law enforcement to help disrupt human trafficking networks and put a stop to this criminal activity.
Andrew Prozes serves as executive chairman of the board at the Association of Certified Anti-Money Laundering Specialists.
