If you wanted to know exactly what technique BNP Paribas used to hide the illegal origin of funds from Sudan and Iran, it was mentioned this week by the New York State Department of Financial Services (NYSDFS). The simplicity of the evasion technique raises the question: why did it take US regulators so many years to charge BNP ? Were there political considerations that interfered with the progress of the investigation ? I, for one, knew for several years about the bank's systemic AML lapses; it must have been common knowledge among US regulators. What's wrong with this picture ?
(1) Money from Sudan was routed through "regional banks" in Africa, and then on to the New York banking center. BNP controlled accounts in the African banks, whose compliance regimes were substandard. American banks receiving the funds had no clue that their origin was Sudan.
(2) Iranian funds were sent first through regional banks in Middle Eastern and European countries, and then on to the United States. Cuban funds were similarly disguised, by passing first through intermediary banks.
(3) Before arriving in the United States, the funds were often "parked" for one or two days, at the regional intermediary banks and then move onward to the ultimate recipients in the US. This ploy resulted in two, apparently unrelated, transactions, and were therefore not regarded as suspicious by compliance officers at the regional banks. NYSDFS refers to this procedure as "delinking" the elements of the transactions, and it is a highly effective money laundering tool when used at financial institutions who maintain compliance departments who do not maintain banking best practices.