Tuesday, April 24, 2012


A reader recently noted the regulatory slap on Citigroup's wrists for client monitoring failures in foreign Remote Deposit Captures (RDC)*. If I was still in the money laundering business, I assure you that I would be facilitating transnational money laundering through judicious use of RDC.  I hope and trust that there are already policies and procedures in place to prevent these little schemes:

(1) If the overseas clients can send scanned cheques in directly, how can the bank protect itself from clients sending in scanned-in financial instruments from other countries, particularly those where the narco-clients earn their money ? Using a proxy server, one can masquerade the national origin of such emails; the onshore bank, which may be checking the addresses, will be fooled. I might smuggle cheques to a jurisdiction where I enjoy a degree of immunity from prosecution, or extradition, and operate freely there, out of the reach of law enforcement.

(2) Assuming that the onshore bank requires that the foreign bank itself send in the scanned cheques, imaginative money launderers could use deceptively similar addresses, or bribe corrupt foreign bankers to allow the launderers to use their emails, or even their bank facilities, to move drug profits back onshore for investment purposes.

Remote Deposit Capture, in my humble opinion, should NOT be used by foreign clients to make deposits from afar. There are just too many ways they can use RDC to move criminal proceeds. Besides giving money launderers a free pass into your bank, it makes the early detection of counterfeit cheques much more unlikely. I know that "Cheque 21," as we refer to it in the United States, was designed to speed clearing times, and it does, but at a cost, and that cost is increased opportunity for financial crime.
*Aren't you Road-Testing your AML Programme ?

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