Kenneth Rijock

Kenneth Rijock

Sunday, November 18, 2018


Money laundering is not about bulk cash smuggling any more; the days of daily Learjet flights out of the US, carrying million of dollars in cash, are long gone. Today, professional money launderers who need to move their clients' narco-profits often resort to trade-based money laundering (TBML), which is the preferred technique for a large portion of illicit funds transferred across international borders each day.

Due to the huge volume of international trade, the transactions which are actually money laundering operations are seldom, if ever discovered in real-time. The laundrymen employ over- or under-invoicing, to repatriate drug profits earned overseas, purchase product from manufacturers or harvesting organization, hide their obscene profits in opaque jurisdictions, bribe corrupt government officials, purchase high end items to be used in laundering their cash, and a number of other illegal operations.  In one clever variation, very expensive luxury consumer items are invoiced at a small fraction of their true value, and when sold commercially, effectively clean huge amounts of narco-cash.

Candidly, even with computer programs that identify any international trade transactions that differ more than 5% from the market value of the goods, neither compliance officers at international banks who clients engage in trade, nor the law enforcement agencies that are tasked with identifying, and interdicting, the dirty transactions. There's just far too much volume of trades to review each day, and the TBML operators are constantly changing their method of operation; new corporations, new recipients, new types of good ostensibly shipped out, different methods of payment. It is all too well done; unless one of the players is arrested for another reason, and cooperates with the authorities, to shorten his sentence, we seldom learn the details of the pipelines. Identifying TBML six months after the fact is not sufficient to solve the problem, for only if we can learn who may be doing it now, can we effectively suppress their operations.

Enter facial recognition software (FRS) programs: if we change the story from the products being shipped, to the players themselves, both compliance officers and law enforcement have an advantage. They can take a close look at the individuals behind the companies involved, to profile them, search for patterns, prior criminal activity, associates, possible Cartel links, and indirect relationships.

All this information can be gleaned through facial recognition searches of social media/social networks, and resource searches of the alleged principals at both ends of transactions, the majority of of whom, in at least one end of the sale, must routinely supply government photographic identification, which we run through an FRS system. The results will give us a pictorial window into the real backgrounds of the individuals engaged in international trade transactions. The questions we seek answers to:

(1) Do any of our trade clients' corporate officers have prior criminal convictions ? Judgments for fraud ? Pending litigation ? Administrative sanctions ?
(2) Are there organized crime figures in the clients' social network ?
(3) Do any of the clients' former companies have dodgy histories ? Who are their former partners, and what are they doing now ?
(4) Who are the clients' friends and family ? What businesses are they involved in ?

Through the use of FRS to put the clients under the social media microscope, we can identify those that have a high probability of engaging in TBML, for our risk-based compliance program. Traditional investigative TBML techniques have failed; new need an effective solution, and FRS offers access to information and data that was not previously available. We suggest that it be deployed to take a bite out of trade-based money laundering.

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