Sunday, January 26, 2020


The days when one could access one or more of the leading commercial off-the-shelf databases for high-risk individuals and entities, and be reasonably assured that you were not onboarding a new bank client who was sanctioned, or otherwise unsuitable due to criminal or corrupt activities. Now, due to the combination of modern technology and widespread governmental corruption, you may be presented with official identity documents that present the client with an alias, but which pass each and every enhanced due diligence test for authenticity.

Take the Citizenship by Investment (CBI/CIP) programs currently in place in five East Caribbean states; successful applicants receive not only the prized passport, but back-up documents, including but not limited to birth certificates, drivers' licenses, proof of residence, titles to local real estate, utility bills, and everything else that a diligence New Accounts officer at a bank would require. Oh, and by the way, the name on the passport is a clean alias, and the listed place of birth shows that the holder was born there.

The individual will pass any traditional due diligence inquiry, although under his real name he may be subject to OFAC sanctions, be a terrorist financier, a convicted transnational criminal, or worse, an actual terrorist. His authentic identity documents generally will not be questioned.

If the applicant cannot, for some reason, avail himself of the CBI method, perhaps he can find a totally corrupt government official in his home country to issue a bogus, though real,  passport and supporting evidence, for the right amount of money. The passport is properly issued, and cannot be found to be counterfeit, because it is real.Therefore effective Customer Due Diligence cannot be accomplished. True identities cannot be obtained using traditional compliance procedures.

Does technology provide a solution ? Yes, but it appears to be currently unavailable, Facial recognition technology solves the problem, BUT facial recognition software requires access to a complete, passport-quality, photo library of images, to check your targets against, and to date, such a database has not been created nor made commercially available. It probably does not yet exist, even as a classified asset.

Is there an alternative ? We cannot find one, which means that until facial recognition technology, coupled with an adequate image library, comes along, you must fall back upon your transaction monitoring to catch your money launderer, terrorist financier or transnational criminal. You are going to have to unwittingly admit unsuitable clients, through ignorance, and rely upon your effective transaction monitoring software to identify bad actors, Therefore, it is humbly suggested that you insure that it is not only effective, but that it gives you real-time information, and is constantly monitored by competent, experienced staff, with the authority to shut down suspected money laundering.

Eventually, the marketplace will result in the creation of the combination of facial recognition technology, with adequate image resources, and customer identification procedures will  return .

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