UNLESS COMPLIANCE OFFICERS LEARN TRADECRAFT, THEIR EFFECTIVENESS IN INTERDICTING MONEY LAUNDERING IS LIMITED

Back in my misspent youth, whilst engaged in money laundering for very demanding clients, one literally ran into me at Miami's oldest watering hole, Tobacco Road, where both criminal defense attorneys and their opponents, Assistant US Attorneys, eyed each other with suspicion, across the legendary bar.

The client accused me of neglecting my obligations, as he had learnt that one of his Delaware shell companies had been recently dissolved, due to failure to file an annual report. I could not offer an oral response, in such a public place, because to do so would expose a important element of money laundering tradecraft; given that the initial officers and directors of the company were all from the corporate services firm that had organized it a year earlier, to file a return the current year would expose my client, and even his nominees, to eventual law enforcement scrutiny, as the company had been used to very briefly own a sailboat used for narcotics smuggling.

Money launderers often take advantage of the gap between the date of corporate formation, and the date at which one must disclose information. I called it "use it and lose it," meaning that the illicit use of a corporation was limited to that short window. A loophole, if you wish.

This is an example of what we call tradecraft, the actual techniques employed successfully by money launderers in their daily operations, and unfortunately most of these tricks of the trade are not known to frontline compliance officers at financial institutions, who instead focus on suspicious activity as a means of interdicting money laundering and terrorist financing. They aren't taught at conferences, or anywhere else, and most law enforcement agencies regard those techniques that they themselves know about as sensitive information, and restrict its dissemination. Call them trade secrets if you wish.  

Compliance officers need to view transactions through the lens of money launderers if they are to catch them literally in the act. To do that, they need to learn the trade secrets that laundrymen employ, and to understand their perspective, so that they can better accomplish their goal, to keep the laundrymen out of their bank. it is humbly suggested that they learn them forthwith. 

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