Sunday, March 12, 2023


Money launderers often create credible cover stories to obscure the true nature of their business, which is to quietly and successfully move the proceeds of crime through your bank, en route their eventual cleansing of the funds, and investment into the legitimate economy. They also form companies with the specific intent of portraying them as traditional business entities, beng operated to turn a profit.

Unfortunately, neither is true, but the cover story and the shell company together appear to be convincing at first examination, and often even after a deep dive through enhanced due diligence by you as gatekeeper at account opening time.Laundrymen go to a great deal of trouble to build cover stories and to acquire shell companies that will, at first glance pass muster, and sometimes a quick glance is all the time a busy compliance officer has to vett a new bank client.

Enter Artificial intelligence, which can sift through unstructured data not otherwise available to you in the time you have to check out a new bank customer; it may even be completely unavailable. Count on AI to ferret it out. Here's how:

(1) The Shell Company; was it formed by a corporate formation provider abroad linked to companies also named in money laundering cases in other jurisdictions? Is the name deceptively similar to one of a legitimate corporation? Is the name a modification of shell companies that in the past were used for financial crime? What other shell companies has your target formed, directly or indirectly, during the past 20 years? have any companies formed by, or naming your target, been abruptly abandoned, and allowed to be dissolved anywhere?

(2) Your new bank client's cover story about his occupation and business: Where else, both domestically and abroad, has he been engaged in similar business activity? has he ever been the subject of litigation where fraud or some other financial crime has been alleged or proven? has he ever been known by any other name or title? Has he used this company named elsewhere in other jurisdictions before? Are there any negative news stories about your target anywhere, under any circumstances, during the past 25 years? Is there anything inconsistent with his background and stated work history in social media? Does he show up on internet archives on other businesses?

These are just a small sampling of what true enhanced due diligence, using AI, can uncover. Traditional searches, using legacy platforms and resources, rarely, if ever, stumbles on to this material, and it only takes one Red Flag to know that you have a potential problem not worth the level of risk taking on such a client will incur. Artificial Intelligence will uncover data that you never would have found without it, no matter how good your EDD skills are.

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