Monday, May 29, 2023


Tradecraft 101, my current series of articles that is attempting to raise the level of awareness among frontline compliance officers, has generated reader responses that confirm many of the advanced or esoteric money laundering techniques are unknown to the vast majority of individuals who are charged with recognizing bank customer financial crime in progress. During Transaction Monitoring, when the indicia of specific methods are present, a trained observer who has been properly briefed and trained will spot them in progress. A lack of such a knowledge base results in the individual glossing over, and thereby ignoring, the Red Flags of specific methods. It is a recipe for failure.

Is this why money launderers are successful 95% of the time? There simply has to be a reason for the historic failure of the compliance profession to ferret out money laundering in real-time. When I was tasked with full-time enhanced due diligence duties, at an investment firm which was the largest of its type in the world, I had no trouble spotting the laundrymen, because I worked from the perspective of knowing how they operate, and which methods they employed, as I had utilized many of them myself in the past, and was familiar with others that have since been created, and deployed, with a high degree of success.

Unless and until advanced tradecraft training classes, using realistic fact patterns as teaching aids, compliance officers will remain in the dark, when what is required is exposing them to the methods they can expect to see each day, so that they can identify them, and interdict those operations, before they are completed. I suggest using the Socratic method, which will stimulate critical thinking, through probing questions that cause the student to fully understand the material, as they must themselves reach out for the knowledge. It's time to properly educate our frontline compliance officers; give them the tools to succeed.

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