TRADECRAFT 101 PART TWELVE: MONEY LAUNDERING THROUGH CORRESPONDENT BANKING

We are all painfully aware that what is known as Derisking, the abrupt shedding of correspondent banking relationships by onshore banks of financial institutions located in the developing world, increases daily. if we are to be blunt about it, the reason is that American banks do not want to be subject to civil penalties and naming & shaming by regulators for money laundering through their accounts due to correspondent banking. it's just that simple.

Any objective examination of banks overseas that desperately want to maintain their correspondent banking relationships with the major New York financial institutions finds: (1) Effective and comprehensive onboarding of new clients does not exist; (2) Ongoing and continuous transaction monitoring of accounts once opened is spotty if it occurs at all; (3) Accurate verification of beneficial ownership of corporate bank clients is a joke; and (4) Widespread corruption amongst underpaid & unethical offshore bank staff is itself grounds for universal application of Derisking, especially in those jurisdictions where the local government, to cover its bloated, employee-heavy budget, engages in dodgy Citizenship by Investment (CBI) passport sales programs that sell to high-risk individuals from sanctioned jurisdictions and transnational criminals.

As an active career money launderer in the past, I found that, by forming shell companies offshore, with bearer shares, and armed with frontmen, I could obtain the equivalent of cashier's checks, with both the names of the offshore as well as us bank printed thereon, signed by a senior officer of the overseas bank, and drawn on the New York correspondent account, with impunity. It allowed me to move cleaned clients narcoprofits back onshore, to make purchases, without any fear that the beneficial owner/clients would even be named or disclosed abroad to American law enforcement agencies. More complex techniques, which I correctly decline to detail in a public forum ( but which I have available to compliance on demand) make identification of correspondent banking money laundering next to impossible. Those compliance officers who are thinking about BVI companies when reading this article might have scratched the surface of what I am referring to.

I understand the public policy behind discouraging Derisking, to give access to the US financial system to foreign businesses that must have it to succeed, but if ANY significant correspondent banking is allowed by your bank's executives, you must institute certain protocols, notwithstanding public pressure from government regulators or politicians, without fail. I am sure that you know what they are; do not end up a victim because your compliance officers don't properly protect the bank from advanced correspondent banking money laundering techniques.