Saturday, July 1, 2023


When compliance officers engaged in Transaction Monitoring encounter a set of unusual, but not necessarily suspicious, transactions, they often quickly pass over them when the bank client is in a trade or industry not known for being used by laundrymen, or is not, by virtue of its type and nature, amenable to money laundering methods. That may not necessarily be the case.

As we intend to further cover in depth in this series, money launderers stay up nights and weekends to create scenarios which will not be detected by compliance officers. Their job is to beat you, every day of the week, They are never off duty; those cogs are forever turning around in their brains 24-7, spawning new methods, as well as the strategies behind them. Expect the unexpected. 

In their constant quest for new and esoteric laundering tricks and techniques, laundrymen tune in on extracting information specific to an industry or business type that is not only non-public, it may be a closely-guarded secret known only among experienced individuals in that sector, but which serves as a valuable (and often lucrative) component in its success. Laundrymen inquire into inside information about specific businesses, in hopes of ferreting out those secrets, because they may be useful in facilitating money laundering through that type of business. They talk to the cognoschenti to learn those secrets.

For example, tricks of a specific trade that allow virtually undetectable tax evasion in international funds transfers, or covert cooperation between competing businesses in the same industry or trade, regarding shipping might provide an avenue of access not publicly known, but exploitable by laundrymen. As we say, in this dark profession, you are only limited by your imagination. Company secrets and tricks can be fertile ground for money laundering. outside the industry circle, nobody, not even experienced law enforcement investigators, are unfamiliar with these techniques.

 Compliance officers, however, who are sensitive to the fact that their Transaction Monitoring has revealed something possibly, but not probably, inconsistent with the business type they are looking at, might be part of a non-public aspect of their bank client's operation linked to financial crime, must be alert for anything that doesn't add up, no matter how insignificant it appears. Not all legitimate international transactions arr what they appear to be, or they may have illegal components hiding within something clean, as frequently happens in Trade-Based Money Laundering, or Product Diversion, two subjects which we have covered in prior installments here on Tradecraft 101. Trust, but verify, please.

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