TRADECRAFT 101 PART NINETEEN: HOW MONEY LAUNDERERS DEAL WITH IDENTITY VERIFICATION ISSUES

                                   

One of the most important, and least examined, aspects of the money laundering trade is how laundrymen deal with the identity verification procedures conducted by compliance officer on new clients at account opening. It is not a routine topic to money launderers, for they often must tweak or disguise not only their own identities, meaning various aspects of the profile that they present to New Accounts staff at international banks, laundrymen often are called upon to construct or alter their criminal clients' identities, to prevent their exposure as career criminals, which generally not only results in compliance gatekeepers, or customs & immigrations officers preventing them from achieving their goals, but becoming in danger of investigation or arrest as well. Therefore, laundrymen are extremely careful when going about their identity verification countermeasures.

The focus is on:

(1) OCCUPATION OR PROFESSION: Laundrymen who work for, or themselves are, Politically Exposed Persons, or PEPs, individuals in government, military, government-owned companies, charitable organizations, or other field where they have ready access to institutional funds, are subject to constant monitoring, and increased scrutiny. Laundrymen in those circumstances construct bogus occupations showing them as private, non-PEP, businessmen. They go so far as to create shell companies, build websites, even rent brick-and-mortar facilities temporarily, to stand up to customer due diligence. of course, they have well-prepared documentation "proving" that bogus identity and occupation. A general from a third-world country who is laundering government funds earmarked for defense use, but stolen, does not want to be exposed, nor does the money launderer assisting him.

(2) IDENTITY DOCUMENTS: We have extensively covered the use of Citizenship by Investment (CBI) passports purchased through cooperating countries as a method of deception. When supported by sufficient backup documents they often serve their criminal clients and laundrymen extremely well. The underground purchase, in countries prone to systemic corruption, of legitimate passports and driver's licenses, for cash, to be used one time only and them discarded, is an alternate mean of deceiving compliance officers. Another is to obtain a legitimate passport under and alias or an altered name. A wide variety of identity documents are available in the developing world, or in non-democratic countries, where government officials supplement their meager incomes through passport and ID card sales. Of course, money launderers labor hard to support those bogus identities through Internet postings, creating a trail for due diligence queries to follow. 

(3) IDENTITY THEFT: In some cases, laundrymen who are known to law enforcement or the financial sector may be forced to assume the identity of a legitimate individual to escape detection and exposure. Though such actions are not preferred, circumstances may dictate such action. In that case, legitimate identification under the stolen identity is acquired through corrupt means, but its use is temporary, due to the distinct possibility that the individual who identity has been appropriated will learn of the scheme, or information inconsistent with the bogus personna becomes available.

As we often remind our readers, money launderers are only limited by their imagination. There are other tricks not appropriate for revealing here in a public forum, which are employed each and every day, with great success. Compliance officers needs to be painfully aware that, when it comes to identity, things are seldom what they seem, in the money launderer's world.