TRADECRAFT 101 PART TWENTY: WHEN MONEY LAUNDERERS GIVE YOU UNINTENTIONAL EASTER EGGS FOR YOUR ENHANCED DUE DILIGENCE INVESTIGATION

When you engage in enhanced due diligence investigations as a compliance officer conducting Customer Identification Procedures, you are charged with arriving at a reasoned conclusion about your target, regarding his or her level of risk, and suitability for onboarding as a bank client. To do that, you must wring out every possible drop of information from your sources, analyze it, and reach an educated decision, based upon fact, as a gatekeeper, because your bank is trusting you to adequately discharge your duties in a risk-based compliance program.

We have all seen Easter Eggs, hidden messages or images in computer software, or motion pictures, which have a clever or additional meanings, provided you are sharp enough to catch them literally on the fly. During my decade as a career money launderer, and while I was also engaged as a practicing attorney, I made it my business to do a deep dive into the facts whenever a fellow money launderer was indicted, because I wanted to learn from his mistakes, to reduce my level of risk by not engaging in similar tactics.

In the military, we called it Attention to Detail; looking at the little things, to insure that they did not adversely affect the big picture. In examining the factual basis for a money laundering indictment, one usually found details about the shell and shelf companies the errant laundrymen used in their operations. One thing stood out, from time to time: as the laundrymen themselves chose the names of the shell companies (and not the clients), sometimes betraying their own background or history. 

When conducting EDD on a potential bank client, always do this:

1. ACCESS ALL AVAILABLE OPEN SOURCE DATA ON THE CORPORATION: If the client's companies were all formed by the same attorney or accounts, or other financial services provider, look to see what OTHER companies this individual formed, and for whom, and when. Money launderers, especially those who are skilled professionals, generally work for more than one criminal organization. Did this same lawyer show up representing drug clients in criminal court, or in civil litigation, or an an application for a license or permit somewhere? Is he or she linked to, or associated with, or is representing fraudsters, major tax evaders, or some other criminals? 

2. DOES THE PERSON WHO FORMED YOUR CUSTOMER'S CORPORATIONS SWING BOTH WAYS? Remember this: most experienced criminal defense lawyers instinctively shy away from performing ANY civil legal work for criminal clients, because they may be unwittingly facilitating future crimes. If your client's lawyer is performing both criminal defense as well as civil legal advice, he may very well be an attorney-criminal. factor that into your EDD investigation.

3. TAKE A CLOSE LOOK AT THE ACTUAL NAMES; DO THEY PROVIDE ADDITIONAL CLUES? Often, geographical terms in company names supply information about the former. Have you done a due diligence on this individual? He may be the Registered Agent for the corporation. what other obviously shell companies is he RA for? Are any of these actual legitimate companies with a physical address?

As you can see, even careful money launderers, acting for their criminal clients, reveal things about themselves, and others, by simply forming corporations. They intend to shield their clients from scrutiny, but instead, unless they are extremely detail-oriented, give up hints about activities. Watch for them.