SPONSOR BANKS: TO UNCOVER MONEY LAUNDERING OPERATIONS BEING CONDUCTED THROUGH YOUR FINTECH PARTNERS, YOU SHOULD USE THE LAUNDRYMAN'S GOLDEN RULE AGAINST HIM

Financial technology (fintech) firms are at a distinct disadvantage when it comes to AML; Fast-moving businesses that rarely have any face-to-face contact with clients, focus on building their customer base, and lack of any legacy compliance history, especially in startups, equals increased risk that career money launderers are able to exploit those weaknesses, and consistently run the proceeds of crime into, and through your bank.

In my opinion, smart sponsor banks should use what I call the money launderer's Golden Rule against them. Laundrymen typically continue to employ traditional tradecraft of one known technique or another, so long as they remain undetected. They quickly abandon those that are unsuccessful, either at the customer identification stage, or during transaction monitoring; they stick with whatever you are unable to identify and interdict or deter.

Good compliance officers can usually identify the unsuccessful money laundering techniques that fintech compliance officers face, because compliance rejects those attempts. Logic indicates that the fintech is NOT catching specific other techniques, as they are not being interdicted in real-time.
Those are the methods you need to now search for, both in the present, and in a look back of several months. to ferret out the successful tradecraft. In short, what techniques are you not seeing? Do you know what to look for?

This means that the sponsor bank compliance team check out their fintech partners must be have a detailed knowledge of all the specific money laundering techniques in the laundryman's toolbox.They are looking for indicia of techniques not found by your fintech compliance staff, and thus could be the successful methods in use.

The question becomes: how well trained are your sponsor bank compliance officers on money laundering tradecraft specific to fintechs? If you can't affirmatively respond, then you need to properly train them to recognize the broad range of money laundering techniques known to be in use. You catch the laundrymen by identifying their techniques, but first, be sure that your compliance people know what they are looking for.