4 Money Laundering Red Flags to Watch Out For

The 2002 hit Catch Me If You Can, a biographical depiction of real-life scammer and high-stakes launderer Frank Abagnale Jr., was one of our first close looks via contemporary cinema of what goes on—and what can go wrong—in our treasuries. The movie’s rather charming portrayal of the teen sees him posing as a Pan American pilot, removing label pieces from model airplanes, and sticking them onto forged checks accumulating millions of dollars’ worth.

But what the financial sector would wish for the public to know is that actual financial crimes are hardly ever as cinematic and easy to track—that banks are victims of money laundering by virtue of systems that are vulnerable in some way, that corruption likely thrives on complex institutions and networks rather than just one opportunistic individual’s wiles, and that the cleanup that is required by law enforcement if a money laundering operation proves successful takes a heavy toll on our time and human resources as well as on our accounts.

When AI enters the money trail

Luckily, in the past decade alone, a number of strides have been made in linking human abilities to technological ones in order to combat money laundering. For example, aside from tightening the existing protocols among their staff, some institutions have also turned to artificial intelligence solutions that complement, rather than disrupt, the systems that they have in place.

Artificial intelligence and machine learning bring some key things to the table as regards a bank’s anti-money laundering systems. Among these are the abilities of classifying high volumes of data, especially for geographically diverse institutions; efficiently assembling or clustering the said data into groups; and aiding investigators, or the human counterparts, in more precisely identifying leads for anomalous behavior, based on a reliable interpretation of the patterns.

It means that the technology can be applied to counter how money launderers can circumvent the law—as per Compliance Week, via any of these methods: introducing criminally generated cash into a legal financial system; and layering bank transactions with related transactions, as well as legitimate transactions, to disguise this anomalous behavior with the said cash.

4 money laundering red flags

That said, if you work in or with a bank, here are just a few of the red flags that might appear within the scope of your bank’s system during a money laundering operation.

  1. The sparseness of information about your client. It’s a cause for concern if a depositor suddenly makes a transaction with your bank and is rather evasive with giving necessary information—about their addresses, income, assets, or any history of previous transaction they might have had with a client they claim to be working on behalf of.
  2. Unusual transactions, and unusual means. Be wary of deposits and wire transfers that suddenly pop up in between geographically distant countries, with no clear precedent of legitimate business dealings. Also check for odd time stamps, and even odder (read: larger) amounts of cash suddenly coming in, or being withdrawn.
  3. A need to transact quickly, and without question. Some professionals in this dark industry will insist on immediate transactions, while seeming shifty about your bank’s rules and hierarchy. They’ll want to drop their cash like a hot potato and cover their traces for when law enforcement might pick up.
  4. Troubling financial histories. When bank staff have sneaking suspicions about the transactions they’re overseeing, it could be because a person or business entity’s name sounds familiar: they might have seen the name on the news, or heard memorable things about it via word of mouth. If that’s the case, you can search online, or consult by legal means, for information that needs to be clarified: if you can really trust the person behind the transaction.

Any of these 4 concerns merit sounding the alarm, checking against your system, and getting bank staff and your investigators on the right leads. Fine-tuning your security measures will, in the long run, help you avoid scandal and heavy regulatory fines, and the loss of both your institution’s funds and the loss of public trust. Therefore, keep the money safe, and never keep your eyes off the money trail.

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About Dequiana Jackson

Dequiana Jackson, CEO of Inspired Marketing, Inc., is a small business marketing coach who teaches women entrepreneurs how to monetize their message so they can make more money from their expertise. Dequiana is the author of Know Your Business: How to Attract Ideal Clients & Sell More and runs the award-winning blog, Entrepreneur-Resources.net.

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