PrintAnti-Money Laundering - Case Studies
Enhanced Due Diligence (EDD) on Private Banking Clients
Several international private banks have engaged IPSA to be its exclusive provider of enhanced due diligence services. In the regular course of its relationship with the bank, IPSA has conducted numerous enhanced due diligence assignments on foreign national clients, often in multiple international jurisdictions. IPSA’s enhanced due diligence process is comprehensive and typically includes, for all U.S. and foreign nationals, verification of personal identification and address information, inquiries to determine whether the account holder has any criminal records, civil litigation or other legal proceedings, real estate property ownership, corporate affiliations, and lastly, confidential inquiries regarding the client’s reputation.
Suspicious Activity Investigation
A multi-billion dollar commercial bank engaged IPSA following a review by the bank’s internal audit department of certain suspicious transactions involving certain of the bank’s senior officers and several of the bank’s clients. IPSA’s investigation was conducted under a rapid timetable in order to allow the bank’s Audit staff and Board Committee to meet with and respond to inquiries made by Federal bank regulators. Under an aggressive timetable, IPSA was able to conduct a thorough investigation of the banking officers under suspicion and identify a variety of inappropriate and unethical relationships among the officers and several of the bank’s clients. IPSA’s investigation located several critical documents that served as evidence in the investigation. As a result of the bank’s internal inquiries and IPSA’s investigation, several of the targeted bank officers were terminated from employment.
Know Your Customer (KYC) Red Flag Investigations
An international financial institution that utilizes an account screening database hosted by a third-party service provider retained IPSA as a sole source vendor to provide investigative research service related to all of the accounts that were "flagged" as a result of the institution’s KYC screening process. The extensive amount of interaction, procedure development and implementation of the KYC account screening process undertaken by IPSA’s client illustrates the customer due diligence challenges each financial institution faces daily. Many of the searches conducted by the third party database were "name only", a process that can be hampered further by ethnic naming conventions and a lack of full descriptive data regarding the "high risk entities" described in the commercial database. Indeed, many of the red flag "hits" surfaced during the data mining process were "name hits" only, which required IPSA to undertake an intensive research process in an effort to determine if the red flag was in fact a match with the client’s customer. IPSA’s research was designed to corroborate identifiers such as Social Security number (or foreign national ID number), address, business name, nationality and other distinguishing data provided at account opening.
Regulatory Event Response
State and Federal bank examiners found that the U.S. agency of a major global banking institution had numerous compliance deficiencies in the regulatory requirements related to monies/funds transacted to and through customer/client accounts as well as accounts from certain countries. The bank entered into a written agreement to address all deficiencies in its AML programs, customer due diligence and internal control environment.
IPSA’s AML professionals, in conjunction with an external accounting firm and bank staff, developed criteria to identify those accounts which would be subject to reviews. The selection criteria included: type of account, dollar amount, frequency, cash or equivalent instruments and wire transfers and selected "high-risk" foreign countries. Pursuant to these overall criteria, thousands of accounts were identified for both historical review and subsequent real-time review. The accounts selected for review included individual personal, partnership, small and large corporate, municipal and government, charity/religious and non profit organizations, institutional bank and securities brokerage accounts.