AML CHALLENGES
Recognizing the potential for future
abuse abates willful blindness and
financial institutions should be cognizant
when any commodity sale “leaves normal”
and is deemed “suspicious”
Editorial Credit: Monticello/Shutterstock.com
As these particular commodities grew public notoriety, both traditional and non-traditional
financial institutions followed suit and promptly documented the sale of this subject to
abuse commodity and its identified red flag indicators. Furthermore, on several occasions
they inadvertently identified the money laundering conduits responsible for furthering the
criminal activity.
While retailers and wholesalers cannot control the intent of the customer, the very skill nec-
essary to know what desired inventory to restock and henceforth preserve profitability, is
the same talent that can be, but may not be, monitored by financial institutions. AML mon-
itoring software is designed to detect an upsurge in anomalies. However, when are com-
modities properly identified as suspicious irregularities instead of being branded as a
lucrative business profile because it is a yet-to-be identified trend? AML investigators have
an opportunity to conduct their own version of forecasting by analyzing whether a drastic
increase in sales and/or restocking purchases by their customer is indicative of a fad, a con-
ventional commodity, or a money laundering conduit’s trend worthy of being deemed a
highly suspicious activity. Financial institutions have the ability to distinguish a high
demand for a product by comparing and contrasting the known “norms” and cross-referenc-
ing the information with the know your customer (KYC) documents on file. The comparison
of business profiles of like competitors in the same geographical area, can help scrutinize
customers that sell commodities that can be easily flipped on the black and gray markets.
Once again, highlighting the need for thorough and complete KYC documentation.
Financial institutions already have monitoring systems that identify the red flags associated
with the identification of a high-risk product inventory; however, failure to recognize the
propensity for a commodity’s abuse upon resale and its known associated indicators
is a concern. Recognizing the potential for future abuse abates willful blind-
ness and financial institutions should be cognizant when any commodity sale “leaves
normal” and is deemed “suspicious.”
Moreover, detection and documentation of
anomalies associated with vulnerable com-
modities by financial institutions would aid
law enforcement in the fight against prod-
uct exploitation. The identification of yet-
to-be recognized items that can be resold
on the black market and in turn put markets
in the “black” is the crucial forethought
necessary to combat money laundering and
the underlying suspected unlawful activity
by both traffickers and money laundering
conduits. Lax and benign oversight is a
mentality that (much like the black market
commodities) has an expiration date. Who
knew years ago that cheese would become
“contraband dairy” and be the legal com-
modity behind major smuggling rings into
Canada? Are sugary beverage tax hikes in
Philadelphia now causing an upsurge in
sodas sales outside of the region with cer-
tain distributors? Even more reason why
analysis of legitimate products and the sub-
sequent customer’s profits should not be
discounted.
Stacey Ivie, M.Ed., task force officer,
Washington Baltimore HIDTA, Northern
Virginia Financial Initiative (NVFI),
Annandale, VA, USA, [email protected]
Who knew years ago that
cheese would become
“contraband dairy” and be the
legal commodity behind major
smuggling rings into Canada?
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