Correspondent Banking (1) Mr X Citizen of Country

Correspondent Banking (1) Mr X Citizen of Country

Correspondent Banking (1) Mr X Citizen of Country A Country B Country C Country D Country E Registers Acme Bank Opens account for Acme Bank Opens account for Acme Bank Opens account for Acme Bank Deposits illegal funds USD $25 M

Tx from Country B Tx from Country B Copyright Lessons Learned Ltd 2016 Tx from Country B 1 Correspondent Banking (2) Key facts Purpose: banks can undertake international financial transactions in jurisdictions where they have no presence Relationship between two banks: correspondent bank (service provider) and respondent bank (customer) Types of service: transactions for both the bank and its customers; wide range of potential services Inherent risks: reliance on AML and due diligence procedures in respondent banks Money launderers perspective Indirect relationship between originator of the transaction and the correspondent bank performing it

Increased potential for concealment Use of shell banks as vehicles for money laundering Copyright Lessons Learned Ltd 2016 2 Correspondent Banking (3) Possible red flags Respondent banks ownership structure cannot be verified Respondent bank has no real physical presence Respondent bank unable to provide background detail regarding entities for whom they have requested services Respondent bank unable to provide originator details for transfers for which they are an intermediate bank Respondent bank provides correspondent banking services for shell banks Respondent bank permits third parties access direct to its accounts for payable through transactions Numerous requests for large volume wire transfers Unusually frequent and repetitive transactions Direction of transfer does not appear to fit with normal or expected business activity Copyright Lessons Learned Ltd 2016 3

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