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From the FinCEN Kleptocracy/Public Corruption Advisory: Red Flags

FinCEN has identified the following financial red flag indicators to assist financial institutions in detecting, preventing, and reporting suspicious transactions associated with kleptocracy and foreign public corruption. Because no single financial red flag indicator is determinative of illicit or suspicious activity, financial institutions should consider the relevant facts and circumstances of each transaction, in keeping with their risk-based approach to compliance.

  • Transactions involving long-term government contracts consistently awarded, through an opaque selection process, to the same legal entity or entities that share similar beneficial ownership structures.
  • Transactions involving services provided to state-owned companies or public institutions by companies registered in high-risk jurisdictions.
  • Transactions involving official embassy or foreign government business conducted through personal accounts.
  • Transactions involving public officials related to high-value assets, such as real estate or other luxury goods, that are not commensurate with the reported source of wealth for the public official or that fall outside that individual’s normal pattern of activity or lifestyle.
  • Transactions involving public officials and funds moving to and from countries with which the public officials do not appear to have ties.
  • Use of third parties to shield the identity of foreign public officials seeking to hide the origin or ownership of funds, for example, to hide the purchase or sale of real estate.38
  • Documents corroborating transactions involving government contracts (e.g., invoices) that include charges at substantially higher prices than market rates or that include overly simple documentation or lack traditional details (e.g., valuations for good and services).
  • Transactions involving payments that do not match the total amounts set out in the underlying documentation, or that involve vague payment details or the use of old or fraudulent documentation to justify transfer of funds.
  • Transactions involving fictitious email addresses and false invoices to justify payments, particularly for international transactions.
  • Assets held in the name of intermediate legal entities whose beneficial owner or owners are tied to a kleptocrat or his or her family member.

Categories: Advisories Anti-Money Laundering FinCEN Updates Guidance Kleptocracy Red Flags/Indicators

eric9to5

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