Date of Award
Master of Science (MS)
Bank accounts are a popular place to hide and move illegal funds. Many banks offer private banking or wealth management services, to customers with more than $1,000,000. That provides premier banking services as well as a confidential, safe, and legal haven. With these services is a heightened money laundering risk. The Federal Financial Institutions Examination Council (FFIEC) of Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual specifically states that privacy and confidentiality are important elements of private banking relationships. “Private Banking and Wealth Management services are vulnerable to money laundering schemes that include: private bankers as client advocates; powerful clients including Politically Exposed Persons (PEPs), industrialists, entertainers; culture of confidentiality and use of secrecy jurisdictions or shells companies; private banking culture of lax internal controls; significant profit for the bank.” (Federal Financial Institutions Examination Council FFIEC, April 2014). Banks have operated with the four pillars of an AML/BSA Compliance Program consisting of written policies and procedures, an AML Compliance Officer, independent testing of the institution’s AML program, and employee training. The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a new rule, the fifth pillar, for banks to identify natural persons behind legal entity customers, the beneficial owners.
This paper will discuss how banks can track the “right” owners and identify the real ultimate beneficial owner. Banks with private banking and wealth management services must hire sharp-witted bankers, employ seasoned AML department employees who have spent a significant amount of time reviewing layered entities, trusts, and foundations, and build a quality assurance team with professionals who have an immense knowledge about Bank Secrecy Act/Anti-Money Laundering (BSA/AML).
Lintag-Ihde, Angela, "Beneficial Ownership: Tracking the True Owners of Business Accounts" (2018). Economic Crime Forensics Capstones. 23.