As a countermeasure against those bank customers who would use their bank accounts to fraudulently conceal assets, government regulators commonly require that banks apply customer identification or “know your customer” rules. These rules are often geared toward identifying the true beneficial owner of a bank account and are analyzed at my articles “Beneficial Owners Concealing Their Foreign Bank Accounts” and “Fighting Financial Fraud At UK Banks“.
Despite the use of customer identification / “know your customer” rules at banks, some bank customers still try to conceal their beneficial ownership of assets parked in bank accounts. As outlined by “Nominees & Hidden Assets“, beneficial owners sometimes misuse existing business entities like shell companies, to open financial accounts and circumvent a bank’s customer identification procedures.
The Egmont Group of financial intelligence units, describes this very situation at one of its money laundering typologies, labeled as reference no. 08014. It explains how “Mr. B” essentially used existing businesses in the form of shell companies, to “wash” assets through North American and European bank accounts used in a money laundering circuit. My September 20, 2009 article “Money Laundering By Minneapolis Money Managers?” also discussed what might have been the use of a fictitious business entity to circumvent the U.S. customer identification rules codified at 31 CFR 103.121 ¶ (b) (2) (i).
As more fully set forth in that article, a civil complaint in Minneapolis alleges among other things, that a bank account maintained by the “non-existent, non-registered [business] entity” called Crown Forex LLC, could have transferred the proceeds of a securities fraud. Some of the allegations in that complaint are also believed to be the subject of a federal grand jury proceeding, according to the Minneapolis Star Tribune at: “Twin Cities investment advisers focus of probe“.
Copyright 2009 Fred L. Abrams