They operate even more intensively during holiday seasons. They use every occasion to steal your money, personal data or even identity. Think twice when you little love ones want to look like famous doll… – we touch on all those aspects in the interview with Karol Wojtczak, Head of Transaction Monitoring at ING Hubs Poland.
Transaction monitoring and anti–money laundering – what’s the connection between the two?
There is a very strong connection. Transaction monitoring is a vital element of anti-money laundering (AML). Anti-money laundering that is being executed by obliged institutions is a countermeasure to financial economic crime. Obliged institutions in their type of business create products and services which may be attractive for criminals for money laundering purposes. This is the risk we are facing, and we need to address also through transactions monitoring. Hence transactionmonitoring in anti-money laundering plays a very significantrole.
What’s the procedure of money laundering? If I was the criminal, what should I do?
The series “Breaking Bad” is the perfect definition of money laundering. The procedure of money laundering may be described by the sequence of three stages. Assuming one hasproceeds of crime that is lucrative. He/She wants to use the money to a benefit – buy a flat, apartment, house, or a luxury car. In order to do that the criminal needs to give the money an appearance of legal origin, so it means he/she has to put them into legal financial system.
Ok so I go to the bank and put the proceeds of crime on my account, and I can buy a car .
Then you are identified by the bank along with suspicious source of funds and disclosed to authorities. Because the bank such as ING has the procedure called KYC – Know Your Customer. The bank will check the customer and may refuse service. Moreover, the bank will ask where the money comesfrom. If you don’t have it from a legal source, you are in the investigation with consequence of disclosure of suspicious activity to authorities.
What criminals do is layering money. They create appearance of legal source of funds and put layer on the layer and again to disguise illegal source of funds and integrate them into the legal financial system to operate with the funds, not being caught by authorities.
What are those money laundering steps?
There are usually three steps of money laundering: placement,layering, integration. Placement – when criminals want to place proceeds of crime and not being caught. They are looking to create an appearance in which their financial activity will be justified. Often shell companies or front companies are used as placement vehicles. But this is not the only stage in which such companies are being used in financial crimes.
Next step is layering which is focusing on making a lot of transactions, so layers to disguise the illegal source of funds and increase appearance of legal activity . The final step in money laundering after preceding actions is integration of funds, to use them and not being suspected of predicate crimes.
Throughout the year, which months or seasons are the most beneficial for the financial criminals?
There is no such calendar related seasonality. I would rather say that financial economic crime opportunity is related to non-regular events. If something is not in our economic routine, it’s not that obvious, how it should look like, e.g. a person who is planning vacation for the first time in Zakopane, may book a room in non-existing place. If we often visit Zakopane, we have our routine, so we are not that vulnerable to such trick. On a greater scale of non-regular circumstances, we may refer to pandemic time, where a lot of trade of goods to fight COVID-19 were fraudulent. We’ve been acting in a rush, with non-standard procedures, on unknown ground, trying to buy goods, which were not a part of our regular routine. Some hospitals or even governments bought a substandard face mask, gloves, or disinfectants or respiratory equipment for an inflated price. We should be super diligent when we are operating on unknown grounds.
What the bank can do in such a situation?
We have dedicated groups that were taking care of the spectrum of criminal activity that could post a risk of financial crime and then money laundering through ING. We’ve been looking at that space again and it’s maybe not a seasonality, but a particular event that creates an opportunity for criminals. The truth is that when we compromise on compliance the criminals may act freely. This fact is valid not only for institutions like bank, but also for every one of us.
Example? Now there is a very popular movie with famous doll for children. What did criminals do? They created an app very quickly. This app can make you look like this famous doll. All you must do is to grant access to your data. Do people read carefully what they are giving an access to? Nope – they just click “yes” quickly to everything because they want to use this app right now. What are the data they gave access to? For example, financial data, purchases history, contacts, photos, social media activity etc. This app has been on the radar of the Polish Ministry of digitalization, and they have issued such a warning.
Some years ago, there was also “face app” – you could see how you will look like in the far future.
That’s right. But this is a kind of events I am talking about – the movie is not a seasonality, but it is an event. We tend to go forward with such events not having experience in dealing with the threats to those events, yet criminals are using them very effectively. That’s why we should keep our “firewalls”, compliance guard high to avoid such data breach.
How does the transaction monitoring work?
We are the bank operating based on license and we are an institution of the special trust from our clients but also from the economy and the society– with the business profits we have our business responsibility and obligations. One of them is to operate in a way that that we protect economy and society and the bank from financial crime, bad actors and we do not facilitate transactions that are related to financial crime.Whenever we see that anyone wants to launder money, we are letting know to the law enforcement that such a situation occurs,and they do their job. We are a part of the whole end-to-end system in which we need to play our respective role. That role is not only to catch those unusual situations but also prevent them.We must put the burdens ahead of criminals, so they are not able to launder money. The purpose of this job, it’s just doing the right thing. It’s also one of the obligations of our company based on license that we have, we do the right thing, we allow our clients to operate, we finance their activities and allowing them to their thing. At the same time, we use our capabilities to secure our clients, societyand the economy from financial and economic crime.
