Identifying parties dabbling in money laundering


BAE Systems identifies 6 criminal types responsible for money laundering to help businesses fight threat posed by financial crime

A Global defence and security giant has set out six criminal types responsible for money laundering around the world, to help global businesses understand the motivations and modus operandi of criminals targeting their business.

In identifying them, UK-based BAE Systems plc hopes to help businesses fight the significant threats posed by financial crime.

In today’s digital world, criminals are constantly exploring new ways to find and exploit loopholes in legitimate channels to make the proceeds of crime look like legal tender,” said an official from BAE Systems Applied Intelligence (BSAI).

“But the real issue isn’t simply the illicit money, it’s the wider impact of these criminal acts,” said BSAI VP for financial crime and compliance sales in Asia Divya Khangarot in a recent statement.

Accounting for almost US$2 trillion (RM8.46 trillion) each year, money laundering is having an increasingly devastating effect on societies around the world. The criminals behind money laundering are finding more sophisticated ways of disguising their activity.

Research shows that money-laundering activity has a significant impact on society as it drives up property prices, and increases taxes and insurance premiums while also funding other criminal activity such as the drugs trade and international terrorism.

In order to respond to the evolving money laundering and terrorism financing threats and the international standards, Malaysia has established a comprehensive legislation called Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFA).

The anti-money laundering and counter-terrorist financing framework covers the legal and regulatory framework; preventive measures for reporting institutions, financial intelligence unit and law enforcement agencies; and domestic and international cooperation.

The Malaysian authorities conduct ongoing investigations and regular raids related to these offences.

In August 2017, for example, Bank Negara Malaysia (BNM) raided five premises in Perak, Pahang and Negri Sembilan for suspected offences under the Money Services Business Act 2011 and the AMLATFA.

The premises are DJ Travel & Tour Sdn Bhd in Lumut and Sitiawan, Fathima Warisan Enterprise at Giant Supermarket in Senawang, and Habeeb Textiles in Kuantan and Muadzam Shah.

In March 2017, officials from the central bank together with the National Revenue Recovery Enforcement Team of the Attorney General’s chambers, police and the Immigration Department raided a networks of suspected illegal money services business operators.

In the series of raids, the authorities arrested 12 suspects, including eight foreign nationals, and seized more than RM18 million in cash and assets.

In a statement, BNM said 14 premises, including three premises operated by licensed money services business operators in Kuala Lumpur and Selangor were raided. To facilitate the investigation, relevant documents were seized and bank accounts were frozen, it added.

When identifying the six criminal types responsible for money laundering around the world, BAE Systems’ subject-matter experts analysed customer data to identify the people most commonly involved in money laundering.

The six categories were identified as the Source, Leader, Bystander, Watched, Shark and Shop Front.

Here is a brief description of each category:

1. The Source: White collar fraudsters and organised crime gangs making illegal profit from their crimes. As a result of operating outside the law, they need their money “cleaned” before it can be used.

2. The Leader: Leaders are clinging to power and stripping their country of wealth to line

their own pockets. Their outcast status causes the leader to resort to subterfuge to hide their funds and spend money on the things that keep them in power.

3. The Bystander: Bystanders don’t facilitate crime but are happy to turn a blind eye while their mysterious client lines their pockets.

4. The Watched: People on international watch lists who could either be corrupted or facilitating corruption for a price.

5. The Shark: Sharks enable crime by helping move illicit funds through the banking system, profiting themselves along the way.

6. The Shop Front: Legitimate-looking businesses that exist to launder money, catering specifically to criminals.

Khangarot said the fight against money laundering needs a new era of collaboration between the financial services industry, government, and technology and compliance specialists.

“Understanding the motivations and modus operandi of the people behind it is the critical first step. Businesses need to understand the enemies they face in order to successfully protect themselves against them,” Khangarot said in the statement.

BAE Systems said it helps major banks, insurers and law enforcement agencies defend against criminals and meet their compliance obligations for anti-money laundering and counter-terrorist finance throughout the customer life cycle.