Funnel accounts created by profits earned from committing crimes are commonly used in money-laundering schemes. Watch for these 12 red flags to help you stop the progression of funnel accounts.
12 Red Flags of Funnel Accounts
- Accounts with multiple deposits quickly transferred to other accounts. Checks may have different handwriting on the payee and amount lines than the signature line. A third party may have pre-signed the checks and left the payee and amount lines blank, then handed the checks to a criminal organization that used the checks to pay U.S. or foreign parties.
- Accounts with high aggregate dollar deposit activity and low account balances. Amounts below $10,000 are deposited to avoid identification and transaction report requirements.
- Deposits are withdrawn or wired from the account within two days. An intermediary uses checks or wire transfers to buy goods that are shipped to and sold in foreign countries. Profits are then transferred back to the criminal organization.
- Accounts with deposits from different individuals or companies. If questioned, the individuals may not have any specific knowledge of the stated business activity of the account, the holder, or source of the cash.
- Accounts with multiple deposits from various locations outside banking location. Criminal organizations hire individuals to open U.S. bank accounts that can receive deposits from branches in multiple states.
- Financial activity not in line with the individual’s stated business or occupation. Checks drawn from a produce company’s account may be made payable to a leather goods business, for example.
- Accounts with many deposits from various sources, such as cash, ATMs, checks, and wire transfers. Once an account is opened, individuals working for the criminal organization deposit cash, often in places far from where the account was opened.
- Accounts opened in the U.S. by temporary visitors with border crossing cards or other immigration identity documents who wire transfer funds to Mexico. Checks or wire transfers are cleared through or wired into the U.S. correspondent account of a Mexican bank.
- Anonymous cash deposits made in interior states followed by rapid withdrawals in border states. Depositing a drug trafficking organization’s cash means literally cleaning the bills since they typically hold concentrated narcotic residue and odor.
- Accounts with an unusually high number of chargebacks. An intermediary uses checks to buy goods that are shipped to and sold in foreign countries, then claims the goods were never received.
- Abrupt change in account activity. The criminal organization probably moved on to another financial institution to avoid detection.
- Branch-shopping at different financial institutions to hide the source of deposited funds with movement across U.S. borders. Cash deposits are typically low and high bill denominations, whereas subsequent withdrawals are often high denominations. The decreased volume enables criminal organizations to move and conceal cash loads better.
Help stop the progression of funnel accounts by reporting these red flags to your supervisor. For further assistance with this or other business needs, contact our trained staff at CarterWill Search & Flex today!