Follow the Money and Then Follow the Behavior

There comes a point in any financial crime where the behavior of the main perpetrator begins to work drastically against them. Much of the discussion around behavioral red flags in anti-money laundering (AML) is centered around the client’s initial interaction with a bank and further on the ongoing due diligence of that customer. The Certified Anti-Money Laundering Specialist (CAMS) study materials list red flag examples such as customers with nervous demeanor, discussing financial institution (FI) record-keeping requirements or suggesting paying a gratuity to the employee. While all of these are valid red flags, many major financial crimes are conducted by expert manipulators. Thus, they can achieve decades of financial success by manipulating individuals and institutions to turning a blind eye.

These individuals know better than to bribe an employee; instead, they devise a plan where an entire FI will comply with them, allowing not only the bank to make millions but the individual bankers to make millions as well. This was the case when Jho Low orchestrated the marriage between 1Malaysia Development Berhad (1MDB) and Goldman Sachs. Tim Leissner, Goldman Sachs head of investment banking in Southeast Asia at the time, met Low through another local Goldman banker behind closed doors. Authors of “Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and The World” reported that “dodgy” was Leissner’s initial impression of Low. Someone who strived to make deals and take a cut, but without much legwork. Yet, Leissner continued the relationship with Low despite his initial intuition because he was an ambitious Goldman employee. Thus, began a long relationship in which Low and Leissner would become codependent.

While much of the media around Low has been centered on 1MDB and the partnership with Goldman Sachs, there was little focus on Low’s relationship with Swiss bank BSI. Low hit a roadblock in his complicated, but well-executed scheme in which he turned to a bank that he knew could become dependent on his business. Through the course of their relationship with Low, BSI raised numerous concerns about his transaction behavior. The authors of “Billion Dollar Whale” quoted Low using a series of over-explanations in email communications including the following:

“When good wealth creation is generated, as a matter of cultural respect and good fortune that arises from respect, we always give our parents the proceeds. This is part of our custom and culture. In this case, my father receives it as a token of gesture, respect and appreciation and decides to give it back to me for me to then subsequently provide a portion for the benefit of my family trust.”1

He continues in a separate email to the bank, “I hope this clarifies as this is culturally sensitive and it would be taboo and bad luck otherwise and our family is very particular about respect of the elderly and being appreciative to family.”

It would have been quite simple to research the customs and cultures that Low references. His explanation was drawn out and lacked validity in relation to the corporate structure and transaction behavior he was defending. In reality, many executives from BSI were becoming personally wealthy from Low’s business and were allegedly enjoying the luxuries of Low’s high-class living. Compliance personnel were left with few options but to voice concern and move on.

When their string of decision-making—or from a compliance professional’s perspective of financial transaction behavior—draws the suspicious attention of the public because their wealth is so large, they are likely to turn to philanthropy. Low set up the Jynwel Foundation as an act of desperation after a string of bad publicity and rewarded University of Texas’s MD Anderson Cancer Center with $50 million. Moving money from corporations into nonprofits or educational institutions not only helps the public imagine good intentions but also masks their schemes with the convenience of being a tax-deductible strategy. For example, the Sackler family made their fortunes by funneling substantial2 sums of money out of Purdue Pharma while sending millions to U.S. educational3 institutions like Yale and Columbia. In addition, Jeffrey Epstein—who was convicted of running a sex trafficking ring—also turned to funding Massachusetts Institute of Technology’s Media Lab,4 granting Harvard $6.5 million5 and donating to numerous other nonprofits.

Lies are sprinkled between truths in a tactic used to keep anyone from looking deeper. The same can be said of financial transactions using illegal funds to fund perfectly legal and oftentimes honorable organizations. When the questionable source of funds begins to draw further attention, behavior indicates that something is not right. When Epstein was originally prosecuted back in 2011 for having sex with an underage girl, he was quoted poking fun at his behavior stating, “I’m not a sexual predator, I’m an ‘offender.’ It’s the difference between a murderer and a person who steals a bagel.”6

This statement certainly raises eyebrows to his character. Moreover, and similar to Low’s emails to BSI, their words could reveal efforts to rationalize their behavior and decision-making to themselves. As Los Angeles Times  reporter Nina Strohminger7 reported earlier this month, “…the power of rationalization is so strong that people will engage in elaborate cognitive gymnastics not to see the negative ramifications of what they have just done.” The same can be said for both the perpetrator of the crime and anyone involved in knowingly enabling that perpetrator.

Research shows that people infer what is acceptable based on the actions of others, particularly those with status

Research shows that people infer what is acceptable based on the actions of others, particularly those with status. Being associated with a Low, Epstein or a Sackler is a powerful signal that minimizes their crimes even when intuition points to suspicion. If banks must self-police, then technology must provide the tools necessary to do so while avoiding the social and behavioral factors that enable financial crimes to continue for decades. There are no doubt similar patterns of social behavior in these financial crimes that could be translated into predictive modeling.

Unfortunately, with investigators and law enforcement concerned with hard evidence and data they can use in a lawsuit against the money launderer, human behavior cannot guide the legal process. However, it can help compliance recognize when a high-risk relationship they have become entangled with will turn south. Major innovations in artificial intelligence and machine learning are in the beginning stages of taking the pressure off compliance officers to be all things AML and fraud detection. However, imagine if compliance officers could be provided with predictive human behavior modeling to better assist their intuition, or if they could utilize technologies like blockchain to facilitate information sharing. In turn, senior management will be left with little reason to continue a relationship initially deemed “dodgy.”

Merritt Cooke, founder, Oxkee, San Francisco, CA, USA,

  1. Tom Wright and Bradley Hope, Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World, September 18, 2018.
  2. “Sackler family ‘funnelled $1bn into different bank accounts,’” BBC, September 14, 2019,
  3. Jared S. Hopkins, “Nonprofits Grow Uneasy With Philanthropy Tainted by Opioid Proceeds,” The Wall Street Journal, February 20, 2019,
  4. Ronan Farrow, “How an Élite University Research Center Concealed Its Relationship with Jeffrey Epstein,” The New Yorker, September 6, 2019,
  5. Joey Garrison, “Harvard has ‘no plans’ to return Jeffrey Epstein’s $6.5M gift,” USA Today, July 11, 2019,
  6. Amber Sutherland, “Billionaire Jeffrey Epstein: I’m a sex offender, not a predator,” New York Post, February 25, 2011,
  7. Nina Strohminger, “Opinion: The psychology behind taking dirty money from Jeffrey Epstein,” Los Angeles Times, September 18, 2019,

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