At a suspicious activity report (SAR) Review Team meeting a case is presented about a pizza shop repeatedly making daily cash deposits of $9,900. When asked who among the law enforcement agents would volunteer to take on an investigation a long pause ensues. Finally an agent reluctantly agrees to consider looking at it for possible tax skimming. There is no eagerness on the agent's part. Alacrity has left the building.
In reality, this situation begs for a rude wake-up call.
Does anyone in the room wonder how a legitimate pizza shop could generate that level of currency?
Does anyone know how many pizzas that would take per day?
Does anyone know how big or small this particular shop is?
The vast majority of SARs fail to live up to their true potential. Although the behavior described in the SAR might be a fully accurate description of what was observed, there may be other questions or concerns not addressed or known by the author of the SAR. The reviewing investigator rejects or discounts the SAR for not answering these questions or concerns. The SAR is viewed as an investigative summary and not the confidential tip it was designed to be.
A successful investigation here requires a whole lot of pizza questions long before it gets to any potential criminal ones. Probably the most crucial part of any analysis in a money laundering investigation is to establish normal and identify where your case leaves normal. The only shortcuts here are how much the investigator already knows about the kind of money your average pizza shop makes. The investigator trying to shortcut to the crime question will end up on dead end roads.
Determining normal becomes the initial investigative question. Questions of legitimate variances between this shop and normal ones will follow. Whether this process takes moments or weeks will be based on the AML investigator's experience level, network, and business savvy.
Even without knowing the difference between a New York, Chicago or Sicilian style pizza it is known that credit and debit card sales now typically make up more than half of the gross sales at restaurants. If legitimate, it does not take a lot of imagination to realize this would have to be a pretty popular spot.
A quick Internet check should be able to find out just how and why the popularity. If not their own home page you should definitely find one of several reviews that even the lowliest dives cannot escape these days. If the owners are true pizza aficionados they too will have achieved Internet validation, if they are legitimate. There is also a fair possibility indicators of infamy will also have crept into the web if they are not.
If it is not normal for an average pizza shop to generate this much bulk currency and there is nothing beyond average with this particular shop the suspicions may likely be well founded. The next issue is suspicions of what?
If there is too much cash to be accounted for by extra toppings and cheese bread it has to come from somewhere or something. This is where far more money laundering investigations fail than succeed and where far too many SARs end up in limbo. Nothing is obvious from this point forward.
Unfortunately, what is normal for AML investigators is that far too many believe if you look close enough and long enough at financial statements, run the gambit of data bases, and create enough charts and graphs you can solve a crime. There is comfort in numbers and a fear of conversation. Numbers are neither lies nor truth. What is said about them is the only way to separate the legitimate ones from the illegitimate ones.
The true normal is that conversation will be the "break" that transforms the numbers into evidence. Speculation is the greatest procrastinator of an AML investigation. Investigative conversation produces conclusions; however, these conclusions cannot be choreographed into desired results. Desire is in the vanity of the charts and graphs. Desire stifles investigations.
A productive investigative AML interview is far more complicated than the most extreme forensic accounting. It is often the least practiced art of the AML professional. The fact is that lies about finances far outnumber lies about fidelity. On a positive note, in investigations, provable lies can have greater value than the truth.
Successful business people will normally boast about their business prowess. Scoundrels will gag their fortunes. There are either a lot of pizzas or a lot of excuses in this case. The AML professional needs to know a little about the former and a lot about the latter.
Money laundering schemes are founded on creating plausible deniability, which requires conversation to establish. Remaining silent is perceived as incriminating. Money launderers rarely invoke that option but it takes an indefatigable investigator to get past the excuses and deniability. Even the lowliest tax cheat has at least mentally planned a response if ever confronted. Rest assured a pizza shop owner laundering money has more than mentally planned the cover story to the scheme.
Have you thoroughly prepared for the probabilities?
An investigative interview is far more than simply asking questions and accepting or recording answers. In nearly all other crimes, criminal investigators consider it routine for a suspect to initially deny culpability. The veracity of any answer is questioned until the probability of that culpability has been confirmed or eliminated.
With suspicions of money laundering we don't often start with a clearly defined crime in search of a suspect. The investigator's confidence therefore is more vulnerable to accepting denials, excuses or cover stories that will mask the suspicions. It is important not to accept any excuse that cannot eliminate the probability it still could be money laundering.
Many a restaurant and a number of infamous pizza shops have been used to launder money. They have always been ideal businesses for carrying out money laundering schemes. Let every reason why that is true form the foundation of investigative questioning. Let the reason why any other business might be used to launder money form the questioning of those.
In reality, as far as AML is concerned, the pizza business is quite simple. Money comes in as pizzas go out. Money laundering complicates things. Complex answers to otherwise simple questions have always been good indicators of well-founded suspicions. That is logical for more than pizza.
Practice the art of conversation and you will be surprised how much more your accounting skills are noticed. Tap more on doors than on keyboards and you will know about how many pizzas or how much gas, or how many haircuts, or nails polished or.…