Three card monte of AML

Illustration by John Nicoll
Illustration by John Nicoll

In this old hustler’s game three cards are shifted right before your eyes with the promise of a payout if you can still pick out your card following some seemingly innocuous card shuffling. Many have lost many dollars before realizing it was the dealer’s verbal and mental distractions that beat them and not the shuffling. In AML a similar phenomenon routinely takes place when the investigator is similarly distracted by the shuffling of money around before realizing they’ve missed the actual money laundering scheme.

Nearly all successful frauds and cons are predicated on emotional reactions and distractions over prudent financial scrutiny. After all, money laundering is just a con that lacks an overt victim. Successful money launderers have learned to create and exploit emotional and other distractions. The actual purchase, purpose or expenditure (integration) will be reasonably explainable as long as your investigation can be distracted from the placement and layering that got the money there.

Most legitimate transactions are done in the most linear way possible to accomplish a designed purpose. For example, savings money may be shifted over to checking to make a larger than normal purchase such as buying a car. It would serve no legitimate purpose to shift it through other accounts or other people before finally ending in the checking account to buy the car. In money laundering these extra shifts are common and are made deliberately to cause distractions from the actual source and beneficial owner of the money. The subterfuge is often as layered as the transactions and never reflects the deliberate nature of the overall scheme.

You may think your investigation has drawn you to that shiny new car purchase when in reality the laundered money dispersed several transactions earlier. The new car owner will be well disconnected from that fact. Like the wrong card, you’ve concentrated on the wrong culprit.

Many of these schemes will involve second and third parties and may also include nominee or straw buyers along the way. Although many of the participants will be witting, adding an unwitting participant or layer will create emotional elements, distractions and complications that can derail and deflate an investigator’s enthusiasm to continue. Although innocuous in appearance these distractions will be deliberate and well planned to achieve just that effect.

For example, a business account reflects a suspicious sudden influx of cash deposits. When contacted, the business owner confides that he is hiding some money for a close friend going through a difficult divorce. He portrays himself as an otherwise honest business man with one big fault of being too willing to help out a friend in need. He also paints a pretty sympathetic story of a friend being treated very badly during a divorce and that it was difficult not to want to help out given these grievance circumstances.

This shuffling of the beneficial ownership to someone else makes refocusing the investigation both mentally and logistically challenging. Who you would be investigating and for what at this point is now an issue. The potential of injecting yourself into a nasty divorce makes that equally unattractive of a reason to continue.

For arguments sake, say you do take the next step to contact this beneficial owner. The stories match with this friend re-emphasizing the nastiness of the divorce. He blames himself for putting this friend into this situation and laments all the problems this whole divorce issue has inflicted on his life. He emotionally expresses to you that his life now will be totally ruined because the vindictive ex will now likely learn about this. “Basket case” would accurately describe your parting impression of him.

As an investigator you tell yourself that you’re in the business of finding real money laundering and not getting involved in some messy divorce. At this point all you want to do is to come up with some kind of palatable way to close this case.

In what was an actual case outlined above, a friend of the wife comes forward to advise that the divorce had resulted from the wife finally being sick and tired of the drug dealing and use by her spouse. The final straw came when she found him bouncing their infant child on his knee while he was cutting up cocaine to sell. This wife does not want to come forward fearing she may lose alimony and child support. The right card had finally been turned over.

Emotions and money go hand-in-hand. In AML you need to recognize emotion and investigate its purpose as much as the purpose of the money. A good investigator will always treat and view emotionally laden responses as a potential piece of evidence and not let them become a distraction. Three card monte dealers, con men and money launderers can only succeed through distractions. They create and then exploit emotion. It is always prudent to ask yourself if an emotional roadblock has been placed in front of an evidential one.

In the legitimate world, especially for larger purchases like cars and real estate, creating or exploiting an emotional environment is considered good sales tactics. Automobile dealers routinely insert dozens of add-ons, many of which merely add-on to profit. The buyer is often too caught up with the shiny new car to ever notice. There are many similarities to the illegitimate emotional/money relationships identifiable in these tactics.

Nearly every time a major money laundering scoundrel is finally caught associates will report earlier suspicions they were “afraid” to come forward with. More often than not this fear was of besmirching a perceived stellar reputation the culprit had fostered. Take time to examine how those emotional environments are created and maintained and you will start to recognize them more and be distracted by them less. Take an accounting of the emotion and not an attachment to it. Be a spectator to three card monte and never a player. 

Steve Gurdak, CAMS, supervisor, Washington Baltimore HIDTA, Northern Virginia Financial Initiative (NVFI) Annandale, VA, USA,

One comment

  1. It’s difficut to perfom this type of reasearch with most customer unless your institution has a division within your compliance department dedicated to in deep investigations – like fraud.

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