Author: Richieson Gyeni-Boateng

We live a country where every now and then, there is a new church or mosque being established. The number of churches and mosques in Ghana and even Africa is more than the number of manufacturing factories yet still crime and corruption are on the increase. What an irony. What even makes it worse is that these churches and mosques have services throughout the week. Church members’ attitude towards work and their employers is nothing to write home about, with some literally collapsing the same institutions they work at by stealing, going to work late, poor customer service etc.

What I know from the bible and the church I attend is, the word preached from the pulpit should renew our minds to be better persons and contribute positively to society (Romans 12: 1-2, Philippians 4:8, Psalm 51:10) but the opposite is seen these days.

Reflecting on these made me believe criminals can or are taking over the pulpit to further expand their criminal activities, which includes the laundering of ill-gotten funds. This article throws more light on the activities of criminals, how they can use the religious organizations to launder money and finance the art of terrorism and how their activities could be brought under control.

The United Nations 2000 Convention Against Transnational Organized Crime, also known as the “Palermo Convention,” defines money laundering as the conversion or transfer of property, knowing it is derived from a criminal offense, for the purpose of concealing or disguising its illicit origin or of assisting any person who is involved in the commission of the crime to evade the legal consequences of his actions.

Also the Anti-Money Laundering Act, 2020 (Act 1044) section 1 (2) states that “A person commits an offence of money laundering if the person knows or ought to have known that a property is, or forms part of, the proceeds of unlawful activity and the person

• converts, conceals, disguises or transfer the property for the purpose
• concealing or disguising the illicit origin of the property; or
• assisting any person who is involved in the commission of the unlawful activity,

to evade the legal consequences of the unlawful activity

• conceals or disguises the true nature, source, location, disposition, movement or ownership of, or rights to, the property; or
• acquires, uses or takes possession of the property knowing or suspecting at the time of receipt of the property that the property is, or forms part of the proceeds of unlawful activity.

Simply put, money laundering is the process of making dirty money look clean. The washing of dirty money goes through three main processes or stages namely placement, layering and integration. Criminals using the religious organizations might use any or all the stages to wash their dirty money.

One way criminals can use the pulpit to launder dirty money is by setting up their own church and expanding their operations through it. The nonexistence of any entry barrier and supervisory authority over the activities of church in Ghana and some parts of Africa is encouraging criminals to wash their dirty money through the church. After the church is registered and starts operations, the criminal is able to justify his or her source of funds as he or she is able to comingle the dirty funds with the offerings and tithes collected from church members. The issue is more prominent among the “one man” church set ups.

Some church leaders are using the church to acquire worth for themselves without paying any tax to the government. Some church leaders have reality shows and move around the world to delivery motivational and/or inspirational messages, all in the name of church activity, and avoid the payment of taxes. But professionals who delivery the same motivational and/or inspirational messages are taxed by the government.

Another way the criminal can launder ill-gotten funds through the church is by loaning the church funds for the construction of an auditorium or church related building. The repayment of this loan is mostly done via funds transfer and/or the issuance of cheque. The criminal is able to justify the source of the funds, when questioned, as coming from the church with an acceptable and reasonable purpose. The cheque and/or transfer will then find itself in the financial system as clean money.

Setting up scholarship and endowment fund for church members is another way criminals use to launder their dirty money. Once the dirty money has been cleaned through other means, the criminal has more money and power at his or her disposal to influence the society and the community they find themselves. They use the dirty money to set up all sort of funds to buy the conscious and loyalty of the beneficiaries of the fund. Example can be seen in the life of Pablo Escobar of Columbia.

Setting up investment clubs and other social clubs to lure church members to invest is another strategy used by criminal self-styled men of God to use the church to further wash their ill-gotten funds. They used the cover of the church is convince members to join and invest in their schemes and later defraud them of their hard earn cash. These schemes are presented through seminars, meetings, and broadcasts on TV channels, promising members of greater returns on investments. Mention can be made of Self-proclaimed prophet Shepherd Bushiri, who is currently standing trial for about 350 charges, including fraud, money laundering, and racketeering.

Laundering money through the church has been made easy by criminals as this can be done using the private jets of the Man of God. It should be suspicious or a red flag if the Man of God flies to tax haven countries such as Bahamas, the Cayman Islands, Nevis etc frequently. This makes it easy for the criminal to launder his or her dirty money to other countries with lax anti money laundering controls.

Comingling of tithes, offerings and other donations with the ill-gotten funds and introducing it into the financial systems through deposits is another way criminals use the church to expand their operations. This even becomes worse when the “Man of God” is a televangelist. They then use the church to acquire properties for themselves and associates.

The non-reporting requirement of religious organizations to any regulator and/or authority makes it vulnerable to the activities of criminals in cassock as there is no stringent rules and guidelines over the operations of the religious body.

The regulatory body responsible for supervising and regulating the activities of religious leaders and their institutions should be strengthened and resourced to fight any form of money laundering in the industry. The regulatory body should collaborate with the Financial Intelligence Center (FIC) to develop AML guidelines to understand and comply with AML/CFT & P laws and regulatory requirements and the implications of non-compliance of AML/CFT & P requirement. Also the regulatory body should set standards for every religious leader. Example, requiring religious leaders to obtain a minimum academic degrees and certificates in theology as it is the case in Rwanda.

Training and creating the necessary awareness about money laundering activities among the citizenry will go a long way to thwart the activities of criminals in the church. Church leaders should factor AML trainings and lectures in their daily activities in order not to be vulnerable to criminals. Religious FM/ radio stations should use their medium to educate their listeners about the dangers and consequences of allowing criminals to enjoy their ill-gotten funds.

Another control that can be put in place to thwart the activities of criminals using the church is having an effective and efficient know your customer (KYC) procedures and principles. financial institutions onboarding religious organisations as their customers should properly identify all the leaders of the church, their source of funds and wealth. Enhanced Due Diligence should be conducted on these leaders by verifying all stated sources of funds and wealth. This should be reviewed annually and properly documented. the accounts of these customers should be monitored keenly and where actual transaction activities differ sharply from estimated values, answers and documentary evidence requested. The leaders of these religious organizations should institute KYC (know your church member) principles to enable them to identify suspicious characters within their churches and report same. 

With these legal and procedural changes, greater transparency would reduce the ability of religious organizations to be used to launder money and illegally buy political influence. The time to act is now.

Would you mind doing me a favor? Share this article with someone so that the awareness of money laundering and terrorist financing could be spread to avoid being used as a conduit by criminals

By: Richieson Gyeni-Boateng, CAMS

There is this joke among the youth which goes like “when I was poor, no one bothered to care about the source of my poverty but immediately I became rich, everyone wants to know the source of my riches”. Growing up, anytime I brought someone’s toy home, my granny would be like, “Where and who gave you this toy” and she would make sure I returned it to the owner the following day. This, I believe, forms the basis of Source of Funds (SoF) and Source of Wealth (SoW) assessment.

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When we talk about financial crime risk, many generally think of it as being associated with only financial institutions. But nobody, especially the professional services firm, is immune.

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Technology and digitalisation is helping lots of businesses grow especially in this times that we find ourselves (Covid-19 times) as people can still perform their business without physically going to the shop or bank. At the click of a button, financial transactions are effected.

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Money Laundering, Terrorism financing and the Proliferation of Weapon of Mass Destruction and other organised crime violate human rights and undermine the rule of law, and they can be a threat for the stability of the operations of companies (especially financial institutions) and national economies as a whole. (more…)

Any time there is an impending holiday, joy, happiness and peace spread among holidaymakers, as it takes people out of their busy stressful jobs to relax and have fun.

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Technology and digitalisation is helping lots of businesses grow especially in this times that we find ourselves (Covid-19 times) as people can still perform their business without physically going to the shop or bank. At the click of a button, financial transactions are effected. Financial institutions are finding innovative ways to offer their products and services to their customers without these customers coming to the banking halls. One of such innovations is the Remote Deposit Capture (RDC), which comes in various forms. RDC is one of the fastest growing trends in banking technology, as it allows customers the convenience of depositing money from any location with a scanner, computer and internet connection. But all these technology and digitalisation are also increasing the risk of money laundering and terrorist financing.

The objective of this article is to throw more light on how the RDC works, how it could be exploited by criminals and how its vulnerabilities can be reduced, if not eliminated.

RDC is a method or process of allowing bank customers to submit cheques meant for deposit in their bank account electronically by scanning the images of the cheque. That is allowing customer to deposit cheques at remote locations, usually from the customers’ offices electronically, for virtually instant credit to their account. This provides convenience to the customer. The financial institutions provide their customers with an electronic device for the purpose of the scanning and transmitting of the cheques. Some financial institutions also set up digital centres where their customers can go and perform RDC. Another version of the RDC is the deposit taking Automated Teller Machines (ATM), where customers can use to deposit money 24/7. Some financial institutions offer optional Automated Clearing House (ACH) conversion and clearing in combination with the RDC service.

Customers (both individuals and businesses) patronise the RDC services because of the convenience and reliability it offers. RDC provides substantial benefits to financial institutions as well, such as a means to quickly grow core deposits.

Like any other technological innovation, the RDC is not implemented without any risk, especially money laundering and terrorist financing vulnerabilities. Due to the non face-to-face feature that the RDC offers to customers, criminals are attracted to the service to further wash their dirty money within the banking industry. This raises several challenges for the banks, including but not limited to:

• the difficulty in determining who is using RDC and which jurisdiction they are in
• development of internal controls to ensure transaction data and cheque images are not altered
• implementation of monitoring by qualified personnel for potentially fraudulent, sequentially numbered or altered bank drafts or traveller’s cheques.

Also the risk of cheque duplication is a great concern for financial institutions when it comes to the provision of RDC services. Criminals can fraudulently and/ or accidentally scan and transmit the cheques more than once. Further, criminals enjoying the RDC services can also modify or alter the value on the cheque before transmitting to the bank.

The easy of moving the RDC equipment from one location to the other, makes the RDC service vulnerable to the activities of criminal. For example, the financial institution customer, who the financial institution think is using your RDC service in a particular location might be a front for a criminal gang based in or outside the country to further its criminal activities by scanning stolen/ altered cheques and other instruments

The reliability and data security of the RDC system can also attract criminals as they can hack into the system and manipulate data to their advantage.

Other major risks associated with the RDC service includes forged endorsement, poor image quality, identity theft and many more.

Despite, the vulnerabilities in the RDC service to money laundering and terrorist financing activities, financial institutions can benefit immensely and make the service less attractive to criminals by instituting the following means.

By investing in the right enterprise-wide detection technology and integrating methods that investigate all channels prior to posting, financial institutions can continue to offer RDC while also limiting risks of money laundering and terrorist financing. This makes it a win-win situation for the financial institutions and customers.

Also financial institutions can mitigate the risk associated with RDC service by adopting policies, procedures and controls that account for RDC technology. These policies should address the how and limit of monitoring transactions. Periodic reviews and risk management reports on the AML monitoring issues associated with the implementation and ongoing operation of RDC systems and service need to performed and generated. Strong internal controls and monitoring are your first line of defense to the risk associated with RDC while reviewing and investigating the account across payment services is the second. Where the financial institution offers the RDC service to correspondent banks, it must recognize and respond to the growing use of RDC by correspondent banks and money services businesses. Should such a deposit originate from a high-risk country or client, Enhanced Due Diligence (EDD) controls should be applied and continuous relationship determined by senior management.

Before RDC service is rendered to a customer, proper KYC/ CDD review procedures should be performed. The RDC service should be classified as a high risk service and EDD performed on the customer with senior management approving the rending of the service. The financial institution should develop a detailed Service Level Agreement (SLA) that clearly identify each party’s role, responsibilities, and liabilities, and that detail record retention procedures for RDC data. The SLA should also include procedures for physical and logical security expectations for access, transmission, storage, and ultimate disposal (if necessary) of original documents. Customer’s responsibility for properly securing RDC equipment and preventing inappropriate use, including establishing effective equipment security controls (e.g., passwords, dual control access) should be addressed by the SLA. In addition, the SLA should detail the customer’s obligation to provide original documents to the financial institution in order to facilitate investigations related to unusual transactions or poor quality transmissions, or to resolve disputes. The SLA should clearly detail the authority of the financial institution to conduct audits, or terminate the RDC relationship.

Another way financial institutions can take to mitigate the risk associated with RDC service is to take the time to fully understand the RDC indemnity, educate and train staff on risk, rules, regulations and procedures, and work with customers to be the first line of defense by helping them understand how to protect their accounts and not be vulnerable.

Continuous reporting process and mechanism that will identify and inform the financial institution immediately of suspicious activity should be developed as a means of reducing the impact of RDC vulnerability to money laundering. Also there should be a timely reporting of any suspicious activity to the Financial Intelligence Centre (FIC).

Because of risk associated with RDC service, some financial institutions remain hesitant to integrate an RDC solution because they lack the needed technology to prevent duplicate checks and the costly resolution when duplicate presentments occur. But in this new era that we find ourselves in, financial institutions which fail to embrace distributed capture options become less competitive to institutions that offer RDC capabilities leading to a fall in market share.

Would you mind doing me a favor? Share this article with someone so that the awareness of money laundering and terrorist financing could be spread to avoid being use as a conduit by criminals.

Every now and then, you get or see people creating a page and/or account (mobile money wallet or bank account) to solicit for funds to support a cause especially medical or social intervention causes. These people appeal to the emotions of the citizenry by showing pictures of what they want to do. As to whether the monies collected will be used for the intended purpose, is a question most of us don’t know. This practice, if not checked, can create an avenue for exploitation by criminals to advance their criminal activities. Terrorist Groups can or is adopting this technique to finance their terrorist activities. In Canada, over the past five years, cyber criminals have used crowdfunding websites to launder nearly $30 million. (more…)