Money remitters transfer funds for their customers. They receive cash from their clients which is transferred to designated beneficiaries against payment of a commission. These businesses provide a valid and legitimate financial service. This service has grown over the years simply because of lower commission rates charged and the alternate financial services it provides to customers. The transfer of funds through this service mostly move from advanced/ developed countries to least advanced regions and/or countries where little or no formal banking services exist. The main objective for this service was to enable migrant workers to send money to relatives in their home countries and this contributed to a sizable portion of the country’s GDP.
According World Bank’s Migration and Development Brief, money remittances to Ghana in 2017 was $2.2 billion out of a total of $38.4 billion recorded for Sub Saharan Africa, which represent 11.4% increase compared to 2016 records. The World Bank estimates that officially recorded remittances to low- and middle-income countries reached $466 billion in 2017, an increase of 8.5% over $429 billion in 2016. With this increase in the money remittance services in Sub-Saharan Africa, financial institutions have taken advantage of the service to provide a similar service called Cross Border transfers to enables their customers to transfer funds to relatives and/ or friends in countries where they (financial institutions) operate.
Criminals/ fraudsters have also taken advantage of the surge in money remittance services in Ghana and Sub Saharan Africa to defraud people. In order for criminals to move, hide and eventually use the funds generated by their illegal activities, they seek ways to wash those dirty funds without drawing the attention of law enforcement or other authorities. Given the range of products and services offered, the variety of distribution channels, the high transfer speed and the fact that they are often cash-intensive businesses, the remittance service sector provide significant opportunities for criminals desirous of laundering their dirty money. This article turns to throw more light on how criminal defraud people, wash their dirty money, finance terrorist activities and how the financial institutions and remittance agents can help fight the menace of money laundering and terrorist financing.
The money remittance business has become an attractive vehicle through which criminals wash their dirty money because of the less stringent customer identification rules that are applied to the transactions processed compared with opening bank account and reduced possibilities for the verification of the customer’s identification. The “KYC” procedures for sending and receiving funds are not stringent enough to ward off criminals.
Another reason why criminals are attracted to this service is the nature of the customer’s relationship with the money remittance service provider(s) and/or agents. It is easier to build a relationship with the agent as the liquidation process involve minimum personnel.
Due to the restrictions on the amount of money a person can send to a beneficiary in another country, criminals normally use this service to finance the activities of terrorist. The criminal is able to send small funds (either clean or dirty money) to associates to be use for purchase of supplies to execute the act of terrorism.
In dealing with remittance service business, one should be careful about the following red flags (not exhaustive). These signs should raise the compliance antenna of the agents in order to ask probing questions.
- Name swapping. Names of criminals that have been blocked (placed on the sanction list) are interchanged (surname used as first name and vice versa).
- Two or more persons coming to receive a single money transfer transaction.
- The customer not able to answer follow up questions posed to him or her.
- Customers who provide insufficient or suspicious information.
- Efforts to Avoid Reporting or Recordkeeping Requirements.
- Funds transfers to or from high risk geographies.
- Activity inconsistent with customer’s business or known profession.
- Unusual Characteristics or Activities.
- High volume of transactions over a short period of time.
- Lack of apparent relationship between the sender and beneficiary
- Personal remittances sent to jurisdictions that have no apparent family or business link.
- Multiple senders transferring funds to a single individual
- Consumer presenting doubtful or falsified ID
- Single sender transferring funds to multiple beneficiaries
- Too much in a hurry, nervous or evasive.
The money remittance service can be made less attractive as vehicle through which criminals finance terrorist activity and/ or wash their dirty money by employing the following strategies.
Frequent trainings of the Front Line Agents (FLAs) and/or agents on the policies and procedures of processing transactions, reporting of suspicious transaction, how money is laundered, will go a long way to create the needed awareness about the activities of the criminals. This will even help FLAs to identify suspicious transactions and behaviors.
Another way to ward of criminals from the money remittance service is when the FLAs “force pay” the transactions when they (FLAs) suspect any fraudulent activity. This will make it difficult for the beneficiary (criminal) to go to another agent to receive the money as the transaction will be locked at the first agent. The FLAs will then report the customer to the money remittance company for blacklisting.
Reviewing the threshold limit on how much money can be transferred and/ or received at a particular period of time can go a long way in the fight against money launderers and terrorist financiers. This will make the service less attractive to these criminals.
It is also imperative for countries to institute a national policy on remittance service as another way to fight against money laundering and terrorist financing in the remittance service industry. The country should set a threshold for receiving physical cash over the counter, above which the beneficiary should have a bank account to receive the money. This will help ward off criminals as KYC procedures would have been done on the person.
Blacklisting the senders and beneficiaries from sending and receiving money will go a long way to prevent criminals from being attracted to the remittance services. Senders who are found to be sending lots of funds to people without any strong ties (that is being scammed unknowingly) should be blacklisted for a period of time and counselled on the dangers of money laundering and terrorist financings.
The last but not the least way of fighting crime in the remittance business and making it less attractive to criminals is by promoting the activities of Scamawareness.org and the likes. Scamawareness.org is an international non-profit organization dedicated to educating Americans about scams and helping them to avoid becoming victims of fraud. Their activities should be spread across for it to achieve it main objective.
In as much as remittance service is contributing to the GDP of countries, measures should be put in place to reduce it vulnerability to money laundering and terrorist financing.
By Richieson Gyeni-Boateng, CAMS
If you require further information on this article, please contact Richieson @ firstname.lastname@example.org