The Financial Crimes Enforcement Network today issued an advisory to U.S. financial institutions highlighting the connection between corrupt senior foreign political figures, their enabling of human rights abuses and their illicit use of the U.S. financial system. The advisory, which summarizes existing guidance and regulatory obligations, includes several red flags for banks on how these figures access the U.S. financial system and obscure their activity.
FinCEN highlighted 14 red flags that banks should look out for, including: the use of third parties when that is not normal business practice or when it appears to shield a politically exposed person; use of family members or close associates as legal entity owners; use of corporate vehicles to obscure ownership; declarations from PEPs inconsistent with other publicly available information; access to state funds; PEP control over a transaction’s counterparty or correspondent; and transactions involving government contracts in unrelated sectors, that connect to shell companies or involve expropriated assets. Another red flag is if the politically exposed person or that person’s agent seeks to use a financial institution “that would not normally cater to foreign or high-value clients.”
