MONEY LAUNDERING THROUGH LIFE INSURANCE AND CREDITS IS POSSIBLE TOO
Mr. Hecker, in the beginning of June you had meetings with representatives of several state-run institutions and of many banks, at which you presented Celent software products for identification of attempts at money laundering. How do you estimate the level of the info systems they use in order to prevent the legalization of unlawfully acquired capitals?
- From my conversations with representatives of the Bulgarian National Bank (BNB) and of commercial banks I got the impression that they approach very dutifully the requirements for combating money laundering and are ready to undertake all necessary measures to cut down the risks, connected with possible attempts to legalize unlawfully acquired capitals through the Bulgarian financial system.
Are there info systems which could catch absolutely automatically, without human intervention, money laundering operations and transfers for financing terrorism?
- Most stages could be automated when establishing a system against money laundering. In other words, no human intervention is necessary for their use. But during the last stage of the system, no matter how developed technologically it is, a man is always needed to be acquainted in detail with the clients of a bank, with their business and the specifics of their payments and of the remittances they receive. It is this person who should finally decide if a bank transfer is suspicious indeed and if the controlling authorities, entrusted to combat money laundering, are to be informed about it.
The Bulgarian law stipulates that all transfers and financial deals worth more than BGN30,000, suspected of being used for money laundering, should be reported to the Financial Investigation Bureau. What is the respective money ceiling in Germany and in the other EU countries?
- The minimum amount for some transfers is EUR10,000, and for others it is EUR50,000. Of course, each country may set higher minimum amounts than the ones, stipulated in the directive. I would like to stress that money launderers are perfectly well acquainted with local legislation as a rule. For that reason they effect the operations by transfers of very small and even unnoticeable amounts of money....
Isn't that a very outdated scheme for money laundering?
- Yes, it could well be outdated, but it is still used. Of course, money laundering methods are constantly developing and entirely new schemes are being concocted. The people engaged in legalization of unlawfully acquired capital are extremely flexible and take advantage of any lapses in the legislation to adapt the old schemes to it or invent new ones.
Which are the most up-to-date means of money laundering?
- Recently, there have been attempts at money laundering through life insurance. This method as if has started to replace the already known popular schemes for legalization of capitals by drawing credits which are afterwards repaid ahead of term.
You said that those occupied with money laundering are very flexible and never stop creating new schemes. How often do you update the information systems you sell to your customers so that they can detect any new methods for legalization of illegal capitals?
- Our systems are constructed in a way to allow experts who fight against money laundering in each bank or another financial company to add all new schemes they come upon. An expert may even describe the model a certain customer behaves - in case of securities transactions, credits redeemed before the term set, or terminated insurance agreements, as well as in case of credit cards transactions which have been serving for money laundering lately, too... When the software receives the information, it can assess whether or not a customer's behaviour of the kind gives suspicions for money laundering. Based on that assessment, there is an expert who decides whether to report to the respective supervising authorities. We have encountered very curious money laundering attempts that have been detected thanks to the software developed by our Celent company. You know I cannot mention any names, but our information programmes are used by Germany's largest banks. Recently, some of them managed to detect corruption cases in the local authorities of one German province. These corruption practices were discovered when attempts were made for laundering the money acquired by the officials through these banks. Owing to the software, the violators were identified and surrendered to justice. They used the following scheme - they drew mortgage credits totalling several million euro and then paid off the credits before the term set using the money received as bribes. Thus, they proved that the fortune they had came from borrowed money.
What kind of expenses can banks save by using software to combat money laundering?
- The software allows banks to protect themselves against losses related to attempts to use them for legalization of unlawfully acquired capitals. You probably know that if a financial company fails to identify a money laundering operation on time, the money may be seized and the company - a bank, insurer, or investment intermediary - fined.
In Bulgaria, a banking licence may be revoked because of a money laundering attempt. Is there a sanction of this kind in the EU countries?
- Of course, there is. Imposing it depends on the amount that has been subject to a money laundering attempt, as well as on other features of the crime. But even if the licence is not revoked, the bank through which illegally acquired capitals have been legalized may be fined or have some of its accounts distrained. That can happen even if the financial institution may have allowed the money laundering because of carelessness or unawareness that an operation of the kind has been carried out through it. Having such information systems available allows banks that apply them to receive a higher credit rating.