Банкеръ Weekly

Briefs

WE DO NOT WORK WITH DUIOUS CLIENTS

MONEY LAUNDERING CAN BE EFFECTED THROUGH CREDITS AS WELLJan Willem Overwater, ING Bank Country Manager, BulgariaMr Overwater, last week ING Bank Sofia branch was inspected by the Finance Intelligence Agency of the Finance Ministry. What was the reason for the inspection and what are the results?- The inspection was caused by media speculations that ING has allowed unclear money transfers, which should require more detailed check for money laundering. There were speculations that the bank had not done what was due. The inspection of the Finance Intelligence Agency has clearly indicated that ING Bank does everything necessary and follows anti-money laundering procedures. These conclusions refer also to the particular case of the transfer from the London-based company of Gati Al Gebouri to his company accounts in Bulgaria. We neither had any reason to signal the Agency about these transfers, nor we felt any suspicion about them. How does ING Bank Sofia branch check about cases of money laundering through money transfers and other finance transactions executed by the branch?- In principle, the most important to prevent this crime is to know the client. If you do not know your client, you are vulnerable - you are in a weak position and you can hardly prevent money laundering. When we work with an individual or a company, the most important thing is to know them. Before someone opens an account with ING Bank, we check him in detail. This includes filling in some documents - about the legal representation at the establishment of a company, about its history, about its targets (what it wants to do, what its business is, etc.). Regarding individuals, we require their personal ID card numbers, the numbers of their social insurance in order to be certain that the person really exists. Secondly, in order to avoid money laundering, we have installed a special computer system, which continuously monitors the money flows, going through the bank. Each suspicious transaction is noticed and reported by the system. For example, if a company's transfers ususally amount to BGN50,000 and at a certain time it orders or receives a payment of BGN1MN, the system immediately informs the bank officers about this unusual transaction. And we can check why it has been done. If we get a good explanation by the client, there is no reason to call the Finance Intelligence Agency. Otherwise, we are obliged to signal that there is a suspicious case. All these checks are done on a daily basis. Besides, we have educated the entire staff of ING Bank Sofia branch, even the drivers, as early as their first day at the bank, to know what money laundering is and how to prevent it. We acquaint the personnel with the bank's capabilities, with everyone's responsibility, and explain what has to be done in case of suspicions. This training is carried out every year. Furthermore, we consider each particular case separately - e.g. a legal amendment, which requires the corresponding training and installation in the bank's security systems. We have appointed an employee, to be in charge of money laundering issues. Together with the Internal Audit Department, he makes spot checks at least twice monthly. There is no advance information where and when the next check will be. In the long run, every employee of ING Bank knows that if he has some suspicions, he has to report to the Internal Audit Department. I believe that with all these measures we create an environment that is secure against money laundering. Do you maintain a special list of companies which are risky in view of money laundering? Are there Bulgarian companies on it ?- Yes, globally ING Bank has a black list. But I can not reveal any details. This is confidential information of the bank.How did you proceed with the case of the USD600,000, which the London-based company Alexander Partners, owned by Gatti Al Gebouri transferred to his Bulgarian company PIK OOD, without registering them at the BNB? Were all legislative procedures observed? - We did what was expected from us by the law and by our internal rules. Before that, I want to specify that you should distinguish between the bank's and the client's obligations. The bank is not obliged to register the transferred sum at the central bank. This is the client's obligation. It is impossible to find out what the purpose of each transfer is and what payment it is related to. It can be a loan, a donation, bonds payment etc. This is actually the reason for the misunderstanding. On the other hand, we have to report to the BNB on a daily basis what the total amount of the cross-border transfers over BGN5,000 is. In this way the central bank prepares statistics about the money within the country. This is important for the macroeconomic planning, but it is quite different from the reports related to money laundering. However, when the transfer is directed abroad we require to check also the court registration of our clients. Have you ever had finance transactions, which you reported about to the Finance Intelligence Agency? - Because of the way our work in the bank has been organized, we do not practically have suspicious transactions. We have reported to the Agency several times about people who wanted to start business with ING Bank but were rejected. It is the Agency's responsibility to run further checks.ING Bank is one of the largest finance institutions globally and it is supposed that the measures against money laundering are applied with special attention. Which are the most frequently used schemes for legalization of illegally acquired capital? - ING Bank has been very active in fighting money laundering over the last 7-8 years. This is particularly important after the terrorist attacks against New York and Washington on 11 September 2001. The problem is dealt with increased attention because of the possible connection of dirty money with terrorist organisations. On the other hand, the money launderers are not asleep and are looking for new ways of action. Thus, every time they try to invent a new scheme to evade our measures, and we have to counteract. We call one of the often applied schemes for money laundering 'smurfing'. Our bank has certain limits on transfers to accounts, over which it checks if a certain transaction is suspicious. In Bulgaria, for example, we investigate the sums over BGN30,000. Thus, if somebody wants to legalize BGN 50 000 by 'smurfing', he does this through transfers of BGN10,000. Different sources of payments to one and the same accounts are also used. This scheme is not complicated and is applied very often. In Bulgaria we have had only one case of 'smurfing'. We reported it immediately to the Finance Intelligence Agency, but we can not reveal the rest of the information to you. And what would you say about the legalization of illegally acquired capital through obtaining a fictitious credit, which is very quickly returned?- This is the second example for possible money laundering, which has been observed in many countries and Bulgaria does not make an exception. This method is often used in privatisation, when a company applies for a credit in order to buy an enterprise. But this is not a real loan - it is very quickly repaid in cash. It is secured by cash, which is deposited at the crediting bank or another. The purpose of the loan taking is to create a story about the funds origin. In this way, when the Privatisation Agency requires information about the origin of the money, the applying buyer of the enterprise can say that the money he is paying with are provided through a credit.

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