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NachoNinja19 t1_ixwlyoo wrote

I can see how madoffs banks could be held somewhat responsible given that he was in finance and laundering Ill gotten gains for his personal use. And I see that Chase had to pay $1.7Billion to victims but Epstein wasn’t charged with money laundering. I know he should be in jail for his own financial schemes in the past. He was charged with sex trafficking. How are banks supposed to know a client is sex trafficking? They’d have to hire PIs to follow all their clients looking for illegal activity.


Chippopotanuse t1_ixwpmsj wrote

It’s not the sex trafficking. You are hung up on that. It’s the financial transactions. It falls under anti-money laundering (AML) “know your customer” rules that banks MUST follow.

Let’s say I have an account at chase as my clearing/client funds account. And a bank I’m a solo/small shop lawyer or a banker.

If all of my “clients” I have are all Swiss bank accounts and cayman accounts and I’m sending and receiving tens of millions of dollars…it sets of various “know your customer” red flags. And the custodial bank (Chase) should be observant of them.

Epstein was engaging in financial transactions that were unexplained by his purported “financial advisory” business.

That’s what these types of suits are about. That the custodial bank missed AML red flags.

Here are several common AML red flag indicators, and note how NONE of them talk about rape or trafficking. It’s all about the financial aspects of the transactions:

  1. Secretive new clients who avoid personal contact

Firms should have Know Your Customer (KYC) and customer due diligence (CDD) procedures in place when onboarding new clients. If a customer refuses to answer questions about themselves, firms should consider whether this is suspicious, especially if they have criminal associations, or know an unusual amount about the money laundering process.

  1. Unusual transactions

Customers trying to launder funds may carry out unusual transactions. Firms should look out for activity that is inconsistent with their expected behavior, such as large cash payments, unexplained payments from a third party, or use of multiple or foreign accounts. These are all AML red flags.

  1. Unusual source of funds

Transactions involving large amounts of cash or private funding could indicate money laundering, and if cash deposits or complex crypto assets are involved, identifying the source can be difficult.

  1. Transaction has unusual features

The size, nature or frequency of transactions, or repetitive instructions involving common features, are all AML red flags. Firms should be particularly alert if a transaction appears unusual for the customer’s profile, or if there is unexplained urgency.

  1. Geographic concerns

If a firm is not local to the customer, why are they using it? Unexplained connections with – and movement of money between – jurisdictions should also raise suspicions.

  1. Politically exposed persons

Individuals – and their family and associates – in high positions are more vulnerable to corruption and could pose a higher risk of money laundering for quid-pro-quo favors or kickbacks. While no standardized global definition exists, PEPs typically include heads of state, senior politicians or government officials, judicial or military officials, senior executives of state-owned corporations, or important political party officials.

  1. Ultimate beneficial ownership is unclear

Ultimate beneficial owners are the people who ultimately own or manage a company. Complex ownership structures, or the use of shell companies, could be an attempt to disguise criminal activities and carry out financial crime.

  1. Jurisdiction risk

Some countries or jurisdictions have high levels of corruption, unstable governments, or are known as money laundering havens. They could also have inadequate AML/CFT regulatory and judicial frameworks, or be subject to economic sanctions. Transactions that involve these countries should be carefully monitored as AML red flags.

  1. Sanctions exposure

It is important that firms review relevant international sanctions lists to ensure that customers are not sanctioned themselves, or involved, or transacting with, a sanctioned entity. As Russia’s invasion of Ukraine has demonstrated, sanctions lists are subject to change at short notice. This means firms need to ensure they have a real-time plan for managing rapid changes.

  1. Adverse media

Additional checks may also be needed if the customer is a subject of negative news media in any part of the world, as this could increase AML risk. Firms should ensure their adverse media screening is appropriately aligned with common predicate offenses.