U.S. authorities estimate that money laundering has grown from about $85 billion in 1990, to over $1 trillion to $1.5 trillion. Only $1 billion – $2 billion of this amount is detected and seized annually by authorities. Treasury officials estimate that 99% of criminal/terrorist money presented for laundering is successfully deposited. The identity verification requirements of the Patriot Act are directed toward stopping these deposits by entities with bogus identities. Approximately 24,000 financial institutions in the United States are required to comply with federal and state laws & regulations aimed at thwarting the introduction of laundered funds into the U.S. banking system. Non-compliance with these regulations, including the Bank Secrecy Act of 1970, the Money Laundering Control Act of 1986, the Anti-Drug Abuse Act of 1988, the Annunzio-Wylie Anti-Money Laundering Act of 1992, the Money Laundering Suppression Act of 1994, and especially the anti-terror Patriot Act of 2001, can expose a financial institution to severe criminal and civil sanctions and fines, including the withdrawal of an institution’s operation license. The Patriot Act also imposes identity verification requirements on foreign banks doing business in the U.S.
Click here for a general overview of how money laundering happens.
According to Ernst & Young, more than 500 million checks are forged annually, resulting in losses in excess of $100 billion. Additionally, an institution’s inability to verify the identity of customers can also make the institution susceptible to credit card fraud, mortgage and loan fraud, securities fraud and insurance fraud. Unlike money laundering, fraud results in a direct and instantaneous loss to the targeted financial institution.
TTI’s Sentinel was specifically designed to assist banks in reducing fraud and preventing money laundering by complying with the amendments put forth in the USA Patriot Act, as well as previous laws and regulations. Sentinel focuses on the idea of “know your customer” and functions as a Customer Identification Program. It allows financial institutions to input client information and assess the risk of an account holder participating in money laundering, fraud or criminal activity. This check can be done before or after an account is opened. The customer is checked against a set of government and private data sources. Identifying information about the customer is compared against these data sources to determine if the applicant poses a high risk of being involved in fraud, crime or terrorism. Details about why an individual received a particular risk level for a given data source are available for review. This aids the Compliance Officer in the final decision regarding the overall risk of a client. For more information about TTI’s Sentinel, click here.