ANTI-MONEY LAUNDERING (AML) PROCEDURES

Reporting Suspicious Indicators and Red Flags

There are a wide variety of factors that can indicate that a customer’s activity may be related to money laundering or terrorist financing to include behaviors, as well as transaction patterns. When it comes to concerns related to suspicious activity, both MeChat and users are expected to file a Unusual Activity Form (“UTF”) with the Compliance Officer via the concierge box.

The indicators provided below, are a sample contained on national and international websites, and are generally accepted red flags, based on trends observed in banking, trade financing, and/or the financial services industry. MeChat Compliance Department uses the KYC/AML information as a checklist for verifying users and indicating suspicious activity. 

Suspicious Indicators and Red Flags Related to Money Laundering

Transferring Money Withdrawing to High-risk Jurisdictions

(According to FATF blacklist, reviewed by the International Co-operation Review Group (ICRG): https://www.fatf-gafi.org/countries/#high-risk) 

The FATF encourages all countries and jurisdictions to conduct improved due diligence on all listed countries as high-risk.

• Albania
• Myanmar
• Barbados
• Botswana
• Burkina Faso
• Cambodia
• Cayman Islands
• Nicaragua
• Pakistan
• Panama
• Senegal
• Syria
• Ghana
• Uganda
• Jamaica
• Yemen
• Mauritius
• Zimbabwe
• Morocco

Removal from FATF Review

A jurisdiction must meet all or almost all the action plan elements to be excluded from FATF control. Once the FATF has concluded that the jurisdiction has done so, it will plan an on-site check to ensure that the required legal, administrative, and organizational changes are being implemented.

Unwillingness or Inability to Provide Required Information

• Information provided by a customer is insufficient or their behavior seems unusual;
• A customer provides unusual or altered identification documents that cannot be readily verified;
• A customer uses a different Taxpayer Identification Number with variations of their name;
• A business customer is reluctant, or unable, to provide complete information about the nature and purpose of anticipated funds transfer activity, its key personnel or its physical location;
• A customer’s home or business telephone is disconnected;
• The customer’s transaction activity differs from that which would be expected on the basis of their business/occupation;
• Many Electronic Fund Transfers (EFTs) that are sent in large, round dollar amounts;
• EFT activity related to a financial secrecy haven, or a high-risk jurisdiction, without an apparent purpose;
• EFT activity that is inconsistent with the customer’s history or what is expected, given what we know about the customer;
• EFT activity that is unexplained, repetitive, or shows unusual patterns;
• Large, outgoing EFTs that are sent on behalf of a third party, with no apparent affiliation with the RE, who is unable to provide a rational explanation; or
• Unusually complex series of transactions indicative of layering activity involving multiple accounts, banks, parties, jurisdictions.
• A lack of evidence of legitimate business activity, or any business operations at all, undertaken by many of the parties to the transaction(s);
• An unusual financial nexus and transactions occurring among certain business types (e.g., food importer dealing with an auto parts exporter);
• A RE’s transaction patterns show a sudden change, which is considered inconsistent with normal activities and cannot be adequately explained;
• A large volume of EFTs sent, but the RE’s typical activity does not align with the total or velocity;
• A business has dramatically different transaction patterns from similar businesses, in the same general industry and location; or
• The beneficiary of EFTs, do not align with the expected transaction patterns or business activities.
• Correspondent accounts being utilized as “pass-through” points by foreign jurisdictions with subsequent outgoing funds to another foreign jurisdiction.
• EFTs that are structured through multiple beneficiaries by the same RE, or digital properties, simultaneously;
• EFTs that are requested in amounts just below the identification and/or reporting thresholds;
• A RE who is not concerned with the associated costs of the transaction, but is more focused on immediate execution or avoiding reporting requirements;
• A RE who is clearly attempting to use personal funds for business purposes, such as providing personal bank account details, for a payment that is specifically related to their business;
• RE’s makes multiple and/or frequent transactions to various beneficiaries, or destinations, without a reasonable explanation;
• A customer conducts high-value transactions that do not align with the RE’s expected income volume; or
• Beneficiaries maintaining accounts at foreign banks that have been subject to previous STR filings.

Efforts to Avoid Reporting or Record keeping Requirements

• A customer tries to persuade an employee not to file the required regulatory or internal reports, in order to avoid the maintenance of required records;
• A customer is reluctant to provide information needed to file a mandatory report, to have the report filed, or to proceed with a transaction after being informed that the report must be filed;
• A customer asks to be exempted from regulatory reporting, identification or recordkeeping requirements; or
• A customer sends funds to several different foreign beneficiaries, usually in amounts of less than USD 10,000, particularly to, or through, a location of specific concern (e.g., countries designated by national authorities on money laundering or the Financial Action Task Force as non-cooperative countries and/or territories).

Suspicious Electronic Fund Transfers

1. Activity Inconsistent with the RE’s Business
2. Other Unusual or Suspicious RE Activity
3. Other Unusual or Suspicious RE Activity (facilitation of trade)
4. Over invoicing;
5. Under invoicing;
6. Multiple invoicing by issuing more than one invoice for the same goods;
7. Short shipping – seller ships less than the invoiced quantity or quality of goods;
8. Over shipping – seller ships more than the invoiced quantity or quality of goods;
9. Deliberate obfuscation of the type of goods by simply omitting information from relevant documentation or deliberately disguising or falsifying it; or
10. Phantom shipping – no goods are shipped and all documentation is completely falsified.

Suspicious Indicators and Red Flags Related to Terrorist Financing

• Activity Inconsistent with the RE’s Business
• The stated occupation, or nature of business, of a RE is not consistent with the type or volume of activity stated;
• Persons involved in transactions who share a common address or phone customer particularly when the address is also a business location or does not seem to correspond to the stated occupation (e.g., student, unemployed, or retired); or
• In regards to a non-profit or charitable organization, EFTs are conducted where there appears to be no logical economic purpose or commonality between the stated activity of the organization and the beneficiaries of the funds being transferred.

Suspicious Electronic Terroristic Fund Transfers

• A large number of outgoing EFTs where there does not appear to be a logical business or other economic purpose for the transfers, particularly when this activity involves high-risk jurisdictions;
• EFTs requested in small amounts in an apparent effort to avoid triggering reporting requirements;
• EFTs requested by a customer who is unable or unwilling to provide information on the beneficiary or the person on whose behalf the transaction is being conducted; or
• In regards to a non-profit or charitable organization, multiple EFTs which are all sent to a specific foreign beneficiary, particularly when there appears to be no logical economic purpose for the transaction and/or a high-risk jurisdiction is involved.
• Multiple transactions within a short period of time, that involve high-risk jurisdictions;
• Multiple individuals simultaneously request EFTs to a foreign beneficiary in high- risk jurisdiction; or
• A customer engages in transactions involving the movement of funds to a high- risk jurisdiction, when there appears to be no logical economic purpose and/or an explanation cannot be provided.

Other Transactions That Appear Unusual or Suspicious

• Multiple transactions within a short period of time, that involve high-risk jurisdictions;
• Multiple individuals simultaneously request EFTs to a foreign beneficiary in high- risk jurisdiction; or
• A customer engages in transactions involving the movement of funds to a high- risk jurisdiction, when there appears to be no logical economic purpose and/or an explanation cannot be provided.

• MeChat’s KYC Registry: https://mechat.us/gossip/mechats-central-kyc-registry
• ANTI-MONEY LAUNDERING (AML) PROCEDURES: https://mechat.us/gossip/anti-money-laundering-aml-procedures
• KYC/AML: https://mechat.us/gossip/mechat-kycaml
• CDD RISK PROFILES: https://mechat.us/gossip/mechat-cdd-risk-profiles
• KYC/AML DOCUMENTS REQUIRED: https://mechat.us/gossip/kycaml-documents-required
• CONFIRMING PHYSICAL ADDRESS: https://mechat.us/gossip/confirming-physical-address
• CONFIRMING KEY PERSONS: https://mechat.us/gossip/confirming-key-persons
• DIGITAL WALLET OPENING PROCESS FOR INDIVIDUALS: https://mechat.us/gossip/mechat-digital-wallet-opening-process-for
• CUSTOMER SUPPORT POLICY: https://mechat.us/gossip/customer-support-policy
• MECHAT SHIPPING POLICY: https://mechat.us/gossip/mechat-shipping-policy
• MECHAT RETURN & REFUND POLICY: https://mechat.us/gossip/mechat-return-refund-policy
• MeChat Restricted Products: https://mechat.us/gossip/mechat-restricted-products
• CHARGE BACK AND FRAUD DETECTION SYSTEM: https://mechat.us/gossip/charge-back-and-fraud-detection-system