Banks Assist Fraudsters to Open Bank Accounts and Launder the Proceeds of Crime.

This is hardly the headline anyone wants to see – especially the banks. Unfortunately, given the ease at which fraudsters are able to open bank accounts using forged or fraudulently obtained documents, this could be argued to be a very accurate description.

In the new world of Open Banking and the emergence of many ‘challenger’ banks, many of which operate entirely online without any high street presence, competition for business is fierce. There is a saying that the first casualty of war is the truth, and perhaps the biggest challenge is effective due diligence.

In the race to onboard customers, and despite protestations to the contrary, identity checks are often perfunctory and are nothing more than a ‘tick-box’ exercise so as to avoid any delays or ‘friction’ as they like to call it. Fraudsters are aware of this and (understandably from my point of view) decide to make hay while the sun shines.

Allow me to assist by describing a situation involving a former ‘work colleague.’ ‘Vasile’ is Romanian and has been in the UK for about five years. He speaks almost perfect English – unless he chooses not to (usually when he is stopped by the Old Bill) and is incredibly well organised. He is methodical and scrupulously tidy – think Hannibal Lecter but without the table manners. He is best described as the CEO of a small business created to launder cash from drugs or human trafficking through mainstream bank accounts. His team opens the bank accounts for him using either forged or genuine documents in someone else’s name. The police call these documents FOGs (Fraudulently Obtained Genuine documents).

Vasile runs a small team led by ‘Denis’ who is in charge of flying groups of guys in from Romania and Bulgaria on a budget airline. They usually arrive in groups of 12, live in a rented house (paid for in cash through a friendly lettings agent), and eat nothing but takeaways. They get paid a basic amount and a small bonus for every account they successfully open. They can speak passable English but often have a ‘minder’ close by, in case they need a translator. There is usually a woman in the group for those occasions when the presence of a woman adds authenticity to the application. It’s amazing how a (staged) loud domestic argument can distract even the most focused bank employee from paying too much attention. Vasile’s girlfriend ‘Maria’ often fills in if there is no other female in the group. She is attractive (further distraction is always a plus) but always looks as if she put her lipstick on during an earth tremor.

In the house, one room is put aside to run the operation. The room contains a whiteboard which says who is doing what – normally in some form of code in the event of a police raid – and a collection of zip-lock bags, containing the identity documents they will use to open accounts. Each bag contains all you need to open a bank account (or take out a tenancy agreement or mobile phone contract or do anything else requiring identity verification). A good forged passport can be bought quite easily for about £500. Some of the good forgeries can only be detected under a microscope so how the banks expect a spotty school-leaver to spot a forgery is laughable!

As a good businessman, Vasile is keen to offset operational costs so he uses this passport as frequently as possible. In the trade we call it ‘spanking’. Similarly, he uses FOGs as much as possible so the team can relax; safe in the knowledge that they are using genuine documents that will pass the strictest scrutiny. Forged utility bills (you decide on the utility provider and the address) can be bought for £25 after a quick search on the Internet. The providers offer a discount for bulk orders and Vasile is a regular customer.

Typically the team goes to a large town in a minibus or in people carriers, and moves en-masse to a cafe where, to the annoyance of the owner, they nurse a latte for three hours or so. The minder takes out two or three people at a time, and they hit the high street banks. They know the banks’ processes and procedures and they know that bank staff pay scant attention (if any at all) to the identity documents produced to open accounts. (I shall expand in a future post on the ease with which people obtain forged documents or FOGs – without going anywhere near the scary ‘dark web’)

For a comparatively modest investment to open each account, by the time the team returns home in a few days, Vasile has control of about 50 newly-opened accounts. The banks post cards and PINs to the addresses separately as a ‘security measure’ – talk about shutting the door after the horse has bolted!

Vasile normally uses these accounts to assist others in laundering money or if he needs quick cash, he simply sells them on as a job-lot.

In a week he has paid out:

● Return flights to Romania/Bulgaria 12 x £70      £840 

● House rental                                £400 

● 4 x Forged/FOG identity documents              £2000 

● Team ‘wages’                                £2400

● Food/petrol/bills                              £300 

Total                                                        £5940

Vasile has the choice of selling each ‘virgin’ account (including cards and PINs) to other ‘businessmen’ for £1,000 each (x 50 = £50,000) which represents a net profit of £44,000 a week. Alternatively, he can use the accounts to launder cash as described elsewhere – where his longer-term profits from drug and people smuggling are considerably larger.

None of this is rocket science. As described above, opening a bank account using FOGs or forged documents is easy – far too easy. Effective due diligence and fast onboarding are not mutually exclusive, and If banks talked to each other (or even communicated properly between branches) it would make life so much more difficult for fraudsters. But they don’t, and for that Vasile, and the hundreds like him, are eternally grateful.

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