Crime-centric entertainment is increasingly gaining popularity in mass media, with several stories now available in the form of documentaries, movies, and TV shows. Some portray drug trafficking and money laundering, others show cybercrimes and identity theft - all tell a story that stimulates excitement with viewers. However, many of the storylines hardly apply in real life scenarios, because there are regulations and institutions providing measures to prevent or combat such organized criminal activities from coming to fruition.
Dirty money is often associated with organized crime, but legitimate businesses seeking to disguise kickbacks also carry out money laundering. This loophole makes it possible for illicit business owners to evade authorities.
TV shows that portray fraudulent activities create an unimaginable world for their audience where money laundering techniques are totally undetected, making them great for television. Whether the audience understands how money laundering works or not is an entirely different story. Examining some of the popular TV shows offers a new perspective on financial crimes and compliance with AML (Anti-Money Laundering) regulations.
Federal police investigators, Marco Ruffo and Verena Cardoni discover corruption at the highest levels of government and work to expose the mechanism that is used to conceal it. All their efforts to bring the criminals to justice are met with strong opposition due to the extensive nature of the criminal network. The mastermind, Roberto Ibrahim, moves his illegal cash around the country without resistance by bribing officials who ensure that the origin of the wealth appears clean in the eyes of the public.
This TV series about money laundering reveals widespread corruption in government. It tries to give viewers some insight into the fight against fraud from the viewpoint of law enforcement agents that work to uncover clandestine activities and expose the criminals involved within the government. Uncovering the truth about this political culture where a nation’s decision-makers use their power to sustain their status and wealth is relatable, as it happens in the actual world. But in reality, maintaining ultimate secrecy in this era of digital technology remains implausible for Politically Exposed Persons (PEPs).
Walter White, an unsuspicious chemistry teacher, partners with a former student, Jessie, to cook and distribute meth. In order to pay medical bills and secure his son’s future through an education plan, he built a drug and money laundering empire. He further launders by buying a car wash and having his associate open a nail shop, while claiming the source of funds are winnings from a lottery.
Walter also recruits a lawyer who helps him erase the origin of the illegal funds and stay a step ahead of the law. Erasing digital footprints and documents is difficult in this era of digital identities. But since the story fits the target audience, it’s made to appear easy.
Ozark features Marty Byrde and his accounting partners concealing illegal money from a drug business. Buying a bar, the Blue Cat Lodge, made the infusion of drug money into legal taxable funds easier as it mixes with proceeds from the business. Donut shops and pizza parlors with ties to the cartel he works for, were used to launder some of the illegal funds since customers usually pay cash and do not ask for receipts.
To launder more money Marty bought the equipment needed to run his businesses from companies owned by the cartel. This Ozarks money laundering strategy helps in the integration of illegal money, as it finds its way back into the hands of the criminal as taxable income. However, this would raise an eyebrow in real life, for the authorities and financial institutions are not only monitoring the transactions but also PEPs.
How could you catch these TV criminals today?
The entertaining storylines in these TV shows amongst others, leave out AML solutions which involve transaction monitoring, extra checks for PEPs and other KYC processes - all obtainable in real life. Including those might not be entertaining to viewers with little knowledge about AML regulations. Now, let’s delve deep into the frameworks that would make money laundering and other financial crimes from TV shows more challenging in the real world.
Financial platforms incorporate advanced ID verification and KYC solutions that authenticate new and old users to ensure they are who they say they are. With liveness detection and 3D face authentication features, fraudulent transactions cannot go unnoticed. Users are often required to take selfies, submit biometrics and upload identity documents while using a money or asset transaction platform. The image gets analyzed in real-time by an integrated computer vision technology. Eye reflections, skin texture, and 3D depth are measured to establish the identity of customers.
If Breaking Bad were reality, a chemistry teacher at a local school buying a car wash and a school dropout acquiring a nail salon would raise suspicion. They would also be required to have bank accounts, register their businesses with the authorities and also explain their source of income. The idea that the funds used to take over and run these businesses were winnings from a lottery or gambling won’t also apply in real life, as records would show they have no accounts or documents with any betting institution or platform. Even if they did, it would be easy for them to be caught, as their so-called bet winnings and spending will not correlate.
KYC and AML Compliance
AML regulations ensure that businesses and financial institutions are not exposed to risks associated with financial crimes. Organizations now take precautionary measures by integrating KYC and AML solutions that collect and analyze customer identity information with relevant reporting frameworks for regulatory due diligence. They also carry out suspicious activity reporting, and as stated previously, ongoing monitoring.
The involvement of a lawyer in Breaking Bad to clean dirty money gives a TV show about how money laundering works credibility. But any online activity leaves digital footprints that enable tracking of its origin. Keep in mind that deleting digital records would involve not only removal from the government servers, but also from the records of the fundraising platform, financial institutions, and other organizations the launderer would have interacted with. This will be difficult to accomplish in real life.
In Ozark, a successful financial advisor deciding to move from the city to run a business that looks less lucrative in a suburban area might look plausible for TV but not in reality. The continuous transfer of large amounts of money would not only raise an eye with their bank but also the government’s AML taskforce. Their registered businesses will need to have bank accounts where transactions can be tracked and monitored. The couple’s eventual involvement in politics and public charities makes them PEPs, therefore further monitoring and document requirements from their financial institution. All these will snowball into investigations by AML regulators and reveal their real source of wealth and income.
Implementing a risk-based approach to authentication for PEPs ensures that individuals with executive roles in government or commercial enterprises get screened following due diligence measures. Their relatives and close associates may also be classified in that category as they can also acquire assets through financial crimes, unlike other citizens. Ongoing monitoring has made it possible to identify these individuals and customers whose PEP status has changed.
In The Mechanism series, Roberto Ibrahim’s association with PEPs would make him a high-risk client on any platform with an effective monitoring system. When individuals use political power to hinder investigations, financial reports can provide evidence against them after their PEP status changes. In reality, the ongoing monitoring that comes with a person of his status would make it difficult to launder money through any modern day financial institution.
Liveness Detection and Ongoing Monitoring
The use of biometric identifiers in real life is increasingly becoming popular in ID verification as it effectively mitigates the risk of identity theft. With ongoing monitoring, the integrity of verifications is maintained to ensure that identity spoofing attacks are not successful. Customers are sometimes asked to submit additional documents and take a selfie video holding their ID card , so fake representation using video recordings or other technologies will be flagged.
In Ozark, money owned by deceased people was transferred and withdrawn. In real life, this technology would notice the ongoing transactions, trigger suspicious activities and compel compliance officers to demand a liveness check.
In Breaking Bad, the idea to split the money into smaller sums that would be donated from computers all over the world sounds brilliant but has drawbacks in reality. Anonymous donations are often aimed at protecting the privacy of the donor, but the transactions are traceable when there are suspicions of fraud. Many institutions will ask for liveness checks, additional documents from the so-called donors, possible re-authentication and transaction monitoring. These solutions will detect when exactly the same amounts are made to a specific account from various locations and pose red flags.
Popular Money Laundering Techniques
Transfer mechanisms made possible by the Clearing House Interbank Payments System (CHIPS), Federal Reserve (Fedwire), and the Society for Worldwide Interbank Financial Telecommunications System (SWIFT) have improved electronic payment. An International Narcotics Control Strategy Report revealed that fast-growing and unregulated virtual asset service providers made financial crimes flourish in countries like Georgia and countries where AML regulations are almost non-existent. The technique of smurfing which involves splitting the money into small sums and depositing them separately into a bank account became more convenient. But these TV shows weren’t made in Georgia.
Misrepresenting prices and quantity by altering transaction documents as seen in the Ozarks money laundering scenarios is another common technique. Though offshore banking relies on bank secrecy laws to protect customer’s data, some exceptions may allow the disclosure of certain information to authorities.
Not all you see on TV is obtainable in reality. Financial institutions and cryptocurrency exchanges now implement KYC and AML measures to mitigate the risks of performing transactions on their platforms. Changes in cash flow can trigger ongoing monitoring of customers, PEPs, and their transactions to ensure that illegalities are swiftly identified. Keeping track of AML and PEP regulations in your jurisdiction might be cumbersome since legislation can change over time.
Partnering with a compliance platform provider like Passbase can safeguard your business from illegal use of funds. You may not fully understand how money laundering works from TV shows, but you can ensure that Passbase will help your organization keep financial criminals out.