TBML-Q1:Are items consistent with the nature of the customer's business?

When all is said and done with regards to systematic analysis of trade-based money laundering, more has been said than done.
There are typically 2 parallel conversations; one of them concerns the risks of TBML (Trade Based Money Laundering) and the importance of monitoring, the other explains why it's too hard to address systematically.
This leaves even large banks, big players in trade finance, justifying their reliance on manual systems.

Personally, I take my cue from Voltaire, who said "The perfect is the enemy of the good." There are systematic things that can be done that specifically address Trade Finance questions in the FFIEC exam manual.

This post concerns itself with a very basic one; Are the items consistent with the nature of the customer's business?

Step 1. Use the industry codes associated with customers on your own books. In the US (and for the rest of this example), that will likely be a NAICS code.
Step 2. Build a reference list of the keywords associated with the industry. These are available from NAICS as well.
Step 3. Using list-matching software, or something similar, compare 'description of goods' with the keyword references for the customer's industry.
Step 4. Alert on mismatches.
Step 5. Investigate.


Simple example:

You scan a letter of credit between Denel Pty in South Africa, and your customer, Camden Manufacturing where the description of goods reads;

5,000 M1 AC Grenades
1,000 M1 CNS Grenades
1,200 XM47 primers
1,200 40mm Barricade Penetrator CS Grenades


Your KYC system identifies Camden Manufacturing with the NAICS code 332993, Ammunition (except small arms) Manufacturing.
Reference keywords for this industry code would include:

Artillery shells
bomb cluster
Ammunition
Arming and fusing devices,
Artillery ammunition
Bomb loading
Bomb cluster adapters
Bombs
Boosters and bursters, artillery, manufacturing
Artillery cartridges
Canisters, ammunition, manufacturing
Caps, bomb, manufacturing
Depth charges
Detonators,
Fin assemblies, mortar, manufacturing
Fin assemblies, torpedo and bomb, manufacturing
Fuses
Grenades, hand or projectile, manufacturing
Igniters, ammunition tracer
Jet propulsion projectiles
Loading and assembling bombs
Mines
Missiles
Missile warheads
Mortar shells
Primers
Projectiles
Rockets
Shell loading
Torpedoes
Tracer igniters


Based on this reference list, the items are in fact consistent with your customer's business. They are also consistent with Denel's but that's another story.

What if your customer's NAIC was instead 812990, Miscellaneous Personal Services? (you can let your imagination run wild. That NAIC includes massage therapists, nail salons and escort services.)
There would be no match at all between the description of goods and your customer's industry (cough, cough), and you should receive an alert on that inconsistency.

You should also receive an alert for another reason, but that will be the topic of the next post.

ERI: Blurring the line between payments and trade

In November 2011, the Federal Reserve Bank introduced a new variation on the basic customer transfer, a payment message that includes Extended Remittance Information (ERI). It's a wire transfer that includes invoice details, 9000 bytes worth of invoice details.

There are banks and financial institutions that require that the purpose be present on wire transfers. There are jurisdictions that encourage/require that the purpose be present on wire transfers. In the SWIFT world, there are typically 210 bytes available for this purpose. The Fed provides space for 9000 bytes.

With 4 double-spaced pages on invoice data accompanying the payment; at what point do your payment AML concerns start sounding like trade finance AML concerns? (NOTE: Invoice details are completely fictional.)

Is the amount of the payment equal to the sum of the invoiced items?

Are the goods listed over-priced or under-priced?

Looking at the example invoice data below, what do you do if the payment is for $15,000?

Is $2.00 too much or too little for a polyester pajama top?

For example:

FABRIC: 100 PERCENT POLYESTER JERSEY -200GSM

EACH

STYLE NO. DESCRIPTION PO QTY COST SHIP DATE

EB58BD76 MILITAR STAR

LAYERED SLEEVE PJ TOP 2914 420 2.00 07-01-07

EB58BE88 SPORTS SHIELD

L/SLV PJ TOP 2914 576 2.00 07-01-07

EB58BC76 MILITARY STAR

LAYERED SLEEVE PJ TOP 2914 588 2.00 07-01-07

EB58BB88 SPORTS SHIELD

LONG SLV PJ TOP 2914 564 2.00 07-01-07

EB58BD76 MILITAR STAR

LAYERED SLEEVE PJ TOP 2915 108 2.00 07-01-07

EB58BE88 SPORTS SHIELD

L/SLV PJ TOP 2915 162 2.00 07-01-07

EB58BC76 MILITARY STAR

LAYERED SLEEVE PJ TOP 2915 162 2.00 07-01-07

EB58BB88 SPORTS SHIELD

LONG SLV PJ TOP 2915 162 2.00 07-01-07

EB58BD76 MILITAR STAR

LAYERED SLEEVE PJ TOP 2616 72 2.00 07-01-07

EB58BE88 SPORTS SHIELD

L/SLV PJ TOP 2916 144 2.00 07-01-07

EB58BC76 MILITARY STAR

LAYERED SLEEVE PJ TOP 2916 144 2.00 07-01-07

EB58BB88 SPORTS SHIELD

LONG SLV PJ TOP 2916 138 2.00 07-01-07

EB58BD76 MILITARY STAR

LAYERED SLEEVE PJ TOP 2917 84 2.00 07-01-07

Are the goods consistent the nature of the parties?

For example:

Originator: Wal-Mart

Beneficiary: Samsung

50 Televisions, Model LN26R71BAX/XBG

90 Televisions, Model LN32R71BAX/XBG

10 Functional MRIs, Model MagFinder II

Are the goods of a high-risk nature?

Are there instructions to trans-ship items to an unrelated third party?

Originator: Cabela’s

Beneficiary: Argus Publications

890,000 12 GAUGE 00 BUCKSHOT

5,800,000 9mm BALL

9,600,000 5.56x45mm M200

10,000 40mm HEDP

4,500 20mm VULCAN HEIT SD M246 WITH M14A2 LINK

100,000,000 M855 5.56 Ball

20,000,000 5.56mm Tracer

16,700,000 5.56mm Blank

5,700,000 5.56mm 4 Ball/1 Tracer

13,600,000 7.62mm Ball Long

790,000 .50 Caliber 4 Ball/1 Tracer

10,000 40mm HEDP Grenades

32,000 60mm HE Mortar Rounds

32,000 60mm Illumination Rounds

5,000 81mm HE Mortar Rounds

5,000 81mm Illumination Rounds

7,000 Signal Flares

7,300 Stun Grenades

6,700 HC Smoke Grenades

12,035 M4 Carbines

What if (and I suspect this is the most likely case) the included invoice detail does not tell you a darn thing about the payment?

For example:

PO NO LINE QTY PRICE TOTAL LSHIPDATE COLR

-------- ----- ------ ------- ---------- ---------- ----

SK233C 711 16 130.03 2080.48 2007-07-15 WBP

SK242C 712 12 66.01 792.12 2007-07-15 WCM

SK243C 713 25 66.01 1650.25 2007-07-15 GRN

SK244C 714 9 70.12 631.08 2007-07-15 KCO

SK930R 231 19 207.62 3944.78 2007-07-25 BLK

SNK930 1003 31 207.62 6436.22 2007-07-25 BLK

SNK931 1004 79 63.99 5055.21 2007-07-25 PLD

SNK932 1005 80 43.66 3492.79 2007-07-25 GRY

SNK932 1006 75 43.66 3274.49 2007-07-25 OLV

SNK950 1014 180 108.36 19504.80 2007-07-30 GRY

SNK951 1015 172 39.90 6862.80 2007-07-25 AAP

SNK951 1016 220 39.90 8778.00 2007-07-25 BLK

SNK952 1017 12 21.09 253.07 2007-07-20 BLK

SNK952 1018 89 21.09 1877.01 2007-07-20 BLY

SNK952 1019 134 21.09 2826.06 2007-07-20 RAS

SNK952 1020 95 21.09 2003.55 2007-07-20 ROS

SNK953 1021 28 40.61 1137.08 2007-07-25 BBE

SNK953 1022 410 40.61 16650.10 2007-07-25 CBB

SNK953 1023 143 40.61 5807.23 2007-07-25 CPD

SNK953 1024 220 40.61 8934.20 2007-07-25 FDG

SNK953 1025 32 40.61 1299.52 2007-07-25 OCB

SNK954 1026 561 43.46 24381.06 2007-07-20 BBE

SNK954 1027 701 43.46 30465.46 2007-07-20 CBB

SNK955 1028 425 43.46 18470.50 2007-07-20 FDG

SNK956 1029 770 43.46 33464.20 2007-07-20 CPD

SNK956 1030 535 43.46 23251.10 2007-07-20 WPD

SNK957 1031 147 43.46 6388.62 2007-07-20 OCB

The inclusion of invoice data on payments certainly provides a benefit to commercial customers; they can, more or less clearly, marry the payments to the goods. The inclusion of invoice details on a payment also suggests to banks and their regulators that more information is available on these payments with which to answer critical questions. In most cases, though, the bank will have data, but it will not have usable information.

Uncover Hawaladars Hidden in Your Wires.

I want to introduce a new, or at least unusual wire transfer surveillance concept that can lead to some interesting cases.

The heart of the technique is looking for individuals that have a higher than average number of unique counterparties. I wish I could take credit for this concept, but I can't. Dr. Michael Recce introduced the concept one day over lunch. (OK, I admit it, we're nerds. We'd spent the morning talking about automated monitoring of trade finance, and for a change of pace we shifted back to regular AML surveillance concepts.)

At this point you're wondering why the number of counterparties would mean anything. Let me ask you this; how many wire transfers have you received in your personal account this month? This year? Ever?

For purposes of this post, I've applied the concept strictly to wire transfers.

The basic drill is as follows;

1. Using, rules, filters, or queries, identify account holders with a higher than average number of unique counterparties. Alternatively, you could 'band' the number, or use specific number ranges. (for example; how many accounts have between 30 and 50 unique wire counterparties?)
2. Review the wires; wire instructions, OBI info, detailed counterparty information. Confirm that your account holder in fact has a bunch of unique counterparties, and become familiar with the details of the transactions.
3. Ask “Do the transactions make sense for the account holder?” For example, the account holder is running a business out of their personal account (you'll have to chat with them about that anyway), the invoice numbers and descriptions are all consistent with each other.
4. Ask the account holder to explain the business nature or the underlying reasons for the transactions.

Variations on the drill might look at

1. counterparty country. Are the countries as diverse as the counterparties? What portion of the counterparty countries are high risk countries in your institution's risk assessment?
2. Looking at wire roles separately; number of unique originators where the account-holder is the beneficiary is one slice, and number of unique beneficiaries where the account-holder is the originators is another slice. Same kind of wire profiling applies in both cases.
3. Forget about counterparties entirely and just look at number of counterparty countries

Here's an example ripped from the headlines, as they say.

I've liberally borrowed from the details of an Iranian sanctions case involving Dr. Mahmoud Banki, who recently won, at least in part, an appeal of his conviction for having run an unlicensed money remitter and violating Iranian sanctions in the process.

Dr. Banki (he has a doctorate in chemical engineering, and worked as a management consultant.) was the beneficiary of 56 wire transfers from 44 unique entities. Here's a quick profile of the wires:

• 56 wire transfers in amounts between $2600 and $199971, total value $3,400,000.
• 9 wires for $10,000 or less
• 41 wires between $10,000 and $100,000
• 6 wires for more than $100,000
• Majority of originators were individuals
• Some originators were business entities, including
• Hillmarcs Construction Corp. (Philippines),
• United Gulf Exchange Company (Kuwait),
• Torgovy Dom Atlanta (Russia),
• Trenton Group, LLC (Latvia).
• Unusual wire instructions
• “contract for pistachios”
• “tomato paste and transportation”

1. Identifying a customer with an unusual number of unique counterparties. Of course, in this instance, the case focuses on Dr. Banki for us. In your own institution, you would have to develop a query or filter that captures a beneficiary customer with multiple distinct originating parties. If you don't create a 'party' profile in your wire data respository, go for the simple substitute: profile on unique originating party account numbers.
2. Reviewing the wires to understand the transactions. Again, done for us in the court case. In your own institution, it's business as usual for any investigator or analyst that has worked on wires in the past.
3. Do the wires make sense on their face, for this customer? On their face, no, these don't make a lot of sense. Certainly, the OBI information about pistachios and tomato paste raise an eyebrow. United Gulf Exchange and Torgovy Dom Atlanta are basic trading/exchange houses, and Trenton Group's name certainly does clarify their business. Keeping in mind that Dr. Banki is an individual, the account is a personal account, and he's a chemical engineer, there's little that's plausible in the wire set. (How many wires have you personally received this year?)
4. Ask the customer to explain the underlying business nature or reason for the transactions. As it turns out, of course, Dr. Banki had no direct business relationship with any of the originators, and was not the ultimate beneficiary of the wire transfers. His role was as an intermediary party between the originator, an Iranian hawaladar, and the ultimate beneficiaries.

This type of surveillance is tailor made for identifying parties involved in the placement of funds from a variety of sources into a single account. Whether that's an unlicensed money remitter, a 'consolidator' for funds (whether those funds are from criminal sources, or they are destined for criminals or terrorists), or the professional money launderer.

To make it work effectively in your own shop;

1. Find a way to identify, profile and work with the number of counterparties for each customer.
2. Focus on individual (personal) accounts initially.
3. Start with wire transfers
4. Start with the originating party as the counterparty.
5. Establish absolute number bands until you can build a profile distribution.
6. Test, test, test.

Happy hunting!

Risk Rating questions for a corporate customer

Collecting CDD/EDD information on corporate customers can help with customer AML risk-rating, if you get to the interesting questions, and apply risk information you already have:

Some sample questions:

1. Nature of business/industry (implies a listing or set of high-risk business types)
2. Type of business formation
3. Jurisdiction of business formation (apply country risk factor)
4. Business privately held or publicly traded?
   1. If publicly traded are shares on a recognized exchange (implies listing of acceptable exchanges worldwide.)
5. Identification of beneficial owners:
   1. Document direct owners
   2. Document indirect owners
   3. Calculate actual ownership
   4. Drive to statutory required level (say 10%)
   5. Drive to actual persons as beneficial owners
6. Identification of board members, senior management, other signatories
7. Types of products to be used (implies a risk assessment of products, for example)
   1. Lower Risk (savings account, certificates of deposit, basic demand deposit)
   2. Moderate Risk (lending, financing, certain kinds of investment products)
   3. Higher Risk (cash services, wires, ACH, standby letters of credit, etc.)
8. Listing of expected counter-party countries (from list, and applying country risk factors)
9. Expected value, volume, variations
10. Screen of signatories, beneficial owners, board members, senior managers;
    1. Cases (this is a little controversial)
    2. Sanctions
    3. Negative news

For Entertainment Purposes Only: SDN Search

On December 7, 2011, OFAC debuted its own online SDN Search Tool.

Accompanying the tool is a formidable disclaimer (I've taken some liberties):

“This SDN Search application (“SDN Search”) is designed to facilitate the navigation of the Specially Designated Nationals and Blocked Persons list (“SDN List”).

SDN Search uses literal character matching logic to identify exact matches between word or character “strings” exactly as entered into SDN Search, and any name or other information exactly as it appears on the SDN list.

SDN Search will not detect misspellings or other incorrectly entered text, and will not return near matches to, or other variations of, the entered text.

SDN Search may suddenly accelerate to dangerous speeds.

Discontinue use of SDN Search if any of the following occurs:

• itching
• vertigo
• dizziness
• tingling in extremities
• loss of balance or coordination
• slurred speech
• temporary blindness
• profuse sweating
• heart palpitations

Do not taunt SDN Search.

Use of this system implies understanding that searches performed by SDN Search are conducted at the user’s own risk, and that the search results provided by SDN Search do not represent an official confirmation by the Office of Foreign Assets Control or the Department of the Treasury of the existence or absence of a match between any information entered by the user and any information contained on the SDN List.

The use of SDN Search does not limit or excuse any liability for any act undertaken as a result of, or in reliance on, such use.”

Donning appropriate safety gear; I tested my favorite SDN “Daytona Pools, Inc.” with some variations.

The listing:

“DAYTONA POOLS, INC., 225 Syracuse Place, Richardson, TX 75081

[LIBERIA]”

Target Text	Hit?
Daytona Pools	Yes
Daytona Pools Incorporated	No
Daytonapools	No
Daytona*Pools	No
Dayt0na Pools	No
Daytona Poo1s	No
Daytona Pool	Yes
Dayton A Pools	Yes
Daytona Polos	No
Daytona Poods	No
Dayton A Polos	No

In addition to misspellings, near matches or mistakes in data entry warned about in the disclaimer, SDN Search does not recognize “glued names” (Daytonapools) or fully elaborated names (Daytona Pools, Incorporated.) These 2 variations have been featured in recent OCC tests of OFAC screening tools.

With all of the limitations of the SDN Search tool (both in search mechanics, and 'fitness for decision-making') it's hard to imagine an operational, 'prime-time' use for this tool.

Risk Rating the Vatican!

A 'Quick and Dirty' Approach to assessing an AML/CTF risk weight for the Vatican.

I was inspired by Stephan Schmitz's post on the Vatican and FATF to demonstrate a 'quick and dirty' AML/CTF risk rating for the Vatican. Even though the Vatican is ignored in most open source assessments, it is possible to use those methodologies to develop and document a usable AML/CTF risk factor.

You won't make a lot of friends this way, but here's one way to describe the Vatican;

a theocratic monarchy, where women are denied citizenship, and where there is 1 soldier for every 5 residents.

For purposes of this post; there are two components to the risk factor; a set of core AML/CTF infrastructure questions, and the Transparency International Corruption Perception Index.

Core Questions

For the 'quick and dirty' approach, I used the same questions employed by the US Department of State to assess the money laundering risk of various countries. Their results are published annually as part of their International Narcotic Control Strategy Report.

To answer the core questions, I used the Vatican's “LEGGE CONCERNENTE LA PREVENZIONE ED IL CONTRASTO DEL RICICLAGGIO DEI PROVENTI DI ATTIVITÀ CRIMINOSE E DEL FINANZIAMENTO DEL TERRORISMO”, which was put into effect in December 2010. My facility with Italian is not great, so any assessment errors are my own.

Core Questions	Qualitative Answer	Numeric Score
1. “Criminalized Drug Money Laundering”:Has the Vatican enacted laws criminalizing the offense of money laundering related to the drug trade?	Yes	0
2. “Criminalized Beyond Drugs”: Has the Vatican enacted laws criminalizing the offense of money laundering related to crimes other than the drug trade.	Yes	0
3.“Know Your Customer Provisions”: By law or regulation, does the Vatican requires banks and/or other covered entities to adopt and implement Know Your Customer/Customer Due Diligence programs for their customers or clientele?	Yes	0
4. “Report Large Transactions”: By law or regulation, are banks and/or other covered entities required to report large transactions in currency or other monetary instruments to designated authorities?	No	1
5. “Report Suspicious Transactions”: By law or regulation, are banks and/or other covered entities required to report suspicious or unusual transactions to designated authorities?	Yes	0
6. “Maintain Records over Time”: By law or regulation, are banks and/or other covered entities required to keep records, especially of large or unusual transactions, for a specified period of time, e.g., five years?	Yes	0
7. “Disclosure Protection - ‘Safe Harbor”: By law, does the Vatican provides a “safe harbor” defense to banks and/or other covered entities and their employees who provide otherwise confidential banking data to authorities in pursuit of authorized investigations?	No(?)	1
8. “Criminalize “Tipping Off”: Under Vatican law, is disclosure of the reporting of suspicious or unusual activity to an individual who is the subject of such a report, or to a third party, a criminal offense?	Yes	0
9. “Financial Intelligence Unit”: Has the Vatican has established an operative central, national agency responsible for receiving (and, as permitted, requesting), analyzing, and disseminating to the competent authorities disclosures of financial information in order to counter money laundering?	Yes	0
10. “Cross-Border Transportation of Currency”: By law or regulation, has the Vatican established a declaration or disclosure system for persons transiting the jurisdiction’s borders, either inbound or outbound, and carrying currency or monetary instruments above a specified threshold?	Yes	0
11. “International Law Enforcement Cooperation”: Does the Vatican cooperate with authorized investigations involving or initiated by third party jurisdictions, including sharing of records or other financial data, upon request? (Based on past experience. Their new law promises a better level of cooperation.)	No	1
12. “Mutual Legal Assistance”: By law or through treaty, has the Vatican agreed to provide and receive mutual legal assistance, including the sharing of records and data?	Yes	0
13. “System for Identifying and Forfeiting Assets”: Has the Vatican established a legally authorized system for the tracing, freezing, seizure, and forfeiture of assets identified as relating to or generated by money laundering activities?	Yes	0
14. “Arrangements for Asset Sharing”: By law, regulation or bilateral agreement, does the Vatican permit sharing of seized assets with third party jurisdictions that assisted in the conduct of the underlying investigation?	No	1
15. “Criminalized the Financing of Terrorism”: Has the Vatican criminalized the provision of material support to terrorists, terrorist activities, and/or terrorist organizations as required by the UN International Convention for the Suppression of the Financing of Terrorism and UN Security Council Resolution 1373?	Yes	0
16. “Report Suspected Terrorist Financing”: Are banks and/or other covered entities required to record and report transactions suspected to relate to the financing of terrorists, terrorist groups or terrorist activities to designated authorities?	Yes	0
17. “States Party to 1988 UN Drug Convention”: Is the Vatican party to the 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, or a territorial entity to which the application of the Convention has been extended by a party to the Convention?	Yes	0
18. “States Party to the UN International Convention for the Suppression of the Financing of Terrorism”: Is the Vatican party to the International Convention for the Suppression of the Financing of Terrorism, or a territorial entity to which the application of the Convention has been extended by a party to the Convention?	No	1
19. “States Party to the UN Convention against Transnational Organized Crime”: Is the Vatican party to the United Nations Convention against Transnational Organized Crime (UNTOC), or a territorial entity to which the application of the Convention has been extended by a party to the Convention?	No	1
20. “States Party to the UN Convention against Corruption”: Is the Vatican party to the United Nations Convention against Corruption (UNCAC), or a territorial entity to which the application of the Convention has been extended by a party to the Convention?	No	1
21. “US or International Sanctions/Penalties”: Has the US, another jurisdiction and/or an international organization, e.g., the UN or FATF, has imposed sanctions or penalties against the Vatican?	No	0
Total Quantitative Score		7

So, who else scores a “7” on these questions?

• Angola
• Central African Republic
• Comoros
• Nauru
• Solomon Islands
• Suriname
• Tajikistan

That's some risk neighborhood!

Transparency International Corruption Perception Index

The CPI scores run in the opposite direction from the risk weighting factor we built with the Core Questions; 'clean' jurisdictions have higher scores than 'dirty' ones. To fix that, we simply take the 10's complement of the CPI scores; in other words, subtract the country's CPI score from 10 to find its risk increment.

The second difficulty to overcome is that there is no CPI assessment for the Vatican. Well, using “0” as a risk increment is certainly possible, but it might be misleading. Standard practice in statistics accounts for missing measurements by supplying an average value. (It's certainly what my bridge club does when a pair has not played a hand.) And statistics being what it is, you have a rich variety of 'averages' from which to chose. Here are some approaches to consider; see if they match your approach to risk assessment.

1. Simple median score, in this case “5”.
2. The average for the country's nearest geographic neighbors; in this case Italy, France and Switzerland, giving an average risk increment of “3.4”
3. The average for countries sharing the same set of attributes; in this case, countries with the same scoring on the core questions, giving a risk increment of “7.5”

AML/CTF Score for the Vatican

Using the core questions, and the median CPI score, we get an AML/CTF risk score for the Vatican of 12. To put that in context; here's where it sits between the lowest rated and highest rated countries using this method:

Denmark	0.6
Vatican	12.0
Somalia	29.0

When in doubt, blame OFAC!

It seemed so simple; Ann Jones, a writer for The Nation, wired rent money from her account on a US bank to her landlady, Heidi, in Norway. Well, she tried to, at any rate.

Heidi didn't get the money. Ann called her bank, to find out what went wrong. Her bank told her the hold-up was her fault, she hadn't provided enough information about herself on the wire. She provided the additional details.

A few days later, Heidi still hadn't received the money. Ann called her bank again. The bank insisted that they didn't know where the money had gone, it had gone out of the bank, and they had collected the wire fee. They assured Ann that this time it wasn't her fault.

The bank told her that OFAC was holding up her wire transfer.

At this point in the narrative, I will pause to let you run over to your favorite sanctions screening software. You can search on “Ann Jones”, “Jones”, “Heidi”, and if you have extra time, see if there are any Norwegian banks or bank branches located in Norway on the OFAC list.

That didn't take long did it? Because, well, they aren't there.

And not to leave you in suspense, some days, maybe a week after Ann provides the additional information, the funds turn up in Heidi's account.

Ann recounts her misadventures with OFAC in her online article Me and OFAC and Ahmed the Egyptian.

Except OFAC never had a single thing to do with her wire transfer.

Key items in the story actually point the finger at Heidi's bank in Norway. They are:

• a wire transfer from a bank in the US to a bank in Norway
• the wire is held up for lack of information about the originating party 
  the funds are not being held at the US bank
• providing additional information about the originating party gets wire moving again.

The more likely culprit was EU 1781, payments transparency regulation base on FATF SR VII. It requires banks in the EU/EAA to monitoring incoming cross-border wire transfers for certain standards of originating party information, and to obtain that information if it is missing. It's not a new rule, the law was enacted in 2006.

The US bank should have know about it, and certainly could have explained as much to Ms. Jones. They chose not to. They chose to blame the holdup on OFAC. Actually, put another way, they chose to tell a story to a journalist that would fall apart the moment you searched for “Jones” on the SDN list. It just doesn't make any sense. And there's really no excuse for misleading their customer.

I suppose at the end of the day everything worked out; the bank got a pesky customer off the phone, a journalist got fodder for an interesting piece, Heidi eventually got her rent money, OFAC got to gather information on Ms. Jones under the guise of helping her trace the wire transfer while retaining the air of mystery that comes with good misinformation.