CHAPTER 5

Suspicious Transaction Types

According to MASAK’s website, suspicious transaction types are mentioned as follows:

    •  Circumstances of clients not willing to provide information about the transaction or themselves during the operation. Additional situations include providing inadequate or wrong information or documents and the purpose of the transaction to the relevant authorities or financial institutions. or cases when transactions do not meet its declared purposes.

    •  Establishing transactions by transferring large funds to countries with illegal activities such as; drug trafficking, smuggling, or terrorist financing. These large transactions could also be directed to offshore centers.

    •  Inactive bank accounts with large sums of money within and detecting unusual and high increases within these bank accounts.

    •  Large sums of money transfers by customers to different accounts and addresses than regular transfer accounts or addresses.

    •  Large sums of cash movements send by accounts from other countries to a customer with bad reputation, no definite business, and no business background.

    •  Large sums of money transfers to or from abroad with no reasonable explanation and requiring cash payment of electronic money transfers.

    •  There is more than one account of a customer and the funds within these accounts become large when they are combined. Not reporting the number of these transactions could lower number of transfers identified.

    •  Transferring money by variety of people and accounts to the same bank account with no rational information.

    •  Opening a deposit account for transferring money to banks abroad by people with small businesses that does not require a banking transaction in their countries. Moreover, transferring deposited cash with aiming to transport money into different bank accounts by reserving and holding the money within the account for a short time.

    •  Transferring money that are not maintained from commercial functions and making payments to people or organizations that are not related with the company or the person that has an account in the financial institution.

    •  Obtaining high loans and paying the credits with unpredicted ways with providing no information in a short time.

    •  Receiving loans in home country by presenting a bank account as a collateral in a foreign country under the conditions of:

    •  Paying the credit abroad by transferring the deposited money from off shore banks overseas.

    •  Not providing information or a reasonable explanation about where to use or how to pay the loan when demanding credit.

    •  Transferring similar funds from or to other countries.

    •  Providing selling and acquiring orders for the accounts in future and stock markets aiming to achieve transactions with no reasonable purpose.

    •  Having two or more accounts, which are performing on the stock exchange, with similar transactions including regular profit and loss, belongs to one client.

    •  Different investors are sending money or their profits to the same account with the purpose of closing an account with a big loss.

    •  Transferring large sums of money on the date of accounts are opened.

    •  Brokers open various accounts to maintain same type of transactions to conceal money transaction movements.

    •  Suspecting that the funds in the accounts are related to terrorism activities, financing or purposes.

Some examples of cases related with such transactions in Turkey are described hereafter.

A Case of Money Laundering Resulting from Corruption

Gabriel, a Romanian resident, is working under a contract for a foreign company, SC Ltd, and has a high public position. The company had recently made an acquisition of a foreign company. After the acquisition the foreign company sends USD 1,020,000 using a foreign fund registered in a tax-free offshore centre.

SC Ltd transfers,

    •  USD 150,000 to the bank account in Hungary, and

    •  USD 300,000 to the bank account in Austria on the behalf of Gabriel’s name.

On the same day of the fund transfers, SC Ltd transfers USD 570,000 from Romania to the bank in a foreign country under the name of ‘Account 1’ on behalf of a Romanian citizen (Gabriel). A few days later, Gabriel places USD 450,000 cash into the bank account ‘Account 1’ from his bank account in Romania. On the same day of the transaction he is also:

    •  Opens an account as ‘Account 2’ in a foreign country and transfers USD 420,000 to the new account from Romania,

    •  Opens an account as ‘Account 3’ in a foreign country and transfers USD 480,000 to the new account from Romania, and

    •  Carries out exchanges of USD 120,000 worth in cash.

On the next day, Gabriel performs the following transactions from ‘Account 2’:

    •  Transfer of USD 170,000 to a non-profit organization directed by his wife,

    •  Transfer of USD 210,000 to different accounts that belong to his relatives, and

    •  Transfer USD 40,000 into his credit card account.

On the same day, Gabriel, using ‘Account 3’ does the following transactions:

    •  Paying USD 110,000 of life insurance policies,

    •  Withdrawing USD 265,000 cash,

    •  Paying USD 35,000 education expenses to the same non-profit organization directed by his wife, and

    •  Transferring USD 70,000 to an auto dealer.

Managers in the banks of the foreign countries that have Account 1, Account 2, and Account 3 suspected the transactions of Gabriel to be fraudulent and report the issue. As a result, National Office for Combating and Preventing Money Laundering analysed the suspected transactions and reported to the authorities to examine the whole money route.

Suspicious Transaction Case 1

A cash transaction above USD 10,000 is performed by a client company. The manager of the bank has identified the transaction and reported the operation as suspicious. The account was opened on 2011-08-01. The suspicious transactions started as follows:

    •  The client company M receives wire transfers with the explanation of invoice payments and borrowings large sums from business partners.

    •  On the same day of the transaction, money is transferred to another account with the explanation of material costs by the authorized individual of the company.

    •  The transactions were both performed in one branch of the bank.

    •  The client M has increased his proceeds in the bank account to USD 339,000

As a result, the bank manager examined the transactions and found them suspicious. He reported the case to the AML director as suspicious.

Suspicious Transaction Case 2

A client deposits USD 62,000 cash to his bank account. The funds on the clients account have three months maturity. The client transfers money in two parts with the explanation that he is loaning funds to two different companies. Both of the transactions are completed before the time of their maturities with no valid explanations. The client does not have income and is in no stable economic condition. Furthermore, the client will not receive interest from his account because he took out funds before their maturity.

The account was opened in 2008 and the client has not updated any personal information since then. According to the bank’s internal procedures, the bank employees were not requesting detailed information from their clients since 2010. The account was opened in 2008 so the personnel of the bank did not receive any kind of new information from the client. In 2010, bank employees started to collect data from its clients and received information about the suspected client. According to his identification, he was unemployed and has no additional income. The branch manager noticed the movements within the client’s account and compared the transactions with his personal data. As a result, the transactions are reported as suspected to the authorities, AML directors.

After the managers updated the bank’s inner procedures about ‘know your customer (KYC)’ policies, money laundering transactions became easier to detect and report.

This case illustrates how important internal regulations of the financial institutions can be.

According to the records of MASAK in 2009, the number of suspicious financial transactions which are reported to the Financial Action Task Force (FATF) has increased from 180 to 4,318 in the period of 2003 to 2008. The results represent a 24-fold increase for that period.

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