John Doe, non-customer, has obtained several large cash advances during the past 5 weeks....can't say no to the trans. So, we were wondering how a person may use a credit card for the wrong reasons....same card, just lots of cash advances. In terms of the money laundering cycle, we don't see how one card, used domestically, can be "useful" and leave no trail, etc. etc. Comments welcome!

They could make payments with illegal funds and launders it for clean cash on the back side. Sounds like SAR material.

It's Friday and I just got through week one with "company". can you explain your scenario more....begiining with John Doe and his card with a huge credit limit...Thanks

John receives his weekly drug money, makes a payment on his credit card and then gets a cash advance. He has then 'laundered' his money into clean cash.

OK, then the cash advance is used to buy more drugs...to be sold at a higher price and the diff is used to pay down the card...right??

What is difficult is that the card rules prohibit a bank from saying "you don't have your accounts here...go to your own bank to do this"...

By itself, would you all file a SAR, considering the person has no accts with you, you don't know the person, he is giving a plausible reason for the use of the card (sort of).....recommendations on how to handle welcome!

The "plausible" reason would be in my narrative along with my reasons for thinking it suspicious. The narrative would be short and sweet:

John Doe, who does not have a customer relationship with our bank, may be laundering money through the use of cash advances on his personal credit card.

During the 5-week period of March 1, 2009 - April 15, 2009, Mr Doe made 6 cash advances, averaging $5000 each and totaling $30,000. He stated that he was ... with the funds. Each was made at our 123 Street, City, State location with Amy, Betty, and Sue, tellers.

No law enforcement agency has been contacted at this time. The supporting documentation for this SAR includes a detailed listing of the cash advances in questions, copies of the cash advance logs and receipts, and statements from the tellers involved.

Trees,

I agree with smash in how to proceed with the narrative for a SAR in this case--we had a similar scenario that did not end up being a SAR: it went on a couple of weeks (large even amounts withdrawn) but it did end up being legitimate-a seasonal resident from the UK (wealthy!) paying his yacht club fees...as long as you don't feel the reasons this individual has given you are legitimate, I would go ahead and get a SAR ready because it does sound like a feasible laundering scheme.

I had a similar situation. We used sharing under 314b to contact the issuing bank as we suspected laundering. They investigated, and ended up closing the account, and we all "filed our appropriate paperwork".

Hmmmm. Good thought-provoking responses. Now, lets say the person has given us an explanation, that is "I am giving the money to X, to open a new business. X is related to person. Details of the business not provided. I'm not so much as worried that the person is laundering money" rather than trying to hide something......

Hide what? Income for tax evasion?

When in doubt...fill it out.

Trees,

That explanation sounds rather vague to me...if that were the case I would think the person would at least give you a basic idea of what the business is. The only thing I can say in their defense is if the person is from a cash-intensive culture it's not uncommon for business transactions to be done this way--a lot of times they might be using an informal personal lending system and the cash is to pay back the initial start-up costs...still, I would be putting the SAR together at this point, the devil's advocate stuff only holds so much water...

Several years ago, there was a money laundering ring that used credit cards. Street drug dealers made payments to the credit cards, driving their balances negative. Then the card owner would request a disbursement for the credit balance.

It doesn't take much to translate that concept to the one being described in this thread.

Here's a link to a FinCEN SAR Activity Review that includes a discussion on how credit cards have been suspected in illegal activities/money laundering.

http://www.fincen.gov/news_room/rp/files/sar_tti_04.pdf#page=35

Thanks for the info and link.John, do you by any chance have any further details on that scenario? I'm getting all my docs. together in support of my recommendation to file the SAR. I have a bit of a problem here. Some of the committee members have that "this is American. Since when do we file a SAR for something like this...we have no proof that the guy is committing a crime". It doesn't happen often here but, well, its here today!

That scenario will get you in trouble, as you well know. You don't need proof - just suspicion.

It is a very unusual transaction pattern - that should be all you need unless you have additional information to justify the transactions. Credit cards may be occasionally used for cash advance purposes, but multiple transactions for large amount are unusual.