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#1752958 - 10/26/12 08:04 PM Need help! Potential money laundering?
CSB98 Offline
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Joined: Dec 2003
Posts: 1,236
Wisconsin
We have a customer that has a privately owned ATM. This customer is in the business of purchasing scrap metal to recycle. When a customer comes in to sell the metal, they are paid with an ATM card, which can then be used at the ATM to withdraw the funds. They have an amored car service bring the canisters to the bank to replenish the cash. This is done twice a week and the canisters are filled in excess of $100,000. The armored car service then picks up the canisters and returns them to the business. The other issue I'm hearing is that when the canisters are returned, there is always at least one that has the security ring broken (meaning someone has gotten into the canister for some reason). They try and tell us that the machine is jamming so they need to get in there, but we're not necessarily buying it.

My gut is telling me that there is potential money laundering going on here. I've been reading many things that indicate ATM use is becoming more prevalent for money laundering.

So, what should I do to either prove my theory or ease my worries? I'd like to tell the customer to hit the road, but he has substantial loans with us as well, so we need to tread carefully with this.

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#1752986 - 10/26/12 08:51 PM Re: Need help! Potential money laundering? CSB98
SF Giants Offline
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That sounds a little fishy to me. He have a customer that has multiple recycle center for metal and other things such as old computers, and things like that. Our customer does not operate his business that way.

I would look to see if they have more than one location and look at other similar businesses on the internet to see if that is trend or if your customer is the only one doing it this way.

Over 200k per week seems a little much.

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#1752991 - 10/26/12 08:58 PM Re: Need help! Potential money laundering? CSB98
JacF Offline

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Posts: 6,719
PA
Large cash payouts from a scrap yard are, in and of themselves, pretty normal for that type of business.

As to your question about the on-site ATM: Is the scrap yard's ATM settlement account at your bank? If so, take a look at the deposits going in to the account to reimburse the scrap yard for the withdrawals. Those deposits should be in the neighborhood of the cash going into the cannisters.

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#1753012 - 10/26/12 09:31 PM Re: Need help! Potential money laundering? CSB98
SF Giants Offline
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SF Giants
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I should have clarified myself, as to my customer. The amounts he deals with are around those amounts but the ATM payout system is what I was referring to about that he does operate his business that way.

Hope that clears up any confusion.

The ATM settlement account research is a very good idea.

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#1753033 - 10/27/12 04:09 PM Re: Need help! Potential money laundering? CSB98
ACBbank Offline
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New York City
I'm probably misreading this, as it's been a long night, but why would a scrap yard have a private ATM? In my area, private ATM's are usually at high foot traffic businesses like 7-11's, hair salons, deli's, etc. I could be mistaken, but I just don't see this as BAU for a scrap yard.
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#1753130 - 10/29/12 03:25 PM Re: Need help! Potential money laundering? CSB98
BrendaC Offline
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Sweet Home AL
As mentioned, review of the ATM settlement account should help you determine whether the customer's cash ins/outs match. If you don't have other scrap metal customers, speak with a peer bank in your area and discuss activity volumes. That will help you understand whether the cash activity is commensurate with similar businesses in your area. Obviously, conversation would be very high level...no specifics regarding customers UNLESS during the conversation you feel you could be discussing the same customer. In that case, invoke 314 rule and document discussion with appropriate individual as ML investigation of that suspect.
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#1753145 - 10/29/12 03:56 PM Re: Need help! Potential money laundering? JacF
CSB98 Offline
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Joined: Dec 2003
Posts: 1,236
Wisconsin
The ATM settlement is not at our bank.

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#1753165 - 10/29/12 04:45 PM Re: Need help! Potential money laundering? CSB98
BrendaC Offline
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BrendaC
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Sweet Home AL
If you are registered for information sharing with other banks under 314(b), you can call them to discuss potential ML. Are you familiar with that process?
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#1753479 - 10/30/12 05:18 PM Re: Need help! Potential money laundering? CSB98
NotDoneYet Offline
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NotDoneYet
Joined: Jul 2010
Posts: 482
PA
There is a scrap yard near me that uses an ATM on sight as previously described. Might cut down on potential robberies since there isn't cash in the office safe? I think there are limits, too, but we never reached it to know for sure.

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#1753522 - 10/30/12 06:32 PM Re: Need help! Potential money laundering? CSB98
McGruff Offline
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McGruff
Joined: Feb 2004
Posts: 262
Texas
Several questions come to mind....

1) Why isn't the ATM settlement account at your bank? I would make a serious effort to have that account moved to my bank.

2) How are repairs, maintainance, etc done to the ATM? Does the scrap yard do the repairs themselves? Why aren't new canister seals placed on the canisters?

3) If they are selling residual cash back to the bank, why are the canisters allowed to be returned in an unsecured manner? Have they ever challenged your cash count on the returning canisters?

I would address concerns in this order: Unsecured cash canisters, the ability to do an reasonably accurate risk assessment on the customer, then look at potential money laundering. The third item might be a whole lot clearer once you address the first two.

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