Proxy Arrangement

By interposing a proxy as the nominal controller, criminals create a hidden layer that shields the true beneficial owner or the origin of the funds.

By positioning the proxy as the formal account holder, criminals can bypass KYC barriers and exploit weak ongoing due diligence. This allows them to secure or maintain financial access that would likely be denied if the true owner were revealed.

This technique primarily exploits weaknesses in identifying and verifying the true beneficial owner. By installing a proxy or nominee as the official account holder or controller, criminals obscure the real individual behind the funds, frustrating customer due diligence and ongoing monitoring processes.

In jurisdictions with weak requirements for verifying beneficial ownership or those offering high levels of secrecy, proxies can operate with minimal scrutiny. This lack of transparency allows criminals to maintain hidden control over assets and evade detection by AML frameworks.

Provides details of individuals holding public or political roles, including their official positions and affiliations. This data helps identify hidden beneficial owners or proxies who may be politically exposed, triggering enhanced due diligence to uncover concealed ownership or control.

Consolidates risk information about jurisdictions known for secrecy or limited AML transparency. Flags higher-risk proxies or beneficial owners operating from these areas, enabling deeper due diligence to identify concealed ownership.

Aggregates publicly available information, such as social media, news reports, and web content, to verify declared ownership structures and identify undisclosed relationships. This process helps uncover adverse media or hidden affiliations that may confirm proxy arrangements.

Includes official powers of attorney, signatory authorizations, and other legal instruments. Enables the detection of broad or indefinite delegations of authority that may conceal a true beneficial owner behind a proxy.

Provides comprehensive records of each financial transaction, capturing the initiator, time, amount, and the accounts involved. Helps detect potential proxy usage by identifying initiators who are not the registered owner or signatory and flagging patterns inconsistent with the known account holder.

Stores verified details on beneficial owners, authorized persons, and overall customer profiles. Facilitates the comparison of listed signatories with actual transaction initiators to uncover inconsistencies or mismatches indicative of proxy arrangements.

Captures international wire transfers, participating countries, and associated beneficiaries or intermediaries. Highlights rapid or high-volume fund movements routed through proxy-held accounts to obscure the original source or beneficial owner.

Provides official or aggregated information on company ownership structures, directors, and shareholders. Helps confirm that declared beneficial owners align with registry data, revealing discrepancies that may point to a proxy arrangement.

Assess the necessity and scope of each proxy's authority by requiring comprehensive legal documentation, such as notarized powers of attorney, and verify authenticity through external registries or OSINT checks. Identify and confirm beneficial owners behind corporate or trust structures to ensure that no undisclosed individuals exert hidden control.

Require periodic re-validation of all active third-party mandates or powers of attorney to confirm the continuing authority of the proxy and verify whether beneficial ownership or the principal’s circumstances have changed. By frequently updating documentation and reviewing any newly introduced signatories, institutions can prevent undisclosed proxies from emerging as hidden controllers.

Mandate in-person or high-security identification for individuals who will operate accounts on behalf of others. Obtain notarized Power of Attorney (PoA) or representation documents, ensuring they comply with local regulations.

Implement targeted rules to flag transactional patterns that are inconsistent with the proxy's known profile, such as unusually large transfers or repeated high-value deposits and withdrawals. Investigate abrupt cross-border movements or transactions that deviate from the principal's typical activity to help detect when a proxy is masking the true origin or ownership of funds.

• Proxies open and manage accounts on behalf of the true principal, diverting scrutiny away from the real source and ownership of funds.
• Delegating signing authority to a proxy hides the identity of the actual controller, complicating due diligence by financial institutions.
• This arrangement allows illicit funds to be deposited, transferred, or withdrawn under another individual’s name.

• Properties are purchased or held in the name of a proxy, masking the true purchaser or owner.
• The proxy’s official control of the property conceals the beneficial owner’s involvement, diminishing transparency in land registries and financial institutions.
• This enables the true owner to hold valuable assets without direct attribution.

• Criminals designate a proxy as the registered holder of stocks or bonds, disguising the true controller of these instruments.
• By operating under the proxy’s name, the ultimate beneficial owner remains obscured, frustrating KYC and beneficial ownership checks.
• Transfers of securities can occur with minimal direct evidence linking the hidden principal.

• Criminals appoint proxies as the named beneficiaries or trustees, distancing themselves from the trust’s official records.
• The proxy’s formal role complicates efforts to identify the real controlling party behind trust assets.
• This delegated authority structure exploits legal trust mechanisms to conceal the genuine owner.

• By physically transferring bearer share certificates to a proxy, criminals relinquish any formal registration linking them to the company.
• Ownership is effectively with whoever holds the certificates, allowing the real principal to remain invisible.
• This low-transparency setup is exploited to mask the actual beneficial owner behind a nominal holder.

• Family offices often manage diverse assets and can be overseen by close associates or relatives acting as proxies.
• The reliance on inter-family or associate relationships can mask the real source of funds, especially if oversight is limited.

• Lawyers can draft or formalize powers of attorney, enabling a proxy to transact on behalf of the criminal principal.
• The attorney-client privilege may further obscure the true owner’s identity, impeding AML inquiries.

• Professionals (e.g., lawyers, accountants) may hold funds on behalf of criminal principals, with the professional acting as the named account holder.
• This arrangement blurs the line between the proxy manager and the true beneficial owner, reducing transparency.

• Criminals may rely on proxies to manage private banking accounts, benefiting from dedicated account managers who might not scrutinize ultimate owners as rigorously.
• Personalized services and higher transaction thresholds can facilitate large-scale fund movements under a proxy’s name.

• Proxies can open and operate offshore accounts in high-secrecy jurisdictions, concealing links to the true principal.
• The layering effect is enhanced by remote access and minimal disclosure requirements, shielding the primary controller.

• By assigning proxies as trustees or beneficiaries, criminals can distance themselves from the funds’ ownership.
• This structure leverages delegated authority, making it harder for investigators to establish the real source of assets.

• Enables criminals to form companies in jurisdictions with limited oversight, using proxies or nominee directors to mask the true owners.
• Secrecy-friendly laws can further shield the actual beneficial owner’s identity, complicating standard due diligence.

• Criminals may designate proxies as official trustees or corporate directors, obscuring the real beneficial owners behind legal structures.
• By interposing these proxy entities, illicit proceeds can be controlled without revealing the ultimate individual in charge, hindering AML transparency.

Beneficial owners orchestrate proxy arrangements by:

• Delegating authority to a proxy or nominee, avoiding direct scrutiny of personal financial activity.
• Remaining off official records, making it difficult for financial institutions to trace the true source or control of funds.
• Potentially being high-risk individuals, including PEPs in secrecy-friendly jurisdictions, further increasing AML/CFT concerns.

Nominees act as stand-ins for the true principal’s accounts or assets by:

• Formally serving as signatories or account holders, concealing the actual ownership from financial institutions.
• Often being close family members or associates who deposit or transfer large sums on behalf of the hidden controller.

This delegated authority arrangement complicates due diligence and ownership verification, enabling illicit funds to be transacted under another individual’s name.