Corruption

Corruption is a predicate offense where officials or persons in authority illicitly acquire funds by abusing their position or influence. This forms the initial source of illegal proceeds that must then be laundered.

This technique primarily involves corrupt officials, such as Politically Exposed Persons (PEPs) and public officials, abusing their positions of trust to generate illicit proceeds, categorizing them as high-risk customers. They exploit their status and power to conceal the origin of funds and evade scrutiny, complicating Anti-Money Laundering (AML) due diligence efforts.

Corrupt actors frequently move or conceal illicit proceeds in offshore and secrecy-friendly jurisdictions with weak AML controls. They leverage these locales to hide beneficial ownership and avoid detection of illicit assets.

Identifies public officials or individuals in prominent political roles, along with their known affiliations. In corruption scenarios, referencing PEP lists ensures transactions involving these high-risk individuals receive enhanced scrutiny, helping detect potential bribery or kickbacks.

Compiles negative news stories, legal proceedings, and court documents involving individuals or entities. These records help investigators detect allegations of bribery, embezzlement, or personal misconduct, offering insights into possible corruption cases and justifying heightened scrutiny of the involved accounts.

Covers profit-and-loss statements, balance sheets, and tax returns, enabling verification of reported income and expenditures. In corruption probes, this data reveals hidden revenue streams, sham businesses, or inconsistencies suggesting kickbacks or embezzlement.

Provides comprehensive records of account ownership, balances, and transaction details, including timestamps, amounts, currencies, and parties. In corruption cases, these logs help trace suspicious fund flows, identify layered transactions, and detect anomalies that exceed a public official’s legitimate income sources.

Offers detailed information on account owners, balances, and transaction histories. In corruption investigations, sudden large deposits or rapidly increased balances can signal misappropriated funds or bribery proceeds funneled through personal or related-party accounts.

Documents a public official’s declared assets, liabilities, and financial interests. By comparing these declarations with transaction histories, investigators can identify unexplained wealth and uncover illicit enrichment linked to corruption.

Contains verified identities, addresses, beneficial ownership structures, and income details. For corruption investigations, these records confirm potential PEP status, declared sources of wealth, and highlight inconsistencies suggesting embezzlement or abuse of office.

Details ownership and transaction data for real estate and other high-value assets. For corruption inquiries, linking expensive asset acquisitions with minimal reported income helps expose bribery proceeds or embezzled funds laundered through property purchases.

Tracks international fund movements, including originating and beneficiary institutions, currencies, and settlement details. This data is crucial for identifying high-risk cross-border transfers tied to corrupt officials moving illicit proceeds offshore.

Provides official data on company structures, directorships, shareholdings, and ownership relationships. In corruption cases, these registries help trace shell entities or hidden beneficial owners used to launder embezzled funds.

Conduct detailed background checks on public officials and PEPs by cross-verifying declared income sources, asset declarations, and external records. Proactively evaluate the beneficial ownership of legal entities or accounts linked to the individual, identifying any nominee or shell structures that could mask bribes or embezzled funds. Require robust documentation that justifies sources of wealth, with particular scrutiny of entities or transactions tied to high-risk corruption jurisdictions.

Establish targeted monitoring scenarios for high-risk corruption indicators, including recurring large payments that exceed known government salary ranges, multiple round-figure wires, or structured deposits from government-affiliated entities. Investigate anomalies such as sudden spikes in transaction volume, transits through high-risk corruption jurisdictions, or payment flows involving associates of public officials lacking clear business justification.

Regularly screen customers and related parties for changes in PEP status or new adverse media referencing bribery, illicit enrichment, or embezzlement. Update beneficial ownership checks to detect concealed changes in control tied to corruption allegations. Promptly escalate any matches or material negative findings for further enhanced due diligence (EDD) or service restrictions.

Periodically re-verify the financial activities of public officials or PEPs against official asset declarations, tax records, and external public data to detect unexplained enrichment. Investigate irregularities, such as a sudden accumulation of wealth or recurring high-value transfers inconsistent with declared income. Escalate any suspicious growth in assets to senior compliance for enhanced scrutiny and potential reporting.

• Corrupt proceeds are funneled into property acquisitions at manipulated prices, disguising the true amount of money laundered.
• Titles are frequently registered under shell companies or relatives to conceal the actual beneficial owner.
• Complex ownership structures hamper financial institutions' ability to identify and link suspicious transactions to a public official’s illicit funds.

• Corrupt individuals acquire high-value artworks or historical artifacts to store and transfer illicit funds in an opaque market.
• Subjective valuations and private auction arrangements allow them to understate or overstate purchase prices, masking the amount of illicit capital involved.
• Minimal disclosure requirements and inconsistent due diligence in art transactions make tracing ultimate ownership difficult for authorities.

• Ownership transfers simply by handing over physical certificates, allowing corrupt officials to easily switch legal ownership and avoid registries.
• This anonymity impedes investigators' ability to track beneficial owners, offering a convenient mechanism to conceal bribe or embezzled proceeds.

• Corrupt actors, such as Politically Exposed Persons (PEPs) or public officials, inject illicit proceeds into legal entities by purchasing shares or ownership stakes, disguising the true origin of funds.
• Complex corporate structures and nominee arrangements obscure beneficial ownership, enabling corrupt individuals to layer assets and thwart financial institution scrutiny.
• Leveraging layered shareholding or offshore registrations further complicates regulators’ attempts to identify the real source and controller of these investments.

• Bribes or kickbacks are often paid and collected in physical currency, leaving no direct electronic record.
• Incremental deposits under regulatory reporting thresholds help layer cash into the financial system, making the source appear legitimate and hindering detection.

• Corrupt officials purchase expensive items, such as high-end watches, yachts, or premium vehicles, with illicit funds, converting ill-gotten gains into physical assets that can be easily resold or transferred.
• These goods can be discreetly moved across jurisdictions, circumventing standard banking channels and reducing the likelihood of detection.

• High-value art sales and purchases allow large sums of corrupt money to be obscured as investment in collectible assets.
• Limited transparency in art transactions creates an ideal environment for laundering, where beneficial ownership and exact sale prices are often undisclosed.

• Corrupt officials can funnel bribes or embezzled funds into property purchases, masking their origin through high-value transactions.
• Inflated or undervalued pricing is often used to hide or relocate illicit capital, making it harder for authorities to trace the true source of funds.

• Corrupt proceeds can be integrated into diversified portfolios, diluting their suspicious nature among various investments.
• Complex structures and layered asset management make it difficult for investigators to identify the ultimate beneficial owner or illicit origin.

• High-value clients, including PEPs, may receive specialized handling with potentially less stringent scrutiny.
• Complex investment portfolios or managed accounts can disguise large deposits traced to corrupt sources by blending them into legitimate assets.

• Use of accounts in secrecy jurisdictions enables PEPs to move illicit funds without robust local reporting, diminishing traceability.
• Facilitates currency conversions and cross-border transfers that complicate any trail leading back to corrupt activities.

• Incorporating companies in offshore jurisdictions with limited disclosure requirements allows corrupt actors to hide beneficial ownership.
• Assets and revenues from corruption can be shielded from domestic scrutiny by leveraging secrecy-friendly regulations.

• Establishing trusts, shell, or shelf companies helps obscure the identities and beneficial ownership of politically exposed persons (PEPs).
• Nominee structures or layered corporate entities complicate AML due diligence, impeding clear visibility into illicit funds’ origins.

Politically exposed persons exploit their prominent public positions to generate illicit funds through bribes, embezzlement, or kickbacks. They move these proceeds through intermediaries or shell companies, making it harder for financial institutions to trace the true source and ownership of assets.

Shell or front companies serve as vehicles to conceal beneficial ownership and cash flows derived from bribes or misappropriated funds. Their lack of transparent operations impedes financial institutions' ability to assess the ultimate origin of assets, enabling corrupt actors to layer or disguise illicit proceeds more effectively.

Public officials misuse their authority or access to public resources to accumulate illicit proceeds, such as securing personal benefits from government contracts or misappropriating funds. These officials pose challenges for financial institutions, as their transactions may exceed any legitimate salary or income sources.