AML false positives on new accounts

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SirTararam

New member
That's a bit of a technical question for the "insiders" I guess =)

I was wondering, when you open a new bank account and you haven't "trained the system" yet with your bank use behaviour to create a reference, doesn't the bank get too many false positive AML reports for that account? I don't say transactions from Panama or Cayman Islands, 7 digit numbers and stuff like that, but even normal transactions from different accounts you own won't they trigger false positives in the beginning?
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
Depends on the bank and depends on the AML software but yes. However some software learns your transactions over a period of time before reporting anything and forms a pattern on your habits. When you then deviate you get flagged. The algorithm used certainly will take into consideration the banks total volume thresholds, transfer amount thresholds, time, high risk factors such as source and destination country, currency etc etc.
 

MiddleEuroAsia

opportunist
Mentor Group Gold
Entrepreneur
That's a bit of a technical question for the "insiders" I guess =)

I was wondering, when you open a new bank account and you haven't "trained the system" yet with your bank use behaviour to create a reference, doesn't the bank get too many false positive AML reports for that account? I don't say transactions from Panama or Cayman Islands, 7 digit numbers and stuff like that, but even normal transactions from different accounts you own won't they trigger false positives in the beginning?
as @Martin Everson, it tottally depends on the bank and the jurisidiction of said bank.

but even if you trigger a false positive, your case goes to a compliance officer, and your average compliance officer in zurich is tottally different from the average compliance officer in dubai. plus, as long as you have the documents to back these transactions, you won't face any major problems.
 

SirTararam

New member
as @Martin Everson, it tottally depends on the bank and the jurisidiction of said bank.

but even if you trigger a false positive, your case goes to a compliance officer, and your average compliance officer in zurich is tottally different from the average compliance officer in dubai. plus, as long as you have the documents to back these transactions, you won't face any major problems.
So I assume, in "normal" situations - at least for new accounts - you will get asked for source of funds before the person responsible submits a STR without you knowing it.
 

JackAlabama

Entrepreneur
That's a bit of a technical question for the "insiders" I guess =)

I was wondering, when you open a new bank account and you haven't "trained the system" yet with your bank use behaviour to create a reference, doesn't the bank get too many false positive AML reports for that account? I don't say transactions from Panama or Cayman Islands, 7 digit numbers and stuff like that, but even normal transactions from different accounts you own won't they trigger false positives in the beginning?
That is why you fill out these bullshit forms regarding your networth, income, expected transactions and similar blabla. This is used to kickstart your profile.
Also if you do resident banking it is much less risk than doing offshore.
But mostly, these banks are pretty dumb and also prefer you making them money than showing you the door by this cumbersome process.
 

MiddleEuroAsia

opportunist
Mentor Group Gold
Entrepreneur
So I assume, in "normal" situations - at least for new accounts - you will get asked for source of funds before the person responsible submits a STR without you knowing it.
it depends on the severity/suspiciousness of the transaction/s, and the type of financial entity you are dealing with.
for example,. if you are dealing with crypto, and you exchange a specific number of coins on an exchange for fiat, and your coins are tainted to some degree, the chainalysis like systems that are implemented in these exchange witll trigger the AML algorithm and will provide a detailed report about why your transaction is flagged to the compliance officer. and this isn't good with crypto specially, because of the transparent nature of most blockchains (minus privacy coins). So, your options are limited unless you can come with a believable story to the CO, backed with documents that support said story.

With banks, it differs a lot, because bank transfers are private to some degree (meaning no random joe will be able to look up your bank accounts on the internet), and if the transfer is suspicious (Depends on the system implemented by the bank) they will usually ask you for a SOF first, they can't point fingers until they hear your part of the story, and if you have "good" paperwork that satisfy the SOF that the banks want, then you are good to go.

unless you are dealing with sanctioned individuals/entity, then that requires different things completely. but that's for another topic.
 
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