Wire Transfer: Sanctioned Company Reference Removal

B

The activity described in the question is Wire Stripping.

Wire stripping is a money laundering technique in which the beneficiary or reference details of a wire transfer are removed or altered to disguise the origin or destination of the funds. This is typically done to avoid detection by anti-money laundering (AML) controls, sanctions screening or other regulatory requirements.

In the given scenario, the bank received a wire transfer that included a reference to a sanctioned company. Instead of blocking the transaction, the bank's operations team removed the reference to the sanctioned company and allowed the transfer to process. By removing the reference to the sanctioned company, the bank effectively concealed the true nature of the transaction and facilitated the movement of illicit funds.

Wire stripping is illegal and violates AML laws and regulations. Financial institutions are required to have robust AML controls in place to prevent this type of activity from occurring. Wire stripping can also lead to severe legal and reputational consequences for both the financial institution and the individuals involved.

U-turn payment is a specific type of transaction that involves a transfer of funds from one foreign bank to another foreign bank through a U.S. bank. This type of transaction is subject to U.S. sanctions and requires specific licenses and approvals to process. Cover payment misuse and layering are other types of money laundering techniques used to conceal the origin or destination of illicit funds. Cover payment misuse involves using a separate transaction to cover up the true nature of a transaction. Layering involves moving funds through multiple transactions and accounts to make it difficult to trace the funds back to their original source.