Rodolfo Correal, an expert in compliance analysis, has weighed in on why U.S. banks are making it more difficult to open accounts for Latin Americans, despite great business for the financial sector.
A leading Latin American authority on compliance, anti-money laundering, and anti-terrorism, Correal explained that there is an intensification of anti-money laundering and anti-terrorism regulations globally and in the United States.
Correal says this includes the banking sector and other sectors, whose compliance departments must increasingly intensify investigations for individuals or companies that wish to open accounts in the United States or move capital into them.
“It is evident that banks must be careful about the origin of the assets. Because if they are sources of some illegal activity and the government can demonstrate that true compliance with proper due diligence was not performed, for the person or company that opened the account, it is likely large fines will be incurred, or in some cases, the bank could be linked as an accomplice,” said Correal, who has 25 years of experience in analysis and background checks.
Many banks, adds Correal, prefer to avoid opening accounts for Latin Americans as they do not have sufficiently robust sources of information to develop a compliance or background check, which allows them to determine who the person is and the origin of their funds.
Correal said the knowledge of the client’s history, which is mandatory, must be done not only to comply with a legal requirement but also for the security of both the bank and the U.S. economy itself.
“The U.S. economy must be certain that the funds being transferred to U.S. accounts do not come from illicit sources that could hypothetically be used to finance illegal activities and even terrorist attacks, as has happened in the past,” adds Correal.
A matter of national security
Correal said it is a matter of national security because it is the main link in the chain for a terrorist attack to be carried out.
“It’s simple. Without money, there is no infrastructure and no organization to carry out an attack. And that is why it is imperative to know to whom the money that is being deposited in the United States from other countries belongs,” explained Correal.
Correal also cited the importance of what the money is being transferred for. He says the most effective way to find out is through a true and deep analysis of the history of the client who opens the bank account, which he describes as the “first step” in the chain.
Money used in acts of corruption
Apart from money laundering and terrorist financing, another risk the U.S. economy could face when receiving cash from individuals of other countries is the utilization of money to fund corrupt activities.
“In many cases, it has been determined that this money arrives in the United States and is used in acts of corruption, but now the action is in North America. This would form chains usually of white-collar criminals that end up infecting good health of the economy,” Correal stressed.
Identifying politically exposed persons
In such cases, Correal said it is crucial to be able to identify PEPs (politically exposed persons). PEPs are individuals who perform or have performed prominent public functions. He says due to their high degree of power or influence, PEPs can lend themselves to this type of activity with greater ease and stealth.
However, Correal said the difficulty lies in identifying them since a PEP, for instance, can be a mayor of a small town in a Latin American country, which makes his status virtually undetectable by a bank unless they, in good faith, indicate their status.
“However, leaving it to the individual would be ill-judged. The more efficient and reliable solution is to rely on technological platforms for that due diligence,” he explained.
As a leading compliance analysis expert, Correal has founded more than six successful companies dedicated to compliance and background checks.
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