Anti Money Laundering: Rule-Based Methods to Identify Funnel Accounts

Money Laundering is a controversial topic. In some geographical areas (such as the United States especially after September 11th), the topic of Money Laundering is conflated with the topic of financing of terrorism and the two expressions are often used interchangeably. In other geographical areas (such as the Netherlands), some researchers wonder what all the fuss is about with Money Laundering. Such researchers even go so far as to question whether or not Anti Money Laundering (AML) activities infringe human rights. And, if AML does not infringe human rights, some researchers will argue that AML does, at the very least, infringe some civil rights especially regarding personal privacy. Be that as it may, in many, if not most, countries, Money Laundering is an illegal activity. The US Immigration and Customs Enforcement (ICE) agency publish guidelines to assist in recognizing Money Laundering. One such guideline is the presence of funnel accounts where many deposits are input into an account and then dispersed to other accounts within a short period of time. In addition ICE publishes 12 Red Flags on how to recognize such funnel accounts. These 12 Red Flags can be the basis of a rule-based algorithm to programmatically identify funnel accounts.