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US Probe of connection between banking remote check scanning and money laundering

US Bank Regulators are investigating the multi-billion dollar payments processing sector due to security gaps which leave the banking institutions exposed to money laundering schemes by drug cartels and terror groups.

Regulatory enforcement has forced banks to hire more staff to conduct in-depth reviews and invest in higher technology improvements.

There is still ongoing concerns that the “weakness in the check clearing process” still leave security gaps.  Banks receive massive numbers of scanned checks making them more difficult to screen than the traditional wire transfers for suspicious activity.

Banks can also “mine” data easier in the wires….however, it proves difficult in the large numbers of scanned documents.

In recent years the scan process “Remote Deposit Capture” has allowed businesses to scan massive amounts of checks and deposit them in US Banks.  The process takes seconds to complete and the physical checks never reach the bank.

This leaves the door open for the drug cartels and terror groups to set up check cashing businesses and scan checks, money orders and travelers checks that they purchase with “dirty dollars” and create deposits in the US Banks.  Then transfer the deposits to legitimate businesses that support the cartels and terror groups….immediately providing “clean currency”

At least four major banks have been cited by the regulators for not adequately enforcing the security measure needed to prevent this from happening…and it is expected that more will follow.

The technology exists to close this “security breach” however it will take time and a great deal of money to close it completely.

Ref source:  Reuters News,  Brett Wolf  ( forward from fellow PSDA member Chait )

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