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Suspicious Banking Activities: Possible Money Laundering by U.S. Corporations Formed for Russian Entities

GAO-01-120 Published: Oct 31, 2000. Publicly Released: Nov 29, 2000.
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This report discusses possible money laundering by U.S. corporations formed by Russian entities. It is easy for foreign entities to hide their identities while forming shell corporations that can be used for money laundering. GAO investigated the following two Delaware corporations that are suspected of money laundering: Euro-American Corporate Services, Inc. and International Business Creations. Suspicious banking activity involved correspondent bank accounts and wire transfers of funds from Eastern European banks through U.S. banks to other Eastern European banks. Two U.S. banks, Citibank of New York and Commercial Bank of San Francisco, violated their customer policies by failing to close the accounts of clients who did not comply with the bank's requirement to appear at the bank in person within 30 days of opening an account. These banks facilitated the transfer of about $1 billion from Eastern Europe, through U.S. banks, and back to Eastern Europe by corporations formed for Russian brokers. It is possible that these transfers were used to launder money. GAO referred the matter to appropriate law enforcement authorities.

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Bank examinationBanking regulationFinancial institutionsForeign corporationsFraudInternal controlsMoney launderingOrganized crimeBankingPrivate banking