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How Source of Wealth unmasks financial crime

Kathleen Wainwright
Kathleen Wainwright
Regional Manager of Business Intelligence for EMEA

The recent cases of a fake German heiress and bogus Saudi prince highlight how banks and financial institutions are at risk of engaging with criminals using social media and other tools to conceal their identities. How can Source of Wealth checks as part of enhanced due diligence help to unmask and #FightFinancialCrime?

  1. The recent cases of Anna Sorokin and Anthony Gignac show how financial criminals can use social media and other tools to conceal their true identities.
  2. Banks and financial institutions need to take adequate steps to build a holistic picture of the potential risk introduced by each new client.
  3. Enhanced due diligence should include Source of Wealth checks, which provide the critical insight needed to identify illicit activity and unmask financial crime.

The high-profile case of Russian-born Anna Sorokin, widely known in New York social circles as heiress Anna Delvey, has focused attention on the apparent ease with which scammers can deceive legitimate businesses through misrepresentation.

In 2019, Sorokin was found guilty of a host of charges, including attempted grand larceny in the first degree, grand larceny in the second and third degrees, and theft of services.

As part of her deception, the working-class Sorokin used social media to build an online identity as a German heiress and leveraged this fictitious persona in an elaborate plot that eventually defrauded hotels, banks, restaurants and other businesses out of more than US$250,000.

In a separate case, Colombian-born Anthony Gignac adopted the false persona of Saudi Prince Khalid Bin Al-Saud.

He used ostentatious props, including fake diplomatic licence plates, to support his assumed identity and employed social media to lend credibility to his purported royal connections, leveraging his ‘status’ to convince unsuspecting investors to pour vast sums into often non-existent ventures.

In 2019, Gignac eventually pleaded guilty to numerous charges, including wire fraud, conspiracy to commit wire fraud, aggravated identity theft and impersonating a diplomat.

These cases have, once again, highlighted the importance of conducting thorough due diligence, and should act as cautionary tales for the wealth management industry, which remains at risk of onboarding entities or individuals with potentially hidden links to financial crime.

Source of Wealth investigations

Banks and financial institutions should ensure that they take adequate steps to build a holistic picture of the potential risk introduced by each new client.

The risk-based approach, widely regarded as best practice, requires these due diligence efforts to focus on areas of higher risk in order to maximize the effectiveness of often limited resources.

Where heightened risk is detected, enhanced due diligence, including in-depth searches of public domain sources and interviews with trusted industry sources, should be carried out. Where necessary, this enhanced due diligence should also include Source of Wealth investigations.

The purpose of a Source of Wealth investigation is to build a coherent and holistic picture of the source of an individual’s net wealth. Some examples of information included as part of deep-dive Source of Wealth research include:

  • Any money invested in a deposit account and the interest earned.
  • Any investments originating from the sale of property or businesses.
  • Inheritances or divorce/alimony settlements.
  • Accumulated cash from trading profits.
  • Shares and assets owned (including real estate, luxury goods and vehicles).
  • The individual subject’s wealthy family members (if available).
  • Any potentially derogatory information, such as links to sanctioned countries or parties.

Other red flags to look for include inconsistencies that indicate that the origin of net wealth cannot be fully explained; the use of complex tax management or avoidance schemes; links to offshore jurisdictions to hide wealth from tax authorities; or ties to a high risk country.

Watch: What is the key to turning the tide on financial crime using emerging technologies?

Protect against financial crime

Financial crime remains pervasive and banks and FIs have legal obligations to ensure that they do not allow financial criminals to access their services.

The Anna Sorokin and Anthony Gignac cases highlight that appearances can be highly deceiving and organizations should therefore ensure that they take the necessary steps to protect themselves against the financial, regulatory and reputational fallout that can result from failing to adequately address financial crime risk.

Enhanced due diligence, including Source of Wealth investigations, provides the critical insight needed to identify illicit activity — and timely access to this detailed intelligence can mean the difference between a good decision and a bad one.

Discover how Enhanced Due Diligence can help safeguard your reputation and comply with your regulatory requirements