Highlighting the importance of robust Customer Due Diligence (CDD) – A case study of a woman who tried to buy a £23m mansion found guilty of money laundering.
Written by Stephen Williamson, Senior AML Consultant, FCS Compliance
When undertaking Customer Due Diligence (CDD), it is important to continually sense-check the transaction with which you are dealing. Consider what you are seeing and hearing, does it sound plausible, reasonable and crucially does it make sense.
Ensuring that your CDD processes incorporate and encourage the recognition of red flag indicators can make a positive impact on protecting your business from ‘bad actors’. One such example of where this approach might have been useful was seen at Southwark Crown Court recently:
Jen Wen (42), was found guilty of money laundering on 18 March 2024 and awaits sentencing. In 2017 Wen declared an annual income of £5,979 while working in a takeaway in South East London. However, at the time of her arrest she was found to be in possession of Bitcoin worth £1.4bn, now valued at £3bn. She was living in a £17,000-a-month Hampstead home worth £5m after paying a £40,000 deposit and six months’ rent in advance. She was also known to have bought two apartments in Dubai for more than £500,000 and had looked into buying a £10m 18th century Tuscan villa with a sea view.
Such a dramatic and sudden change in circumstances should certainly arouse curiosity and warrant further challenge.
Had effective and appropriate CDD been undertaken during the course of any of these transactions then law enforcement may have been able to act sooner than they did. Tellingly, during police investigations Wen could offer no reason nor evidence to support being in possession of such vast sums of money.
Unfortunately, money laundering is never a victimless crime and so was the case here. The Bitcoin came from a £5bn investment scam carried out in China by Wen’s associate Yadi Zhang, who arrived in the UK on a false St Kitts and Nevis passport after conning nearly 130,000 Chinese investors in fraudulent wealth schemes between 2014 and 2017. It’s a salutary lesson, if something doesn’t feel right, it probably isn’t!
Written: March 2024
Sources:
https://www.msn.com/en-gb/news/uknews/how-chinese-takeaway-worker-led-police-to-bitcoin-worth-3bn/ar-BB1kdVj4
https://www.reuters.com/technology/woman-guilty-laundering-bitcoin-uk-63-bln-china-fraud-2024-03-20/