Use of Traveler?s Checks to Disguise Identities

SAR reporting indicates that criminals may be using traveler's checks as a money laundering tool to provide anonymity to the purchaser and/or the ultimate payee. Although traveler's checks may be a preferred instrument for conducting large business transactions in some countries, the use of traveler's checks to negotiate these transactions may offer the opportunity to commingle illicit funds with legitimate funds. Several major U.S. banks and traveler's check issuers have detected and reported suspicious practices involving the use of hundreds of thousands of dollars in traveler's checks per instance, often in strings of sequentially numbered thousanddollar traveler's checks. In some cases, the payee was a numbered account in a foreign bank. Frequently, the name and/or address on the purchase agreement were:

• left blank;
• unverifiable;
• illegible; or
• not matching the signature name on the corresponding traveler's checks.

Mexico, Nigeria, Israel, and a number of East Asian countries have been cited in multiple SARs as the point of origin or negotiation for instruments involved in this type of activity. An example was the purchase of traveler's checks from an investment house/travel agency in Asia, where the traveler's check seller appeared to have gone to unusual lengths to conceal the identity of the buyers. One employee of the traveler's check seller personally signed the purchase agreements for $27 million worth of traveler's checks. When the traveler's check issuer told the seller to have the buyer sign the purchase agreement, the traveler's check seller started producing purchase agreements with many different names, but frequent similarities in handwriting.

Excerpted from SAR Activity Review Issue 3, page 22