The Bank Account.
The financial transaction may relate to a bank, or it could relate to
another category of financial institution: a savings and loan
association, a brokerage account, a credit union, a pension fund, or any
combination of these institutions. Or it could be a pure cash
At all financial institutions two functions occur: money flows in and
money flows out. In a hidden-asset investigation, the money flowing from
the account may be the investment in the hidden asset. The money flowing
into the account may be even more important.
When an account has been identified as the source (or possible source)
of an illicit investment, you must secure that account in its entirety.
That account can only be secured by proper legal process to the bank or
other institution, or directly to the subject business.
Often it is preferable to secure the financial records directly from the
subject business or the suspected front, for a number of reasons. You
will be securing the original document, which is, of course, the best
evidence. Also, you may obtain the records even faster and you will
eliminate the possibility of poor quality documents so often associated
with financial institution duplication.
This method is suggested but must be tailored to your investigation. If
your effort is overt at this phase of the investigation, the bank or
financial institution can be used as a backup source for documents not
received from the subject business or suspected front.
Upon receipt of financial records, tracing of investments begins.
Assuming that the investigation has revealed an investment of a specific
amount from a front’s corporate account, the following should be
analyzed at once:
– All opening account deposits should be obtained and examined.
– All major deposits shortly before and shortly after the date of
investment in the illicit enterprise should be obtained.
– All cash deposits during the same period as (2) should be noted.
– Establish a dollar threshold based on the magnitude of the account and
record all deposits greater than that threshold.
– Complete (4) for all withdrawals of funds.
– Pay special attention to even-dollar disbursements.
– Identify and investigate all regular payments for potential leads.
– Note all wire transfers and credit and debit memos for follow-up
Pursuit of the above items should be the initial steps in the analysis
of bank or financial accounts. The purpose is to identify funds of major
proportion flowing in and out of the account to the subject of the
investigation or his accounts. It may also generate new lead material.
In the analysis of bank accounts, it is crucial that attention be given
to detail and items small in size. Although you may want to focus
initial investigation on the major items in the account as suggested
above, do not overlook the balance of the records. They could be
There are an array of banking records that could prove valuable,
including certificates of deposit, credit card advances and currency
transaction reports. Loan records deserve special attention.
If a deposit analyzed in the financial records was generated as a result
of a loan, it should be pursued diligently. Several questions should be
addressed. Who applied for the loan? How were the proceeds deposited to
the account of interest to the investigation? And perhaps most
important, how was it secured or collateralized?
Answers to these questions regarding the loan could tie your target to
the business, especially the security or collateral for the loan.
Along with bank records, consider the banker. The banker could be the
liaison between the loan for the investment in the illicit asset and the
subject of your investigation. He may also have intimate knowledge of
the business and may even be an informal advisor. Include the banker in
your investigation as a possible valuable source of “inside” information
concerning the ownership and operation of the illicit enterprise.