Locate Hidden Assets

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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 transaction.

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.

Securing the Account

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.

Tracing the Investments

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 memos for a follow up investigation.

Analyzing Deposits and Withdrawals

Investigators should pursue the above items as the initial steps in analyzing bank or financial accounts. The purpose is to identify major funds flowing in and out of the account to the subject of the investigation or his accounts. This process may also generate new lead material.

Paying Attention to the Details

When analyzing bank accounts, investigators must pay attention to detail and small items. Although you may want to focus your initial investigation on the major items in the account as suggested above, don’t overlook the balance of the records. They could prove critical.

Valuable Banking Records

An array of banking records could prove valuable, including certificates of deposit, credit card advances, and currency transaction reports. Loan records deserve special attention.

Investigating Loan Records

If a loan generated a deposit in the financial records, investigators should pursue it diligently. They should address several questions: Who applied for the loan? How did the proceeds reach the account of interest to the investigation? And perhaps most important, what secured or collateralized it?

Answers to these questions about the loan could tie your target to the business, especially through the security or collateral for the loan.

The Role of the Banker

Along with bank records, consider the banker. The banker could serve as the liaison between the loan for the investment in the illicit asset and the subject of your investigation. He may also hold intimate knowledge of the business and may even act as 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.