What can AML professionals learn from Inventing Anna?

inventing anna

Inventing Anna, the 2022 Netflix series, takes viewers on a rollercoaster ride through the world of financial fraud and deception. While the show is undoubtedly entertaining, it also serves as a rich source of insights for Anti-Money Laundering (AML) compliance professionals. 

In this article, we take a look at intricacies of financial crime and deception portrayed in the series, drawing parallels to real-world challenges faced by AML professionals. 

From suspiciously complex financial structures and the rapid movement of funds, to inconsistencies in documentation; we share our take on how the show offers up some key pointers for AML professionals and share how technology can play a pivotal role in mitigating the risks associated with fraud and financial crime. 

What’s the story (no spoilers!)? 📺

Inventing Anna is a Netflix series inspired by the real-life case of Anna Sorokin, a Russian-born con artist who posed as a wealthy German heiress named Anna Delvey in New York City. 

Sorokin arrived in the city in 2013 and managed to infiltrate high society by convincing people that she was a wealthy socialite with access to a substantial trust fund. As Anna Delvey, she engaged in elaborate schemes, including staying at luxurious hotels, dining at expensive restaurants, and befriending influential individuals, all while attempting to secure loans and financial backing for her fictitious, exclusive arts foundation. 

The con artist’s fraudulent activities eventually caught up with her, leading to her arrest in 2017. In 2019, Anna Sorokin was convicted of multiple charges, including grand larceny and theft of services. The show explores the events leading up to Sorokin’s arrest and trial, examining the impact of her elaborate deceptions on those she encountered in New York’s elite social circles.

“Maybe she had so much money she just lost track of it. Somebody had to foot the bill for Anna Delvey’s fabulous new life. The city was full of marks.”

The Cut

Identifying red flags 🚩

The show takes us on a journey through Anna Delvey’s schemes, showcasing the elaborate tactics employed by fraudsters to manipulate financial systems. It provides a first-hand look into the art of identifying red flags in the financial landscape. 

Showcasing the intricacies of financial deception and levels to which bad actors will go to commit fraud, the show highlights some key tactics that resonate with real-world AML challenges. 

The show explores the stages of laundering money. The swift movement of money, a signature of illegitimate funds, is also known as ‘layering’, a step in the money laundering process that aims to mask the illicit origin of cash by quickly moving funds from person to person. This underscores the importance of real-time monitoring and remediation, a reminder for AML teams to adopt technology that enables the swift identification and response to any suspicious activity. 

But Anna did get surprisingly far. Banks extended credit (credit cards, cheques, advance withdrawals) to people who look ‘right’. Not in the millions, but enough for her to scam some nice dinners, swanky hotel stays, and designer clothing.

Additionally, the series sheds light on the repercussions of inconsistent documentation, emphasising the significance of meticulous due diligence and the role of technology in verifying the authenticity of financial and identity documentation. 

Concealed ownership structures, strange or unexpected behaviour from clients, and unusual geographic movements of funds also emerge as red flags unveiled in Inventing Anna, offering AML professionals a compelling reminder to ensure their risk detection and mitigation strategies include awareness training, making use of the latest technology to support due diligence processes, and building a culture of compliance across a business.

Financial crime prevention still needs human expertise 🗣️

Throughout the show, we see Anna creating a circle of influence around her. From high profile socialites, to befriending the VIP concierge at one of New York’s most exclusive hotels; Anna’s ability to infiltrate circles of high society, develop bonds, and build relationships is largely what allowed her schemes to go on undetected for so long. 

It is these human traits of trust, friendship and, in some cases, greed, that enabled Delvey to defraud companies and individuals. In the series, we see Anna’s lawyer vouching for her without seeing proof of her trust find, source of wealth or identity documents. 

In building this personality of trust, confidence, and exclusivity, Anna was able to gain access to a $100,000 overdraft. 

As a result, typical AML and KYC processes were overlooked by those funding her fictitious arts foundation, on the basis that she came from money, had relationships with some of New York’s elite, and was manipulating their need to be liked, accepted, and not embarrassed. On paper, Anna made sure investors saw what she wanted them to see.

Despite this, in the world of due diligence, trusting our gut feelings and relying on the know-how of real people is still key. Technology platforms like NorthRow makes things smoother by handling routine tasks such as information gathering and verification during onboarding, allowing human professionals to excel in navigating the intricacies of exceptional cases supported by robust technology-driven processes. 

Enhancing Know Your Customer (KYC) processes 🔍

A substantial portion of Inventing Anna revolves around the consequences of lax Know Your Customer (KYC) procedures.

Thorough KYC processes play a pivotal role in the prevention of financial crime and the need for complete understanding of customers’ backgrounds, financial activities, and risk factors are crucial in identifying bad actors such as Anna Sorokin. 

For AML compliance professionals, Inventing Anna highlights the importance of ensuring the KYC procedures in place are both robust and comprehensive. Importantly, they must be stress-tested and reassessed at regular intervals to ensure KYC processes are always up-to-scratch. 

Furthermore, Inventing Anna invites is a prime example of the consequences of relying solely on surface-level information and emotion, emphasising the necessity of leveraging identity verification tools and biometric authentication.

The onboarding and vetting process must be rigorous in banks and financial institutions, and even more so for a loan of the size Anna was requesting ($40 million). In this case, however, the banks Anna was approaching to fund her art foundation were sloppy in not conducting initial checks into her background, family connections, or the existence of her trust fund.

This highlights the importance of adopting AML compliance solutions that can improve the accuracy of customer due diligence and information gathering, ensuring that clients are verified with more vigilance using more comprehensive sources from global databases, watchlists, and government records. 

How can KYC prevent financial crime?

Financial institutions are subject to stringent anti-money laundering regulations designed to combat financial crime. In vetting every customer, firms can be assured that their products and services aren’t being used for nefarious reasons such as money laundering, fraud, terrorist financing or other forms of financial crime.

To adhere to these regulations, banks and financial entities must conduct due diligence on potential clients, including KYC checks for identity verification. 

Additionally, assessments are carried out to validate documents and bank accounts, screening for politically exposed persons (PEPs) and sanctions against individuals. 

The entire KYC process can be streamlined through the use of advanced technology platforms such as NorthRow. By automating onboarding processes for low-risk clients, NorthRow allows compliance teams to focus more on medium and high-risk clients. As a result, teams can review flagged clients and request additional information as needed, all while maintaining a comprehensive audit trail of actions and decisions. 

In the case of Anna, further information was requested, but she was unable to provide it. Consequently, fearing exposure as a fraud, she withdrew her loan applications.

An important lesson in fighting financial crime 🎓

Inventing Anna offers valuable lessons for AML compliance professionals, highlighting the importance of thorough due diligence and scepticism when dealing with high-net-worth individuals or clients with complex financial transactions.

Anna was able to deceive various institutions and individuals by fabricating her identity and creating a façade of wealth, exposing vulnerabilities in existing AML protocols. This emphasises the need for enhanced customer due diligence, including verification of the source of funds and a deeper understanding of a client’s financial activities.

Additionally, Inventing Anna sheds light on the role of social engineering in financial fraud. Anna’s ability to manipulate people and gain their trust played a crucial role in her fraudulent activities.

Overall, the series underscores the necessity for constant vigilance, adaptability, and a holistic approach to AML compliance to stay ahead of evolving tactics employed by fraudsters in the financial sector.

Show credit: Inventing Anna. Created by Shonda Rhimes, Shondaland, 2022, Netflix, www.netflix.com

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