Beyond the allure of exclusivity associated with private jets, lies a dark underbelly, not immediately visible to the compliance officer.
Here are 10 AML risks associated with the private jets industry:
- High-Value Transactions: Private jets involve substantial financial transactions. Criminals might use these transactions to legitimize illicit funds, making it important to verify the source of funds to prevent money laundering.
- Cross-Border Travel: Private jets facilitate international travel, which can make it easier to move funds across borders without detection. This increases the risk of funds being laundered or used for illegal activities in different jurisdictions.
- Anonymity: This became more obvious in the context of sanctions against Russia recently, but ownership of private jets can be obscured through complex legal structures. Dodgy characters may exploit this anonymity to hide their true identities and launder money through the purchase or operation of private jets.
- Lack of Transparency: Due to the private nature of these transactions, there may be a lack of transparency in the ownership, financing, and usage of private jets. This can make it challenging to identify and trace suspicious activities.
- Third-Party Vendors and Services: Criminals might use various third-party vendors and services (e.g., maintenance, catering) associated with private jets to legitimize funds. These intermediaries could unknowingly facilitate money laundering (or sanction evasion).
- Complex Ownership Structures: Criminals may exploit intricate ownership arrangements through trusts and shell companies to obscure the true beneficiaries of private jets. These structures can make it difficult to determine the actual individuals behind transactions, and make it equally hard to enforce judgments on those assets (e.g. creditors, divorce proceedings etc)
- Cash Payments: Cash payments for private jet transactions can be indicative of attempts to launder funds without leaving a digital trail.
- Non-Face-to-Face Transactions: Remote or online transactions in the private jets industry can increase the risk of fraudulent or illicit activities going unnoticed. These transactions may lack the oversight present in traditional face-to-face interactions.
- Rapid Resale and Flipping: Criminals may purchase private jets and quickly resell them to move funds and obfuscate the money’s origin. This rapid turnover can complicate efforts to track the flow of illicit funds.
- Complex Financing Arrangements: Elaborate financing structures, such as leasing or fractional ownership, can provide opportunities for criminals to obscure the movement of funds. Monitoring these arrangements is essential.
Compliance officers can remain diligent by implementing comprehensive due diligence procedures, monitoring high-risk transactions, & staying informed about industry practices, to ensure adherence to AML regulations within the private jets sector.