5 international money laundering scandals background checks should have caught

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Financial Hiring Trends Report of 2023

Background checking pays a key role in protecting institutions and individuals from crime. When banks and other institutions are compliant with Anti Money-Laundering (AML) legislation, it helps ensure that money which has been used in a crime can not be legitimised through their company. But despite the best efforts of governments and AML agencies, it is estimated that around $2 trillion US dollars are laundered every year.

Here are some of the biggest cases that might have been prevented if institutions had carried out their AML and KYC obligations correctly.

Standard Chartered Bank - 2009-2014

Standard Chartered were fined $1.1bn for breaches of AML controls which contributed to illegal transactions worth $438m. The bank said that former junior employees were partially to blame for the infringements; they were “aware of certain customers connections and conspired with them to break the law, deceive the group and violate its policies.” Had Standard Chartered Bank carried out extensive background checks on the employees, they may well have uncovered the offenders and prevented the crime.

HSBC – 2012

A US senate report found that HSBC were failing to stop known drug traffickers and other criminals from using its systems to launder money. HSBC admitted that senior executives in London knew that transactions involving “drug kingpins and rogue nations” were taking place, but failed to stop them, and were also aware that AML practices at its Mexican subsidiary, HBMX, were lacking. Carrying out comprehensive background checking on senior banking officials and tighter KYC practices might have deterred the criminals.

Wachovia - 2010

Wachovia, now part of Wells Fargo & Co, was fined $50 million for not complying to AML regulations which led to more than $400 billion of laundered money, much of which was used to purchase planes which trafficked drugs across borders. Columbian and Mexican traffickers identified Wachovia as having lax AML procedures and exploited this to their advantage.

Nauru – 1990s

When the small island in Oceania, Nauru, transformed itself into a tax haven in the 90s, Russia and al-Qaeda began capitalising on their failure to verify banking customers identities, leading to $70 billion in laundered cash. Nauru have since cleaned up their act and passed AML laws in 2005.

Danske Bank – 2007-2018

When Denmark’s largest lender took over Sampo Bank, the Estonian based branch was then used to launder money from non-resident customers, mainly Russia or ex-Soviet countries. This failing to raise an eyebrow to large deposits made by non-residents eventually led to an estimated €200 billion money laundering scheme. Eventually, in 2018, several executives were charged, and the bank was fined.

Background checking helps confirm that your staff and customers are who they say they are, which is crucial in the financial sector. A specialist background checking provider can advise on the necessary checks for specific roles and positions, while ensuring efficacy and accuracy of checks.


What background check do I need?

This depends on the industry and type of role you are recruiting for. To determine whether you need reference checks, identity checks, bankruptcy checks, civil background checks, credit checks for employment or any of the other background checks we offer, chat to our team of dedicated account managers.

Why should employers check the background of potential employees?

Many industries have compliance-related employment check requirements. And even if your industry doesn’t, remember that your staff have access to assets and data that must be protected. When you employ a new staff member you need to be certain that they have the best interests of your business at heart. Carrying out comprehensive background checking helps mitigate risk and ensures a safer hiring decision.

How long do background checks take?

Again, this depends on the type of checks you need. Simple identity checks can be carried out in as little as a few hours but a worldwide criminal background check for instance might take several weeks. A simple pre-employment check package takes around a week. Our account managers are specialists and can provide detailed information into which checks you need and how long they will take.

Can you do a background check online?

All Veremark checks are carried out online and digitally. This eliminates the need to collect, store and manage paper documents and information making the process faster, more efficient and ensures complete safety of candidate data and documents.

What are the benefits of a background check?

In a competitive marketplace, making the right hiring decisions is key to the success of your company. Employment background checks enables you to understand more about your candidates before making crucial decisions which can have either beneficial or catastrophic effects on your business.

What does a background check show?

Background checks not only provide useful insights into a candidate’s work history, skills and education, but they can also offer richer detail into someone’s personality and character traits. This gives you a huge advantage when considering who to hire. Background checking also ensures that candidates are legally allowed to carry out certain roles, failed criminal and credit checks could prevent them from working with vulnerable people or in a financial function.

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