A government issued passport is a legal form of identity issued by a specific legitimate country. In addition to providing identification, a passport provides proof of a person’s citizenship, permits international travel, and helps to facilitate access to consular assistance. People who attempt to obtain a passport illegally, or use stolen and altered passports, often seek to change their identities and conceal their illegal activities and movements.
Common types of passport fraud
- Using the identity of a deceased person to apply for a passport;
- Using phony support documents, such as fake birth certificates, when applying for a passport or visa;
- Using stolen or altered passports.
Common reasons criminals commit passport fraud
- Concealing identity;
- Illegally entering a country or avoiding deportation from a country;
- Committing financial crimes; and
- Facilitating other criminal activity such as drug trafficking or human smuggling.
Anti Money Laundering (AML) provides a primary safeguard from financial crimes and terrorist activity. Since passports are such an important identity document used throughout the world of financial institutions, especially as part of a Know Your Customer (KYC) program which is one of the cornerstones of a Quality AML Program, it is important to understand and decipher between the legitimate and the illegitimate. Unfortunately, in addition to legitimate passports there are counterfeit passports, camouflage passports, and fantasy passports. So, what are the differences?
A counterfeit passport has a striking resemblance to the actual legitimate passport of that country. A counterfeit passport is a document that constitutes an unauthorized reproduction of a genuine document. These documents are not legitimately manufactured, nor issued or recognized by an official authority. They falsely claim the bearer is from that country in order to get them through borders illegally and provide identification documentation.
Fantasy passports are issued by private organizations or groups. These passports are usually a novelty, a souvenir, or a joke. The casual observer should be able to identify one immediately as a novelty. For example, you might have a passport to Disney World that resembles a government issued passport. I have a passport for my dogs which is simply a passport lookalike size medical & vaccination record booklet that keeps track of my dogs health history. It is not issued by any government agency and available via the Internet.
A camouflage passport attempts to disguise itself as a legitimate passport by using the name of a country that has since changed names for political reasons, no longer exists, or, it uses the name of a territory that is not internationally recognized.
A camouflage and/or a fantasy passport is a document produced with no authority and is not officially recognized. They can occur in various forms and may have the physical appearance of a passport or an ID card. They are completely fictitious, and quite bogus, however, it looks much like a regular legitimate passport. To the casual observer (including onboarding financial institution personnel) a camouflage and/or fantasy passport could appear to be legitimate.
So, if the purpose of the counterfeit passport is nefarious, and the fantasy passport is a novelty, then what is the camouflage passport used for?
In recent years many United States citizens have been targeted by terrorist groups and/or criminals for a variety of reasons. (Note: it could be a citizen of any country that might feel threatened). This has made U.S. citizens traveling abroad feel uncomfortable and worried about their safety. Hence, the birth of the camouflage passport. The camouflage passport is not meant to be a replacement for your real passport. It will not get you across borders and should not be used as identification especially in legal matters. To do so could get you arrested and in deep trouble, and in some countries, the penalties could be quite severe. The camouflage passport was designed with the intent that if you are moving about in certain areas of the world that might not be U.S. friendly (or it could be any country) you would have a document that does not identify you as a U.S. citizen but as a citizen of another (non-existent) country. If someone found themselves in a precarious situation, they could present their aggressors with a genuine-looking document claiming they were from, for example, Northern Ireland, rather than the US.
I have a camouflage passport from the non-existent country of Northern Ireland, which uses my old undercover narcotics name as the name on the passport (BTW there is little chance of me sharing that name with the entire cosmos 🙂). Since this document is fictitious and if you were creating your own camouflage passport, you could use any name that you’d like. The hope is that by using a camouflage passport indicating that you are from another country, you would not be singled out by a terrorist or a criminal just because you are an American. You still need your actual U.S. passport to get in and out of a country, but, the concept is that while you are in country X, you can leave your U.S. passport in the hotel safe, and move around with the camouflage passport in your pocket.
The Danger to Financial Institutions
Most camouflage passports seem to be of good quality and may pass an inspection by someone not trained or ill trained in the art of passport inspection. Those employees responsible for on-boarding should make sure they review the identification documentation provided by the customer and verify any uncommon country.
The European Commission has created a list of known camouflage and fantasy passports. That list can be located at: https://home-affairs.ec.europa.eu/list-known-fantasy-and-camouflage-passports_en
The implementation of effective Know Your Customer (KYC) standards is an important and necessary part of a financial institution’s risk management program. Financial institutions with deficient KYC risk management programs, including onboarding personnel who miss identifying camouflage passports, may be exposed to substantial risks. Strong KYC policies and procedures reduce the likelihood of a financial institution becoming entangled in money laundering, terrorist financing, or other illegal activities.
There are four essential elements necessary for a sound KYC program. These elements are:
- Customer acceptance policy;
- Customer identification;
- Continuous monitoring of high risk accounts; and
- Risk management
A key challenge in implementing sound KYC policies and procedures is how to put in place an effective program. Focus on each of the four elements required individually and make sure that each element is identified and mitigated. As new potential risks are identified they should be incorporated into the policies and procedures and summarily shared with staff via your preferred training method.
Linking up your KYC policies, with a recently identified risk, in this case, a camouflage passport, and marrying them with your training regime is one of the best ways for your staff to be able to recognize this potential breach of KYC policies and reduce operational risk.
How can financial institutions help prevent the criminal activity committed with fake passports?
- Train employees on the identification of false passports and the identification of false documents used to obtain the false passport (Birth Certificates are often more easily falsified do to the lack of countermeasures)
- Ensure access to tools used to aid in document verification and ensure the environment is conducive to document verification such as being well lit, digital files that can be zoomed in on for clarity, access to and training on any software used to aid in document validation.
- If you use a vendor to onboard customers, ensure your vendor and the vendor employees are trained and vetted. Also, ensure your employees are trained on the vendor software.
- Allow sufficient time to conduct appropriate verification of documents during onboarding and investigations
- Do not rely on validation of just one security feature of a passport. A combination of the available security features on the passport should be validated.
- Report documents thought to be fraudulent on a SAR
- Perform “Know You Customer” checks at onboarding, conduct scheduled risk based checks, and event based checks.
- There are multiple databases to aid in passport verification a few are:
- Law Enforcement entities may access Interpol’s Stolen or Lost Travel and Identity Database (SLTD) at “https://www.interpol.int/en/How-we-work/Databases/SLTD-database-travel-and-identity-documents to perform a check against over 99 million records to verify documents have not been reported stolen or lost
- The financial sector can use Interpol’s I-Checkit to submit documents for screening against the SLTD database. Positive hits are then relayed to law enforcement. I-Checkit was developed to help financial institutions screen new and existing clients and meet their obligations to carry out appropriate due diligence. This can help identify fraudulent accounts and fight against money laundering schemes and financing of terrorism. https://www.interpol.int/en/How-we-work/Border-management/I-Checkit
- The National Police of the Netherlands, Central Intelligence Division has developed EdisonTD at https://www.edisontd.nl/ which is a reference database containing images of travel and identification documents around the globe to aid in verification
President of The AML Training Academy and Advisory LLC