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An account is referred to as a “ghost bank account” if it has been inactive for a considerable period of time – or if it is a fake account. In both cases, such accounts may be used by criminals for all kinds of fraud, money laundering activities, or identity theft. We recommend bank account owners monitor them attentively from time to time to identify those that are not in use to close them before they attract the fraudsters’ attention.
Of course, banks take their precautions to prevent all these goings-on. We invite you to our portal where you can contact a specialist who will help you choose a reliable bank for your purposes. We also have a large number of articles on foreign banking, and you can also read more about the risks of ghost bank accounts.
Keep an Eye on Your Accounts
Even if you don’t use an account, be sure to log in to the mobile app or online platform from time to time to see the news. Or still better, use your account periodically for minor transactions to prevent it from becoming inactive – this way, you considerably reduce the risk of your account and identity being used for illegal purposes.
Remember that most banks set a deadline: if your account remains inactive for some time, it expires. And if you have any funds on it, they will be written off as income or transferred to the state as unclaimed property.
2 Stories of Ghost Account Abuse
One case happened in Bengal, India. The fraudsters first collected welfare documents from several hundreds of villagers who provided their personal information and signatures in them. Following that, they opened 231 ghost accounts by providing the information obtained from villagers. These accounts were used for money laundering purposes using a scheme that involved livestock smuggling. The whole thing was uncovered when it became clear that 200 out of 231 account applications were signed by the same person (as established by handwriting experts).
The other case we know about does not come with so many details, but it still marks the existing problem: a number of employees in a South African bank used inactive customer accounts to perform some illegal transactions (their nature is not disclosed). Of course, this does a lot of harm to the bank’s reputation and to the customers who are shocked to find out the news.
As you see, choosing a bank may be of crucial importance, and this is the reason why we advise entrusting the choice to specialists. We will not just give recommendations: you will make an informed decision that you will never regret. Follow the above link to ask your questions!
Mind the Documents Submitted to the Bank
It is not that easy in the present-day world to open an account under someone else’s (or false) name. And even if you do, you will face serious legal consequences – from fines to imprisonment. With that in mind, it is important to prevent any mistakes and inaccuracies when you submit your documents to the bank to open an account.
Banks take precautions to prevent fraudsters from realizing their schemes. They apply the Know Your Customer (KYC) principles to check the identity of the person who intends to use the banking services and often hold an interview to find out more and make sure that the person who opens an account really exists and has the intention to legally use the banking opportunities.
Illegal Activities Associated with a Ghost Account
The purpose of opening a ghost account (or using an existing one) is to hide the wrongdoer’s identity to perform the following operations:
The funds are typically transferred from one account to another in succession until the origin of funds appears to be lost and they finally seem legitimate.
Ghost bank accounts are often used to hide a part of income to avoid including it in the tax return and paying taxes on it in the country of tax residence.
Corporate bank accounts may be used to transfer a part of the money to a ghost account and thus appropriate them.
A typical fraudster will receive an amount of money in the account for products or services that have never been sold or rendered.
And what if we talk about an anonymous offshore account? Is it always illegitimate? No, it is not – the customers that wish to have an offshore account usually want more confidentiality than they can have back home, but it does not mean that these accounts will be used for illegal purposes.
We recommend using our consultant’s services to set up an account that will have enhanced privacy settings and will not look like a ghost account at the same time.
Ghost Accounts: Risks
Fictitious (ghost) bank accounts are prohibited in most countries and they entail multiple risks that you should be aware of:
- Legal risks. A ghost bank account is simply out of the law and is sure to result in fines or imprisonment if it is uncovered.
- Loss of money. If an individual or a legal entity is found to have used the ghost account for some fraudulent activities, all the funds will be instantly confiscated.
- Damage to the reputation. Illegal use of a ghost account may result in the impossibility of the individual or legal entity to obtain loans in the future or engage in any legal business.
- Tracking of operations is difficult. The transactions you make using a ghost bank account are very hard to track, which makes it even more difficult to prevent fraudulent activities.
- A target for authorities. As ghost accounts are usually anonymous, they may attract a lot of attention from regulators and become legal targets for numerous checks.
Balance Between Law and Confidentiality
Our specialists cannot help you in any way if your goal is to engage in illegal practices. However, we know that customers who wish to open offshore bank accounts would like to remain in the shadow as much as possible. Follow the link above, and our experts will suggest options that will allow you to strike the right balance between hiding your identity and keeping within the laws.