A rookie’s guide to money laundering
Turns out, it’s not that difficult
I frequently talk about money laundering and how financial services industries are required to guard against it, but I’m consistently asked by friends and colleagues, “just how easy is it to take questionable cash and turn it into legitimate funds?” Turns out, it’s not that difficult.
Despite the damage that the illegal flow of money inflicts on the global economy, it’s been occurring for thousands of years and people do it every day. It’s international in scope, with China holding the dubious honor of being at the head of the pack. Conservative estimates have China losing more than $1 trillion between 2002–2011, despite laws prohibiting foreign exchange. Other countries with significant problems include Russia, Mexico, Malaysia, India, Saudi Arabia and Brazil.
So how is it done? There are several ways a U.S. citizen with a little illegal money can launder it, despite the many laws designed to thwart this activity.
Get opals and diamonds Down Under.
Australia produces some of the world’s finest gemstones, but it has yet to tighten up its anti-money laundering laws for purchasing them. Currently, anyone can pay cash for opals, diamonds and more without providing any identification. And Hollywood has frequently shown us how these stones can be smuggled back into the country where they can be exchanged for “clean” money from unscrupulous jewel dealers.
Take a trip to the Caribbean (but maybe wait until the Zika virus has run its course).
There are a number of countries that would love to take your cash as a foreign investor, such as the Cayman Islands. Once the money is deposited, it’s essentially in the legal monetary system. Of course, you must meet the requirements of the Cayman bank system for identification and such to open an account, but if you’re already involved in illegal activities, this shouldn’t be a problem.
Sit on SoBe in Florida.
You’ll have to act fast to take advantage of this idea, now that the U.S. Financial Crimes Enforcement Network (FinCEN) announced tougher requirements for all-cash real estate purchases in Miami-Dade County (South Beach/Miami Beach) and Manhattan. Perhaps those new requirements had something to with Global Witness’ recent report about how suspect money enters the US, in which 12 of 13 lawyers interviewed suggested using anonymous companies or trusts to hide assets.
Here’s the one lawyer who refused to participate:
Before last month, a shell corporation could purchase a high-end residence in cash without reporting the true owner. This is still possible in states outside of the two targeted areas, so perhaps you could take a look at beachfront property in Delaware or Biloxi, Mississippi instead.
Ask Papa Smurf.
If you thought the Smurfs were just cartoon characters, think again. In colloquial terms, a smurf is someone hired to launder a large amount of money by making small transactions over time that fall below the reporting threshold. For example, a smurf could make deposits of less than $10,000 in geographically disbursed banks without drawing attention if it was done slowly. And here’s an interesting piece of trivia: smurfs are often recruited to launder cash by ads claiming that it’s possible to make up to a thousand dollars a week by working at home. Seen one of these ads lately? I know I have.
The point is, while it’s getting increasingly difficult to launder money, it’s still possible as long as a little creative thinking is employed. And as long as thieves live among us, the world’s financial institutions will need to continue to be vigilant with their anti-money laundering programs and processes.
