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Everyone’s Laundering Money — Even You

Everyone’s Laundering Money — Even You

You don’t have to move in elite circles to unwittingly associate with money launderers.

Once a relatively shadowy crime known best to forensic legal teams, money laundering is now big business. Very big business. Though exact figures are impossible to determine, the 2016 PWC Global Economic Crime Survey estimates that money-laundering transactions represent 2 to 5 percent of global GDP, or about US$1 to 2 trillion per year.

All that attention (and payoff) has cast money laundering into the mainstream. Movies and TV routinely use it as a foundation for storylines. Elsewhere, ordinary citizens are swept up by the allure of dirty cash. It’s become so commonplace in fact, that you may be associating with money launderers without even realizing it.

Consider the Buffalo, NY, car dealer sentenced to 63 months in prison in 2015 for helping drug dealers purchase luxury used cars with the dirty cash they supplied. Or the California real estate broker, sentenced last year to 168 months for her role in a fraud scheme involving more than $30 million in fake residential mortgage loans.

It’s not like the feds aren’t watching. Prosecutions are on the rise and regulators across the globe are focused on trying to combat money laundering and terrorist financing through legitimate financial institutions. As part of that effort, new FinCEN guidelines are set to take effect in 2018 including a rule the anti-money laundering (AML) community refers to as “The Fifth Pillar.” It tightens due diligence by requiring covered institutions to collect beneficial ownership information — essentially a beating heart and not just an LLC.

This shift to more stringent compliance raises questions for the institutions about how best to utilize technology to meet the new standard.

Meanwhile, we can gain insight into the variety (and creativity) of money launderers from recent events in the news as well as realistic depictions on TV and in the movies. As you read below, ask yourself: how well do you really know your neighbor?

Isn’t that your kid’s high school chemistry teacher?

Source: CNN

In the AMC series "Breaking Bad," mild mannered Walter White (Bryan Cranston, above right) puts his chemistry skills to work by manufacturing homemade methamphetamine (“meth”) to finance his cancer treatments. To avoid detection, he employs a structuring method of laundering, whereby cash is broken into small deposits to avoid triggering anti-money laundering regulations on deposits greater than $9,999.

Note: With marijuana now legal in some form or another in 29 states and D.C., we could see a rise in the structuring method as more small businesses, unable to form traditional banking relationships, resort to dealing only in cash.


Recognize your favorite sports star?

Source: Soccerly

Rafael Marquez, captain of Mexico’s national soccer team, was among 22 people sanctioned by the U.S. Treasury in August following a multiyear investigation into activities of drug kingpin Flores Hernandez. Marquez is alleged to be the “front person” for Hernandez and was arrested under the Foreign Narcotics Kingpin Designation Act. The 1999 law freezes the assets of foreign nationals believed to be involved in international narcotics trafficking.

Note: Money laundering, fraud and tax evasion tend to follow the big bucks, making those involved in the sports industry vulnerable. Think of the FIFA scandals or the arrest in May of this year of the former president of the Barcelona Football Club for his alleged role in a money laundering scheme related to his tenure with Brazil’s national team.


Isn’t that your accountant?

Source: TV Insider

In the new TV drama "Ozark," an unassuming financial advisor named Marty flees to the Midwest (Ozark area) to launder a drug dealer’s cartel money. Marty leverages legitimate businesses (a strip club for one) that transact in cash to process the funds. He mixes his clean money with the cartel’s dirty money to hide the illegitimate cash and throw off investigators.

Note: Watch out for cash-only businesses. Ever wonder why some neighborhoods have numerous massage parlors but seemingly few customers? It could be a front for money laundering (and human trafficking).


What’s your favorite classic rock band doing here?

Source: The Sun

Let’s be clear: The Rolling Stones are not involved in money laundering by all accounts. But Mick and Keith and company are among numerous celebrities, politicians, athletes and others whose use of private tax havens to shelter income has been leaked to the press over the past few years. Such havens are legal, but the anonymity of the arrangements — especially those located offshore far from the prying eyes of regulators — have led to multiple investigations into money laundering schemes.

Note: Why stash cash offshore when you can do it right here in the United States? By one count, 17 states have laws that provide the privacy and anonymity of LLC asset protection.


Published September 2017

© Copyright 2017. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.

About The Authors

Elaine Carey
Managing Director
Forensic and Litigation Consulting
FTI Consulting

Katya Hirose
Managing Director
Forensic and Litigation Consulting
FTI Consulting

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The views expressed in this article(s) are those of the author and not necessarily those of FTI Consulting, Inc., or its professionals.
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