Anti Money Laundering Blog

On July 2, 3 executives at a toy company were arrested on suspicion of laundering millions of USD for Mexican and Colombian drug traffickers in the US. The arrests followed a 2-year, multi-agency probe into the Angel Toy Corp., located in a downtown warehouse.

John Morton, director for U.S. Immigration and Customs Enforcement, said: “It’s no small irony that a multimillion-dollar company which promoted itself as retailer of cuddly stuffed animals was allegedly acting as a financial linchpin for drug trafficking operatives”.

The police arrested Meichun Cheng Huang, 57, and Ling Yu, 52, 2 co-owners of the business, and Xiaoxin Ju, 48, CEO.

Allegedly, these individuals were involved in a complex money-laundering scheme that included representatives from drug trafficking groups dropping cash at Angel Toy’s downtown headquarters or depositing money into toy company accounts. To avoid suspicions, the deposits were always for less than USD 10 000. After that, the money was wired to China in order to purchase teddy bears and other stuffed animals that were allegedly sent on to Columbia, where they were sold and the proceeds, in pesos, were given to the drug traffickers.

Due to possible conflicts in banking regulations between Gibraltar and Spain, a considerable fine will be paid by Jyske Bank.

According to bank management, Spanish financial authorities have issued Jyske Bank a EUR 1.7 million fine for violating Spanish money laundering regulations.

Activities at a division of Jyske Bank’s in the British overseas territory of Gibraltar are at issue in the case. The Spanish authorities assume that they have been denied access to essential information.

Making the decision to fine the bank, the violations were described as “very serious”; Jyske Bank in Gibraltar was claimed to fail properly report, be unwilling to investigate certain transactions, and have inadequate control procedures.

It is worth noting that this was the 1st time a Danish bank has been fined for violating another country’s money laundering rules.

Jyske Bank has appealed the decision to the Spanish courts.

According to documentation from the Danish Financial Supervisory Authority, the case has been underway for some time. Authorities in Denmark were informed about the possible violations in November 2008 for the 1st time. Information on the case was exchanged between Denmark and Spain in March 2009.

Record numbers of suspicious financial deals were reviewed by Swiss authorities in 2010. The financial deals under money laundering suspicion totaled CHF 2.23 billion (USD 2.1 billion). Most of the reports were forwarded to prosecutors.

It should be noted that for decades Switzerland was viewed as a safe haven for money of dubious origin. However, the country started to clean up its image by introducing anti-money laundering laws in 1998.

According to the legislation, it is obligatory for financial operators to report suspect transactions, regardless of the amounts involved. In 2009, Switzerland’s Money Laundering Reporting Office received a total of 896 reports on suspicious financial activities, which was a 5.3% increase from the previous year.

Judith Voney, a spokeswoman for the Money Laundering Reporting Office, said that there had been an upward trend in suspicious activity reporting in the past 3 years. She said: “The Swiss financial place has become very attentive and the quality of the reports is nowadays very good”. Also, she noted that it was impossible to make a direct link between the financial and economic crisis and the record number of suspect transactions, but crisis situations in general tend to lead to more fraud.

Stricter reporting requirements for suspected money-laundering were introduced in Switzerland in 2009. But the Money Laundering Reporting Office said that the reports were made before these rules were introduced. The banking sector accounted for 2/3 of all reports.

For the 1st time since Bahrain got its independence in 1971, a Minister has been arrested on charges of money laundering.

Following months of investigations and close monitoring, the Minister was arrested in Manama on March 18.

According to some sources close to the investigation, the alleged money laundering operations exceeded 12 million Bahraini dinars. The Minister faces charges of money laundering operations in Bahrain and abroad.

According to the US Department of Justice, Wachovia Bank, which was purchased by Wells Fargo & Co., agreed to settle a money laundering case with USD 160 million.

Wachovia made a statement claiming that it had spent USD 42 million in upgrades to its security system in order to “strengthen its ability to guard against unlawful use of its system by wrongdoers.”

The US Department of Justice said that Wachovia had “admitted failure to identify, detect, and report suspicious transactions in third-party payment processor accounts.” About USD 420 billion in transfers went through Wachovia Bank without adequate money laundering detection systems in place. According to prosecutors, billions of USD transferred from Mexican money exchange houses were used for buying planes for drug traffickers.

Federal attorney Jeffrey Sloman said, “Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations by laundering at least $110 million in drug proceeds. Corporate citizens, no matter how big or powerful, must be held accountable for their actions.”

The Bank agreed to pay USD 110 million to the US Justice Department and USD 50 million to the US Treasury.

The criminal court of Guatemala authorized the extradition of Guatemalan ex-president Alfonso Portillo to the United States. In the US, Portillo will face money laundering charges. The Fifth Sentencing Court’s decision said: “This court finds the US government’s extradition request against Alfonso Portillo, accused of crimes of conspiracy to engage in money laundering, will go ahead”.

The former president has been held at a high security facility in Guatemala that houses some of the most notorious criminals like drug dealers and kidnappers.

Following the US extradition request for charges dating back to his 2000-2004 presidency, Portillo was arrested in January.

Having lost immunity from prosecution for alleged corruption during his administration, Portillo fled to Mexico in 2005. In October 2008, he was extradited from Mexico to Guatemala. Guatemala has accused the ex-president of authorizing USD 15 million in transfers to Guatemala’s Defense Department, where some officials allegedly took part of the money.

On March 15-17, 2010, the 15th Annual International Anti-Money Laundering Conference was held in Hollywood.

US Law enforcement officials who spoke at the event admitted that it was not easy to keep up with the changes in money laundering these days. This is because criminal organizations are early adopting new technologies. Mobile phones, prepaid cards, and online games are often used to illicit money over international borders.

For example, criminal gangs are increasingly using stored-value cards in order to move cash. These cards look and act like ATM or credit cards and they can be used all over the world. However, they require no bank account and can be activated online.

The legislation requires banks to report suspicious activity. Also, it requires those who enter the country to declare cash in excess of USD 10 000. But the cards are unregulated. Duncan Levin, an assistant U.S. attorney in New York, said: “We have made it very difficult for bad guys to walk into a bank with USD 200 000 in cash in a bag. But if you can transfer that money onto a card, you are staying a step ahead of us.”

A supervisory special agent with the U.S. Department of Homeland Security, Deborah Morrisey, recently busted the money laundering arm of a Colombian drug cartel with operations in Miami. She said that, during 9 months, the criminal group moved more than USD 4 million using stored-value cards and operated undetected until discovered by an undercover investigator. She also said that concerns are growing about mobile phones that can be used as virtual bank accounts. For example, Apple’s iPhone allows users to transfer money between 2 PayPal accounts by bumping the handsets together.

Tavid, Estonian exchange company, has been implicated in one the largest money laundering schemes in the history of the CEE region. This is the 2nd money laundering scheme with the participation od the Estonian exchange company in the past 3 years.

The company is claimed to receive a payment of 45 million kroons in late 2007 to its Nordea Bank account. This payment was made by Stern Treid LLC. Stern Treid LLC is a company that is partially owned by Yuri Kasjanov, a Russian citizen who is the subject of a major money laundering probe in Bulgaria. This company had signed a contract with Tavid under which the company was to transfer more than 200 million kroons to Tavid.

It is believed that the money has originated in Russia and has bee laundered through a series of fake sales agreements in Bulgaria to be transfered back to Russia through the Estonia company.

Former President of Guatemala Alfonso Portillo faces money laundering charges in the US.

Portillo is charged with embezzling tens of millions of USD in public funds. These money was allegedly laundered through bank accounts located in the United States and Europe as well as in other places. According to prosecutors, the money laundering took place allegedly through at least 2006.

It should be noted that Portillo was the president of Guatemala from 2000 to 2004. He came into power promising to erase corruption, however his own government mired in the same accusations as his predecessors.

Guatemalan authorities started searching for the ex-president after the US requested his extradition.

On November 24, 11 former officials of Colombian football club Independiente Medellin were charged with money laundering.

The charged officials included Rodrigo Tamayo, club president in 1998-2000 and 2004, his wife, Dolly Cardenas, and 2 other former presidents, Mario de J. Valderrama and Luis Fernando Jimenez. Conviction carries a term of 6-15 years in prison.

According to the estimations from the club’s former auditor Juan Bautista Avalos Salgar made by prosecutor Cesar Velez, Tamayo might have laundered USD 4.6 million during his terms as president.

Salgar said that one way of laundering money could be selling a player for, for example USD 100, but entering the transaction on the books as USD 1 000. As a result, the extra USD 900 entered on the books was money gained allegedly through drug trafficking.