Archive for May, 2008

BVI’s Anti-Money Laundering Regime evaluated by CFATF

Wednesday, May 28th, 2008

In February 2008, the Caribbean Financial Action Task Force (CFATF) team examined the anti-money laundering and terrorist-financing regime of the British Virgin Islands in February.
 It has recently emerged that the Cayman Islands Monetary Authority (CIMA) was part of the CFATF team.

In its annual report for 2007, CIMA announced that Legal Counsel, Sandra Edun-Watler was the legal examiner in the delegation of law enforcement, financial and legal examiners that conducted the 3ird Round Mutual Evaluation in the British Virgin Islands. The team that undertook the inspection from February 10 to February 23 included officials from the Netherlands, Barbados, and Trinidad and Tobago.

In its 3rd Round Mutual Evaluation, under the CFATF initiative, the Cayman Islands underwent the same process of examination in November 2007.

Peru’s Banking Supervisor anxious about Money Laundering

Saturday, May 24th, 2008

To combat money laundering, the banking supervisory agency in Peru needs more powers.

Peru is notorious as the world’s second-largest cocaine producer after Colombia. Fighting money laundering is a large part of anti- drug plan of President Alan Garcia for Peru.

According to the head of the Financial Intelligence Unit of Peru’s Superintendent of Banking (SBS), an investigation was conducted between September 2007 and February 2008 which revealed that transactions suspected of having relation to money laundering totaled USD 1.9 billion.

Superintendent of the Financial Intelligence Unit, Silvia Wuan, said to the congressional finance committee that the unit requires a law that would urgently allow reviewing tax documents with a view to fight money laundering.  Wuan said that if the unit does not have a strong comparison of how much people are reporting for taxes and how much is in their balance, it’s very hard to make a report.

In March 2008, a separate financial investigation of casinos, currency exchange houses, used car dealerships and other businesses that do not have to answer to any government regulatory agency was begun by the unit. The businesses have to provide a registry of clients who have monthly transactions that total USD 10 000 or more the SBS.

In January 2008, a major money-laundering investigation was launched by police to reveal the members of a Peruvian family and more than 100 of their businesses.

Famous Tejano singer is money launderer

Tuesday, May 20th, 2008

Adalberto Gallegos, Jr., the lead singer of a popular Tejano band, has pleaded guilty to a money laundering charge. A 52-year old Gallegos, Jr. Is a member of the musical group Latin Breed.

Gallegos, Jr. was charged with conspiring to conduct financial transactions that involved the proceeds of distributing marijuana.

In 2004, he established a bank account in Florida. This account was used for receiving more than USD 270 000 in drug proceeds. According to federal investigators, the money deposited in Florida was later withdrawn by and Gallegos, Jr. in Tucson.

The son of the singer, Adalberto Gallegos III, is charged with receiving nearly USD 62 000 in drug proceeds in a different bank account. The son, who has an outstanding arrest warrant from a previous unrelated case, is also being sought in relation with the money laundering charge.

On August 6, 2008 Gallegos, Jr. will be sued by U.S. District Court Judge Cindy Jorgenson. A conviction for money laundering he faces is a maximum penalty of 20 years in prison and/or a USD 500 000 fine, or both.

Australia organises AML Workshop

Friday, May 16th, 2008

A workshop on Anti-Money Laundering and Combating Financing of Terrorism organised by officers from the Australia Transaction Report (Austrac) was attended by 20 officers from banks, insurance and financial companies. The organisers were Austrac technical advisor Nicholas Stokes and communications and training officer, Lisa Bradford.

The Anti-Money Laundering workshop was organised in conjunction with the sixth technical assistance working visit to Brunei Darussalam who has been making efforts to develop public awareness on the threats imposed by money laundering. According to a press release issued by the Ministry of Finance, he tried to ensure the integrity of the financial system by means of encouraging an appropriate environment for the foreign investment to increase.

The workshop on Anti-Money Laundering and Combating Financing of Terrorism is one of the initiatives of the technical assistance programme that were created by Austrac for Brunei Darussalam.

Placement, layering and integration in Money Laundering. Eddie Antar

Monday, May 12th, 2008

The process of money laundering has been discussed and it has been also indicated that the process of money laundering can be divided into basic 3 steps – placement, layering and integration. These steps can happen either one by one or simultaneously, or separately.

Below is one of the notorious cases of money laundering that clearly illustrates the three steps.

In the 1980s, Eddie Antar skimmed millions of dollars from the company to hide it from the IRS. He was the owner of Crazy Eddie’s Electronics who had a very original plan, anyway. But, eventually, he and his co-conspirators decided to make better use of the money if to send it back to the company disguised as revenue. This move would inflate the reported assets of the company in preparation for its IPO.

Having travelled to Israel a number of times, he carried millions of US dollars strapped to his body and in his suitcase.

The money laundering scheme worked out by Antar worked the following way:

PLACEMENT – Antar made a series of separate deposits to an Israeli bank. Once, “Crazy Eddie” made 12 deposits in a single day.
LAYERING – Before US or Israeli authorities noticed the unexpectedly huge balance in the account, he had transfered all the money from the Israeli bank to Panama, where bank secrecy laws are in force. From the account in Panama, Eddie Antar made anonymous transfers to numerous offshore accounts.
INTEGRATION – Antar slowly wired the money from the offshore accounts to the legitimate Crazy Eddie’s Electronics bank account, and in the account of the company the money mixed in with legitimate US dollars and documented as revenue.

All in all, “Crazy Eddie” laundered more than USD 8 million. Antar’s scheme boosted the initial offering stock price so that his company ended up worth USD 40 million more than it if the revenue would have not been added. When Eddie Antar sold his stock, he had USD 30 million in profit. In 1992, he was found by the authorities in Israel and extradited to the US to stand trial, where he received an 8-year prison sentence.

Fighting Money Laundering. The Bank Secrecy Act

Thursday, May 8th, 2008

The Bank Secrecy Act (1970) has previously been described as one of the basic tools of anti-money laundering enlisted US Securities and Exchange Commission. However, this important document deserves much more attention than being just mentioned on the list.

When talking about the US addressing the crime of money laundering in countless legislative acts, the Bank Secrecy Act (1970) is the document that is the first one to be discussed as the Bank Secrecy Act basically eliminates all anonymous banking in the United States of America. It establishes the basic framework aimed to prevent and fight money laundering for financial institutions.

The Act gives the Treasury Department the ability to make banks keep records. Keeping records by the banks  makes it easier to notice a laundering operation. The requirements of the Act include reporting all single transactions above USD 10 000 and multiple transactions totaling more than USD 10 000 to or from a single account in one day. It case a banker consistently violates this requirement, he can be sentenced to serve up to 10 years in prison.

So, the Bank Secrecy Act is vital in stopping the flow of laundered cash in the US.

Money laundering scheme exposed in Australia

Sunday, May 4th, 2008

On April 28, 2008, Police arrested a man on charges of running a money laundering scheme. The cheme assisted some customers in avoiding taxes by transferring $93 million through offshore bank accounts.

According to police, an arrested Australian, 58-year-old Robert Agius was charged with 3 fraud and money laundering offenses that allegedly operated in Australia, New Zealand and Vanuatu. The suspect has been living in Vanuatu.

Robert Agius is charged with collecting $1.3 million in commissions.

According to police commander Gray, although the charges regatded only about 20 alleged customers and unpaid Australian taxes exceeding $12 million, more than 400 people might have paid money into the money laundering scheme. Australian Federal Police contacted also other customers to warn them that they may collectively owe millions more in unpaid taxes. Gray, a senior crime officer with the Australian Federal Police,  said the police expects to make some more arrests. The scheme was related to transferring money out of Australia as consulting fees, and afterwards claiming a business expense before returning the funds to Australia already as an interest-free loan.