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Current Money Laundering Concerns
Internal Revenue Service—Criminal Investigation International Operations – International Training Team Current Money Laundering Concerns 1
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Money Laundering Concerns
Current Money Laundering Concerns Private Banking Off-Shore Banking Correspondent Accounts Terrorist Financing Trade Based Black Market Peso Exchange Stored Value Cards Loan/Investment Fraud 2
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Private Banking Personal and Discreet Financial Services
Very Profitable for Banks Persons of Political and Economic Influence Gross Failure of Due Diligence Vulnerable to Corruption by Foreign Officials 3
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Off-Shore Banking Bank Secrecy Laws Dead End for Law Enforcement
Key to “Integration” Stage in Money Laundering 4
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Case Study: UBS Swiss “Bank Secrecy” Laws v. U.S. Income Tax Laws
18 Billion USD 52,000 “Secret Accounts” 780 Million USD Fine 200 to 300 Disclosures to IRS 5
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Correspondent Accounts
Foreign Bank Accounts In Another Country “Pay Through” Accounts Nested Accounts U.S. Banks Due Diligence Requirement by U.S. Patriot Act 6
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Correspondent Account
USA Country A $ BANK BANK Country A Account Individuals, companies and banks in Country A using a correspondent account in USA 7
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Nested Account $ Country A USA Country B Country A Account
BANK $ BANK Country B Country A Account BANK Bank in Country A allows Country B to use it’s bank account in USA 8
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Terrorist Financing Informal Value Transfer Systems (IVTS)
Charitable NGO’s Historic Investigations (Post-Attack) Preventive Actions (Sanction Enforcement) 9
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Alternative Remittance System
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Trade Based Money Laundering
Under and Over Invoicing of Goods & Services Multiple Invoicing of Goods & Services Under and Over Shipments of Goods & Services Falsely Described Goods & Services 11
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Trade Based Money Laundering Example
Source: “FATF, Trade Based Money Laundering, 23 June 2006” 12
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Black Market Peso Exchange
Colombian “Peso Broker” Illegally Derived USD for Goods Shipped to Colombia Colombian Pesos Paid to Cartel 13
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Source: “FATF, Trade Based Money Laundering, 23 June 2006”
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Stored Value Cards One of the fastest growing financial products
Potentially lucrative for issuers Fall into two general categories: Closed Systems Open Systems 15
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Open System Card Examples
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Closed System Card Examples
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Loan/Investment Fraud
Mortgage Fraud Bank Fraud Focus on Facilitators Investment Fraud Madoff (65 Billion USD) Stanford (6 Billion USD) 18
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