1. CWAG Africa Alliance Partnership www.cwagweb.org/aap

2. Money Laundering Financial Investigations
DAG Anthony Da Silva
California Atty. Gen. Office
Criminal Law Division

3. Scope of Money Laundering
CA is center of reverse flow of billions of dollars of illicit bulk cash proceeds of transnational criminal organizations
CA is one of top two states in which narco dollars are seized and to which narco dollars are destined
Flow of illicit money fuels ongoing operations of transnational criminal organizations

4. Scope of Money Laundering
The true scope of money laundering problem in CA is unknown
Estimate it is 1.5 to 2 percent of gross domestic product (GDP) is laundered annually
Based on CA $2 trillion GDP in 2012, approximately $30-40 billion could have been laundered in the state

5. Globalization
As globalization increases and CA’s participation in international trade continues to intensify, transnational criminal organizations exploit the increase in the volume of goods and services crossing international boundaries to disguise, launder and smuggle the money they reap from the sale of drugs and trafficking of persons

6. Money Laundering Scheme
Designed to mislead law enforcement and mischaracterize the source and origin of financial proceeds resulting from criminal activity (“dirty money”)
Process – Break up large amounts of money into smaller less conspicuous sums which are deposited (“placed”) into the financial system

7. Layering
Through “layering,” the money launderer then engages in transactions designed to distance the money from its original illicit source
Example – funds wired through a series of shell corporation accounts at various banks across the country, or disguised as payments for non-existent goods or services

8. Elements of Penal Code §186
Elements of Penal Code § Four Elements of Money Laundering Offense
A person who conducts or attempts to conduct a transaction, or series of transactions within a 7-day period;
involving a monetary instrument (or instruments) of a value exceeding $5,000;
through a financial institution or financial institutions
with the specific intent to promote, manage, establish, carry on or facilitate the promotion, management or carrying on of any criminal activity; Or
with the knowledge that the monetary instrument represents the proceeds of criminal activity or is derived directly or indirectly from the proceeds of criminal activity.

9. Financial Institution Definition includes banks, savings & loans, and credit unions
Check cashers
Engage in business of traveler’s checks/money orders
Licensed money transmitter
Currency exchange (casa de cambio)
Securities, investment banking, insurance
Engaged in legal/non-legal gambling (casino, card club, bookmaking)
Travel agency
Vehicle, boat, airplane dealer
Escrow companies
Delivery/holding packages (UPS)

10. Health & Safety Code § 11370.6 (Possession over $100,000)
Possess cash or negotiable instruments over $100K
result of sale, possession for sale, transport or manufacture of controlled substances
knowledge money derived from unlawful activities OR
2. intent to purchase
3. commits act in substantial furtherance

11. Federal Money Laundering 18 U.S.C. § 1956 (a)(1)
Conducts or attempts to conduct a financial transaction
with property known to be derived from crime
property in fact proceeds of specificied unlawful activity (SUA)
intent to promote SUA OR
intent to engage in tax fraud
4. knowing the transaction is designed to avoid reporting requirements or to conceal nature or ownership of proceeds

12. Federal Money Laundering 18 U. S. C
Federal Money Laundering 18 U.S.C. § 1956 (a)(2) [Transportation offense]
Transports, transfers, transmits (or attempts)
a monetary instrument
between United States & another country
intending to promote SUA (clean money) OR
knowing proceeds are from unlawful activity (felony) and knowingly conceal nature, location, ownership of proceeds, or intent to avoid state or federal reporting

13. Federal Money Laundering 18 U.S.C. § 1956 (a)(3) [Sting Offense]
Conducts or attempts to conduct a financial transaction
property represented by law enforcement to be proceeds of, or facilitate SUA
intent to promote SUA or conceal nature, location, source, or ownership , or avoid reporting requirements

14. Federal Money Laundering 18 U.S.C. § 1957 [Similar to PC § 186.10]
Knowingly engaging (or attempting) in monetary transaction with criminally derived property of value greater than $10,000
Property is from SUA

15. Transmitters Financial Code §§ 2000 – 2172
Person/business selling/issuing payment instruments or stored value; or receiving money for transmission within or without the United States
Knows supposed to be licensed with the state but is not
Records: DFI – extensive financial records

16. Federal Anti-Structuring Statute 31 U.S.C. § 5324 (a)
Prohibits structuring transactions to evade the reporting requirement of cash in excess of $10,000 through one or more financial institutions OR
Multiple cash transactions to purchase T-Cs, money orders, or cashier checks of less than $3,000 to avoid verification and reporting under § 5325.

17. U.S. Treasury Department FinCEN Financial Crimes Enforcement Center
Can research and analyze information and provide other critical forms of intelligence to support financial crimes investigations
CTRs, CMIRs, SARs, Interpol case tracking, U.S. Treasury investigation, NADDIS (DEA)
High roller DMV; check casher’s permit
Request Form

18. State Agency Resources
Franchise Tax Board
Employment Development Department
Board of Equalization
ABC

19. Federal Agency Resources
U.S. Postal Mail cover; suspicious transaction database
FBI Regional Computer Crime Labs
SAR Review Committees
ICE databases/border surveillance
INS – FOIA requests

20. Other Resources WSIN – Sacramento LA Clearinghouse SECC
JDIG (Joint Drug Intelligence Group) – LA
Nevada Gaming Control Board
Trash searches

21. Private Company Resources
Mailbox service companies
Telephone providers – Neustar
Consumer Credit Agencies
Non-bank financial records (Western Union)
DIG database

22. Court Assisted Records
Investigative grand jury – SDT process
Ex-parte order for utility, financial & escrow records

23. Authorization to release tax records
Voluntary Compliance
Authorization to release tax records
Authorization to release financial records

24. Checklists
Financial investigation
Money Laundering Prosecution

25. Exhibit List

26. Source & Application of Funds Analysis
FUNDS APPLIED (EXPENDITURES)
2002
2003
Increase in checking account balance (this entry is often not used in the actual
prosecution due to the fact that defense counsel can often attack this figure)
$5,000
$10,000
Increase in savings account balance
$20,000
$15,000
Purchase of securities shares of a corporation
$30,000
Purchase of residence
$200,000
Purchase of automobile Porsche
$40,000
Purchase of fur coat
Reduction of loan on Porsche**
Reduction of mortgage on residence**
$100,000
Living expenses
$50,000
$60,000
Total Funds Applied (Expenditures)*
$315,000
$240,000
SOURCE OF LEGITIMATE FUNDS
Automobile loan
Mortgage on residence**
Salary
$25,000
Total Sources of Legitimate Funds
$125,000
INCOME FROM ILLEGITIMATE OR ILLEGAL SOURCES
$190,000
$215,000
* All Assets valued on a Cost Basis
** Important to investigate the early repayment of mortgages/loans. Often a target will take out a loan to finance the purchase
of a substantial asset and pay it off a short time later in an effort to conceal his true cash-rich position.

27. Thank You Anthony Da Silva, Deputy Attorney General
California Department of Justice
Tel: (619)

28. CWAG Africa Alliance Partnership www.cwagweb.org/aap