“LATIN AMERICA IS PRIME TARGET FOR MONEY LAUNDERING”
FROM THE -
JOURNALS of Monte Friesner ~ Friday February 25, 2011 >
Financial Crime Consultant for WANTED SA >
2011: Watch for Increased Bulk Cash Smuggling into Latin America
Note to readers: For those who were unable to attend this week's 11th Annual FIBA AML Conference in Miami, the following is the special article prepared by me for attendees at that event: “Kenneth Rijock”
An examination of these factors will confirm that a clear and present danger exists:
- The Financial Crimes Enforcement network [FinCEN] has issued a regulation which will impose an obligation upon financial institutions to report all cross-border wire transfers to US regulators. Additionally, all funds transfers made by money service business [casa de cambios] over $1000 shall be required to be reported. These actions will drive money launderers for narcotics trafficking organisations towards bulk cash smuggling, and away from international wire transfers, due to the increased risk that regulators reviewing wire transfer records will discover their illicit operations.
- * The Government of Mexico has recently enacted strict laws, which severely limit the ability to deposit American dollar notes into Mexican financial institutions. This will cause those money launderers who previously placed their clients' dollar drug proceeds in Mexico to go elsewhere in the region. Case in point: the seizure of Panama City bound US dollars at the Mexico City Airport by law enforcement. Countries where the US dollar is either the official (dollarised) currency (such as Panama, Ecuador, British Virgin Islands, and the Turks & Caicos Islands), or where new or existing bank clients can open dollar accounts, are especially at risk.
- * The US Government Accountability Office [GAO], an official watchdog group, reported that the efforts of Federal law enforcement agencies to stem south-bound bulk cash smuggling only resulted in the seizure of an microscopically small percentage of the total amount being smuggled into Latin America. The white paper, which bluntly (but essentially) concluded that US bulk cash smuggling interdiction actions have failed, means that increased bulk cash smuggling operations will probably be successful.
- * Canadian marijuana growers, who are paid in US dollars for their products when they are sold in North America, are finding it increasingly difficult to convert their greenbacks into Canadian dollars. Expect that their money launderers will increase efforts to move these criminal profits south, rather than north, so as to more easily place and launder the money, eventually moving a large portion of it into Canada.
- ** Just how much transits Latin America is unknown, but you should be alert to large dollar deposits, and conversion into your local currency, coupled with subsequent funds transfers into Canada.
Therefore, you should anticipate that there will be an increased flow of US dollars into Latin America during the coming year. The Red Flags that you may want to look for:
- Dollar deposits from clients who do not have a history of such activity.
- Dollar deposits from purely local businesses that have had no international transactions in the past.
- New clients claiming to be well-funded investors allegedly interested in purchasing a local company.
- Sudden, new, major deposits from a casa de cambio that is a bank client.
- Unusual activity from local import-export companies that is inconsistent with their business structure.
Alert your compliance staff to watch for any signs of an increase in bulk cash smuggling of dollars, and carefully examine any requests form existing clients to involve US dollars, to ensure that you do not unwittingly facilitate the movement and laundering of criminal profits.
WANTED SA Thanks to Mr. Kenneth Rijock of World Check and all the Parties, Law Enforcement and Securities forces who have contributed to this article and their sincere opinions and statements.
WANTED SA states that the facts and opinions stated in this article are those of the author and not those of WANTED SA. We do not warrant the accuracy of any of the facts and opinions stated in this article nor do we endorse them or accept any form of responsibility for the