ESTONIA JOIN THE USE OF EURO IN EUROPE >

ESTONIA JOIN THE USE OF EURO IN EUROPE > 

FROM THE -
JOURNALS of Monte Friesner ~ Saturday January 01, 2010

Financial Crime Consultant for WANTED SA >

Watch for Money Launderers Moving Funds out of Estonia in 2011

Today, the Republic of Estonia abandons the Kroon, and formally joins the Eurozone. If you remember what you have learnt here about money laundering and currency conversion, particularly adoption of the Euro, you know to examine any substantial international transfer of funds out of all new Eurozone members, such as Estonia in this case, that occurs during the next six months, very carefully. For those who are unaware of the money laundering opportunities created when a nation converts to the Euro, read on, please. 

History has shown us that, when a country announces that it will be joining the Eurozone at a date in the future, money launderers immediately size up the opportunities this event creates for them:

• *     Most nations have neither sufficient law enforcement agents, nor regulatory staff, necessary to check Source of Funds on all local currency presented for exchange in the weeks after the Euro is adopted. 
• They also do not have the political will to cross-examine every grandmother with cash hidden under her bed, nor operators of cash-intensive businesses, who will always affirm that it is their life savings, or that they do not trust banks, or offer some other plausible story supporting their possession of large amounts of cash.

So, given the opportunity, what do money launderers do ? Here are a couple of the common tactics:

• Move the proceeds of crime into a country as soon as future scheduled Euro adoption is announced, which often means two or more years in advance. If the jurisdiction has weak or unenforced AML/CFT regulations, circuitous methods to place the funds are not necessary. Assets, including real estate, can be purchased, only to be sold shortly after the Euro is adopted.
• Purchase or gain control of a cash-intensive business in an industry where customers typically do not pay in any method other than cash. You then pump up the receipts, using criminal profits, only to sell, for Euros, to some unsuspecting legitimate buyer who is mesmerised by the apparent cash flow. You must leave the country after the sale, for the buyer soon learns that there are only a small number of actual customers. You have not only laundered the dirty money, you have earned a large profit through fraud.
• Bring in your criminal profits from abroad, and exchange the funds for local currency. At conversion time, hire a number of "smurfs" as front men, to exchange the local currency for Euros.
• Bribe an underpaid employee at a commercial bank or NBFI to exchange your money for Euros amidst the chaotic first week the Euro is the currency of the realm.

 *Therefore, take a hard look at any cross-border wire transfers originating in Estonia during the next few months. Should you encounter one, demand verified Source of Funds and Beneficial Ownership information, and do not compromise on these requirements.

**   For further reading: Estonia to Enter Eurozone: Raise Country Risk Accordingly, World-Check 20 June, 2010

WANTED SA Thanks 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 articles.