Between February 2008 and June 2011, Pedro Navarro, Jr., 36, of Zapata, Texas, was involved in a drug trafficking conspiracy in which he helped a Mexican cartel arrange for the distribution of its marijuana and methamphetamine loads in the United States. Navarro pleaded guilty to these offenses in December, along with admitting to conspiring with others to launder the proceeds of his drug trafficking, putting the money from the drug sales back into the cartel’s hands. The case, the result of a three-plus-year investigation led by agents from the U.S. Drug Enforcement Administration and the Criminal Investigations Division of the IRS in conjunction with other agencies, is just one example of how money laundering fuels crime. Unfortunately, most such efforts go undetected.
Money laundering is exactly what it sounds like—a way to clean money by transferring it around so that its dirty beginnings become obscure and less traceable. The money can be from any illicit activity, from tax evasion to illegal trading to drug dealing and everything in between, and it can fund anything from legitimate business to terrorism. Law and regulations designed to catch money laundering have become more stringent since 9-11. For example, the Bank Secrecy Act (BSA) anti-money-laundering provisions were strengthened and the U.S.A. Patriot Act included anti-money-laundering sections. Other countries, such as Mexico, and international governance bodies, have also made efforts to crack down on these schemes. But criminals continue to launder money every day using methods both old and new.
Although more criminals are turning to technologically advanced laundering methods, traditional techniques, such as cash transferring and smuggling, are still effective and widely used. In fact, they still constitute a high proportion of the global money laundering efforts, according to the U.S. Financial Action Task Force (FATF), an intergovernmental organization formed to combat money laundering.
Structuring. One proven means of getting large amounts of cash into banks without triggering reporting requirements is called structuring. Structuring is the movement of money in certain patterns, rather than one bulk sum, so as to avoid having to report it to the government under BSA and IRS rules. Transactions of $10,000 must be reported in a Currency Transaction Report. Bank compliance departments are more vigilant about spotting structuring than they used to be, and now there are plenty of software programs that can flag suspicious patterns. But people still do it.
(To continue reading "Interrupting the Wash Cycle," our February 2012 cover story, please click here)
photo from by planetofsuccess.com