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[ PRACTICAL SOLUTIONS ]
Is improving law enforcement’s financial investigation literacy on the “micro” level of illicit financial activities the key toward
achieving “macro” results from Bank Secrecy Act/anti-money laundering (BSA/AML) compliance efforts? The following example takes a look at a real case and explores the macro and micro sides of BSA/AML efforts.
Jake (not his real name) would meet almost weekly with various associates in a parking lot of a blue-collar department store in Northern Virginia. These associates would bring a suitcase full of cash with them. What would follow was a four-hour-plus drive to New York City. Jake estimated there was about $500,000 in these suitcases each time. He figured he had transported about $13 million dollars that way.
Jake’s case provides an interesting snapshot of both the micro and macro worlds that make up money laundering activities. Jake’s undoing was not being caught with any of these suitcases full of cash; that was linked to the macro part of the money laundering world. He was undone by how he personally handled his illicit compen- sation in the micro and more personal part of that world. In both worlds, it is often the “little mistakes” that result in the biggest downfalls.
Jake could not tell you precisely where the cash came from or who was the owner of the cash. He suspected that it came from drugs, prostitution and probably other petty crimes. Jake’s illegitimate occupation was being a money mule. He simply picked up money and dropped it off to associates in New York, trying not to draw any attention along the way. His legitimate occupation in banking made him the ideal type not to draw that attention. He earned a good fee for each trip but was also known to “skim” some of the cash out of the suitcases during the trips. The precise counts and accounting he was used to at his bank did not work as well for these clandestine suitcase money services. The skim was either never noticed or tolerated to a point.
In Jake’s quest to launder his personal, albeit illicitly earned monies, he had a dream of establishing a legitimate business――he wanted his own restaurant. Jake knew this cash-centric banking would likely draw attention to where he worked. It actually did at the other bank he chose for this personal business. They filed the suspicious activity report (SAR) he was hoping to avoid. This SAR may have otherwise been ignored by the SAR review team except for the additional red flag that indicated Jake was in a management position at another bank. That inspired agents to take a closer look. The prosecutor was also in agreement that BSA/AML “gatekeepers” like Jake needed this additional scrutiny.
From a money laundering perspective, Jake was a pivot point. On the macro side was the convergence of the monies from all over into New York. Included in this anti-money laundering (AML) picture there are straw companies, versions of Black Market Peso Exchanges (BMPE) and other schemes regularly described in AML training materials. On the micro side were the lesser explored and recognized parts of those AML training materials that outline how these lesser criminals regularly filled those suitcases.
When examining how law enforcement commonly addresses and investigates narcotics distribution, there will normally be a ground-up strategy. Each level is investigated to the next higher one. Arrested local users and dealers are pressed to identify their suppliers. From there, the investigations will attempt to go as far up the ladder as they can. Many cases start out at a local policing level and grow into a federal case. High Intensity Drug Trafficking Areas (HIDTAs) and Organized Crime Drug Enforcement Task Forces (OCDETFs) have long recognized this investigative strategy by combining local and federal forces into task forces.
Contrast that with prevailing money laundering investigative strategies and there will commonly be the propensity to begin the financial aspects of the investigations only at the middle or higher levels. Nuanced experiences and understandings of the typologies on how the monies got to those levels is far too often lacking. The success and effectiveness of those investigations are bound to suffer as a result.
Most experienced “narcs” take great pride in their nuanced understanding of all aspects and activities associated with how narcotics are bought and sold――right down to packaging materials and use of paraphernalia. Local fraud detectives similarly
learn all the tricks of the trade from the scoundrels they arrest or investigate.
They normally can cite intimate details about check and card processing procedures and how the fraud schemes they investigate attempt to circumvent them. Money laundering investigations might similarly benefit by starting with knowing the detailed nuances of
these lower level money movements.
While the macro-level SARs will always be important, a far larger portion of
current BSA/AML compliance
efforts are now identifying
activities more associated with the micro-level activities. Much of this activity is the kind
that helped fill
those suitcases.
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