fp Turks and Caicos

How many of us as a child watched westerns at the movies? We can all remember the bank robber who took his ill gotten gains from the bank robbery into the hills and buried his sack of cash. So why did he do this?

But the problem was that the robber had a large amount of cash, and everyone who knew him would notice him spending more money than usual. How would he answer their questions? How would he stop attracting the attention of the sheriff looking for the bank robber? Who is this person who suddenly has so much money to spend?

So he made a plan — to hide the cash until everyone forgot about the bank robbery and he could then begin spending. He had to do it carefully because some people have long memories, but the more he could make the money look legitimate, the easier it would become to benefit from the risk of being a bank robber.

Without knowing it, the cowboy bank robber had just committed what would be in the modern day an offence under the Proceeds of Crime Ordinance, being that of concealing criminal property. Even further, had he used a friend to help him carry the cash or dig the hole in the ground, that person would have also committed an offence.

So we have the first characteristic of a money launderer. They are very patient people. The bank robber considered it worthwhile to wait for years before he started spending. The longer he waits, the more chance he has of people forgetting about the bank robbery.

Now let’s move forward a few years.

Mobsters operating in the United States are often quoted as undertaking the first organized efforts to launder money. Al Capone, convicted of tax evasion in 1931, had the same problem as the cowboy bank robber — how to spend his money which should have gone to the tax authorities without attracting attention to himself.

It is well understood that Capone and his fellow mobsters took over businesses with high cash turnover, such as launderettes and car washes. They then mixed the dirty money with genuine clean money generated from the businesses, thereby adding legitimacy to the money they had. This technique known as commingling is still often used today in money laundering schemes.

We mustn’t think, therefore, that money laundering is new to us. We have seen that money laundering has taken place for many years. But it has now become much more organized and sophisticated, from the cowboy bank robber to Capone’s mobsters and now to “Organised Crime Worldwide Ltd.”

It is estimated that some $1.5 trillion dollars is laundered every year. If we write that down as $1,500,000,000,000 then we begin to realize how much that is.

A few other comparisons:

The U.S. national debt now stands at $14 trillion, ($14,000,000,000,000). The famous U.S. stimulus package was only $787 billion ($787,000,000,000), and the sales turnover of Apple Inc. is $65.23 billion ($65,230,000,000).

In other words, the amount of dirty money that is being laundered every year through Organised Crime Worldwide Ltd. is much bigger than one of the most successful companies in the world. Exaggerated you may say, but probably not. Remember that criminals do not file tax returns, and they do not produce audited accounts, so at a guess the figures quoted are lower than reality, and the problem is much bigger and probably rising.

Nowadays Organised Crime Worldwide Ltd is what is says — “organized.” We have all heard of the criminal groups, Colombian drug cartels, the Russian and Italian mafia, the West African and Nigerian fraudsters. These people are highly organized.

Paul Coleman, vice president of compliance at International Banking Group, has more than 40 years experience in the banking industry. He is a professionally qualified expert in Operational and Business Risk, Internal Audit, Anti Money Laundering and Regulatory Compliance.

The views expressed are the opinions of the writer and whilst reflective of general policy implemented by IBG, there may be aspects of detail which may differ between this article and detailed procedures adopted by IBG. IBG accepts no liability for errors or actions taken on the basis of this information.