Money Laundering

Money laundering typically involves disguising the source or true beneficial ownership of funds which are the proceeds of crime.  Because the white-collar crime of money laundering often extends beyond just one nation's borders, over 170 jurisdictions worldwide have adopted the anti-money laundering policies of the Financial Action Task Force.  Some nations also follow the anti-money laundering recommendations and/or policies of the Wolfsberg Group of Banks, the Basel Committee on Banking Supervision,  the Egmont Group, the European Union, or the United Nations.


Money laundering circuits are sometimes used by: individuals protecting assets from lawsuits; spouses hiding marital property during a divorce; tax evaders hiding assets; debtors in bankruptcy concealing assets from creditors; terrorists financing their activities; or other kinds of criminals hiding profits.  Any of the above activities could violate 18 U.S.C. §1956 (Laundering of Monetary Instruments); and / or 18 U.S.C. §1957 (Engaging in monetary transactions in property derived from specified unlawful activity); and / or 18 U.S.C § 1961 (Racketeer Influenced and Corrupt Organizations Act), along with other U.S. laws.


Money laundering is often described as occurring through placement, layering, and integration. Illegally obtained money is first placed into a financial system.  Layering then occurs as laundering links help disguise who the true beneficial owner of the money really is.  As the laundering "link chart" from a financial intelligence unit based in Canada partly demonstrates: bank accounts, shell corporations, and nominees may all be used as laundering links which act as the protective layers of a money laundering circuit.  Many times laundering links are located in a Major Money Laundering Country / tax haven where strong bank secrecy laws make them difficult to detect.  In its final stage, money in a laundering circuit is integrated into the financial system in the U.S. or elsewhere, after it has been washed by a series of transfers between the laundering links.


Although a back-to-back loan is one of the ways money is sometimes washed, some banks like Griffon Bank openly advertise them.  A back-to-back loan is a loan which appears to be arm's-length and for example originate in Amsterdam, but is actually fully collateralized by an earlier cash deposit in say a Curacao bank. Because of strict compartmentalization, (i.e. first the depositing of the money in Curacao and then the loan disbursement in Amsterdam), one can not see the fact that the borrower in Amsterdam is also the lender in Curacao.


Although some of the details below have been changed for privacy reasons, the following accurately depicts how "True Beneficial Owner" used a Liberian shell corporation, offshore bank accounts, and a back-to-back loan to disguise the origin of U.S. funds:                                                        
                
                                                                                                                                       
Copyright 2007 Fred L. Abrams     

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