Based on my many years working on an Economic Crime Squad investigating financial frauds where the subjects of my cases where charged and convicted of wire fraud, mail fraud, and money laundering, Insider.com asked me to review eight movies and TV shows and rate for accuracy the scenes featuring money laundering. You can watch the YouTube video here or read the transcript post at Insider.com
My comments were edited for time. The following is my full explanation of the investigative concepts mentioned during the Insider.com interview.
Money laundering is the process of concealing or disguising the origins of money. It’s what a person with money from an illegal source or business does so they don’t have to honestly answer the question, “Where did all that money come from?”
Money laundering allows the person to lie to authorities, or even better, set up a situation where no one ever asks about the origins of funds because they assume it’s revenue from a legitimate business or service provided. That’s done, not by running the illegal funds through a washing machine, but by running the money through the proceeds, co-mingling cash, with the revenue of multiple high volume cash businesses such as strip clubs, restaurants, bars, laundromats, nightclubs, and nail salons.
Questions regarding the source of the money are asked when anyone attempts to deposit or make a purchase valued at more than $10K. A bank is required to ask you to complete a CTR – currency transaction reports (CTRs). And don’t think you can go in several days in a row and deposit smaller amounts $3K and $4K at a time to avoid filing a CTR, because banks are required to report suspicious activity like that. It’s called structuring, and it’s a crime too. Criminals can also be charged with money laundering when funds determined to be the proceeds of an illegal scheme are used to purchase anything valued at $10K or more. Large cash payments are reported to the IRS on form 8300. These large ticket purchases, homes, cars, jewelry, etc. can be seized by the government.
These reports, CTRs and form 8300, are sent to the Financial Crimes Enforcement Network (FinCEN) whose mission is to safeguard the financial system from illicit use, combat money laundering and its related crimes via the collection, analysis, and dissemination of financial intelligence, such as Suspicious Activity Reports (SARS) to the FBI and other law enforcement agencies.
Law enforcement charges money laundering once it can be proven that the bad guys knew the money came from a Specifies Unlawful Activity, an SUA. Just moving that illegal money through a financial institution is money laundering too. Known as the “spending statute,” it’s the fraud related money laundering charge the prosecutors I worked with used most. In every one of my Ponzi schemes, advance fee scams, embezzlement, and business-to-business telemarketing cases, the subjects were charged with this spending violation.
I was also asked to comment on other investigative concepts portrayed in the movie and TV clips I reviewed. The following are my notes regarding those scenes:
Art can be used to launder money. Purchasing expensive pieces of art is a money laundering standard. Transactions often are private, and prices can be subjective and manipulated and, guess what? Art dealers are not required to file Suspicious Activity Reports (SARs). The purchase of precious metals, stones, and jewels may trigger a SAR, but not art. No such rules currently apply to U.S. dealers in art. Provenance attached to legitimate artwork would reveal the prior ownership transactions. Art dealers are encouraged to report transactions to the authorities when the “source of funds give rise to grounded suspicions of money laundering and in the absence of plausible explanation.”
Swiss banks are forbidden by law to accept money which they know might be as a result of a crime. Swiss banks won’t accept your business if they think it is illegal. Plus, they’re going to want to verify who you are and the source of the funds you are putting in the bank. Otherwise, they won’t let you open an account.
A mandatory deconfliction form providing very basic information about major drug investigation must be submitted to HIDTA to prevent such a situation or conflict. The High Intensity Drug Trafficking Area program (HIDTA) is a drug-prohibition enforcement program run by the United States Office of National Drug Control Policy. It was established in 1990 after the Anti-Drug Abuse Act of 1988 was passed. Deconfliction is the process of determining when law enforcement personnel, local, state, or federal, are conducting an event in close proximity to one another at the same time. Events include law enforcement actions, such as undercover operations, surveillance, and executing search warrants.
Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law I’ve never worked a case where RICO was charged. It’s primarily used for investigations involving large criminal enterprises, like organize crime families and transnational drug trafficking. The simplest definition is that it provides for extended criminal penalties for actions performed as part of an ongoing criminal organization.