Tuesday, June 26, 2012

U.S. bank looked other way to Mexican drug war money laundering, agent says

A former compliance officer with the U.S. bank Wachovia, Martin Woods has seen the Mexican drug war and its illicit money unseen by even the most seasoned observers. Woods started asking questions about billions of dollars pouring into Wachovia accounts in the U.S. from Mexican currency exchanges back in 2006. "I guess what surprised me most was my own naïveté . I aggravated my own employers (by bringing forward evidence of laundering) and also the regulators themselves."

Wachovia, currently owned by Wells Fargo, settled out of court for the largest violation of the Bank Secrecy Act in U.S. history in 2010, paying a fine of $160 million for laundering a staggering $378.4 billion from Mexican currency exchange houses between the years 2004 and 2007.
The majority of the cash is believed to be drug money, moved without proper documentation from Casa's de Cambio in Mexico to U.S. banks. "There was no consequence for anyone dealing with that money. Some other compliance officers broke the rules and they kept their jobs. I obeyed all the rules, blew the whistle and lost my job," Woods says.

This is a side of the Mexican drug war that few people see. Ever since Mexican President Felipe Calderon used his nation's military against the drug cartels, an estimated body count has soared past 50,000 people dead.
Public beheadings have become commonplace and the cartels have brazenly gunned down unarmed civilians in public. Financial analysts, then say there is no exaggeration in accusing bankers of laundering blood money for international assassins."The whole point of being a drug dealer is money," Heather Lowe, a Washington-based lawyer with Global Financial Integrity says. "Identifying and stopping that money flow is crucial."

The U.N. Organization on Drugs and Crime estimates that illegal narcotics represent the world's third-biggest export, after oil and the arms trade, worth more than $300 billion annually."You have these horrendous crimes being committed, people being shot 10, 20 or 30 at a time," Walter MacKay, a former Canadian police officer who has trained Mexican security forces says. "This dirty money washing through economies just exacerbates everything," he told Al Jazeera. Illicit drug sales in the United States generate annual revenues between $18 billion and $39 billion, according to the U.S. Justice Department's Federal Bureau of Investigation. The money in turn flows back into Mexico, where cartels use it to pay underlings, bribe politicians, invest in legitimate businesses and purchase raw product.

Most tragically, the "war on drugs" doesn't seem likely to end anytime soon. Many analysts believe the military solution isn't working as violence is increasing. Some policy experts and forensic accountants believe tracking money earned by cartels, along with waging a PR campaign to tackle the demand side of the equation in the U.S., is the best in a series of bad options."In order to weaken organized crime, it is far safer and more effective in the long run to erode its financial base," Laura Carlsen, director of the Americas program of the International Relations Centre in Mexico City says.

Currency exchange houses, like the ones used by Wachovia, are probably the most common way for cartels to launder funds. Traffickers normally "contract with money brokers to use their networks of bank accounts and business connections to structure large sums for transport across the border"; former Arizona Attorney General Terry Goddard told a gathering at Woodrow Wilson Center said.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Friday, June 22, 2012

Ireland levies first fine under money laundering law

* UBS says has addressed the control weaknesses identified

The Central Bank of Ireland has reprimanded and fined the Dublin-based life assurance arm of Swiss bank UBS after it failed to comply in a timely manner with anti money-laundering legislation introduced in 2010.
The CBI said it had fined UBS International Life Limited (UBSIL) 65,000 euros ($81,900) for failing to instruct its staff on changes to the law embodied in the Criminal Justice Act 2010.
"This is the first fine we have issued under this anti money-laundering legislation," said CBI spokeswoman K atie Philpott.
The law, which came into force in July 2010, is designed to protect Ireland's financial system from exposure to money laundering and terrorist financing, the CBI said.
The CBI also said UBSIL had failed to show it was adequately checking information on policy holders provided by third parties, thus failing to comply fully with "know your customer" requirements.
UBSIL had also failed to adopt adequate written policies and procedures for identifying and reporting suspicious transactions, the CBI said.
"The breaches identified related to delays by UBSIL in implementing certain requirements of the act after it was implemented on 15 July, 2010," said UBS in a statement, adding that it had dealt with all the control weaknesses identified.
A spokesman for UBS said UBSIL had worked closely with the CBI to redress the control weaknesses, and had received a near 30 percent discount on the fine originally proposed as a result, adding that UBSIL had not committed any contraventions in doing business.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Tuesday, June 19, 2012

Millions stolen from Medicare wound up in Cuban banking system

By Michael Sallah
Miami Herald

In an unprecedented case, federal prosecutors have charged a Miami man with engaging in a massive money-laundering operation that moved millions stolen from the federal Medicare program into Cuban banks.
Prosecutors say Oscar Sanchez, 46, was a key leader in a group that funneled $31 million in Medicare dollars into banks in Havana — the first such case that directly traces money fleeced from the beleaguered program into the Cuban banking system.Most of the money moved through an intricate web of foreign shell companies before ending up in Cuba, to avoid being detected in the United States, said investigators.

“We’re obviously dealing with a very sophisticated network,” said Ron Davidson, an assistant U.S. attorney, during a court hearing on Monday.

The federal investigation marks the first time prosecutors have brought a cash-for-Cuba case in the ongoing battle against Medicare fraud in South Florida, which leads the nation in dollars fleeced from taxpayers.
Despite arguments from Sanchez’s lawyer on Monday that his client was not a flight risk and has family ties to Miami, U.S. Magistrate Jonathan Goodman ordered the defendant be held without bail. “The fact that [he] has made more than 78 trips out of the country over the years” was a major reason, the judge said.
For years, Sanchez was a player in a global organization that spanned from Montreal to Havana, prosecutors said. Though no one else has been charged so far, prosecutors say Sanchez, who owned a check-cashing business, was in a position to launder millions in government checks and wire payments doled out to crooked providers between 2005 and 2009.  He was charged last week with one count of conspiracy to commit money laundering.
“Oscar Sanchez was a financier for fraudsters and a capitalist for the Cuban banks,” prosecutors said in a court motion. While Sanchez was a target of the ongoing investigation, prosecutors say dozens of crooked Medicare providers — who offered HIV and medical equipment services — all took part in the laundering scheme set up for one reason: To hide the money.

15 accounts

With millions pouring in from Medicare, suspects opened 15 bank accounts in Canada and Trinidad to move the money from the United States, court records state.
In one major tactic, the ringleaders plunked down millions to buy reams of money orders — 20 boxes in all — and then put the money into an account in the Royal Bank of Canada in Montreal. To make the purchases, they used a host of names, including a famous alias: Bill Clinton.
Then, after the money was concealed in the bank accounts, it was immediately wired to several accounts at Republic Bank in Trinidad. Investigators later found out that the accounts were not actually opened in Trinidad, but at the branch of Republic bank in Havana, records state.
In addition, the bank had firm instructions on two of those accounts to wire all the money immediately into the Cuban banking system. So far, prosecutors, who are gathering their information from financial records and unnamed witnesses, said they have traced $63 million into Cuban banks — nearly half tied to Sanchez’s case.
“This is not a traditional money-laundering case,” prosecutors said.
One reason that the rogue healthcare providers turned to Sanchez was because he acted like a money machine: providing much-needed cash to them while they were waiting for their money to be laundered, prosecutors charged.

Fast, efficient

“The defendants’ money laundering operation was faster, more efficient, and financially benefitted everyone involved, including [Oscar Sanchez], who charged a fee for his services,” prosecutors wrote.
In all, 70 medical company owners in South Florida submitted more than $374 million in claims to Medicare, and were reimbursed about $70 million. Many of those providers wanted to withdraw their proceeds in cash to “purchase luxury items or to pay illegal kickbacks,” Davidson wrote. Though prosecutors charged that Sanchez would be a flight risk if released on bail — saying he traveled from the country 78 times since 2002 — defense lawyer Peter Raben said most of the trips were to Mexico where his client owned a condo.He said charging Sanchez in the international money-laundering ring was “a big red herring” to taint his client, w ho has no prior convictions. Prosecutors say Sanchez was part of a much larger scheme to get money into Cuba, a Communist country that does not extradite fugitives from the United States.As part of the Sanchez case, prosecutors are asking the court to seize seven homes he owns in Miami-Dade, Lee and Collier counties as well as two vehicles to recover the millions in laundered money.
Experts who have watched Miami-Dade emerge as the nation’s Medicare fraud capital say the Cuban government’s involvement would not be too far-fetched — though they have no proof to back it up.
Andy Gomez, a senior fellow of Cuban studies at the University of Miami, said he has heard from sources in Miami and Cuba that the Castro government extorts Medicare bounty from criminals who are allowed to travel freely between here and the island nation.  More than two dozen people charged with Medicare fraud have fled back to Cuba over the last five years, and many more are suspected of hiding there.

“The Cuban government knows what’s going on,’’ Gomez told The Miami Herald last year.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/