Anyone can understand President Jagdeo’s unhappiness over the lack of prosecutions under both the old and new anti-money laundering laws. It has been said that crime knows no geographic boundaries. This is no more true than in the realms of drug trafficking and money laundering. The increasing international scope of this type of criminal activity complicates law enforcement efforts to interdict the illicit proceeds of these crimes. However the foregoing notwithstanding, one might be forgiven for asking if the efforts thus far by the Financial Intelligence Unit, have considered all aspects of money laundering, and whether these are aggressively being investigated in a scenario of confidential information-sharing. The techniques employed by the drug trafficker (DT) to hide their ill-gotten gains are legion; many of them are imaginative and are not as unknown as some may be inclined to think. Illicit drug transactions are basically cash transactions that the DT would like to conceal and convert to appear as being generated by a legitimate business transaction(s). Simply put it is the process of legitimizing wealth by disguising its source or ownership. The money laundering process occurs in three phases which are briefly described as follows: (1) Placement – where the money from an illicit source is inserted into an apparently legitimate location; (2) Layering – which is the means by which a series of movements are used to mask the origins of the money; (3) Integration – covers the movement of the laundered funds back into commercial activity. A couple of examples of the methods employed will suffice at this time to give readers an idea of some of the challenges with which the FIU may be faced.
The choice of a particular technique depends on the DT’s ultimate objective and the unique circumstances. The most widely practiced method is applied when the DT conducts any number of cash transactions with the bank sometimes exchanging cash for treasury bills, bank drafts, letters of credit, travelers cheques etc. DTs also use money exchanges and brokerage houses and avoid the conventional banking system; using the exchanges (or cambios) facilitates the transfer of monies to other jurisdictions.
The DT in many instances uses the method of direct investments and successful foreign business transactions where the DT makes a direct investment using a dummy foreign corporation as a front. In some instances legitimate businesses agree to accept a new criminal partner who makes the new investment with illicit funds funneled through one of his foreign corporations. Drug traffickers have also been known to disguise illicit money as profits allegedly derived from a successful foreign business or real estate transaction. They then pay the requisite taxes as if the venture had been legitimate and use the remainder in any manner they choose. Double invoicing is another popular technique where a company orders merchandise from its foreign subsidiary at an inflated price and deposits the difference between that and the real price in a special off-shore account. Sometimes the company reverses the process by selling merchandise at an artificially low price and deposits the difference in a secret foreign bank account maintained by the company. Corrupt banking officials have been convicted for facilitating the movement of illegally generated wealth. Another practice employed is the selling of a business which ostensibly shows substantial cash flows and which should – all things being equal, realize a better selling price. In almost all scenarios there is an abundance of anecdotal evidence to assist the law enforcement agency as a starting point.
The number of unique money laundering techniques employed by DTs makes it difficult and time consuming for agencies like the FIU to effectively get a handle on the illegal methods and proceeds of the drug trafficker. Guyanese are unarguably among the smartest people on planet earth and it is therefore safe to assume that the FIU is staffed with people who reflect this truism, and who may even now be focusing on some of the more ingenious techniques employed by DTs. In this regard it is imperative that Guyanese support all interventions which make available the appropriate legal tools giving latitude to law enforcement agencies in their efforts to interdict the proceeds of crime.
Yours faithfully,
Patrick E. Mentore
