Hanging Global Money Launderers Out to Dry

Part One: Finding Evidence

By W. Michael Kramer, J.D., CFE

Global money laundering has ballooned - some estimates range as high as $500 billion a year worldwide. But overt and covert methods can trace the funds, find the evidence, and make the fraudsters pay. 

Phillip, the fraud examiner, knew that "Samuel" was the kingpin in a global bribery case but just needed the evidence. A check of local building permits revealed that Samuel had spent several hundred thousand dollars in a short period of time on additions to his house and a swimming pool. Witness interviews revealed that the subject purchased expensive artwork, a luxury automobile, and took extensive vacations during the same time period.

Phillip's contacts with the contractors, auto dealership, art gallery, and travel agency revealed that Samuel and his wife paid for their possessions in cash ($100 bills), traveler's checks purchased overseas, and checks drawn on seven previously undisclosed bank accounts. Samuel's home contractor suspected fraud so he kept copies of the $100 bills; the other sellers kept copies of the traveler's checks and bank checks.

Phillip studied the serial numbers on the bills and found that they were recently issued (which would rebut a possible cash hoard defense) and discovered that one of Samuel's vendors had purchased the traveler's checks. The bank checks led to proof of bribe deposits. Phillip had the evidence and had caught another money launderer.

Global criminals generate large sums of money through financial fraud, drug trafficking, and arms smuggling. Some estimates range as high as $500 billion a year worldwide. To avoid detection, they wash their euros, yen, deutsche marks, and dollars through elaborate networks with no regard for borders. According to the United Nations Global Programme Against Money Laundering, criminals are taking advantage of the globalization of the world economy by transferring funds quickly across international borders. The rapid developments in financial information, technology, and communication allow money to move anywhere in the world with speed and ease, the U.N. says.

This two-part article explores money laundering schemes, ways to discover evidence, and methods to build cases for trial.

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