From: Mark Keesee <[EMAIL PROTECTED]> The New York Times Magazine September 26, 1999 THE WAY WE LIVE NOW SALIENT FACTS: MONEY LAUNDERING All Washed Up The headlines say Russian crooks are laundering money through American banks, but what exactly does that mean? By TIMOTHY L. O'BRIEN JUST HOW DO YOU LAUNDER MONEY? By moving the proceeds of criminal activities — drug deals, corporate embezzlement, political graft, arms trafficking and the like — through a maze of banking and brokerage accounts in order to disguise their origins. As recently as the 1980's, prospective launderers had to pack bundles of cash onto planes or send small amounts via courier. But now, using the electronic financial networks that link much of the world, launderers in Moscow, for example, can simply tap on a computer keyboard and zap their digital money to New York. A few more keystrokes and the money can be winging toward Antigua. DOING THAT ENOUGH WILL THROW INVESTIGATORS OFF THE SCENT? Yes, partly. Each additional transfer makes an investigation more difficult. And often the money winds up in a seemingly legitimate business. A furniture maker, for example, in cahoots with a crooked buyer, might sell $20,000 worth of couches for $200,000. The outrageously padded receipt from that transaction makes the $180,000 of dirty money seem like profits from a law-abiding enterprise. CAN ANYONE GET IN ON THE ACTION? Hard-core money laundering requires a lot of cash because each time you move the money, banks charge a small fee, which adds up. Don't feel shut out of the club, though. Anyone can fly to the Bahamas with a pot of cash and open an account — XYZ Inc. — with one of Nassau's many friendly tax shelters. Then get a credit card issued in XYZ's name and use it to shop, eat and party around the world — all on XYZ's tab. If anyone starts trying to figure out why XYZ is being so generous with you, your reps in the Bahamas can easily shut them out, unless there is hard evidence of illicit activities. HOW DOES ANYONE EVER GET CAUGHT? With nearly $4 trillion — that's right, $4 trillion — passing through global electronic banking networks each day, getting caught usually requires bad luck. Big sums, like the billions that investigators believe the Russians have washed through the Bank of New York, are theoretically easier to trace, but when there's that much money at stake, bank officials might play dumb. And prosecuting even the strongest case usually requires the cooperation of other countries, which often prefer to avoid the intrusion and all the embarrassing headlines and inconveniences. Moreover, there are only seven foreign crimes that can trigger a money-laundering investigation in the United States — bombings, robbery, murder, drug sales, bank fraud, kidnapping and extortion. Other nefarious deeds — stock manipulation, for example — don't yet meet the money-laundering smell test. THEN WHY LAUNDER THROUGH UNITED STATES BANKS? The dollar is, indeed, almighty these days. Businesses and governments around the globe have a strong preference for trading in greenbacks, and United States banks have an unsurpassed global reach. A bank in Moscow and a bank in Antigua might be too suspicious of one another to do business together, but if an American firm steps into the middle of the transaction, everybody's happy to deal. So, paradoxically, it's the rock-solid reputation of the dollar that exposes American financial institutions, especially ones that are greedy or unscrupulous, to humiliating spectacles like the current Bank of New York investigation. Copyright 1999 The New York Times Company --------------------------- ONElist Sponsor ---------------------------- Share your special moments with family and friends- send PHOTO Greetings at Zing.com! Use your own photos or choose from a variety of funny, cute, cool and animated cards. <a href=" http://clickme.onelist.com/ad/zing14 ">Click Here</a> ------------------------------------------------------------------------
