Posted by Andrea Rovira in Untagged
By Steve Cocheo, executive editor, email@example.com
Passengers and crew pretty much ignored the “Stay Float” containers conveniently distributed around the passenger ship—much as people ignore fire extinguishers mounted on office walls.
Little did they know that the metal boxes contained millions of dollars worth of illegal substances being smuggled by drug lords.
The bogus safety devices had been fabricated at the suggestion of veteran money launderer Kenneth Rijock. Rijock, a banking attorney gone bad, had been working for some time as a money launderer for North and South American drug gangs, and had been asked for a fresh idea for smuggling the illicit products themselves. His brainstorm was to devise something that no one would meddle with because it was only meant for a special purpose. To enhance the camouflage, Rijock directed that the containers be emblazoned all over with phony trademark symbols and fake patent numbers. The scam worked very well.
Rijock, later prosecuted and imprisoned on racketeering, money-laundering, and other charges, turned his life around after turning states’ evidence and eventually became a consultant to federal and private anti-money-laundering efforts. He told this story to make a point during a session at ABA’s Regulatory Compliance Conference, sponsored by World-Check, where Rijock works as a financial crime consultant.
“This is the kind of ingenuity these people have,” Rijock told bankers. “If they worked for good, they’d be presidents of mega corporations.”
He shared stories and tips for banks to use to improve their enhanced due diligence efforts for anti-money-laundering and Bank Secrecy Act compliance.
Rijock spent most of the 1980s laundering funds for drug organizations while maintaining a low-key commercial law practice. He not only masterminded the full-service “wash, dry, and fold” laundering, as he describes it, but carried out some of it personally, disguising much of it as weekend trips that just looked like he enjoyed travel. Rijock has told his story in a fascinating multi-episode blog called “Confessions of a Money Launderer: A First Hand Account of What It Is Like To Be A Practising Laundryman.” He also blogs regularly on AML/BSA issues in an e-letter, “A Different Angle,” that claims thousands of readers
He regaled the ABA crowd with stories of enhanced due diligence assignments for banks, and suggestions for avoiding being duped.
One rule: Any significant investor in a firm being checked out by a bank “had damn well better have a footprint on the internet. If you are making all that money,” said Rijock, “what are you doing with it after taxes?” Legitimately wealthy people, he continued, stand out because they attend functions attended by other wealthy folks. They make headline-grabbing donations. They go out and get seen. They leave footprints.
So if an individual being checked is a “ghost”—their name doesn’t come up in a web search—this should be a warning, according to Rijock. The bank or their operative needs to drill deeper. Rijock said the best strategy is to get very local, checking out the newspapers covering the area. The object is to find anything at all about the subject. Someone who doesn’t show up there, either, should be treated with caution, at the least.
Rijock noted that one thing he had learned, in the course of doing legitimate legal work for bank clients in his lawyering days, was that the rich and their attorneys are rarely out of touch.
“Very wealthy people have to have very close access to their lawyers,” he said.
Thus, a wealthy borrower or investor may be checked out through their lawyer. One item to consider is obtaining a letter from their law firm, acknowledging that the person or their company is a client, and is in such-and-such a business.
“If they don’t have confidence in the client,” said Rijock, “they won’t endanger their law license for them.”
This can be more reliable than looking at where the individual puts their money. “Any kind of legitimate investment can be suborned by money launderers who know what they are doing,” he explained.
Rijock also offered a tip about checking out attorneys. One place is Google Scholar, at http://scholar.google.com/. This free search engine specializes in items such as legal cases and opinions and law journals. Another is a paid federal legal database called Pacer, at www.pacer.gov. (Many users of Pacer can have fees waived; see the site.) Pacer enables users to track not only public court records, but also to obtain court documents online.
Both services will give a banker checking out a lawyer some sense of what they do. And again, if the lawyer is “ghost,” with no visible trail, that’s cause for caution.
Should an enhanced due diligence effort lead the bank to decide not to do business with a prospect, Rijock urged extreme care in conveying that message.
“Never, ever tell people outside of the bank why you declined their business,” warned Rijock. “It could be hazardous to your health.”
And if any written communication on this point is necessary, Rijock advised keeping it quite vague. Essentially, the letter should tell the rejected prospect nothing beyond the point that the bank declines to do business with them.
Recordings of the 2010 ABA Regulatory Compliance Conference are available from Peach New Media. Click here
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Lucy and Nancy’s Common Sense Compliance Blog
John Byrne’s AML, Fraud, and a Few Other Things
Compliance Inbox Online
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[This article was posted on June 30, 2010, on the website of ABA Banking Journal, www.ababj.com, and is copyright 2010 by the American Bankers Association.]