Kenneth Rijock

Kenneth Rijock

Friday, September 12, 2014

A REMINDER THAT SOME MONEY LAUNDERING OPERATIONS INVOLVE MORE THAN ONE TECHNIQUE


The high-profile seizure of tens of millions of dollars in cash, from companies located in the fashion district of Los Angeles should serve as a painful reminder that money laundering operations more often than not involve more than one method of cleaning dirty cash. In this case, US-generated drug profits were laundered through a combination of both trade-based money laundering, and the Black Market Peso Exchange. Such a combination can skew the appearance of the indicia, or Red Flags, of each type of technique or method, making detection more difficult.

Inasmuch as most law enforcement investigators are generally not familiar with market pricing in the apparel industry, substantially raising or lowering the sales price of manufactured goods, the cloth necessary to create finished products, and associated raw materials, the use of the fashion industry for trade-based money laundering was predictable. Factories in Latin America are typically used for manufacturing, or for making unfinished goods, for final assembly in the US, thus creating a golden opportunity for money launderers to conceal drug profits in "sales" to foreign manufacturers, which were, in essence, controlled by the cartels.

The BMPE, which can be hidden within virtually any international industry, and which is often extremely difficult to identify, was the supplemental technique employed. The takeaway from this case: money launderers are, unfortunately, very creative when it comes to constructing a scenario with multiple techniques. running at the same time A sufficient number of the traditional red flags may not be readily apparent to the untrained eye, so take even a small number of inconsistencies found in a target's trade or business as grounds for further inquiry.    

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