How did the money laundering industry start in the US and Russia?

Many people know about the concept of money laundering, mainly from TV series and political news. Years have passed since the mafiosi began using schemes to cover up illegal businesses with legitimate enterprises. The phenomenon itself is overgrown with many facts and stories. Here is a detailed story about a mafia-era business that made its way into art, real estate and the sphere of virtual currencies.

Фото: Depositphotos

Legal regulation of money

Money laundering is a transfer to the legitimate status of property or money obtained by criminal means, writes Tjournal. Simply put, the transfer of black cash and electronic currency from the shadow zone to the legal one, in order to be able to use the funds in the open and in public.

The most popular reason for money laundering is to keep them safe. If all the funds are in a bank, then it is more difficult to steal them than if they are stacked in a corner of the house.

The second reason is personal security. If a person’s expenses do not coincide with his income, then the taxation will have questions as to where these funds come from.

The third reason is mobility. You can transfer money from a bank account quickly, and carry cash in a suitcase for a long time. With the advent of electronic money and cryptocurrency, this process has been simplified, but in order to buy Bitcoins or its analogs, cash will have to be carried somewhere and reflected somewhere.

Cash in Russia

In Russia, there is practically no legislation regulating cash. In 2014, the year of power intended to impose a restriction on the turnover of cash between citizens to 600 thousand rubles, and later to 300 thousand rubles. In 2016, the initiation of this idea were postponed on 2019 year, but because of foreign sanctions abandoned it. According to the government, in order to preserve the functioning and development of the country's solvency.

However, there are some nuances. Law No. XXUMX of the Federal Law “On Counteracting Legalization (Laundering) of Proceeds from Crime and Financing of Terrorism”, it is saidthat banks should be required to check monetary transactions in excess of 600 thousand rubles. This includes some cash transactions carried out through banks - for example, cash deposit to the account of a legal entity or a deposit, as well as the purchase of foreign currency. Banks are not obliged to report these operations to the authorized bodies (the Central Bank of the Russian Federation, Rosfinmonitoring), but are obliged to provide information upon their request and may, on their own initiative, transmit the information if they identify a systematics.

Banks required report to the nearest branch of the Federal Tax Service on the opening of all deposits or accounts of individuals, organizations and individual entrepreneurs. However, they do not indicate the amount of funds in the accounts - this information can be issued only at the request of authorized bodies, for example, tax, if it needs to block the account due to non-payment of taxes. In the case of the purchase of an apartment or car, the FTS also receives information about the property in order to charge taxes, but does not deal with finding out the source of funds for these operations.

If you go and buy a batch of diamonds, this will also be known. According to 115-FZ, purchases of precious metals and jewelry should be reported to the relevant authorities. Therefore, in jewelry stores, they can rightfully ask for a passport upon purchase.

In Russia, the control over the circulation of money and property is exercised by Rosfinmonitoring - he can request information about the origin of funds from the bank. And on the basis of verification information can refer to the tax or police. The tax audit will happen only if the inspector compares the income and expenses of the person and sees that the unemployed person is buying property worth millions of rubles. Then questions will arise. In Russia, due to the lack of tight cash controls, cash withdrawal schemes are more often used, so classical Western laundering techniques are not so popular.

Cash in the USA

In the US, the fight with cash payments is a long time. Until 1945, the largest denomination was considered to be a banknote with a denomination of 100 thousand dollars for settlements between Federal Reserve Banks. There were also bills in 500, 1000, 5000 and 10000 dollars.

Currently, cash in the US is about 11% of the total money supply. Consequently, about 90% of cash transactions go through a cashless transaction.

The regulatory framework for the United States related to cash and non-cash payments is huge and has been around for over 20 years. Under the Ministry of Justice, there is a working group for tracking suspicious cash transactions. Casinos, stock exchanges, mortgage brokers and banks inform the government about transactions worth more than ten thousand dollars.

How appeared and entrenched the term

Mafia trail

At the time of Prohibition, huge money from the sale of alcohol passed through the Chicago mafia. In order to legalize their income, they bought a network of automatic laundries and mixed dirty money into the net proceeds. Laundries were always paid in cash, so it was impossible to obtain real data on the number of services provided.

The appearance of the term is attributed to Al Capone - one of the most famous gangsters of the 20-th century. However, he appeared in court in 1931, receiving 11 years in prison for tax evasion, and the first laundry in the USA opened in April 1934 of the year in Texas. So the merit of Al Capone is just an urban legend.

There is a mafia trail in the money laundering industry, but not in the laundry. After the arrest of Al Capone, the American law enforcement agencies realized that it was possible to catch and plant large members of the mafia gangs, not for their specific crimes, but for obtaining illegal income from their activities. But there were problems.

In 1934, Switzerland passed a law "About banks and savings banks": It was fixed the concept of banking secrecy and criminal prosecution of employees who violate it. Almost 80 years later, Switzerland will simplify the concept of banking secrecy, but in the 20 century its unbreakable principles led to the legalization of "dirty money".

While Al Capone was in custody, Meer Lansky, better known as the “mafia accountant,” was making plans to create schemes for legalizing his shadow incomes. Meer was born in the city of Grodno in the Russian Empire and emigrated to the United States as a child with his family in 1911. Lansky's surname is short for his original surname Sukhomlyansky.

Unlike his colleagues, Lansky lived modestly and almost never came under the attention of law enforcement. He lived in a small house, and officially worked as the head of a car-care center.

Lansky's money laundering occurred through gambling establishments. Illegal money was added to the casino's net proceeds - thus, the casinos claimed large profits, from which they paid taxes, and thereby removed their profits from the shadows. When there was too much money, Lansky acquired several casinos in Cuba, where casino revenues were not controlled. He secretly imported cash there, from where they were transferred to Swiss banks and then to their homeland in the USA.

Over time, Meer Lansky complicated the scheme by adding fictitious firms to it. The money supply passed through many firms, some of which were in the jurisdiction of different countries, which made it difficult to trace the movement of money.

In 1959, the revolutionaries of the Che Guevara squad led by Fidel Castro gripped Meer Lansky casino in Havana, after which the scheme ceased to function as before. Lansky did not despair and began cooperate with the Bahamas and the state of Nevada. There, the casino city of Las Vegas was gradually born, so the mafia invested in the construction of hotels and gambling business. He also financed the construction of similar establishments in the Bahamas, returning the money laundering scheme to the rails. Later construction took over the territory of the Caribbean - thus Lansky had a hand in the creation of modern offshore zones.

The US government tried to hold him accountable for tax evasion, but there was too little evidence. Meer Lansky spent the rest of his life at a ranch in Miami and died of lung cancer in January 1983 in the year 81.

Watergate scandal

In a broad sense, the term "money laundering"Appeared only in 1972 during the Watergate scandal, which forced US President Richard Nixon to resign.

The forerunner of Nixon’s departure was the incident at the Watergate Hotel in 1972, when five people were detained during the presidential election campaign at the headquarters of the Democratic Party. In the course of the investigation, it became known that the attackers were trying to establish a wiretap and were photographing documents at the headquarters on the orders of White House officials.

In court was provedthat most of the money in the Nixon re-election support fund came from anonymous sources. US law prohibits this, so funds were passed through Mexican banks, and then transferred to the account of the electoral committee.

USA against four million dollars

In legal proceedings, the concept of "money laundering" stuck in 1982, in the framework of the case: "United States vs 4 255 625 dollars." It was found that the American company Sonal spent through their accounts at Capital Bank money received from the sale of drugs. Cash from the United States was exported to Colombia, where they were exchanged for Colombian pesos, and then again for dollars and brought back to the United States, where they were credited to Sonal. More than 240 million dollars passed through the company, but only a little more than four million were tracked down.

For an unknown reason, in open sources there is no information about whether any penalties for its participants followed the opening of the criminal scheme. Perhaps this is due to the fact that in 1982, money laundering has not yet been treated as a crime. In legislation, this phenomenon reflected in 1986 year, and the international campaign to fight kicked off three years later.

Money laundering recipes

Hawala

The history of this term goes back many centuries. Translated from the Arabic "hawala" means a bill or receipt - the word appeared in the eighth century before the birth of the banking system. In essence, this is shadow banking. The main feature is that all financial transactions occur at a confidence level. Hawala is popular in Africa, Asia and the Middle East. In India, such transfers are called Hundi. Works as follows.

A person comes to the broker to transfer money to another country. Broker gives him a secret code. Previously, it could be anything, for example, a drawing or symbol. Now more often use the numbers from the bill and send them by phone or e-mail. Next, the person reports the code to the trustee. He comes to the right broker, reports the code and gets the money. Sometimes in this way money does not even leave the country, and settlements between brokers are carried out by mutual settlements. Such transfers can not be traced.

In 2013, the FATF (International Organization for the Prevention of Money Laundering) released report on the impact of the hawala system and its counterpart on the money laundering industry. Tracking Javal is almost impossible, according to data from the FATF report, it can take from 10% to 50% of the total mass of cash transactions. Clarifying its role in money laundering for this reason is also problematic.

After the September 11 attack of the United States 2001 drew close attention to Javala and suspected this scheme in support and financing of terrorist organizations.

Real estate

Investigation of The New York Times in 2015 has shownthat a huge amount of luxury real estate in the United States owned front companies that do not disclose data about the buyer. Sellers are not interested in the source of funds, as this is not required by law. As the journalists found out, 37% of luxury apartments in the Time Warner Center multifunctional complex in New York belong to foreigners. These are residents of Russia, China, Colombia and Mexico.

This does not mean that all these apartments have been acquired for the purpose of money laundering, but the possibility of hiding your data when purchasing real estate guarantees the transfer of shadow income there.

Moldavian scheme

In 2016, through the commercial banks of Moldova washed 23 billion dollars from Russia. This is how the circuit works.

The conditional Russian firm Khlebmolok concludes a contract with the foreign firm BurgersPivo for the delivery of bread and milk from Russia to another country. The contract spelled out the resolution of conflicts through the courts or by settlement.

“Khlebmoloko” did not bring the order, therefore “BurgersPivo” make a claim and demand their money and penalty back. Khliboloko agrees with the claims and offers to compensate for the loss in money. Further court, writ of execution and bailiffs. All the money went to the "Burger Beer". At the same time, “Bread, Milk, Burgers and Beer” are all interested parties and participate in the same scheme.

A distinctive feature of the scheme is the presence of a guarantor in the person of a citizen of Moldova. Since the citizen of Moldova is present in the transaction, the case is considered in a Moldovan court. The bribing judge makes a decision obliging the Russian company Khlebmolok to repay the debt to the foreign company BurgersPivo. After that, the officer of the court bailiffs, who is a participant in the scheme, opens an account in the private bank Moldindconbank, where KhlebMolok transfers money, automatically legalizing it.

On evaluation The Central Bank, in the 2012-2014 years of the Moldovan scheme washed about 23 billions of dollars from Russia.

Art

Art practically not regulated by law, prices can be flexible, and the buyer can remain anonymous.

In 1982, Brazilian banker Edemar Sid Ferreira brought back at John F. Kennedy International Airport in New York a bundle with a picture worth 100 dollars. Soon law enforcement agencies found out that this picture of “Hannibal” was painted by American artist Jean-Michel Basquiat worth eight million dollars. Thanks to the criminal scheme hidden behind the interest in art, Edemar laundered more than 50 million dollars and collected a collection of thousands of paintings from 12. In the 2006 year, Ferreira was sentenced to the 21 year in prison for fraud, tax evasion and money laundering.

In the U.S. underway Work on the return of illegally acquired art to their homeland. For example, the actor Nicolas Cage agreed to return to Mongolia the skull of a dinosaur that was illegally exported from there. And in 2015, the painting by the American artist Jean-Michel Basquiat "Hannibal" returned to Brazil.

Since any manipulation of more than ten thousand dollars, US banks must inform the government, when buying works of art use a lot of deposits in the amount of less than ten thousand dollars or offshore accounts.

Virtual currencies

In 2014, FATF опубликовала report on the impact of virtual currencies on money laundering. It is mainly devoted to clarifying the concept of virtual money and potential risks in the sphere of legalization of shadow income. It also talks about the complexity of monitoring and tracking virtual currencies for law enforcement.

Liberty Reserve is an online payment system registered in Costa Rica. Its main function is the transfer of funds. Registration required a name, email and date of birth. User verification was absent, which attracted many participants. At the time of closing the service, over a million people registered in it. During the existence of the project, more than 55 of millions of operations were carried out, and the Liberty Dollars / Euro currency, which is pegged to the dollar and euro exchange rates, functioned inside the system.

Liberty Reserve website stub: "This domain is withdrawn by the US authorities"

In 2013, the United States Prosecutor’s Office opened a criminal case against seven Libery Reserve executives on money laundering and remittance charges without a license. According to the investigation, more than six billion dollars were laundered with the help of Libery Reserve.

The US Treasury Department unplugged Liberty Reserve from the US finance system, and in May 2016, the founder of the service, Arthur Budowski sentenced to 20 years in prison.

At the moment, the fight against money laundering does not pursue much success. Despite the fact that the phenomenon of this criminal sphere is already more than 80 years old, regulation at the legal level appeared a little more than 30 years ago. FATF is actively working on this problem, but its reports mainly come down to explaining the situation of money laundering in the world. In turn, the development of the Internet, cryptocurrency, and the popularity of offshore zones modernized money laundering schemes, complicating the process of tracking and disclosing crimes in this industry.

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