ICT Views


Money Laundering – from sunbeds to cemeteries

by: (Associate Director, Research and Development) on

Necessity is the mother of invention. Or so the expression goes.

Well, money launderers are an inventive lot. If they want to properly benefit from the proceeds of their crime, the necessity is to make the criminal property look legit.

They need to look for weakness and loopholes. It’s not really a part of the criminal process associated with a blatant and/or brutal approach.  It requires brains and often patience. That’s what makes stopping them a challenge.

Typologies

There is plenty of work out there on money laundering typologies. FATF is a good place to start. The SOCA website news archive also has some good stuff on it around specific cases.

But it was a recent article which prompted me to blog on the subject.

The Telegraph website recently reported that Italian Police had smashed a criminal network which was smuggling home-made gold ingots. Not just a few either by the sounds of it – as the police apparently seized €163m in assets. You can read the article here.

Golden moments

 

goldThe bit that caught my attention was that the network was using cash-for-gold shops. This sort of service is a relatively recent development here in the UK, but over the last few years has blossomed into a sizeable industry.

If you watch satellite of cable TV, you are likely to see an advert for someone who wants to buy your old / broken / unwanted gold and not think much of it.

You don’t even need to visit a shop. Just put your gold (or any gold for that matter ? how do they check its yours ?) in the envelope and post if off to webuyanygoldandasknoquestions.com at the freepost PO Box. Then they’ll send you some money - by cheque, or perhaps directly into your bank account. I understand that in a shop you may get even cash.

Do they know who you are ? Do you know who they are ? Wow. This does indeed sound ‘fantastico’ for laundering money (I am not fluent in Italian. You may have guessed).

This isn’t the first innovation in money laundering and it certainly won’t be the last. Let me throw a couple of others at you.

Anyone for a tan ?

Sun bed shops are inevitably a highly cash based service business. So there are two main opportunities here. Firstly, vastly overstate the amount of people who use the service. I’ve heard it mentioned anecdotally that in London there are a lot of tanning salons. Surely people can’t need all that much tanning ? The suggestion is that if you were to watch one for a day, the volume of customers may not be commensurate with the day’s recorded takings, if you catch my drift. 

Alternatively, why not hotwire / illegally tap your electricity ? I read about this happening in Scotland recently. It’s almost the reverse of the above – less electric suggests less customers, which means more off the books’ cash. Although of course you then run the risk of blowing up your salon or cooking the unsuspecting customers.

Taxi!

Not sure about tanning ? What about taxis ?

Another cash intensive service industry with limited assets. And you can legitimately be out and about, picking up and dropping off people. And other things.

The Royal Oak Taxis case is very interesting one which encompasses all manner of criminal activity. The hub of it was Royal Oak Taxis in Paddington, West London. Particularly handy when the owner is also a Director of a nearby Euro Foreign Exchange. Royal Oak were reported as charging a 5% commission to various criminal gangs in order to “clean up their money”.

You can read more about the case here.

Always moving

We know ML is a constantly evolving environment.

As if to prove this, as I started writing this piece, another story popped into my Inbox. In the US, the President of a now-defunct law firm has ended up in jail following a fraud based around Government Visas.

And how was the money laundered ? They purchased several hundred thousand dollars’ worth of vacant cemetery plots and grave monuments.

Although this is admittedly a brief and slightly sideways look at what is fundamentally an extremely serious issue (these funds are derived from a variety of criminal acts), the point remains. Like I said at the top – the challenge is developing the systems and controls to prevent (ideally) or recognise (if not) these activities before you become exposed.

I should make it clear that I am by no means suggesting that all cash for gold enterprises, tanning salons, taxi firms or cemetery-plot purchasers are laundering money. I’m sure the vast majority are wholly legitimate, but recognising the inherent weaknesses and ‘red flags’ allows us to learn from them.

Finally

If anyone else has seen any bizarre or weird ML efforts they want to share (or even better, write a blog about) then please get in touch with me directly or ICT. After all, the best way to highlight these issues is to discuss them.

Categories :

0 Comments :

Comment

Comments closed

Archive

Tel: +44 (0)121 362 7534

Blogger facebook LinkedIn Twitter youtube google + Trust Pilot

© 2017 – International Compliance Training Ltd, a division of Wilmington plc. International Compliance Training Ltd, is a company registered in England & Wales with company number 4363296 GB. Registered office: Wilmington PLC, 5th Floor, 10 Whitechapel High Street, London. E1 8QS VAT NO.GB 899 3725 51