This morning, I finished Jeffrey Robinson’s “The Laundrymen: Inside the World’s Third Largest Business”. Jeffrey is an American journalist who is considered one of the world’s leading experts on international financial crime.
In this incredibly well-researched book for the most part, the author led us on the tour de force of global money laundering.
It’s difficult to comprehend the scale of money laundering in our world today until you take time to think about this stat: More money is spent worldwide on illicit drugs than on food. And all those funds need to be laundered!
Some of the stories make you gasp. According to the author, money laundering transcends race and country, even governments. What else do you think when even the CIA engages in money laundering to finance covert operations, with the President in the know? In the name of national security, the CIA is said to be running more businesses than most Fortune 500 conglomerates. Even the Vatican is implicated in this business. Saudi Arabia? Yes. The most credible people you can think of have been implicated and indicted. Clergymen. Pregnant Women. “Officer of the Year” security agents. No one seems immune.
Yet for all its flaws, the United States has been the country at the forefront of fighting global laundering perhaps because it understands its demerits, even when other countries were unwilling to make this commitment. This is quite important because a great deal of funds laundered are from the illegal drug business.
#DoYouKnow that the Know Your Customer (KYC) campaign in the financial system started not because the system sought to improve the banking experience for customers but to fight money laundering? There is also the Know Your Non-Customer concept.
Some of the funds laundered make your head fuzzy. How $9.5 billion went missing under the nose of the Bank of England. How a South American President charged a drug cartel $500,000 per flight, pulling $10 million a month. Drug traffickers washing well in excess of $100 billion a year, a figure that exceeds the gross national product of 90 percent of all the countries currently represented in the United Nations. A woman was once caught at Geneva withdrawing $84 million from a safe deposit box. When asked why she didn’t just take a little bit at a time, she responded, “That’s what I was doing.”
#DoYouKnow that when stuff really hits the fan, there is no really no such thing as the attorney client privilege? If it comes from you, your lawyer can be forced to spill, especially when the state makes sure his life is on the line.
Some of the things that baffled me as I read is how some of the punishments do not tally with the crimes committed. How do you explain that a man who washed $750 million in 15 months get fined just $16 million? Well, it may sound fair considering he got served 660 years in prison. But what happened to the money?
Some of the stunts pulled to take funds across borders beat the imagination. Heard of women stuffing dollars in vaginas and swallowing multiple condoms with money rolled inside? Me neither, until this book.
The author reveals several strategies used by money launderers to wash their funds. The South African Method. Identical suitcases trick. The Sydney Method. Using one of these methods, a renowned money launderer formed 40 different companies and opened 90 different bank accounts in 40 different places around the world. Eli Pinkas who used the “He’s got a big mouth” technique to launder as high as $800 million is one of the most breath taking tales for me.
What about the several countries/territories all over the world which seem set up for the sole purpose of laundering money. Some of these res publicas you may never have heard before. Great banking systems. Good communications. Easy access. And politicians who are ready to look the other way. One of those offshore Islands has been said to have as many as 350 chartered banks when they have just a population of 10,000 people.
In some of these countries you can buy your own private offshore bank for under $10,000. A bank over which there is no oversight. You become your own banker. You can run your own bank and put as much cash through the tills as you want.
And this is why we all should root for the good guys in law enforcement. Sometimes they work so hard for little results. In a particular case, law enforcement agencies across 8 countries worked together for 4 years, pulling 550 interviews, but were able to confiscate only $12 million. It can be a thankless job. I mean, even the US Department of Justice raised their hands up in the air and said, “The crooks keep so far ahead of us, we’ll never completely close the net.” This gap continues to increase with the attention of the world directed towards terrorism these days.
No book is complete for me without the Nigerian angle and you have some in this book. I was shocked that in the military era, a 25-ounce unit of heroin
imported from Southeast Asia for $6000 were resold to distributors in Lagos for $120,000. 40% of all heroin going into the United States was brought in by Nigerians. Whether substantiated or exaggerated, the author mentioned the case of a Nigerian caught at the Lagos airport trying to launder $800 million in cash abroad. And of course, he was one of the first to document the Nigerian ‘419’ scam. As an aside, it’s occurred to me that when people say Nigeria has a better mobile banking system than the West, it may just mean that it’s way easier for money laundering to take place.
The book is so good that it has been the push some needed to start careers — both good and bad. A criminal once testified under oath, “I got the idea from Jeffrey Robinson’s book on money laundering.” On the plus side, according to the author it has encouraged good guys to join the law enforcement and has been instrumental in anti-money laundering legislations in many jurisdictions.
It is the kind of book that changes the way you see politics and business after reading it.
What a terrific book!