Okay, rent the “Lethel Weapon” movies. I don’t remember which one it is, but Joe Peschi gives an explanation of laundering money.
Step 1:
Find a depository which fits the following criteria:
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Large cash reserves.
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Much of the cash reserves should represent deposits from an illegal activity (ie. drug transactions). For this example we will use Banco Nacional de Panamá, a depository which is protected by General Manuel Noriega. The depositor will be Pablo Escobar. Finding the proper depository would be the function of the CIA, and in this example we will use William Casey.
Step 2:
Arrange for a loan from this depository. We will use the name of George Bush in this example for the person obtaining the loan. We will use the amount of $8 billion for this example. Sometimes the depository will not be very cooperative. If this occurs, the CIA will coerce or intimidate the depository officials into cooperating. Ultimately, the loan will be made.
Step 3:
Split the loan proceeds in half. One half ($4 billion) will be sent to Iran to purchase “super bills” at the rate of two “super bills” for one authentic bill. Thus, $4 billion in cash buys $8 billion in “super bills.” (NOTE: A “super bill” is a perfectly counterfeited U.S. bill. These bills are printed by an Intaglio press which was sold to the Shah of Iran in the late '60s, early '70s. The Shah was also given the plates, ink and paper necessary to successfully print U.S. dollars in large denominations. This was given to the Shah by the CIA. Unfortunately, the Shah left the press, plates, ink and paper for the Iranian Revolutionary Councils when he fled in late 1978.) The second half of the loan ($4 billion) will be sent to a CIA launderer selected by the CIA (Casey) for his or her ability to move large sums of money around the world as a matter of ordinary business. For this example we will use the name Nana Debusia. (Debusia is the grandson of Guyana’s first democratic leader and owner of many U.S. and foreign banks.)
Step 4:
Repay original loan to depository in “super bills.” (Give Banco Nacional de Panamá $8 billion in “super bills” to replace the authentic currency it loaned.) These “super bills” are placed in the reserve vault and, as long as they are not withdrawn by the depositor, their existence will not jeopardize the value of the U.S. dollar. But, because they are perfect in every way, to put the “super bills” in circulation would eventually devalue the U.S. dollar by flooding the monetary marketplace with U.S. currency.
Step 5:
Arrange to sell Iran something of value for the authentic currency used to purchase the “super bills.” In this example, we will use arms, ammunition and replacement parts for military equipment. (We will use the name Oliver North as the example of a person arranging the sale of arms to Iran.) In other words, the CIA now arranges to sell Iran $4 billion worth of arms and equipment in order to get the original $4 billion of authentic currency back. Now, the CIA has $4 billion to use in funding covert activities without relying on Congressional authority and funding. If caught, the CIA can report the source of funds as being from an arms transaction with Iran.
Step 6:
Ensure that the “super bills” are not withdrawn. This is done through the process of neutralization of the depositor. Neutralization is the use of intimidation, coercion or intimidation. In this example, Pablo Escobar is killed.
Step 7:
This CIA launderer in possession of one-half of the original loan proceeds is moving his $4 billion through a maze of banks which are cooperative with both the launderer and the CIA. For this example, we will use the following trail of deposits to banks: a bank in Spain; the Vatican Bank; banks in Luxembourg. Then the launderer wires from his London offices $3.8 billion in laundered monies to private numbered accounts being controlled by the original architects. The launderer keeps $200 million for his job well done, leaving the $3.8 billion in the numbered accounts.
Step 8:
Neutralize the CIA launderer. In this example Nana Debusia was indicted by the U.S. on 32 counts to include bank fraud. The CIA stepped up in his behalf and stated that it would not be in the best interest of the U.S. to prosecute Debusia. He was facing several hundred years in prison if convicted. He was subsequently acquitted on all counts.
CIA TALLY
$4 billion for use in unauthorized black ops* (*black operations are those covert operations performed without the knowledge or authority of Congress.) $3.8 billion in private numbered accounts controlled by the architects of the funding operation.
SUMMARY OF THE EXAMPLE
To summarize the example, the Director of the CIA, William Casey, approached the Ex-Director of the CIA and current Vice President of the United States, George Bush, with the name of a vulnerable depository, the Banco Nacional de Panamá. Vice President Bush then arranged for a short term loan of $8 billion. Bush arranged for $4 billion to go to Iran to purchase super bills and $4 billion to go to Nana Debusia to be laundered into several private accounts. He (Bush) commissioned Oliver North to oversee the Iranian connection. North delivered $4 billion in U.S. currency to Iran. Iran gave North $8 billion in super bills in exchange for the $4 billion in good U.S. currency. North then delivered the $8 billion in super bills back to the Banco Nacional de Panamá. The loan transaction is now complete. There is $8 billion in super bills in the reserve vaults of the Banco Nacional de Panamá, there is $4 billion in authentic U.S. currency in the hands of the Iranians, and there is $4 billion in good currency with CIA launderer Nana Debusia. North sells the Iranians military hardware and parts for the amount of $4 billion and diverts a portion of the proceeds to the Contras of Nicaragua (Iran/Contra). Nana Debusia, in the meantime , is laundering the deposits of $4 billion through various banks, including the Vatican’s bank in Italy. After several successful banking transactions, Debusia presents $3.8 billion in the sound deposits to numbered accounts in various locations. When the funding operation is complete, there is $4 billion in CIA accounts to be utilized for covert and black operations; there is $3.8 billion in private numbered accounts controlled by George Bush and William Casey. Pablo Escobar, the primary depositor is dead to ensure no one will withdraw the super bills. General Noriega is in U.S. federal prison and under constant U.S. guard to ensure his silence, and William Casey is dead, leaving $3.8 billion in good U.S. currency in the control of George Bush
What is money laundering?
The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardising their source.
Illegal arms sales, smuggling, and the activities of organised crime, including for example drug trafficking and prostitution rings, can generate huge sums. Embezzlement, insider trading, bribery and computer fraud schemes can also produce large profits and create the incentive to “legitimise” the ill-gotten gains through money laundering.
When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or the persons involved. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.
In response to mounting concern over money laundering, the Financial Action Task Force on money laundering (FATF) was established by the G-7 Summit in Paris in 1989 to develop a co-ordinated international response. One of the first tasks of the FATF was to develop Recommendations, 40 in all, which set out the measures national governments should take to implement effective anti-money laundering programmes.
Members of the FATF include 29 countries and jurisdictions – including the major financial centre countries of Europe, North and South America, and Asia – as well as the European Commission and the Gulf Co-operation Council.
The FATF works closely with other international bodies involved in combating money laundering. While its secretariat is housed by the OECD, the FATF is not part of the Organisation. However, where the efforts of the OECD and FATF complement each other, such as on bribery and corruption or the functioning of the international financial system, the two secretariats consult with each other and exchange information.
What is the scale of the problem?
By its very nature, money laundering occurs outside of the normal range of economic statistics. Nevertheless, as with other aspects of underground economic activity, rough estimates have been put forward to give some sense of scale to the problem.
The International Monetary Fund, for example, has stated that the aggregate size of money laundering in the world could be somewhere between two and five percent of the world’s gross domestic product.
Using 1996 statistics, these percentages would indicate that money laundering ranged between US Dollar (USD) 590 billion and USD 1.5 trillion. The lower figure is roughly equivalent to the value of the total output of an economy the size of Spain.
How is money laundered?
In the initial or placement stage of money laundering, the launderer introduces his illegal profits into the financial system. This might be done by breaking up large amounts of cash into less conspicuous smaller sums that are then deposited directly into a bank account, or by purchasing a series of monetary instruments (cheques, money orders, etc.) that are then collected and deposited into accounts at another location.
After the funds have entered the financial system, the second – or layering – stage takes place. In this phase, the launderer engages in a series of conversions or movements of the funds to distance them from their source. The funds might be channelled through the purchase and sales of investment instruments, or the launderer might simply wire the funds through a series of accounts at various banks across the globe. This use of widely scattered accounts for laundering is especially prevalent in those jurisdictions that do not co-operate in anti-money laundering investigations. In some instances, the launderer might disguise the transfers as payments for goods or services, thus giving them a legitimate appearance.
Having successfully processed his criminal profits through the first two phases of the money laundering process, the launderer then moves them to the third stage – integration – in which the funds re-enter the legitimate economy. The launderer might choose to invest the funds into real estate, luxury assets, or business ventures.
Where does money laundering occur?
As money laundering is a necessary consequence of almost all profit generating crime, it can occur practically anywhere in the world. Generally, money launderers tend to seek out areas in which there is a low risk of detection due to weak or ineffective anti-money laundering programmes. Because the objective of money laundering is to get the illegal funds back to the individual who generated them, launderers usually prefer to move funds through areas with stable financial systems.
Money laundering activity may also be concentrated geographically according to the stage the laundered funds have reached. At the placement stage, for example, the funds are usually processed relatively close to the under-lying activity; often, but not in every case, in the country where the funds originate.
With the layering phase, the launderer might choose an offshore financial centre, a large regional business centre, or a world banking centre – any location that provides an adequate financial or business infrastructure. At this stage, the laundered funds may also only transit bank accounts at various locations where this can be done without leaving traces of their source or ultimate destination.
Finally, at the integration phase, launderers might choose to invest laundered funds in still other locations if they were generated in unstable economies or locations offering limited investment opportunities.
How does money laundering affect business?
The integrity of the banking and financial services marketplace depends heavily on the perception that it functions within a framework of high legal, professional and ethical standards. A reputation for integrity is the one of the most valuable assets of a financial institution.
If funds from criminal activity can be easily processed through a particular institution – either because its employees or directors have been bribed or because the institution turns a blind eye to the criminal nature of such funds – the institution could be drawn into active complicity with criminals and become part of the criminal network itself. Evidence of such complicity will have a damaging effect on the attitudes of other financial intermediaries and of regulatory authorities, as well as ordinary customers.
As for the potential negative macroeconomic consequences of unchecked money laundering, the International Monetary Fund has cited inexplicable changes in money demand, prudential risks to bank soundness, contamination effects on legal financial transactions, and increased volatility of international capital flows and exchange rates due to unanticipated cross-border asset transfers.
What influence does money laundering have on economic development?
Launderers are continuously looking for new routes for laundering their funds. Economies with growing or developing financial centres, but inadequate controls are particularly vulnerable as established financial centre countries implement comprehensive anti-money laundering regimes.
Differences between national anti-money laundering systems will be exploited by launderers, who tend to move their networks to countries and financial systems with weak or ineffective countermeasures.
Some might argue that developing economies cannot afford to be too selective about the sources of capital they attract. But postponing action is dangerous. The more it is deferred, the more entrenched organised crime can become.
As with the damaged integrity of an individual financial institution, there is a damping effect on foreign direct investment when a country’s commercial and financial sectors are perceived to be subject to the control and influence of organised crime.
What is the connection with society at large?
The possible social and political costs of money laundering, if left unchecked or dealt with ineffectively, are serious. Organised crime can infiltrate financial institutions, acquire control of large sectors of the economy through investment, or offer bribes to public officials and indeed governments.
The economic and political influence of criminal organisations can weaken the social fabric, collective ethical standards, and ultimately the democratic institutions of society. In countries transitioning to democratic systems, this criminal influence can undermine the transition. Most fundamentally, money laundering is inextricably linked to the underlying criminal activity that generated it. Laundering enables criminal activity to continue.
How does fighting money laundering help fight crime?
Money laundering is a threat to the good functioning of a financial sys-tem; however, it can also be the Achilles heel of criminal activity.
In law enforcement investigations into organised criminal activity, it is often the connections made through financial transaction records that allow hidden assets to be located and that establish the identity of the criminals and the criminal organisation responsible.
When criminal funds are derived from robbery, extortion, embezzlement or fraud, a money laundering investigation is frequently the only way to locate the stolen funds and restore them to the victims.
Most importantly, however, targeting the money laundering aspect of criminal activity and depriving the criminal of his ill-gotten gains means hitting him where he is vulnerable. Without a usable profit, the criminal activity will not continue.
What should individual governments be doing about it?
A great deal can be done to fight money laundering, and, indeed, many governments have already established comprehensive anti-money laundering regimes. These regimes aim to increase awareness of the phenomenon – both within the government and the private business sector – and then to provide the necessary legal or regulatory tools to the authorities charged with combating the problem.
Some of these tools include making the act of money laundering a crime; giving investigative agencies the authority to trace, seize and ultimately confiscate criminally derived assets; and building the necessary framework for permitting the agencies involved to exchange information among themselves and with counterparts in other countries.
It is critically important that governments include all relevant voices in developing a national anti-money laundering programme. They should, for example, bring law enforcement and financial regulatory authorities together with the private sector to enable financial institutions to play a role in dealing with the problem. This means, among other things, involving the relevant authorities in establishing financial transaction reporting systems, customer identification, record keeping standards and a means for verifying compliance.
Should governments with measures in place still be concerned?
Money launderers have shown themselves through time to be extremely imaginative in creating new schemes to circumvent a particular government’s countermeasures. A national system must be flexible enough to be able to detect and respond to new money laundering schemes.
Anti-money laundering measures often force launderers to move to parts of the economy with weak or ineffective measures to deal with the problem. Again, a national system must be flexible enough to be able to extend countermeasures to new areas of its own economy. Finally, national governments need to work with other jurisdictions to ensure that launderers are not able to continue to operate merely by moving to another location in which money laundering is tolerated.
What about multilateral initiatives?
Large-scale money laundering schemes invariably contain cross-border elements. Since money laundering is an international problem, international co-operation is a critical necessity in the fight against it. A number of initiatives have been established for dealing with the problem at the international level.
International organisations, such as the United Nations or the Bank for International Settlements, took some initial steps at the end of the 1980s to address the problem. Following the creation of the FATF in 1989, regional groupings – the European Union, Council of Europe, Organisation of American States, to name just a few – established anti-money laundering standards for their member countries. The Caribbean, Asia, Europe and southern Africa have created regional anti-money laundering task force-like organisations, and similar groupings are planned for western Africa and Latin America in the coming years.
What role does FATF play?
The FATF is a multi-disciplinary body that brings together the policy-making power of legal, financial and law enforcement experts from its members. The FATF monitors members’ progress in implementing anti-money laundering measures; reviews and reports on laundering trends, techniques and counter-measures; and promotes the adoption and implementation of FATF anti-money laundering standards globally. To see a list of the countries, jurisdictions, and regional organisations that belong to or participate in the FATF, click here.
What are the Forty Recommendations?
Drafted by the FATF in 1990 and revised in 1996, the Forty Recommendations are a comprehensive blueprint for action against money laundering. They cover the criminal justice system and law enforcement; the financial system and its regulation; and international co-operation. Each FATF member has made a firm political commitment to combat money laundering based on them.
The Forty Recommendations have come to be recognised as the international standard for anti-money laundering programmes. A number of non-FATF Member countries have used them in developing their efforts to address the issue.
i) PLACEMENT
This is the first stage in the washing cycle. Money laundering is a “cash-intensive” business, generating vast amounts of cash from illegal activities (for example, street dealing of drugs where payment takes the form of cash in small denominations). The monies are placed into the financial system or retail economy or are smuggled out of the country. The aims of the launderer are to remove the cash from the location of acquisition so as to avoid detection from the authorities and to then transform it into other asset forms; for example: travellers cheques, postal orders, etc. (more details follow).
ii)LAYERING
In the course of layering, there is the first attempt at concealment or disguise of the source of the ownership of the funds by creating complex layers of financial transactions designed to disguise the audit trail and provide anonymity. The purpose of layering is to disassociate the illegal monies from the source of the crime by purposely creating a complex web of financial transactions aimed at concealing any audit trail as well as the source and ownership of funds.
Typically, layers are created by moving monies in and out of the offshore bank accounts of bearer share shell companies through electronic funds’ transfer (EFT). Given that there are over 500,000 wire transfers - representing in excess of $1 trillion - electronically circling the globe daily, most of which is legitimate, there isn’t enough information disclosed on any single wire transfer to know how clean or dirty the money is, therefore providing an excellent way for launderers to move their dirty money. Other forms used by launderers are complex dealings with stock, commodity and futures brokers. Given the sheer volume of daily transactions, and the high degree of anonymity available, the chances of transactions being traced is insignificant.
iii)INTEGRATION
The final stage in the process. It is this stage at which the money is integrated into the legitimate economic and financial system and is assimilated with all other assets in the system. Integration of the “cleaned” money into the economy is accomplished by the launderer making it appear to have been legally earned. By this stage, it is exceedingly difficult to distinguish legal and illegal wealth.
Methods popular to money launderers at this stage of the game are:
the establishment of anonymous companies in countries where the right to secrecy is guaranteed. They are then able to grant themselves loans out of the laundered money in the course of a future legal transaction. Furthermore, to increase their profits, they will also claim tax relief on the loan repayments and charge themselves interest on the loan.
the sending of false export-import invoices overvaluing goods allows the launderer to move money from one company and country to another with the invoices serving to verify the origin of the monies placed with financial institutions.
a simpler method is to transfer the money (via EFT) to a legitimate bank from a bank owned by the launderers, as ‘off the shelf banks’ are easily purchased in many tax havens.
Interesting story, and I’m not claiming that NONE of this happened, or something similar to it, but some of the facts are a bit - um - not in order. This whole supposed Iran/Contra debacle took place in the mid-80’s, during the Reagan admimistration, when George Bush Sr. was V.P. (I’m not sure of the exact year the alleged laundering started, but let’s say it was 1986). One of the absolutely, positively KEY components of this whole scheme was to make DAMN SURE that the depositor (Pablo Escobar) wouldn’t withdraw the $8 billion at any time, so one would think that it would be absolutely ESSENTIAL to have Escobar “neutralized” IMMEDIATELY (i.e. in 1986). However, Escobar wasn’t killed until 1993 (during the Clinton administration). The attempt by the Colombian military police, with the “help” of the U.S. Army’s Delta Force, to actually KILL him (as opposed to just trying to arrest him or get him to stay in his self-imposed luxury prison) didn’t even start until around 1991, if I’m not mistaken. (I just read Mark Bowden’s book, “Killing Pablo.” Very interesting and informative). Regardless, if someone wanted to choose a depositor who could be quickly “neutralized,” the VERY LAST PERSON ON EARTH that anyone would choose would have been Pablo Escobar. The CIA, the U.S. government and the Colomobian government all knew that he’d be elusive as all hell, and that it would take YEARS, if ever, to catch the guy. Colombia had been trying on and off for YEARS to do so in one fashion or another. The guy OWNED Colombia. He absolutely terrorized the nation, setting bombs, using assassins and kidnappers, and killing policemen, judges, district attorneys, presidential candidates, army soldiers, members of congress, journalists, and members or wealthy families throughout Colombia for YEARS. He eliminated EVERYONE, government and law enforcement officials included, that even attempted to get in his way. So this part of the story just doesn’t jive.
Also, how does a supposedly normal-looking bill become a "super-bill?" If it looks absolutely the same as every other U.S. dollar bill, what makes it "super," and who on earth is going to look upon it and value it as being "super?" If you tried to sell someone your car for $10,000 and they gave you $5,000 in cash and said, "Don't worry, these are SUPER bills! They're worth twice as much!" you'd be like, "What the fuck?! Get the hell outta' here"! In other words, why on earth would the Panamanian bank accept $4 billion (counterfit or not, whether they knew it or not) as repayment for an $8 billion loan? Because someone told them, "But these are SUPER bills, amigo?!" Uh uh. No dice.
Fine SupaFreak, i apologize for finding humor in this situation…geez try not to act so fucking hard all the time it makes you look like an ass.
(BUMP)!
What I believe he was saying was that superbills were worth half of a normal bill. The CIA gets Iran to print up 8 billion dollars, while paying them 4. Presumably (well, certainly) the CIA could not coerce the mint to produce “extra” money for their use, and even if they could, it would be hard to conceal. The CIA uses the 8 billion in superbills (paid for by only 4 billion) to repay the original loan. They now have 4 billion of real money in their hot little hands, and the bank has 8 bill in fake money, which will never affect the economy if unreleased (so the logic of this story goes). Then it goes on. Dude, you spent a lot of time typing all that, didn’t you? Please tell me you cut and pasted from somewhere…
Who, me? Nah, no cut-and-pasting here! (I’m a pretty fast typer, though). 
That makes somewhat more sense though, I suppose. However, I’m still very skeptical of big conspiracy theories like this. I’m not denying that the whole Iran/Contra thing happened, but I would guess that in reality it was probably a lot simpler and more clear-cut than that. And the part about involving Pablo Escobar?! Noooooooooope. Don’t believe it for a second.
Nah, damici, not you… b_juicer! He’s got practically an encyclopoedia entry on the Iran Contra affair, when you combine all his posts! I’m skeptical as well, but I don’t know the history of this particular instance to argue it from anything other than a logical perspective.
I did not cut and past. In fact I wrote 3 books on the subject at hand. I also served time for bank fraud. In other words I have a lot of experience on this subject. Nephorm is close to being right on the superbills topic. I never fully answered SupaFreaks question; I have never read a good book on money laundering and I have read many. In my previous replies I gave you all the info you need to successfully launder money. Here are a few pointer/tips on how to successfully launder money: laundering is dangerous, never trust anyone, be patient, move large sums throw small banks, move small sums throw large banks, buy a bank or banks in a taxed deprived third world country (of the shelf bank) I own two purchased for around 2 million dollars for the pair, and last but not least do not tell anyone about the bank accounts you have laundered money in. Money laundering is not hard if you use common sense and your brain.
it really depends on how much you want to launder. And what type of money it is (real, or are you trying to get rid of counterfeit?)If it is fairly small sums of real cash (under $100,000 that needs cleaning over the course of one year) owning your own video store is a good option. Also, owning an arcade or a resturant w/ arcade games in it is a good way to go. Banks must report how much money is in your account if the total exceeds 10,000 dollars- so having several accounts is a good way to go. I, too, have read many terrible books on laundering money. I learned everything I needed to know from doing my own research and talking with people “in the know.”