TRADECRAFT 101 PART FOUR: LAUNDRYMENS' VERSION OF HAWALA

If you thought that money launderers seeking to transfer their clients' criminal profits abroad might consider the use of Hawala, the alternative transfer method that uses networks of cooperating individuals at both ends of a transaction to effectuate movement outside the financial system, think again. Money launderers know that, should Hawala participants be interrogated by law enforcement agents, they will give up each and every detail of transactions, to avoid being charged with money laundering conspiracy. it's judged to be too risky for large sums of client money.

A second consideration is that laundrymen instinctively do not trust anyone outside their organization, and that of their most important clients. Their circle of active business associates is generally small, and limited to others in illicit occupations, that they feel they can trust. Call it paranoia, but their culture discourages exposing themselves outside their trusted circle.

So, how do they take advantage of alternative  means of international transfers? For want of a better term, I call it the Swap. Money launderers often clean the proceeds of crime for several unrelated organizations, and these groups are often are at different stages in their operation. Some have been at it for years successfully, yet others are just now earning substantial amounts, as they develop and expand.

Experienced criminal organizations often have many millions of dollars already in multiple bearer share corporation accounts in the offshore tax havens. On the other hand, newer organizations have not yet had their cash cleaned and exported abroad. Sometimes, experienced criminals find that they need immediate access to a portion of their laundered money on deposit abroad, but do not want to risk seizure and exposure in repatriating it. At the same time, newer groups want to move their cash abroad.

Money launderers who work for both groups are often presented with the different needs of both the older  established organizations in recovering some of their money, and the new groups who want to move it offshore into safety. The laundryman then acts as an intermediary. He passes the cash from the newer client to the older client, and gives the newer client credit overseas at a tax haven for the same amount, withdrawing it from the older client's account, or giving him an account fully funded.

No money transits the global banking system; no cash is smuggled onshore or abroad. There are no records or other evidence to incriminate either organization. Call it the money launderers' version of Hawala, but with a twist. No outside intermediary is employed, and thus risk is kept to an absolute minimum. I can tell you from personal experience that all parties are quite satisfied with the outcome, and since no funds enter the global banking system, investigating this type of transaction us rarely successful.