TRADECRAFT 101 PART EIGHT: INVESTING OFFSHORE ILLICIT WEALTH ONSHORE

As I have often explained during my lectures on how to conduct a successful money laundering investigation, criminal clients who have long-term goals often seek to invest their illicit profits onshore, in the legitimate economy. My typical money laundering pipeline, from  placement through layering,to integration, always involves, ultimately, investing in that new office building downtown, somewhere in North America. Clients thinking about their future always look towards becoming legitimate investors, and getting out of their high-risk criminal activities. Those are the ones that law enforcement never catches.

By way of illustration, one of my client invested in shopping centers in Canada, after his criminal proceeds were smuggled out of the Continental United States, into East Caribbean tax haven banks, and subsequently moved around the global financial system, so that his cocaine profits  became just more capital in search of an investment. In fact, as a long-time fugitive from American justice, he was captured while personally monitoring his investments under an alias, after making the mistake of having his US passport, with his true identity, on his person, when he was detained by local authorities.

Smart money launderers place their client's funds abroad, in dodgy jurisdictions where no questions are asked about neither Source of Funds nor Source of Wealth. They are then asked to complete onshore legitimate investments, such as office buildings or commercial property, which can later be sold at a profit, in the process, legitimizing their illicit wealth, as well as usually earning a profit, although that is not the primary objective.

How is this accomplished? Simple; they just literally borrow the money from themselves to purchase the real estate. This is often done by having professionals abroad set up opaque (often shell) companies or entities that appear to be non-bank financial institutions, which literally lend the money to their acquisition. The use of deceptively similar corporate names deceives not only the paties, but most onshore financial institutions, who accept the transaction, well documented of course, at face value. after all, the onshore banks are not lending money. Of course, the laundryman is smart enough to route the "loan" through more legitimate jurisdictions, and reputable foreign banks, so that no red flags appear at closing. There are sufficient measures taken to make the foreign entity appear to be a legitimate, ongoing enterprise, including but not limited to a brick and mortar office, and staff available to answer the telephone, and correspond with the parties, prior to the sale. The laundryman has apparently thought of everything; he will collapse the front entity post-closing, after a short period of time.

Given that the sellers are receiving a hefty profit on their property, and established law firms are employed,  extensive inquiries are the last thing the sellers want, so the transaction is successful more often than not. After a reasonable period of time, with the investment operated by a third party entity, the sale results in a clean payment for the criminal element, which they are now free to reinvest elsewhere with impunity. We wonder just how many of the newer income-producing commercial structures have been acquired in that manner.