TRADECRAFT 101 PART EIGHTEEN: THE USE OF PSYOPS IN MONEY LAUNDERING TO CONFUSE COMPLIANCE OFFICERS INVOLVED IN TRANSACTION MONITORING

As a young soldier in Vietnam during American's fifteen-year war, one of my duties was to actively participate in the US Army's Psyops, or Psychological Operations program against our enemy, the Viet Cong. Flying as the sole passenger on board a small, unarmed light observation helicopter (LOH or 'loach"), it was my job as loadmaster to drop leaflets over enemy-held jungle. The documents offered substantial cash rewards to the VC, provided that they bring with them their personal weapons, and surrender to the Vietnamese authorities. The payments were, in essence, a bribe, a major incentive to the enemy to leave the field of battle and receive a cash dividend. I also broadcast that information on huge onboard loudspeakers during document drops. I am lucky to be here today, and not splattered all over a remote tropical jungle somewhere.

These were referred to as Psyops operations specifically designed to confuse and weaken our opponents, and to interfere with their activities. Later, as a practising money launderer working in the Caribbean offshore financial centres a/k/a tax havens, I used similar tactics to throw confusion amidst the onshore compliance officers tasked with identifying, and potentially interdicting, transactions which could possibly be laundering actions. 

I knew that it is vitally important to create what appeared to be the operations of legitimate businesses, led and owned by affluent individuals who were engaged in a number of activities which one might expect the to be involved in, and I used client participation in such front actions to give the impression to compliance officers that they were merely observing transactions of normal, law-abiding clients, and not drug traffickers clothing their criminal activities, and money laundering activities, as totally clean events.

Some of the conduct that I advised clients to engage in included:

1. Forming, and operating, small legitimate businesses, to give the banks the impression that they were nothing more than normal people seeking to earn a profit. It didn't matter of the companies never were profitable; these front businesses, which were never used for either laundering or payments for criminal activities, existed solely to provide compliance officers with a reason that these clients went to work each day, and used their banking relationships regularly.

2. Giving the clients sufficient public profiles, so that they were regarded as normal bank customers; having them support local sports teams, make charitable donations, show up at public community events, and participate in them. In short, to give their banks, and bankers, the impression that these clients were low risk typical customers. Make the clients appear to be the same as the compliance officers who were engaged in transaction monitoring, so that they were known as low risk when a single transaction which might be suspicious was encountered. Make small but regular political contributions; develop relationships with local leaders, further establishing the clients as vital members of the community.

3. Avoid any distinct and recognizable pattern in funds transfers that were actually laundering operations; mixing up the transfers as purchases for phantom goods, payments for employees and commissions for independent contractors, loan payments, deposits, and any possible type of payment imaginable, which might be interpreted by compliance as most likely legitimate. Because, when the totality of the client's seemingly normal activities was taken into account, the compliance department would decline to issue a SAR, judging a specific transaction to be legal, and made in the ordinary course of business, as validated by the front activities and bogus profile were had constructed for their business and as individuals.

Obviously, the whole thing was a smokescreen for their criminal conduct, and the money laundering which was used to handle the proceeds of their true, illicit activities. The question is: how much of it served to persuade compliance officers, when making a judgment call on a transaction or irregular string or pattern of transactions, that all was well, and they should be disregarded, whilst moving on to other matters? Think Confusion to the Enemy.