THE USE OF COMBINATION MONEY LAUNDERING SCHEMES TO FOIL TRADITIONAL COMPLIANCE TMBL PROCEDURES

Money launderers often use a trick they have up their sleeve, when it comes to insuring that vigilant compliance officers experienced in uncovering trade-based money laundering (TBML) operations don't tumble to their schemes, when using Transaction Monitoring. Many of them have prior hands-on experience in international trade transactions, and they generally know what compliance is looking for, as they used to do the same thing in their prior, legitimate, positions in the industry.

Many of their "workarounds" involve what I choose to label combination money laundering; this means bundling two or more techniques within one complex operation. Allow me to illustrate:

1. The laundryman purchases a multi-million dollar work of art, using narcotics profits, which will ultimately be quietly transported abroad to a jurisdiction that has overworked and corrupt regulatory and law enforcement agencies, for sale. (Money laundering through Fine Art).
2.He has a company create a large number of copies (prints) of this and other works by the same artist, ostensibly for retail consumer sale abroad, but in truth and in fact to cover his export of the authentic work. He first advertises these items for sale with wholesalers and retailers in the destination country, and then requests, through a shell company there, a bulk purchase of those prints from the recipients of his ads.
3. One company abroad responds to his ad, and he ships 250 assorted prints to that firm. Within the shipment is the extremely valuable original which cannot be distinguished by anyone but a few experts from the originals. Should Customs open the shipment, the recipient is a well-known legitimate enterprise above suspicion, and the sale price is nominal.
( Trade-Based Money Laundering)
4. The original is picked up with the prints, and sold to a dealer in that city, who works in an industry still unregulated in that jurisdiction, legitimizing the sale proceeds there.
5. The laundryman proceeds to purchase an office building with the proceeds, creating cash flow for his client, who improves the structure and later sells it for a nice profit. That sale further legitimizes the client's formerly narco-capital.
Combination money laundering is extremely difficult to identify while in progress, because it requires knowledge of not just one, but multiple money laundering techniques. Unless your frontline compliance staff has a broad-based knowledge base in the field, they completely miss the scheme. This is why effective training is the first line of defense.