Money laundering Cae Discuss these questions. 4 Isiteasy or difficult in your country to conceal financial transactions from the “tax man’? Is there a strong ‘black’ economy? 2. Are you familiar with the concept of ‘laundering’ money —turning ‘dirty’ money into ‘clean’ funds? Where does the ‘dirty’ money come from? Is it always criminal activity? 3 Can bank transfers conceal stolen of embezzled funds? A Understanding main points Read the text on the opposite page about how organised crime uses the international banking system to hide its money and answer these questions. 4 Where did the police arrest the Mexican money launderers? 2 How many people were arrested in total? 3 What was Operation Casablanca designed to do? 4 How much drug money is thought to be laundered world-wide every year? 5 According to the UN Drugs report, how much is the illegal drugs business worth every year? & How much can be recovered through anti laundering measures? 7 How is it that more and more money can be laundered? What systems are used? 8 Do criminals have to abide by the same rules as legitimate bank customers? 9 How do criminals hide their financial transactions from officials? 10. What are the legitimate reasons for bank secrecy? 8 Understanding details Answer these questions, 4. What is meant by megabyte money? 2 What are aggregate funds normally used for? 3 Why do UN officials want to make banking riskier? & Who are the shareholders and beneficiaries? 5 What is meant by a walking account? 6 Why has the number of banks increased so much? 7 What must a bank have in order to be established, in certain places? & What is the favourite way of transporting ilegal funds? 9 Why are casinos 50 popular for money laundering? 30 What can the casino offer to do with the ‘winnings"?| | : | : | | | : : | i | | L : | | i eS Report says the ease | and speed of ‘megabyte money’ make it ‘disguise the ownership of assets ‘by setting up shell companies and offshore trusts in Jurisdictions where no questions are asked 9% about shareholders and beneficia: ‘ries. Many accounts and trusts are ‘simple to conceal crooked cash, writes lan Hamilton Fazey _ftoelsa usdnpirctracden ts ‘ysthe biggest money launder session of the UN General move the accounts to another [ing investigation in US history. Evidence had been gathered secretly over many months by Assembly on drugs in Ne ‘With the grawth of ¢ onal drug trade, more i fork. 100 jurisdiction at the first sign of nquiry bY the authorities. UN officials accept that com: -gotten, Sundercover officers risking their. 50 money 4s heing laundered than mercial confidentiality, legal tax lives, The suspects were lured to Las Vegas for a conference on money laundering. Then the police. struck, arresting 22 banking off. Anelals from Mexico’s largest finan- ‘pink Ut alloged ‘Mexican and Colombian drug cartels and anoth- or 70 linked to them, Seizure war- ‘pranks were fasued to recover $1220 (278m) from bank accounts in the US and Italy, to add to 836m seized so far. The operation so damaged confidence in Mexican banks that ‘arthelr shares fol collectively by 3% ‘Anpanie selling. But as Operation Casablanca struck its blow in the Americas, officials of the United Nations ws Drug. Control Programme in ‘Vienna were editing the final ver- sion of a report — to be released soon = that pitts the US triampa into a gloomy perspectis It says that at least $200bn of drag money is laundered ‘year, but with the Megal intors ional drug trade valued at $5006, this is probably a conser ‘year a good one, but hardly vin- lage. ‘The report has been preyared by. ‘88 group of experts for a eer, parfly on the ba ‘tonic banking and the increasing vas tal transfers at low oF nl ax rates globalisation and speed of opera: are legitimate reasons for banke tion of the international financial secrecy and diguising corporate ‘Sine have to pay hy tees tc enverting “of the systom in order to use Si9tm, will probably make the offshore financial havens with lax, financial regulation and poor banking supervision. ‘They also ecial_ go ide behind banking secrecy, and avoidance and the easing of capi. | ownership, but they say the sys- “Cashless transactions, electron tem is too lax in some places, ic trading and computerised clear- 110 allowing infiltration for illicit or. ing mean that what the report nefarious purposes. ‘One of the ‘calls ‘megabyte money’ cnn be most striking things about off ‘moved anywhere with speed and shore financial ‘ease. With 700,000 wire transfers mous increase that bas taken worth §2,000bn every day, the 115 place in the number of banks; report says it is ‘a reasonable says the report, Banks can Ne set ‘guess that 0.00% to 0.1% contain up with relative speed and ease so laundered funds to a yalue of "afd a minimum of due diligence '$900m'. And even though half the investigation, so long as they meet - total volume of transactions are 120 2 basic level of funds, which can - bank-to-bank transfers of ‘agyre- _ Vary between one jurisdiction and. _ gate funds’ for settlement or loans, moh pth sport sys ie compli method deposits to banks where no ques. ions will be asked. Casinos in off tres aro a favourite for : &{_ Money laundering Saerieas 46} A Word search Find a word in che text to complete these phrases. 1 MANY... laundering (para 2) 2 seizure w. (para 1) Bf. version (para 2) By Cocsssseessereses estimate (para 3) B eesssssscerseseeBessseceeneesseecee MOMEY (Bara 4) 6e esses trading (para 5) 7 tiske. . (para 6) af havens (para 7) 9° confidentiality (para 8) 40 C.., transfers (para 8} 2 Oe +e financial centres (para 8) 42 gambling ¢. (para 9) Definitions Match the phrases from Exercise A with their definitions, 2 disgu keeping business secrets ... criminal money by concealing its origins Money laundering. in danger of discovery ... 2 3 asadeatat 4 papers authorising the authorities to take money or property 5, moving large amounts of money from one place to another 6 buying and selling through computers 7 places where laws and tax are especially lenient ... 8 financial services located in small countries or on islands 9 minimum guess 10 publishable form 44 money obtained illegally 12 tokens for playing in casinos| € Scrambled words _ Money launde Use the definitions in the first column to unscramble the words from the text. 4. washing and ironing 2 attract or tempt 3 supposed to be true, but not proved 4 get back 5 harm 6 depressing 7 identity & hide something by making it look different 9 illegal 30 wagering unindrelag . ute dgladiee vecorer maadge moogly tops suisised ltt ar laminbgg 4 Write a short description of how money can be laundered. What kinds of activities lend themselves to the easy disposal of cash into legitimate business? 2 Read in the press any new developments on this theme, and comment on them to your class or write up a summary.