10 Most Notorious Money Laundering Cases of the 20th Century Money laundering, to put it simply, is the process by which

illegally obtained cash is made to appear as if it has been obtained by legal means. The funds are moved into valid accounts or businesses in order to hide or disguise the financial trail that leads back to the criminal activity. In 1996, it was estimated that between 2 and 5 percent of the world s gross domestic product consisted of laundered money. That s a lot of dirty money made to look whiter than white. Here we present ten of the most notorious money laundering cases of the 20th century

10. Sani Abacha

During Sani Abachas five year reign (19931998) as military dictator of Nigeria he and his family managed to transfer national funds of up to 5 billion ($8 billion) into foreign bank accounts. Listed by Transparency International as the fourth most corrupt leader in recent history, Abacha was named as being responsible for wholesale looting of up to 10% of Nigerias national income. Following his sudden death in 1998 possibly due to poisoning the Nigerian government was able to recover $2 billion of the funds. Abachas family insists to this day that the vast amount of money was generated by wholly legal means.

9. The BCCI Scandal

At its peak, the Bank of Credit and Commerce International (BCCI) was the seventh largest private bank in the world. However, during the mid-1980s the bank was found to be involved in various fraudulent activities including massive amounts of money laundering. Billions in criminal profits, including drug money, went through its accounts. The bank was not too picky about its customers, either: clients included Saddam Hussein, former military dictator of Panama Manuel Noriega, and Palestinian terrorist leader Abu Nidal. It has also been alleged that the CIA used accounts at the BCCI to fund the Afghan Mujahideen during their war with the Soviet Union in the 1980s.

In what was to become known as the Benex Scandal, vast sums of money with suspected links to the Russia mafia made its way into Benex Worldwide accounts at the Bank of New York, one of Americas oldest and most prestigious banks. This so called capital flight money the economic term applied when money or assets rapidly flow out of a country was then distributed amongst various European companies before returning to Russia. It is estimated that between 1996 and 2002 between $7 and $9 billion was laundered through the Bank of New York accounts. After a massive police operation, numerous arrests were made.

7. Franklin Jurado
In 1996, Harvard educated Franklin Jurado pleaded guilty to laundering $36 million on behalf of Colombian drug lord Jos Santacruz-Londoo. Using his economic smarts, Jurado moved the cocaine profits far and wide in an effort to make them seem like legitimate earnings. After being funneled through various European banks and companies, the funds would eventually make their way back to Santacruz-Londoos businesses in Colombia. Eventually, a bank collapse in Monaco highlighted Jurados connection to several accounts. An extremely noisy bank counting machine at his house in Luxembourg did not help his cause, either. He was sentenced to sevenand-a-half years in jail.

Franklin Jurado In 1996, Harvard educated Franklin Jurado pleaded guilty to laundering $36 million on behalf of Colombian drug lord Jos Santacruz-Londoo. Using his economic smarts, Jurado moved the cocaine profits far and wide in an effort to make them seem like legitimate earnings. After being funneled through various European banks and companies, the funds would eventually make their way back to Santacruz-Londoos businesses in Colombia. Eventually, a bank collapse in Monaco highlighted Jurados connection to several accounts. An extremely noisy bank counting machine at his house in Luxembourg did not help his cause, either. He was sentenced to sevenand-a-half years in jail.
. Nauru

Nauru is a tiny Pacific island, 1,200 miles off the coast of New Guinea. It may well be one of the most obscure places on earth. However, this little-known landmass was also at the center of some of the highest profile money laundering activity of recent years. In the late 1990s, Russian criminal gangs laundered around $70 billion through shell banks registered on Nauru. Shell banks exist only on paper (they dont have a physical presence in any country), and Nauru allowed its banks to operate without recording the identities of its customers or the trail of deposited money in its accounts. All of which made them extremely popular with money launderers. Since 2001, Nauru has taken steps to clean up its act and has accepted financial aid from Australia.

5. Al Capone

The best known of Americas mobsters was at the forefront of the birth of modern money laundering schemes. It is estimated that he laundered $1 billion through various businesses. His first businesses were in fact laundromats, which, being cash operated, were very helpful in hiding and disguising illegal gains. The fact that Capone made use of the laundry trade is frequently given as the origin for the phrase laundering however this is still subject to debate. Capone was eventually indicted in 1931 for a different financial crime: tax evasion.

Meyer Lansky

Following Capones imprisonment one of his contemporaries, the Polish born mobs accountant Meyer Lansky, deduced that he needed to hide the root of money gained through illegal means in order to avoid the law. It has been said that he can be credited with establishing the modern form of money laundering. He siphoned off around $1 billion from his growing casino empire into Swiss bank accounts and businesses in Hong Kong, South America and the Caribbean. He was never convicted and died in 1983 with an estimated net worth of $100 million

. Ferdinand Marcos

Ferdinand Marcos, an ex-lawyer, was president of the Philippines from 1965 to 1986 before being removed from power by a popular uprising. During his reign he laundered billions of dollars of stolen public funds through banks in the US and Switzerland. It took the Philippines a massive operation, known as Operation Big Bird, to retrieve the money (estimated as US$7.5 billion). As a memorable indication of Marcos opulent lifestyle it is widely remembered that his wife Imelda owned over 2,500 pairs of shoes.

President Suharto

Coming in at number one on Transparency Internationals most corrupt leaders list, Suharto was President of Indonesia from 1967 to 1998. After his forced resignation, Time Asia magazine estimated the Suharto familys wealth at $15 billion, and of this $9 billion was alleged to have been deposited in an Austrian bank. Allegations were also made that up to $73 billion had passed through the familys coffers during Suhartos presidency. He died in 2008, aged 86, and escaped trial due to his advanced age.

1. Pablo Escobar

The most successful criminal ever known, it has been said that at one point Pablo Escobar was so rich he spent $1,000 a week on rubber bands in order to wrap his bundles of cash. Escobars business was drugs at one time his cartel controlled 80% of the worlds cocaine trade. Laundering money was central to Escobars empire, and his recipe for success was relatively simple: [Y]ou bribe someone here, you bribe someone there, and you pay a friendly banker to help you bring the money back. In 1989, Escobars personal fortune was estimated at $9 billion, making him the seventh richest man in the world. His criminal career and life ended in 1993 following a gun fight with Colombian authorities.
REGULATION M-2 ANTI MONEY LAUNDERING MEASURES
Banks / DFIs are advised to follow the following guidelines to safeguard themselves against their involvement in money laundering activities, and other unlawful trades. These will add to or reinforce the precautions, Banks / DFIs may have been taking on their own in this regard: 1. Banks / DFls shall ensure that their business is conducted in conformity with high ethical standards and that banking laws and regulations are adhered to. It is accepted that banks/DFIs normally do not have effective means of knowing whether a transaction stems from or forms part of wrongful activity. Similarly, in an international context, it may be difficult to ensure that cross border transactions on behalf of customers are in compliance with the regulations of another country. Nevertheless banks/DFIs should not set out to offer services or provide active assistance in transactions, which in their opinion, are associated with money derived from illegal activities. 2. Specific procedures are established for ascertaining customers status and his source of earnings, for monitoring of accounts on a regular basis, for checking identities and bona fides of remitters and beneficiaries, for retaining internal record of transactions for future reference. The transactions, which are out of character/inconsistent with the history, pattern, or normal operation of the account involving heavy deposits / withdrawals / transfers, should be viewed with suspicion and properly investigated. 3. Banks / DFIs are required to include accurate and meaningful originator information (name, address and account number) on funds transfers including wire transfers and related messages that are sent, and the information should remain with the transfer or related message throughout the payment chain. However, Banks / DFIs may, if satisfied, substitute the requirement of mentioning address with CNIC, passport, driving license or similar identification number for this purpose. 4. Beneficiary financial institutions shall adopt effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information. Wire transfers with incomplete originator information may be seen with suspicion which may require reporting to FMU or termination of the transaction. Banks/ DFIs should remain careful from financial institutions which do not comply with aforesaid requirements by limiting or terminating business relationship.

MCB BANK LTD CDD / KYC & AML PROCEDURES HANDBOOK 96 5. Banks/ DFIs shall not allow personal accounts to be used for business purposes. except proprietorship, small businesses and professions where constituent documents are not available and banks / DFIs are satisfied with KYC profile of the account holder, purpose of relationship and expected turnover of the account keeping in view financial status & nature of business of that customer. (SBP BPRD Circular Letter No. 42 of 2009 issued on December 31, 2009.) 6. For an effective implementation of banks / DFls policy and procedures relating to anti money laundering / other unlawful trades, suitable training be imparted to members of staff and they be informed of their responsibility in this regard.
7. Bank shall not allow personal accounts to be used for business purposes except proprietorship, small businesses and professions where documents constitute are not available and banks are satisfied with KYC profile of the account holder, purpose of relationship and expected turn-over of the account keeping in view the financial status and nature of business of that customer. (BPRD Circular Letter No. 42 of 2009 dated December 31, 2009.)

Keeping in view the above principles, banks / DFIs shall issue necessary instructions for guidance and implementation by all concerned.

REGULATION M-5 SUSPICIOUS TRANSACTIONS

1. The Banks / DFIs should pay special attention to all complex, unusually large transactions, and all unusual patterns of transactions, which have no apparent economic or visible lawful purpose. Examples of such suspicious transactions are listed at Annexure-IX to this Circular. However, these are not intended to be exhaustive and only provide examples of the most MCB BANK LTD CDD / KYC & AML PROCEDURES HANDBOOK 98 basic ways in which money may be laundered. The background and purpose of such transactions should, as far as possible, be examined, the findings established in writing, and be available to help the relevant authorities in inspection and investigation. 2. If the bank / DFI suspects, or has reasonable grounds to suspect, that funds are the proceeds of a criminal activity or terrorists financing, it should report promptly, its suspicions, through Compliance Officer of the bank / DFI to banking policy department of the State Bank of Pakistan. The report should contain, at a minimum, the following information: a) Title, type and number of the accounts. b) Amounts involved. c) Detail of the transactions. d) Reasons for suspicion. State Bank has been encouraging Banks / DFIs to make use of technology and upgrade their systems and procedures in accordance with the changing profile of various risks. Accordingly, all Banks / DFIs are advised to implement systems which could flag out of pattern transactions for reporting suspicious transactions The existing list of examples of suspicious transactions as Annexure-IX is supplemented with the enclosed list of characteristics of financial transactions that may be a cause for increased scrutiny as Annexure-X. 3. The employees of the banks / DFls are strictly prohibited to disclose the fact to the customer or any irrelevant quarter that a suspicious transaction or related information is being reported for investigation. 4. In cases of foreign branches of the banks/DFIs and subsidiaries of the banks/DFIs in foreign countries undertaking banking business, the banks/DFls would ensure compliance with the regulations (relating to Anti Money Laundering and KYC) of State Bank of Pakistan or the relevant regulations of the host country, whichever are more exhaustive. Termination of

Business with customer Once business has decided to close the accounts of a customer who has been subject to a suspicious activity report, the business must follow up and track the matter to ensure that all accounts are closed on a timely basis. In addition, once a business has decided to terminate a relationship because of Compliance concern, it should add the customer to the Local Negative list maintained by CCG to be used while opening of new accounts. If such a customer is later flagged as a prospective customer, businesses should ensure that CCG is contacted before relationship initiation. Similarly, where a business decides to terminate a customer relationship and it learns during the course of its suspicious activity investigation that the same customer has relationship with another MCB branch; it should immediately

advise the other business of the suspicious activity that was detected and its decision to terminate the customer relationship.

MCB BANK LTD CDD / KYC & AML PROCEDURES HANDBOOK 99 If Business files a suspicious activity report and decides either to keep the account involved in suspicious activity open or to keep an account open, the business should continue to monitor the account. Filing a suspicious activity report does not end the need to monitor transactions involving an account. Filing a suspicious activity report heightens the need to scrutinize customer activity to determine whether additional action is appropriate including, among other things: Whether additional suspicious activity report should be filed in accordance with local law or the customer relationship should be terminated, if the business has not already decided to do so.