Professor Fact Checks Money Laundering Scenes, from ‘Ozark’ to ‘Narcos’ | Vanity Fair

this is my yahwah ruzhin she's a professor and the director of the financial crime intelligence program at the Middlebury Institute of International Studies I've been teaching courses on money laundering for more than 20 years today Moira is going to review what Hollywood gets right and wrong in money laundering scenes money laundering is a necessary step for most criminals especially if they have a lot of criminal revenue they need to clean it if they don't want law enforcement to seize it and if they don't want the IRS to come after them for tax evasion that's what money laundering is it's the process of making dirty money clean first up wolf of Wall Street in this scene Jordan Belfort hires family members and other associates to smuggle cash into Switzerland the next day and Emma flew to Geneva two million in cash in her carry-on which in the big picture was a drop in the Swiss buck because the following month over the course of six round trips Sean Paul's family and friends smuggled in over 20 million in cash without even a hiccup this happened back in the 1990s prior to 9/11 I don't know if any of you remember what airport security was like before 9/11 but it wasn't at all anything like what we have today maybe they would have been able to move that cash past TSA without any questions asked but technically by law they still would have been required to fill out documentation for any amount of cash over $10,000 it's not against the law to move a cash you just have to report it slovenian what they do get right is once they get the cash into switzerland in the early 1990s they probably would have been able to find a Swiss banker who was willing to accept all of that cash without any questions asked but in 1998 Switzerland toughened its anti money laundering laws and so that would not have happened after that date in fact here's a little fun fact between 1998 and the end of 2001 when the new anti-money laundering provisions of the USA PATRIOT Act went into effect Switzerland had tougher anti-money laundering laws than the United States in fact Switzerland is quite cooperative with international law enforcement when it comes to going after criminals next up Ozark in this clip Marty gives us a lesson on the art of money laundering okay money laundering 101 say you come across a suitcase with a 5 million bucks in it what would you buy hyeyeon a mansion a sports car sorry the IRS won't let you buy anything about you with it right off the bat here we're talking about how much cash can we actually fit into a suitcase he mentions five million dollars in a suitcase that would have to be a really big suitcase about ten briefcases worth of cash and that's assuming that it's brand-new hundred-dollar bills but most cash that comes from drug sales isn't going to be in the form of hundred-dollar bills it's gonna be the form of twenties tens 50s you name it so you better get that money into the banking system but here's the problem that dirty money it's too clean looks like it just came out of a bank vault you gotta age it up crumpling drag it through the dirt run it over with your car anything to make it look like it's been around the block next you need a cash business something pleasant you mix the five million with the cash from the joyful business what Marty is doing very effectively here is setting up lots of businesses in which he can commingle his cash so he has the strip club he has the mortuary and he has a casino all of which are cash intensive businesses that is exactly what a money water might try to do because you're you are disguising all that dirty cash as revenue from your business you're very lucrative business that mixture goes from an American bank to a bank from any country that doesn't have to listen to the IRS the bank takes that money puts it into his account and at that point he can move it wherever he likes he could use it for a variety of reasons ostensibly but what he's really doing is having his bank wire that money ultimately to another bank in a foreign location where the drug criminal in this case now has complete access to the funds and can even withdraw the cash from an ATM machine in my professional opinion this is very realistic it says what you see as anybody else's the surprise in this clip Carmela is depositing the money that she stole from Tony in increments of nine thousand nine hundred dollars interestingly at ten thousand dollars were required by law to notify the IRS in the transaction oh really this clip is a perfect example of structuring structuring is when you're breaking down a large amount of cash into smaller amounts below that ten thousand dollar threshold in order to avoid filling out a currency transaction report the crime itself of structuring technically even depositing nine thousand nine hundred dollars just once in order to avoid that ten thousand dollar reporting threshold politicians and grandmothers alike have fallen into that trap I wanted something safe something old economy maybe Treasuries if you'll notice from her notebook she's only making just the one deposit and she's doing it at multiple banks which is a sort move on her part because the banks don't talk to each other and so they're not noticing a pattern if she were to make all of those deposits of nine thousand nine hundred dollars all at the same Bank it would definitely trigger a suspicious activity report and she'd probably get caught next up breaking bad you know you need to launder your money right do you understand the basics of a placement layering integration I ain't buying no damn nail salons just forget it in this scene Saul explains beautifully two out of the three money-laundering stages and why one even needs to launder money in the first place well you want to stay out of jail don't you if you want to keep your money and your freedom because I got three little letters for you IRS if they can get Capone they can get you I really like this II in fact I like it so much that I actually show it in my classes to my students because they start off learning the first three traditional stages of money laundering which is placement where he's putting the dirty drug money into the proceeds of the nail salon layering he combines with the placement but layering is when you move the money around just to muddy the money trail and make it very difficult for law enforcement to follow it and then integration once the money is clean enough that you can take it and actually spend it here's you right pink Pinkman get it okay here's your cash you're out on the town yeah you're partying Hardy or knockin boots with the chicky babes at all who's this it's the taxman and he's looking at you what does he see he sees a young fella with a big fancy house unlimited cash supply and no job now what is the conclusion the taxman makes I'm a drug dealer and wrong million times worse you're a text sheet what do they do they take every penny and you go in the can for felony tax evasion ouch the hardest stage for money water is placement you need a reason for depositing all that dirty cash in the first place it's not just that you're trying to ward off the IRS you also have to demonstrate that this money was not illegally derived and that's why you try to buy these cash intensive businesses where you can then commingle the dirty cash hence the nail salon this is the nail salon right I take your dirty money and I slip it into the salons nice clean cash flow I also like how he shakes the q-tips around what you're really doing is you're putting some dirty q-tips putting them in there and shuffling them around so that when you finally take them all out it looks clean but what you would really be doing if you are a sophisticated money launderer is you would probably be taking that cash and then moving it between accounts using it for other purposes and then finally after you've moved it around made it very difficult for law enforcement to follow the money trail only then would you with for all the cash and then spend it as I said I really like this clip because he's talking about processes just the way that we would talk about it in the law enforcement setting very realistic next up narcos Susan once you open order went on was on the lot might be under place and that's what they tried first on paper Pablo had the most profitable taxi company ever he only had three cars but he was pulling in more than five million dollars and gotcha had the most successful emerald mine of all time you would inject bad stones with oil to make them shine and have his friends in Miami by the end those with drug need give them as gifts dunkers in jail everybody was happy those of you who are familiar with the series it's based on the actual life of Pablo Escobar and it's very realistic Colombia is known to export emeralds and in this case what they're doing is taking the bad poor quality gemstones that aren't worth anything polishing them up making them look nice and then selling them as if they are real fancy emeralds so the drug traffickers in North America are bringing dirty drug cash then to pay for those high quality emeralds that way the jewelry store who's working in cahoots with the minion cartel can justify why they're paying a hundred thousand dollars for an emerald which is really only worth one hundred dollars and that's how they justify wiring the money back to Colombia Gaston lucha play table tennis Picasso's dollies Fingaz cause apartamentos antenna in his garage first off let's talk about how he got away with spending that kind of money in the first place without triggering any trip wires well he's not the one purchasing the Picasso's in fact the exotic zoo that he had on his estate he's not doing that himself he has professional money launderers working on his behalf who have laundered a lot of his money and put it into offshore shell companies and it's those offshore shell companies that are making those purchases whether it's property whether it's the Picasso's whether it's the yacht or the plane just a bit H I was getting was gonna bow she was a huge confident as he my Hippolyta that maybe stuff works he's bringing in so much cash he doesn't know what to do with it there's so many boats planes luxury cars that one person can buy so he's thinking I'm gonna save this for a rainy day did you get it I was he did get it up laptop just like we see in the clip in real life they actually packaged massive amounts of cash in two plastic containers buried it underground what you don't know however is that years later when they went to retrieve that bury cash so much of it had rotted away this is not an uncommon problem to have a drug trafficker of his caliber many of them have faced this very same problem of having so much cash they don't know what to do with it in fact there was a money launderer in Mexico whose home was raided by the police where they found a very large room full of stacks of cash in multiple currencies hundreds of millions of dollars stacked up in one room it was just too much for one money launderer to handle next up the wire coming this a few waiters first thing is we need the names all front companies limited partnerships LLC's and all that nice ease limited liability corporations start with nightclub which Barksdale homes look up Orlando's by address you match it you see is owned by son our Baltimore Street van got it be enterprises and then over the press is gonna get off his ass to walk on over to the state office buildings on Preston Street Preston Street corporate charter Office the other paperwork on every Corporation and LLC license to do business in the state what most lawyers will do is set up front companies now these front companies could be you know shell companies but shell companies are not by their very nature illegal most shell companies are actually set up legitimately for legitimate purposes but if they are set up for illegitimate purposes to hide criminal activity that's when we call them a front company he's sending his assistants out to the corporate registry offices to find more information and look at the corporate registration documents and back in those days it was much more painstaking task because you had to go and look it up on the microfiche of the microfilm write down every name you see corporate officers shareholders are more importantly the resident agent on the filing is usually employer you also want to know who is the lawyer or company incorporation agent who is setting up that company in the first place because chances are they know who they're working for they'll usually use the same lawyer to do the Charter finally find that agents name run into the computer find out what other corporations he's under filing for I really like this clip because this is exactly how a smart investigation will be run and they all know that if you really want to find out who is behind it all you do have to follow the money in this country somebody's name has got to be on a piece of paper a cousin a golfer and a grandmother a lieutenant he can trust somebody's name is on a piece of paper and if that information isn't on the incorporation documents they can at least find out who the lawyer or company in Corporation agent is who set up the front company in the first place you follow drugs you get drug addicts and drug dealers but you start to follow the money and you don't know where the [ __ ] gonna take you Shawshank Redemption in this clip Andy explains how he is stealing and moving money in an untraceable fashion by having created a fictional identity under which he puts all of the accounts I know you're good at it but all that paper leaves a trail now anybody gets curious FBI IRS whatever it's gonna lead to somebody sure it is but not to me that's certainly not to the ward I knew Randall Stephens who the silent silent partner he's the guilty one your honor the man with the bank accounts it's where the filtering process starts they trace anything it's just gonna lead to him what always he he's a phantom an apparition second cousin to Harvey the rabbit I conjured him out of thin air he doesn't exist except on paper Andy is using a synthetic identity in order to conduct the money laundering activity that he's engaging it you can't just make a person up sure you can you know how the system works where the cracks are it's amazing what you can accomplish by male synthetic identities are something that law enforcement is extremely concerned about because it is unfortunately not that difficult to create all you need to do is apply for a line of credit you'll be rejected because they won't be able to recognize any of the information that you're providing then simply by getting rejected in that loan application you have actually created a record and so now you exist mr.

Stevens has a birth certificate driver's license social security number if they ever trace any of those accounts they're gonna wind up chasing a figment of my imagination Andi is being extremely clever here by creating this false identity and thereby avoiding any attention from law enforcement to me this clip is very realistic but pulling off all of the sophisticated fraud wow he's actually in prison that would be a tough thing to do without the help of a lawyer on the outside once again breaking bad are you telling me you make seven million one hundred and twenty five thousand dollars a year seven and a half even before expenses there's no car wash in the world that could do this kind of business I mean this is nine months work here minimum she's right you would need a lot of front businesses besides just one car wash to clean seven million dollars a year if she were to deposit more than what would be reasonable for a really well performing carwash the bank would also notice because they would know what typical cash flow would be for that size business and they would be required by law to fill out a suspicious activity report with the Treasury Department 7 million died I could take yours set some aside save it for a rainy day save it where save it where I can't go to the bank with it I sure can't leave it here wait a minute is this all 50s a piece for a carwash with a 50 she also makes another great point about the denomination of the bills they're all $50 bills very strange and I suspect that a lot of this cash is probably not typically received in the form of $50 bills but in this scene it is and that's very weird would you only be receiving $50 bills from your customers at a car wash most of us use $50 bills most people don't realize that our banks are required by law to be spying on our transactions from time to time and differentiate typical activity from suspicious activity so a bank has lots of cash intensive businesses as customers and they know what a cash intensive business would typically do when they make deposits they would be depositing five tens twenties fifties hundreds if you're only depositing $50 bills that just by itself is a little odd and if you're depositing large amounts even odd or still they would most certainly file what's called a suspicious activity report with the treasury in fact if a bank isn't regularly reporting suspicious activity they'll get in trouble with the regulators and get fined I didn't ask you to do this I was under the impression that you had this under control I just didn't expect this amount of money 50s were gonna be a problem so she's actually right in that they would need multiple car washes or multiple cash intensive businesses in order to co-mingle that money without being detected a better example would be the chicken chain Toyo's on monos for any of you or Breaking Bad fans that would be perhaps an easier way to co-mingle and launder larger amounts of cash I'm guessing that a lot of you have in your neighborhood at least one or more businesses that do very little business and yet those businesses managed to survive year after year after year you have to wonder are they affront for some kind of money laundering operation and again the wire in this clip prop Joe is explaining how they're gonna send money to the Caribbean disguise as charitable contributions now see past ahead he one of about three I like to give him money to help with his good works and all that go works oh he down with all kind of mission we're going on down in the islands you know building a church for some folk schoolhouse for some other folks all kind of like that and what else y'all building Hospital Hospital yeah except they've been building their nest for about 10 years now and nothing ever actually get finished this clip is pretty realistic we do know that charities are abused by criminals for money laundering purposes you have charitable donations which is really dirty drug cash coming in disguised as charitable donations you deposit that into the bank account of the charity no one's gonna ask any questions because it's not unusual for charities to receive cash donations now the bank is wiring money offshore maybe it's a Haiti or somewhere else in the Caribbean where they are supposedly using the money to do charitable deeds but as we heard they're not really doing those charitable deeds God accounts with some of the bank's down there donations come in as cash cashier's checks come out tiny-ass Caribbean island don't truck with no subpoenas no court orders none of it you pay ten on a dollar anything beyond that depends on your generosity to save those who want to be saved it's harder to launder your money to a Caribbean bank today because most countries in the Caribbean have really strengthened their anti money laundering laws certainly in the last 10 to 15 years but charities are still being abused by money launderers eventually somebody might audit the charity and ask to see whether or not those charitable activities were actually carried out unfortunately this clip is realistic next up Jack Ryan in this clip Jack Ryan notices some suspicious activity in the accounts of a Russian client and asks his boss to send him over there you want to go to Moscow I think we have to there unnamed Uncategorized scattered all over the world there hidden accounts robbed these are just the ones I've managed to find how did you find them Amy Tula not to look that hard joke you think they're ripping us off I don't know what to think Jesus Christ you're the compliance officer it's your call first thing I noticed is that the boss is referring to him as the compliance officer would he actually make a trip all the way to Moscow to inquire about those accounts unlikely he'd probably pick up the phone to make enquiries first but I do like this clip it's near and dear to my heart because I'm in the business of training compliance officers can I ask one thing don't screw up the most lucrative partnership this company has please I'm not kidding Viktor cherevin is completely unpredictable and it's Russia insider trading is legal over there it's the Wild West they still ideologues but the new ideology is money another country they're a corporation which is why we're there in the first place don't rock the boat it's not about it's a goddamn luxury yacht and we're all on it together so don't you think us another very realistic thing about this clip is the tension between the side of the company that cares about profits and the compliance team that cares about sticking to the letter of the law and there is an ongoing tension between the two the side that cares about profits is always going to want to push the envelope about the kinds of customers they take on criminal customers tend to be quite lucrative when we see the laptop with all the account information on the spreadsheet we're made to think that what Jack Ryan is actually doing is forensic accounting but in fact that's not what a compliance officer or a compliance analyst actually does the best analogy I've ever heard is it the forensic accountant who might look at Bernie Madoff spooks for example they're like the pathologist who does an aunt see on the homicide victim where as a compliance officer is like the homicide investigator who's looking at lots of different pieces of information to formulate a hypothesis as to what is actually going on they're looking for different patterns of behavior and different characteristics about the customer that might suggest that there is suspicious activity taking place so to portray Jack Ryan as a forensic accountant or that he would even take an overseas trip to investigate one client is somewhat unrealistic as we can see laundering large amounts of cash is never as easy as Hollywood makes it out to be and even if you were able to do it well your clients are always going to be criminals when they have the opportunity for a plea bargain it's usually the money launderer that they turn in first so take my advice and earn your money the legitimate way

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