As a treasury professional, we have more than a passing interest in money laundering schemes. For the unitiated, money laundering schemes are generally designed to make money earned through illegal activities, such as trafficking illegal drugs, appear as if it were earned legitimately, allowing it to freely navigate the financial system.
A great deal of the bureaucracy inherent in the banking system is an attempt to thwart would be money launderers. In the process, they make nearly everyone with a bank account a suspect.
One of the bureaucratic tools employed to nab money launderers is the SAS, or Suspicious Activity Report. This is why your banker wants to see your identification when you withdraw or deposit a large sum of cash, even though they have known you for years. The technical threshold for filing such reports is $10,000, but the bankers are further instructed to file an SAS whenever a deposit or withdrawl deviates from a client’s regular modus operandi.
This brings us to Smurfing. the term came to us via yet another informative report generously provided by Stratfor. Smurfing is the act of depositing a large amount of cash in amounts under $10,000 overseveral days and/or across several financial institutions for the purpose of avoiding an SAS. It is ineffective, for sure, yet it is technically a viable money laundering tactic.
The other money laundering technique described in the report (which can be read by clicking the link below) is much more interesting. It involves money being transferred to China from the US in exchange for appliances which and other goods which are shipped to Mexico and then sold.
The War on Drugs has made drug trafficking so profitable that even it is working as a bizarre sort of stimulus!
The point of the Stratfor report is to highlight the fact that there is an increased incidence of both drug trafficking and money laundering activity now that the US Feds have cracked down on the manufacture of methanphetamines in the 50 states. This report discusses the results of the law enforcement operation “Dark Angel.”
However, as the author points out, the lessons learned from Dark Angel may reveal more about money laundering techniques than they do about meth trafficking.
If this is what Stratfor provides for free email subscribers, we can only imagine the insights that a paid subscription would provide. Their analysis is insgihtful and borders on brilliant.
Without further ado, the report by Ben West: