How to launder $1 million easily, quickly and quietly – and without catching the attention of global authorities: a view into global AML vulnerabilities through the eyes of ‘The Infiltrator’

Image Courtesy: HC Movie Reviews

The Skinny:

  • In a response to the fincrime compliance community throwing down the gauntlet in a serious, not-so-serious query of, “how would you launder $1 million,” a former government agent who went undercover to take down Mexico’s most powerful narco cartels takes up the challenge.
  • In this theoretical organized criminal money laundering cycle, “The Infiltrator” himself, Robert Mazur, reveals how he would take advantage of several of the largest historical and persisting loopholes, including trade-based money laundering (TBML), free-flowing free trade zones and make the most of classic supply-and-demand dynamics.
  • In this case, the Mexican narco cartels have the supply – untold billions of dollars in hard cash – and that meets the booming demand of Chinese foreign nationals desperate to move funds and value out of the restrictive region and evade currency restrictions, with nary a glance or care at where the desperately-needed dollars originate. 

By Brian Monroe
bmonroe@acfcs.org
July 27 , 2021

For the undercover agent who infiltrated Pablo Escobar’s Medellin cartel – and who still is afraid to show his face clearly because he has a hit out on his life – laundering $1 million is, as his former organized narco network brethren used to say, “pedazo de torta.”

The translation: the well-known phrase, “piece of cake.” Or this old chestnut: “Easy as pie.”

That was the response of author and former government agent Robert Mazur to a question posed by longtime financial crime consultant and former compliance officer, Dev Odedra, who also runs the fincrime news website, www.thelaundrynews.com, in a social media posting.  

Odedra’s inquiry to the financial crime and compliance community: “With $1 million in cash tomorrow morning, would you be able to launder it and get away with it?”

To read the post and be part of the conversation, click here.

In this theoretical organized criminal money laundering cycle, Mazur takes advantage of several of the largest historical and persisting loopholes, including trade-based money laundering (TBML), free-flowing free trade zones to maximize the returns tied to global geo-political and financial pressure points in classic supply-and-demand fashion.

In this case, the Mexican narco cartels have the supply – untold billions of dollars in hard cash – and that meets the booming demand of Chinese foreign nationals desperate to move funds and value out of the restrictive region and evade currency restrictions, with nary a glance or care at where the desperately-needed dollars originate.

In other cases, these Chinese foreign nationals are not unwitting pawns.

They are linked to Asian organized criminal syndicates working hand-in-glove with Mexican-aligned money brokers – professional money laundering gatekeepers – who help the cartels get the needed precursor chemicals from China to produce drugs like fentanyl, the most powerful narcotic on the planet and a deadly drug fueling the international opioid epidemic. 

To launder big bucks, don’t just think like a criminal – be one

Even with various jurisdictions and major financial centers – the United States, United Kingdom, Europe, Canada and others – updating and upgrading anti-money laundering (AML) rules and regulations in recent years to prioritize effectiveness and results, over regulatory box-ticking and procedural minutiae, Mazur says there are simply too many gaps to cover.

He would know.

Mazur detailed his illicit financial exploits in the 2009 book titled “The Infiltrator” and 2016 movie of the same name, starring award-winning, A-list actor, Bryan Cranston, who shot to stardom as terminally ill, criminal meth maestro Walter White in AMC’s hit series, “Breaking Bad.”

To check out the book, click here.

So how did he gain such a deep, detailed understanding of international financial crime vulnerabilities, and countercrime compliance blind spots?

Mazur spent “five years undercover infiltrating the criminal hierarchy of Colombia’s drug cartels” as the fictitious Bob Musella, a “wealthy, mob-connected big shot living the good life,” according to a description of his book.

He played his role well, driving, flying and staying in style, drinking and eating the best that money can buy.

His undercover work helped uncover and prosecute the legions of “unscrupulous bankers who manipulated complex international finance systems to serve drug lords – including Pablo Escobar and the infamous Medellin cartel – corrupt politicians, tax cheats and terrorists.”

How?

Under Mazur’s “designer suits and hidden away in his quality briefcase, recorders whirred quietly, capturing the damning evidence of their crimes. Then, at his own staged wedding, he led a dramatic takedown that shook the underworld.”

The result: rather than revelry, a shocking revelation: Musella was Mazur.

Operation C-Chase eventually charged more than 80 individuals and went down as “one of the most successful undercover operations in the history of US law enforcement, and evidence gathered during the bust proved critical to the conviction of General Manuel Noriega.”

So how does one launder $1 million – quickly, easily and with as little risk of compliance officers, regulators and investigators finding the trail?

Here is Mazur’s response:

Step One in the Laundering Cycle: The law of supply and demand – find the Chinese nationals hungry for U.S. cash

In my view, the best method of laundering $1 million for a criminal depends on the physical location of the owner of the illicit funds, their business model, and their needs.

Assuming the owners of the cash are Mexican, cartel leaders that have sold cocaine and heroin in the U.S., though a network of Chinese nationals in North America with a demand for US cash (my clients with a demand for U.S. dollars), I would swap the cash with them, on behalf of my Mexican supply clients, with U.S. dollars.

In return, my Chinese clients with a demand for dollars would provide renminbi (RMB) – the currency of the People’s Republic of China (PRC) – to my Mexican clients in an account in China, or in hard cash.

Chinese nationals with a demand for cash in North America are plentiful.

They operate “legal” grey market businesses in North America that buy and export certain products sent (often smuggled) to China, including those that buy outdated iPhones in bulk, such as 6s and 7s.

My demand clients (for dollars) from China seeking this cash also include wealthy Chinese looking for US cash in North America, due to foreign investment restrictions imposed on Chinese citizens within the PRC.

Many of them seek to buy mansions in Vancouver and other Canadian cities. They can’t get personal value out of China due to government restrictions (maximum $50k per year).

Step Two in the Laundering Cycle: Foreign free zones, trade-based money laundering, value transfers, swindles and swaps

My supply clients, Mexican traffickers, would gladly use the RMB in China to buy goods in the huge free zones in Guangzhou where they can also buy unlimited amounts of high-quality counterfeit goods that can be exported to Latin America for sale.

This provides them with a “legal front” in their home country.

My Mexican clients also use RMB to pay Chinese triads to obtain precursor chemicals they use to manufacture meth and fentanyl.

These chemicals are often acquired from the unregulated pharmaceutical manufacturers in China controlled by Chinese triads. There would be no paper trail of the value transfers due to the swap that eliminates the initial cross-border value movement.

Step Three in the Laundering Cycle: Use an encrypted chat app where the servers are outside U.S., allies’ jurisdictions

All communication between the parties would be encrypted using WeChat, because the servers holding the data concerning communication via WeChat are in the PRC and not accessible to Western law enforcement.

Everyone involved in the network of money brokers would use multiple phones and destroy one every week, then subsequently using a new phone.

The above transaction can be carried out in no more than two days and often in one day, if well-coordinated. 

When I worked in the black money markets undercover, we (meaning the network of money brokers aligned with me) had access to endless “demand clients” and “supply clients” of all nationalities who would participate in swaps, sometimes currency for currency, sometime currency for goods, etc.

These types of transactions occur globally.

The logistics, transfer of value, etc. vary dependent on where your supply client lives, where they want their wealth, their capital needs, etc.

In conclusion, as the old saying goes, “Please don’t try this at home.”