Want to bust drug cartels? Go after money launderers

Last month, a bank with 164 branches in Florida admitted that its corporate scheme involved laundering hundreds of millions of dollars of dirty money from high-level money launderers who served drug cartels. The sin was so bad that some experts believe the bank should have lost its U.S. license and top executives should have been in prison.

Instead, TD Bank received a $3 billion slap on the wrist that shareholders would pay. Yes, $3 billion is a lot of money, but not for an international organization that pumps life into cartels by laundering the proceeds of sales of fentanyl and other illegal drugs that kill tens of thousands of Americans every year.

Dirty banks and other launderers play a critical role in organized crime. They convert mountains of money into bank balances, camouflaging businesses as legitimate concerns. Corruption runs deep. For example, former Honduran President Juan Orlando Hernandez is currently serving a 45-year U.S. prison sentence for his part in selling his country’s rights to Colombian and Mexican cartels that use Honduras as a shipping point for thousands of tons of deadly drugs. United States.

It doesn’t have to be this way.

As a federal agent, I spent five years undercover laundering money for drug lords who moved tens of millions of dollars in dirty cash. I gathered evidence of their crimes and the crimes of the crooked bankers. I assure you we know how to put pressure on dirty banks and bankers. We haven’t mustered the will to do this yet.

Take the case of Da Ying Sze, also known as David. He began laundering approximately $470 million in drug money at TD Bank starting in 2016, according to federal court documents.

Underworld money brokers like David buy money from drug traffickers and sell it in the form of checks and money orders to dollar-strapped businessmen around the world. Money brokers like David charge fees to both traders and recipients of checks and money orders. As a confidential money broker, I have earned more than 10% when making this type of exchange.

Just months after his arrest, U.S. authorities offered David a plea deal. The document said he faced a maximum sentence of 10 years in prison because, among other things, he “assisted authorities and accepted a plea in a timely manner. ” In law enforcement parlance, he attacked his accomplices and told them all.

A government investigation into TD Bank and its employees revealed that much more was laundered than the $470 million in cash that David and his cronies poured into tellers. TD Bank provided VIP service to two more organizations fighting money laundering. In one instance, $120 million in cash was funneled on behalf of a group, a notorious laundering front, that claimed to control precious metals and jewelry businesses. In another, $39 million was moved from Florida to Colombia by a separate laundering group with the help of five corrupt TD Bank employees. This group moved bank balances from Florida-based personal and business accounts through approximately 195,000 cash withdrawals from ATMs in Colombia.

The government’s records against TD Bank list multiple email exchanges about David’s accounts from the bank’s front-line employees, including branch managers, the court heard. They all reflect an awareness of what is going on.

Employee 1: How is this not money laundering?

Employee 2: Oh, 100% it is.

Could it be any clearer than that?

Bank employees issued numerous internal warnings about the hundreds of millions of dollars deposited by David and his friends, according to court records. These warnings, which eventually reached senior TD Bank executives, spurred TD Bank to file formal Suspicious Activity Reports with the government. Despite the efforts of lower-level TD Bank employees, these reports were never submitted.

There is little room to assume that senior management doesn’t know what’s going on. They deliberately did nothing guided by a business plan for growth and expansion. How do they behave? Wouldn’t senior bank executives rise to the level of money laundering conspiracy, a crime punishable by 20 years in prison and a fine of half the value of what David and others laundered?

Any well-intentioned senior bank executive would have noticed other red flags. David’s account records suggested that his businesses were related to the apparel and fashion industry in the northeastern United States, an industry not known to receive a million dollars a day in cash in the normal course of business. Second, cash was quickly withdrawn from each account via domestic and international wire transfers, mostly to China, a well-known pattern consistent with money laundering. It also issued checks and facilitated the payment of bank checks to third parties in a manner consistent with North American black money markets dominated by Chinese nationals for the past five years or more.

In addition to other illegal activities, David’s plea agreement states that he bribed bank employees with improper gifts totaling approximately $3.73 million. Interestingly, the Justice Department said in a later news release that he alone bribed officials with $57,000 in gift cards. We can only hope that law enforcement will soon tell us who took the additional $3.6 million in bribes.

One of TD Bank’s primary defenses is that it is outdated and poor quality transaction monitoring software. Senior administration officials were able to say it wasn’t their fault David’s mistake in laundering almost half a billion dollars in his banks. They said the bad guy was outdated software. But the bank didn’t need sophisticated software to detect what was going on. It was clear.

Separately, we need to take a closer look at what the government knows or should know before David decides to tell all. The bank has filed a 584 Currency Transaction Report, which is required for any deposit, withdrawal, transfer, payment or currency exchange over $10,000. Reports would alert the government that David and his cronies had deposited more than $400 million in cash; This was a clear red flag. Why didn’t the sirens sound at the Internal Revenue Service and other US agencies? Is someone monitoring and analyzing transaction reports or going into a black hole? This is a question many anti-money laundering professionals say.

Here’s a better, less costly way for law enforcement to detect cartel money laundering. Drug users don’t routinely buy fentanyl and meth off the street with cryptocurrency. Cash remains king. Cryptocurrency has an emerging secondary role in drug money laundering, but it is dwarfed by the cash generated by hundreds of Davids dropping cash at bank tellers. For years I have encouraged governments around the world to conduct a reverse audit trail; This means they must determine and backtrack the amount of U.S. currency sent back to their federal central bank each month. My first public call for governments to conduct these audits was published in the New York Times 14 years ago. Reverse auditing will identify the banks from which central banks receive this money. From there, the government can use the Patriot Act to legally determine which banks and account holders give large amounts of cash to central banks. It’s very simple.

Account managers must also be required to provide affidavits in response to substantive questions regarding any account into which at least $5 million is deposited annually; This is something I have suggested to governments and industry professionals in the past. That way, the account managers who brought in David’s accounts and those of other money laundering networks could be more easily sued for deliberately misrepresenting what they knew and when they learned it.

In 2019, I pitched to the global law enforcement and regulatory communities A detailed proposal outlining how countries could establish a US-led multinational task force consortium to consistently identify and prosecute the 10 biggest money laundering threats on the planet. I explained an eight-point process they can follow to achieve this goal. I’m still holding my breath and hope to one day get feedback from agencies on the plan.

If we want to be serious about identifying and prosecuting real money launderers and corrupt bank officials, we shouldn’t worry so much about every little money laundering risk that might exist. Instead, we should keep investigations simple, deal with the real issues, and put corrupt bank executives, managers, and lawyers in jail. They facilitate the cartels’ success and are as responsible for fentanyl and other drug deaths as the dealers who sell lethal drugs to your children. Without money laundering professionals, traffickers cannot hide and dirty money launderers cannot create a veil of plausible deniability. Stop making empty excuses like, “Oh, if we had updated our software, this would never have happened.” Yes that’s true.

Robert Mazur, a federal agent for 27 years, is a court-certified expert on money laundering matters in both the United States and Canada. He is the New York Times bestselling author of the memoir “The Infiltrator,” about the first half of Pablo Escobar’s life spent undercover as a money launderer for the Medellin Cartel, and is the executive producer of the film of the same name. His new book, “Betrayal,” is a memoir about his last undercover mission that nearly cost him his life, a deep dive into Colombia’s Cali Cartel and Panama’s underworld. He is president of KYC Solutions, a company that provides speaking, training, consulting and expert services worldwide.