DIFFERENT ANGLE by Kenneth Rijock
The resignation this week of the Governor of the State of New York, after the disclosure that he had paid $80,000 for certain illegal entertainment, provides the classic illustration of reverse money laundering. Whilst the traditional placement-layering-integration method of taking the proceeds of crime and turning it into legitimate-looking capital is the norm, at times, the opposite result is desired. With reverse money laundering, legitimate money must be transferred to a recipient where the ultimate use of the funds is illegal. See below for a diagram of the method's operation.
- Legitimate cash is placed by moving it into a shell or "cover" company, whose sole aim is to distance the remitter from the ultimate destination and use. In the Spitzer case, the shell company purported to be a legitimate business.
- The layering is often not nearly as complex as layering illicit cash; often only one additional stop is made through another account. After all, the money is still clean. obviously, this was not adequately done, for in the Spitzer case, the money trail was located and followed back to its donor.
- Integration is actually payment for illegal goods or services; at this time, the funds, being co-mingled with other illicit capital, are part of an illicit business.
The sole aim is to put up a sufficiently high wall between the payor and the payee, so as to confuse, and ultimately defeat, any potential investigator or query.
The drawbacks of reverse money laundering:
- There's usually a legitimate target who cannot, or will not, flee to avoid prosecution.
- All money laundering pipelines are only as strong s their weakest link. When someone gets busted, and starts cooperating, it all becomes apparent to the investigator.
- There is often a legitimate business at the sending end that is subject to audits.
Perhaps we will get a better glimpse into the workings of the Spitzer operation if an indictment is issued.
The facts and opinions stated in this article are those of the author and not those of World-Check. World-Check does not warrant the accuracy of any facts and opinions stated in this article, does not endorse them, and accepts no responsibility for them.
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