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  • - [Narrator] This is Moyara Ruehsen.

  • 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.

  • - [Narrator] Today, Moyara is going to review

  • what Hollywood gets right and wrong

  • in money-laundering scenes.

  • [suspenseful music]

  • [siren blaring]

  • - 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,

  • is 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.

  • [energetic music]

  • - [Narrator] The next day, Aunt Emma flew to Geneva,

  • two million in cash in her carry-on,

  • which in the big picture was a drop in the Swiss bucket.

  • Because the following month,

  • over the course of six round trips,

  • Chantalle'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've been able to move that cash past TSA

  • without any questions asked, but technically,

  • by law, they still would've been required to fill out

  • documentation for any amount of cash over $10,000.

  • It's not against the law to move the cash.

  • You just have to report it.

  • - And I have some more. - Really?

  • - Here. - Oh, thank you.

  • - And here. - Welcome. [laughing]

  • - And yeah, like four bags of it.

  • - Are you Swiss Slovakian or Swiss Slovenian?

  • - What they do get right is once they get the cash

  • into Switzerland, in the early 1990s,

  • they probably would've 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.

  • - [Marty] Okay, money laundering 101.

  • Say you come across a suitcase

  • with five million bucks in it.

  • What would you buy?

  • A yacht, a mansion, a sports car?

  • Sorry, the IRS won't let you buy anything of value with it.

  • - Right off the bat here, we're talking about

  • how much cash can we actually it into a suitcase?

  • He mentions $5 million in a suitcase.

  • That would have to be a really big suitcase,

  • about 10 briefcases worth of cash,

  • and that's assuming that it's brand-new $100 bills.

  • But most cash that comes from drug sales

  • isn't going to be in the form of $100 bills.

  • It's gonna be in the form of 20s, 10s, 50s, you name it.

  • - [Marty] 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 the bank vault.

  • You gotta age it up, crumple it, 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 miss 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 the casino,

  • all of which are cash-intensive businesses.

  • That is exactly what a money launderer might try to do,

  • because you are disguising all that dirty cash

  • as revenue from your business.

  • Your very lucrative business.

  • - [Marty] That mixture goes from an American bank...

  • To a bank from any country

  • that doesn't have to listen to the IRS.

  • - The bank tanks 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 the ATM machine.

  • In my professional opinion, this is very realistic.

  • - [Marty] It's as legitimate as anybody else's.

  • - [Moyara] "The Sopranos".

  • - 9,900.

  • - In this clip, Carmela is depositing the money

  • that she stole from Tony in increments of $9,900.

  • - Interestingly, at $10,000, we're required by law

  • to notify the IRS of 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 $10,000 threshold

  • in order to avoid filling out a currency transaction report.

  • The crime itself of structuring, technically,

  • even depositing $9,900 just once in order to

  • avoid that $10,000 reporting threshold,

  • politicians and grandmothers alike

  • have fallen into that trap.

  • - I want it in 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 smart 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 $9,900 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 it,

  • placement, layering, integration?

  • - I ain't buying no damn nail salon, so 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 wanna stay out of jail, don't ya?

  • You wanna keep your money and your freedom?

  • 'Cause I got three little letters for ya, I-R-S.

  • If they can get Capone, they can get you.

  • - I really like this scene.

  • 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 hearty

  • and knocking boots with the chicky babes,

  • and aw, who's this?

  • It's the tax man.

  • And he's looking at you.

  • Now, 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 tax man makes?

  • - I'm a drug dealer.

  • - [buzzing] Wrong, a million times worse.

  • You're a tax cheat.

  • What do they do?

  • They take every penny, and you go in the can

  • for felony tax evasion.

  • Ouch!

  • - The hardest stage for a money launderer 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 salon's 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 and

  • made it very difficult for law enforcement

  • to follow the money trail, only then would you

  • withdraw 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".

  • - [Narrator] 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 $5 million in a week.

  • And Gacha had the most successful emerald mine of all time.

  • He would inject bad stones with oil to make them shiny,

  • and had his friends in Miami buy the emeralds

  • with drug money and give them as gifts

  • to hookers and talent.

  • Everybody was happy.

  • - For 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 Medellin cartel,

  • can justify why they're paying $100,000

  • for an emerald which is really only worth $100.

  • And that's how they justify wiring the money

  • back to Colombia.

  • - First off, let's talk about how he got away

  • with spending that kind of money in the first place

  • without triggering any tripwires.

  • Well, he's not the one purchasing the Picassos

  • or, 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 Picassos,

  • whether it's the yacht or the plane.

  • - 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."

  • - Just like we see in the clip, in real life,

  • they actually packaged massive amounts of cash

  • into plastic containers, buried it underground.

  • What you don't know, however, is that years later,

  • when they went to retrieve that buried 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."

  • - We can come at this a few ways.

  • The first thing is,

  • we need the names of all the front companies.

  • Limited partnerships, LLCs, and all that nonsense.

  • - LLCs?

  • - Limited liability corporations.

  • Start with the nightclub which Barkdsale owns.

  • Look up Orlando's by address.

  • You match it, and you see it's owned by who?

  • - It's on Baltimore Street, right?

  • Got it, D&B Enterprises.

  • - Hand that over to Prez, who's gonna get off his ass

  • and walk on over to the state office buildings

  • on Preston Street.

  • - Preston Street?

  • - Corporate charter office. - Corporate who?

  • - [Lester] We have the paperwork on every corporation

  • and LLC license to do business in the state.

  • - What most launderers will do is set up front companies.

  • Now, these front companies could be 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 a much more painstaking task,

  • because you had to go and look it up

  • on the microfiche or the microfilm.

  • - [Lester] Write down every name you see.

  • Corporate offices, shareholders, but more importantly,

  • the resident agent on the filing, who's usually a lawyer.

  • - You also wanna 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.

  • - [Lester] They'll usually use the same lawyer

  • to do the charter file.

  • Find that agent's name, run it through the computer,

  • find out what other corporations

  • he's done the 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 wanna 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 girlfriend, 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 incorporation 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 [beep] it's 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.

  • And certainly not to the warden.

  • - All right, who?

  • - Randall Stevens.

  • - Who?

  • - A 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.

  • - But who is he?

  • - He's a phantom, an apparition.

  • A second cousin of Harvey the Rabbit.

  • I conjured him out of thin air.

  • He doesn't exist, except on paper.

  • - [Moyara] Andy is using a synthetic identity

  • in order to conduct the money laundering activity

  • that he's engaging in.

  • - You can't just make a person up!

  • - Well, sure you can, if you know how the system works,

  • where the cracks are.

  • It's amazing what you can accomplish by mail.

  • - 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.

  • - You're [beep]ing me.

  • - They ever trace any of those accounts,

  • they're gonna wind up tracing a figment of my imagination.

  • - Andy is being extremely clever here

  • by creating this false identity,

  • and thereby avoiding any attention from law enforcement.

  • - Well I'll be damned.

  • - To me, this clip is very realistic,

  • but pulling off all this sophisticated fraud

  • while 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 $7,125,000 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 $7 million a year.

  • If she were to deposit more than what would be reasonable

  • for a really well-performing car wash,

  • 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.

  • - Seven million, that, that could take years.

  • - So set some aside, save it for a rainy day.

  • - Save it?

  • Save it where?

  • I can't go to the bank with it,

  • and I sure can't leave it here.

  • Oy.

  • Wait a minute.

  • Is this all 50s?

  • Who pays for a car wash 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 his 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 rarely 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, 10s, 20s, 50s, 100s.

  • If you're only depositing $50 bills,

  • that just by itself is a little odd,

  • and if you're depositing large amounts, even odder 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.

  • The 50s are 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 commingle that money without being detected.

  • A better example would be the chicken chain,

  • Pollos Hermanos, for any of you who are "Breaking Bad" fans.

  • That would be, perhaps, an easier way

  • to commingle 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 manage to survive

  • year after year after year.

  • You have to wonder, are they a front

  • 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

  • disguised as charitable contributions.

  • - [Joe] You see the pastor here?

  • He's one of about three I'd like to give money to,

  • to help with his good works and all that.

  • - Good works?

  • - Oh, he down with all kind of missionary work

  • going on down in the islands.

  • You know, building a church for some folk,

  • a schoolhouse for some other folks,

  • all kinda good [beep] like that.

  • And what else ya'll building?

  • - A hospital.

  • - A hospital, yeah.

  • Except they been building that mess for about 10 years now

  • and nothing 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 to 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.

  • - We got accounts with some of the banks 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 that.

  • - You pay 10 on a dollar.

  • Anything beyond that depends on your generosity,

  • to save those who're gonna be saved.

  • - It's harder to launder your money

  • through 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 wanna go to Moscow?

  • - I think we have to.

  • They're unnamed, uncategorized,

  • scattered all over the world.

  • They're hidden accounts, Rob.

  • These are just the ones I've managed to find.

  • - How did you find them?

  • - You pay me to look.

  • - Not to look that hard.

  • Joke.

  • You think they're ripping us off?

  • - I don't know what to think.

  • - Jesus H. Christ.

  • You're the compliance officer it's your call, but-

  • - First thing I notice is that the boss

  • is referring to him as "the compliance officer."

  • Would he actually make a trip all the way Moscow

  • to inquire about those accounts?

  • Unlikely, he'd probably pick up the phone

  • to make inquiries 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.

  • There's still ideologues, but the new ideology is money.

  • They're not a country, they're a corporation,

  • which is why we're there in the first place.

  • - I know, don't rock the boat.

  • - It's not a boat.

  • It's a goddamn luxury yacht and we're all on it together.

  • So don't [beep]ing sink 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 that 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 that the forensic accountant,

  • who might look at Bernie Madoff's books, for example.

  • They're like the pathologist who does an autopsy

  • on the homicide victim, whereas 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 gonna 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.

- [Narrator] This is Moyara Ruehsen.

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