Financial Crime Online » MSB

Wachovia: $160 m laundering penalty

admin — Sun, 21 Mar 2010 06:13:37 +0000

Wells Fargo & Co’s Wachovia Bank agreed to cough up $160 million to end a criminal money laundering probe into the use of its exhange houses in Mexico by drug cartels. The government agreed to defer prosecution on a criminal charge that Wachovia did not set up an effective anti-money laundering program from 2003 to 2008. Wachovia admitted failing to monitor $420 billion in transactions through exchange houses, known as casas de cambio.

The (DEA) investigation apparently started when in 2005 dogs sniffed cocaine in an airplane in Miami. The money used to buy the plane was traced back to Mexican exhange houses; that is how the interest for the money flow from the exhange houses from Wachovia started.

Wachovia admitted offering correspondent banking services to 22 Casa de Cabio’s (CDC) through three methods: wire-transferring money on behalf of third-party customers; accepting bulk cash transfers made by armored cars and other methods; and accepting checks and traveler’s checks put in pouches or digitally scanned through “remote deposit capture.”

From May 2004 to May 2007, Wachovia processed at least $373 billion in wire transfers on behalf of CDCs, the bank admitted. It processed $4.7 billion in bulk cash and $47 billion in ‘remote deposite capture’ deposits for all correspondent banking customers, including Mexican exchange houses, Wachovia admitted.

The case is USA v. Wachovia Bank, 10-cr-20165, U.S. District Court, Southern District of Florida (Miami).

http://www.businessweek.com/news/2010-03-17/wachovia-to-pay-160-million-to-end-laundering-probe-update1-.html

http://www.nytimes.com/2010/03/18/business/18launder.html

Hawala to Brazil

admin — Mon, 25 Jan 2010 19:13:41 +0000

Usually hawaladers come from the East. This time he came from the South. The owner of Bem Brazil in Danbury (CT) was sentenced to 30 months in prison for unlicensed money transfers. The indictment alleged that, in exchange for remitting more than $22,000,000 from Connecticut to Brazil and for guaranteeing the anonymity of both their customer and their customer’s intended beneficiary, the co-conspirators took a percentage of the remitted funds for their own financial gain. While the store displayed adverts for InterTransfers, which is a legit MSB, the suspect would convince clients not to use InterTransfers but their own ‘hawala’ channel to Brazil. This channel was cheaper (better exchange rate) and, as a extra benefit for clients who appreciated that part of the service, would go with complete anonymity and without those nasty currency transaction reports. Over $22 million was transferred to Brazil through this anonymous channel. Most money came from Brazilian immigrants that transferred money back home to fund their families. Because the money flowed from the US to Brazil there was a constant need to settle the balance. The hawalader on the other side in Brazil constantly paid the beneficiaries. Instead of cash transports or regular wires, the set up was to pay a local insurance company to wire the money on behalf of the suspects for a fee. Just a regular family type of hawala operation you could say, but we have seen that even small amounts will do to plot a terror attack. Better safe than sorry, also in the financial world?

http://www.justice.gov/dea/pubs/states/newsrel/boston070208.html

http://www.poten.com/NewsDetails.aspx?id=10317976

Venezuelan forex sting operation

admin — Wed, 01 Apr 2009 00:12:21 +0000

Rosemont Finance Corp is a Miami based Money Services Business (MSB) that acts as a clearing house for casa de cambios in Venezuela. Rosemont controls a bank account with Bank of America widely used for unofficial foreign exchange transactions; US dollar versus Venezuelan bolivars. Rosemont’s account was frozen by US authorities after is was linked to suspicious activity and money laundering. This freeze more or less led to a stop in the USD/Bolivar parallel exchange circuit and may have caused a shortage in US dollars in Venezuela. The Venezuelan government of President Hugo Chavez fixes the bolivar at 2.15 per dollar. On the parallel market, the dollar now trades near 6 bolivars. This spread in exchange rate is seen as a reflection of the political risk of doing business in Venezuela. Rosemont commented that just a small number of transactions was targeted by investigators. Allegedly one of the founders of the company, Vyasulu, was engaged in wiring almost a million dollars from Boston to Miami, whilst undercover law enforcement agents told him the money was generated by drug trafficking. Generally this is not a situation you want to be in. The available data do not reveal exactly why Vyasulu was targeted in the first place, but usually law enforcement starts such an operation when there is some suspicion that you may be involved in shady business to start with. The fact that US authorities decided to “sting” an MSB owner who acted as a key player in the Venezuelan parallel market suggests the Department of Justice may be out to publicly prove the illicit nature (or criminogenic environment) of the ’Black Market Peso Exchange’ and its US-based participants.

www.complinet.com

http://tinyurl.com/c6rooy