Transnational Money Laundering—New Methods

A new federal report suggests that money launderers are becoming much more creative in the ways they “conceal and move dirty cash.”^[1] The report, known as the Money Laundering Threat Assessment [hereinafter MLTA], is “the first government-wide analysis of its kind, which investigates money laundering vulnerabilities across a spectrum of techniques used” by individuals.^[2] 16 different government agencies, offices, and bureaus collaborated on the report, which outlined more than 10 different ways that people are known to have laundered money.^[3]

Casinos remain a popular place to launder money because of the high volume of cash transactions, as well as the “broad array of financial services” available to patrons, such as deposit and credit accounts, funds transfers, check cashing and currency exchanges.^[4] Typically, money is laundered through the casinos by exchanging illicit cash for casino chips and then either: holding the chips for a period of time and later cashing them in for a casino check or wire transfer; using the chips as currency to purchase narcotics with the drug dealer later cashing in the chips; or using the chips to gamble in hopes of generating certifiable winnings.^[5]

Casinos, however, have long been suspected of being places where money gets laundered, and the MLTA highlights a few new methods which demonstrate some ingenuity. The most intriguing new method of laundering money is by using “stored value cards” which are sometimes called prepaid cards.^[6] These cards can operate in either an “open” or “closed” system: open systems can connect to global debit and ATM networks, allowing the user to purchase goods or access cash at any merchant or ATM that connects to the global payment networks; closed system cards are limited in that they can only buy goods or services from the merchant issuing the card.^[7]

According to the DEA, ICE, and the IRS, prepaid cards have been used with bulk-cash smuggling; “[d]rug dealers load cash onto prepaid cards and send the cards to their drug suppliers outside the country. The suppliers then use the cards to withdraw money from a local ATM.”^[8]

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[1] See Jeannine Aversa, Criminals Raking in Gift Cards, Associated Press (via Houston Chronicle), Jan. 12, 2006; Claire Hoffman, New Methods Reported for Money Laundering, LA Times, Jan. 12, 2006; US DOJ, U.S. Money Laundering Threat Assessment, Dec. 2005 (PDF).
[2] US DEA, Money Laundering Threat Assessment Released, Jan. 11, 2006.
[3] See US DOJ, supra note 1, Table of Contents.
[4] Id. at 51.
[5] Id. at 52.
[6] Id. at 20.
[7] Id.
[8] Aversa, supra note 1.