Money Laundering T OPICS Money Laundering Cartels Medelln

Money Laundering…

T OPICS Money Laundering Cartels Medellín Cartel

WHAT IS MONEY LAUNDERING? ? ?

SIMPLE MEANING… ö Money-laundering is a process ö which disguises illegal profits ö without compromising the criminals ö who wish to benefit from the proceeds.

MEANING… Money laundering is the practice of engaging in financial transactions In order to conceal the identity, source, and/or destination of money and is a main operation of the underground economy

DEFINITION (SWISS BANK)… Ø Money Ø the laundering is a process whereby origin of funds generated by illegal means is concealed Ø Eg: drug trafficking, gun smuggling, corruption, etc. .

S TAGESOF O PERATION O F M ONEY L AUNDERING… Placement Stage Layering Stage Integration Stage

PLACEMENT STAGE… The placement stage represents the initial entry of the dirty cash or proceeds of crime into the financial system. Generally, this stage serves two purposes: (a) it relieves the criminal of holding and guarding large amounts of bulky of cash; and (b) it places the money into the legitimate financial system. It is during the placement stage that money launderers are the most vulnerable to being caught.

PLACEMENT STAGE… This is due to the fact that placing large amounts of money (cash) into the legitimate financial system may raise suspicions of officials. The placement of the proceeds of crime can be done in a number of ways. For example, cash could be packed into a suitcase and smuggled to a country, or the launderer could use smurfs to defeat reporting threshold laws and avoid suspicion.

PLACEMENT STAGE… Some other common methods include: a) Blending Funds b) Currency Exchanges c) Currency Smuggling d) Gambling e) Loan Repayment

LAYERING STAGE (STRUCTURING STAGE)… The layering stage is the most complex Often entails the international movement of the funds. The primary purpose of this stage is to separate the illicit money from its source. This is done by the sophisticated layering of financial transactions that obscure the audit trail and sever the link with the original crime.

LAYERING STAGE (STRUCTURING STAGE)… During this stage, for example, the money launderers may begin by moving funds electronically from one country to another, then divide them into investments placed in advanced financial options or overseas markets, exploiting loopholes or discrepancies in legislation and taking advantage of delays in judicial or police cooperation.

THE INTEGRATION STAGE… It is at the integration stage where the money is returned to the criminal from what seem to be legitimate sources. Having been placed initially as cash and layered through a number of financial transactions, the criminal proceeds are now fully integrated into the financial system and can be used for any purpose. There are many different ways in which the laundered money can be integrated back with the criminal

THE INTEGRATION STAGE… However, the major objective at this stage is to reunite the money with the criminal in a manner that does not draw attention and appears to result from a legitimate source. For example, the purchases of property, art work, jewellery, or high-end automobiles are common ways for the launderer to enjoy their illegal profits without necessarily drawing attention to them.

E x a m p l e

CARTELS. . . Cartel means “an informal association of manufacturers or suppliers to maintain prices at high levels, and control production, marketing arrangements, etc. ” Derived from Italian word CARTELLO meaning Little card (Agreement)

MEDELLÍN CARTEL

MEDELLÍN CARTEL The Medellín Cartel was an organized network of drug suppliers and smugglers originating in the city of Medellín, Colombia. The drug cartel operated in Colombia, Bolivia, Peru, Honduras, the United States, as well as Canada and Europe throughout the 1970 s and 1980 s. It was founded and run by Ochoa Vázquez brothers Jorge Luis, Juan David, and Fabio together with Pablo Escobar. By 1993, the Colombian government, in collaboration with the Cali cartel, right-wing paramilitary groups, and the United States government, had successfully dismantled the cartel by imprisoning or assassinating its members.

In the late 1970 s, the illegal cocaine trade took off and became a major source of profit. By 1982, cocaine surpassed coffee as an export, making up 30% of all Colombian exports. Many members of the new class of wealthy drug barons began purchasing enormous quantities of land, in order to launder their drug money, and to gain social status amongst the traditional Colombian elite. By the late 1980 s, drug traffickers were the largest landholders in Colombia and wielded immense political power. They used much of their land for grazing cattle, or left it completely idle as a show of wealth.

“MUERTE A SECUESTRADORES” At the end of 1981 and the beginning of 1982, members of the Medellín Cartel, the Colombian military, the U. S. -based corporation Texas Petroleum, the Colombian legislature, small industrialists, and wealthy cattle ranchers came together in a series of meetings in Puerto Boyacá, and formed a paramilitary organization known as “Muerte a Secuestradores” ("Death to Kidnappers", MAS) to defend their economic interests, to fight against the guerrillas, and to provide protection for local elites from kidnappings and extortion

OPERATIONS During the height of its operations, the cartel brought in more than $60 million per day. The total amount of money made by the cartel was in the tens of billions, and very possibly the hundreds of billions of dollars. There were many "groups" during the cartel's years, usually white Americans, Canadians or Europeans, organized for the sole purpose of transporting shipments of cocaine destined for the United States, Europe and Canada. While many groups were infiltrated and taken down by Federal agents and informers, a few were stumbled upon by authorities, usually due to some small misstep or careless behaviour by a group member. This Cartel also led to many anti-social terrorism activities

END OF THE CARTEL The cartel's violence earned it the enmity of the Colombian and U. S. governments in addition to that of its rival Cali Cartel. Many members of the cartel, including Pablo Escobar, were hunted and killed by a National Police of Colombia force.

THANK YOU Vasudevan. V (Vasee)