Recently, Goodwin Weber PLLC attorney David P. Weber served as one of the two experts to review the Panama Papers, ultimately tying Vladimir Putin to a massive money laundering and corruption scandal.  

Weber, in addition to serving as one of the founders of Goodwin Weber PLLC, serves as Academic Director of the University of Maryland‘s new program, offered jointly with the American Bankers Association, in Anti-Money Laundering Compliance and Fraud Management.  

Weber is currently writing a new textbook to be used in money laundering and fraud examination classes at the undergraduate and graduate level.  The introduction is titled A Prime Minister’s Guide to Money Laundering, and can be found on the University of Maryland’s website.   

Put simply, things are tough for corrupt government officials. After taking bribes or skimming from public funds and development loans, they often end up with piles of cumbersome cash. A former public works minister in Argentina tried to bury his bags of money at a convent on June 14, 2016, but that ended badly. Other officials create shell companies and offshore accounts to hide their side income, but that also can backfire. In one Brazilian case, investigators caught a former Petrobras director with nearly $24 million in bribe money stashed in a Monaco account. More recently, hundreds of current or former world leaders had their secret accounts exposed in the Panama Papers, one of the biggest document leaks in history.

Money laundering today is not just for drugs or arms traffickers.  Increasingly, laundering is also used by citizens to avoid taxes on legitimate earnings. Corrupt public officials also use laundering to hide bribes, kickbacks, public funds and, on occasion, even development loans from international financial institutions.  The process works as follows:

The principles of money laundering are to hide, move and reinvest wealth to prevent others from discovering the source.  Put simply, laundering is the process where the origins and ownership of money, generated as a result of criminal or sometimes legitimate activity, is concealed.

Placement: First the money needs to be put into commerce. This is called placement, or in law enforcement or regulatory circles, smurfing. Many illegal activities are forced at the outset to deal in cash, and cash is cumbersome, hard to protect, and logistically very heavy.  For example, $1 million in $1 bills weighs more than one ton. Multiplied by many millions, the storage, protection and transportation of money is challenging. It is therefore important, if for no other reason than logistical efficiency, to place this money into the banking system where it can be spent in a manner other than a cash transaction.

Layering: Second, it is not enough to place the money into the banking system. It can still be traced to the original illegal acts. Therefore, the proceeds must be laundered through the use of purportedly legitimate means and, as a result, the proceeds lose their existing (criminal) identity and appear to have originated from a purportedly legitimate source. This laundering is usually repeated several times with the specific intention to obfuscate where the money originally came from. Owning legal businesses that can be used as fronts for layering is the Holy Grail for narcotics traffickers and organized crime.

Integration: Ultimately, after the money is sufficiently layered, the third and final process is called integration. By now the funds have been placed in the legitimate banking system and the source of the funds has been obfuscated.  Without a huge undertaking, governments or regulators cannot tell where the funds in question came from.  This allows for their use for any legal purpose — and most of the purposes used are in fact legal. Corrupt officials, organized crime leaders and drug cartels purchase cars, food, homes, vacations, and luxury goods as do any other wealthy people.

Weber serves as the lead at Goodwin Weber PLLC on all fraud, embezzlement and investigations matters.  In addition to being as attorney in Maryland, the District of Columbia, New York, and various federal courts, Weber is a Certified Fraud Examiner and registered Private Investigator in Virginia.  Contact us to learn how we can help with your AML/BSA compliance, or help recover your money.