Shells, Trusts and similar entities. In International Money Laundering. SSA Deborah Morrisey Financial Investigations ICE, Miami, Fl. Why utilize off-shore entities? How easy are they to establish? What are the typical offshore entities utilized in money laundering?
In International Money Laundering
SSA Deborah Morrisey
ICE, Miami, Fl
Criminal Organizations recognize the difficulties law enforcement encounters when international borders are crossed.
Opens the door to the utilization of a wide variety of financial products and/or services.
Banking and Brokerage services
International InvestmentsWhy utilize Off-Shore Entities?
Ease of establishing complex web.Why utilize Off-Shore Entities?
Conceal the true ownership of real property.
Maintain control over criminal proceeds and assets.
Break link between illegal activity and assets.
Provide some security from detection.
Fluctuation of balances or international wire traffic attract less attention in corporate accounts than in personal ones.
Perpetuate or support a fraud.How do they service the Criminal?
TrustsWhat are the typical off-shore entities used for money laundering?
Operate from a mail drop, mail center, office service business or the Internet.
Set up through intermediaries or attorneys.
Laws vary as to what information the establishing service must provide to the incorporating jurisdiction.
May be owned by other corporations, nominee owners.Shell Companies
Are often owned by nominee shareholders, nominee directors, bearer shares or other corporate entities.
Can be registered in remote geographical locations.
Once established, shell companies can hold bank accounts, own property and maintain assets without reporting such to the licensing jurisdiction.
Beneficial ownership need not be disclosed or part of the public record.Shell Companies
Difference between the two is age since incorporation.
Shelf companies are:
Established to provide a cadre of available entities to be sold at a later date.
A defunct corporation that was purchased for its history and later sold to a client.
A company that is passed along between clients but is kept alive and available for re-sale.
Shelf company value is based upon its age, history and banking relationships.Shelf Companies
Formed in Ireland
The trust arrangement can be set up for a determinate or indeterminate period of time.
The trust owns the assets assigned to it.
Trusts separate legal ownership of property from beneficial ownership.Trusts
The person who
transfers property or assets
to the trustee.
The person obliged to manage the property and/or assets.
The person(s) on
whose behalf the
property and/or assets are held.
Most services establishing trusts or other trustee services are not regulated.
Many utilize attorney escrow or operating accounts as an entry point for funds transferred to the trust.Trusts
Although giving up the legal ownership of the property, the criminal maintains distant control over his assets.
The distant control allows him/her to shelter his/her assets from his/her criminal conduct or his/her personal connection to it.
Layering trusts with shell companies creates a complicated and confusing trail between the criminal activity and its proceeds.Trusts and the Criminal
Trustees in BVI
Trust in Cook Islands
by the Trust through…
One piece of information can begin the process of piercing the veil of secrecy.
There are various investigative techniques that should be used to begin this process.
However, there is no one formula except to be as creative as the criminal!Unraveling Beneficial Ownership:
Make use of MLATS, Letters Rogatory, Mutual Assistance Agreements, etc.
Know what you can share – investigator to investigator – on an informal basis to begin the process.
Understand what is available in different jurisdictions and how to obtain the information.Unraveling Beneficial Ownership:
Cooperative efforts between jurisdictions are essential to a successful conclusion.
Explore both criminal and civil proceedings.Unraveling Beneficial Ownership:
This is to include, for Corporations:
Articles of Incorporation
Details of the mailing address
Obtain any correspondence, powers of attorney, emails or instructions.
Be sure to request the Trust Deed, Letter of Wishes and Trustee minutes.
Fully identify the settlor and the trustee.
Obtain any correspondence, powers of attorney, emails or instructions.Unraveling Beneficial Ownership:
Request all memos, correspondence or emails associated with the account.
Carefully review and analyze the checks, wire transfers, debit/credit memos and account activity.
Understand all of the options for obtaining hard to get banking records.
Understand where the funds are actually held for the various types of accounts.
Examine checks for differences in handwriting, endorsements or notes.Unraveling Beneficial Ownership:
Obtain a complete set of closing/settlement records, including all notes, file memos and emails.
Obtain all back up documents for payments made toward any mortgage.
Determine, through the mail system, who is receiving and sending mail at the property.
Obtain any available escrow records for source of funds.
For high value items, determine where the item was delivered and who signed for the delivery.
For high value items, obtain any sales records, including any informal correspondence or notes that may be in the file.Unraveling Beneficial Ownership:
Alleges to be doing this for his clients as asset protection
Comes to the attention of law enforcement due to some structured deposits of cash into his bank accounts.
Initial analysis of business and bank records identified trusts, but little else.
Further investigation unveiled a victim of a financial fraud who had sent money to one of the trusts.Case Study 1:
Investigation lead to the initiation of wire tap, search warrants and seizure warrants.
All of the Charitable Trusts established by attorney were utilized to open bank/brokerage accounts, buy property and launder the proceeds of both fraud and narcotics trafficking.Case Study 1:
Account opened through a representative agency in Las Vegas, NV.
$18 million funneled through account in 16 months.
Other Accounts at firm linked to main account.
Funds sent to shell bank in Denmark, shell companies in Bahamas and Trusts in Lichtenstein.Case Study 2:
Main defendant purchases, amongst other items, a Mercedes SL 600 Sport Sedan.
Car purchased through representative agent in Las Vegas from dealership in California.
Car titled and registered to Trust Company with mailing address of a PO Box in Oregon.
Initially, thought it was a dead end, but…
Car delivered to a parking lot in Las Vegas.
Receipt signed by defendant (almost illegible).
Pictures of car delivery found in search of residence.
Vehicle seized and forfeited.Case Study 2:
Construction company and consulting firm in South Florida identified as being involved in building airports for various countries, including Trinidad & Tobago.
Determined that a criminal bid rigging and over-valuation of goods scheme was committed in connection to the building of Piarco International Airport.
Cooperative effort between jurisdictions helped to unravel a multifaceted criminal enterprise.
Money LaunderingCase Study 3:
Bank accounts and assets were held in a wide array of corporate entities.
How did it unravel?
International Cooperation and sharing of records
Cooperating members of the criminal organizationCase Study 3:
Banking officers were an integral part of setting up off-shore shell companies, where mail and contact information came back to the bank.
Only way to get behind this was the handwritten notes and memoranda in the bank account files.Case Study 3:
Unraveling true property ownership occurred by examining who resided in the houses and who utilized or benefited from the other assets.
High Value ItemsCase Study 3: