Most of my work for Money Crashers is evergreen, meant to last for months or years without going out of style.
With a few tweaks, my piece on safety tips for international travelers will probably be useful a decade from now. Barring some catastrophic change in lending patterns or federal policymaking, so will my head-to-head-to-head analysis of the differences between FHA, VA, and conventional mortgage loans – however dry a slog it might be for readers.
My new guide to money laundering is ostensibly durable too. In it, I cover the basics of this easy-to-conceive, difficult-to-master family of crimes:
- What money laundering is and isn’t
- Why it’s done (mostly, to cover up other crimes)
- How it works (it’s a three-step process: like I said, easy to understand)
- Common money laundering vectors and strategies (I admittedly just scratched the surface here)
- Legal consequences for money laundering (mostly federal)
- Notable examples of money laundering from history
On the last point, I had no shortage of examples to draw from. Tom Delay, a power player in Texas Republican circles, and later the national party, makes an appearance. So do two formerly feted financial institutions:
- BCCI, which effectively functioned as a slush fund for dictators like Saddam Hussein and Manuel Noriega (and helped finance Pablo Escobar’s cocaine empire, I should add)
- Standard Chartered, a British giant that helped the Iranian government evade international sanctions for a decade, eventually totting up $250 billion in illicit transactions
The guide’s most newsworthy thread concerns Paul Manafort and Rick Gates, campaign manager and deputy campaign manager for Donald Trump’s 2016 run. Manafort ran a brazen – and, in retrospect, pretty sloppy – laundering operation to wash tens of millions in illicit payments for services rendered to Russian oligarchs and pro-Moscow Ukrainian politicians. Gates abetted Manafort’s activities for years and got his own nose pretty wet too.
The Manafort-Gates case is so interesting because of its near-term political implications: Manafort is a key figure in the broader Department of Justice investigation into the 2016 presidential campaign. I didn’t have space to fully flesh out those implications in the guide (and certainly don’t here), but suffice to say that Manafort’s decade-plus laundering operation in part concealed the fact and nature of other highly problematic activities that continued through the 2016 campaign and now reside at the heart of the investigation into the matter. There’s much more to be learned about Manafort’s work, though the extremely sensitive nature of the probe will likely limit public information flows, at least until Manafort’s scheduled trials later this year. (He’s charged in two separate jurisdictions.)
The Manafort-Gates matter is the most timely example cited in my piece, but I’d argue that it’s not the most interesting. That honor goes to the curious case of Nauru, the tiny South Pacific island nation that turned to money laundering to combat an existential economic threat.
I wrote that the Nauruan government “offer[ed] passports to foreign nationals (for a hefty up-front charge) and allowed anyone to charter a bank with a $25,000 down payment…as many as 400 banks operated out of Nauru: one for every 30 people on the island, give or take.” Officials asked few questions, and by the late 1990s, Nauru was a notorious offshore banking haven for the newly flush Russian mob.
In 2001, Nauru became the first country sanctioned by the Financial Action Task Force on Money Laundering, an enforcement partnership created to tackle precisely this kind of behavior. The FATFML’s attention forced some reforms, but Nauru never quite kicked the habit.
Hey, at least there’s no Manafort connection – that we know of.
If my guide piques your interest, check out my source material:
- The Federal Financial Institutions Examination Council’s Bank Secrecy Act manual outlines the “policies, procedures, and processes, and overall compliance with statutory and regulatory requirements for monitoring, detecting, and reporting suspicious activities,” including money laundering
- The United States Department of Justice’s U.S. Attorneys manual lays out guidance (best practices) for federal prosecution of domestic, international, and sting money laundering cases
- The Peterson Institute of International Economics literally wrote the book on money laundering; this was an invaluable resource for my discussion of money laundering vectors and strategies