Money Laundering FAQ

What is Money Laundering?

Illegal money is put through a cycle of transactions and is thereby transformed into legal money. All traces of illegality are concealed by a sequence of transfers, so that the funds may reappear as legal and legitimate income.

What are the 4 factors common to all Money Laundering activities?

1) The source of the funds is concealed
2) The form the money takes must be altered (frequently, to reduce the bulk)
3) The (paper) trail left must be hidden
4) Constant control must be exercised over the process (to protect the money from being stolen).

What are the 3 stages of Money Laundering?

1)     Immersion: At this stage, money launderers rely on bank accounts, check-cashing houses, traveler’s checks, money orders, and other negotiable instruments to funnel the cash into the world’s financial system.

2)     Layering: At this stage, the money is moved in and out of shell companies placed and positioned around the world (while mainly relying on bank secrecy and the attorney-client privilege to hide the account owner’s true identity).

3)     Repatriation: At this stage, the laundered money is returned into circulation, in the form of clean, taxable income.

What is a Cash Transaction Report?

A Cash Transaction Report (CTR), technically known as IRS Form 8300, must be filed with the IRS for any and all cash dealings over $10,000. This is a requirement that applies to all businesses. It is also required if the total amount over a 12-month period exceeds $10,000.

Must the identity of the account owner be disclosed in a CTR?

In general, yes. However, when an attorney opens the account in question and when there are “special circumstances,” pursuant to the attorney-client privilege, the identity of the owner may be withheld.

You must make certain that your attorney REFUSES to identify you when opening the account. This is crucial because your attorney-client privilege may be jeopardized in the future, if it is deemed by the Court to have already been previously compromised.

In such a situation, if a banker demands to know the source of the funds, your attorney is obligated to tell him that the source is privileged information. If the banker notifies law enforcement, your attorney may also so notify them that divulging the nature and disclosing the source of the funds (which may also be the source of the legal fees) is breaching the attorney-client privilege.

How did the Attorney-Client privilege evolve?

The courts determined that a just defense is only possible when the accused is permitted to communicate with counsel without the fear that his attorney is an agent for the Government.

For how long are banks and other financial institutions required to maintain their records?

Traditionally, banks and other financial institutions are required to keep and maintain records of every cash transaction of $3,000 or more for 5 years.

What are some examples of money laundering?

Money laundering can happen in gambling. For example, one could buy another person’s winning ticket (using illegally-obtained cash) and pay the true winner exactly what he would receive when the ticket is redeemed. Next, the money launderer redeems the winning ticket and receives all of the money he just spent in purchasing the ticket (minus the face price of one ticket). Now he has “clean” money.

What types of businesses are considered to be conducive to money laundering?

Restaurants, casinos and banks are frequently the subject of Government surveillance. Such businesses are cash-intensive. In fact, high-density drug-trafficking areas (such as New York, Miami and other cities in South Florida) are saturated with restaurants that do not accept credit cards or checks.

What is a Letter of Credit?

In a Letter of Credit, a bank will guarantee payment to another bank (or investor) without money ever changing hands. In such a situation, the buyer (or investor) will pay his bank and the bank will hold onto the money until the seller delivers that which he promised. The seller will deliver once the bank promises to wire the money to the seller’s bank.

Which documents does a bank require before wiring money pursuant to a Letter of Credit?

In most cases, a bank will require a Bill of Lading, which defines the subject of the transaction; a Certificate of Inspection, affirming that the subject of the transaction (as described by the Bill of Lading) is prepared and ready to be transferred; a Certificate of Freshness, stating that the goods have not expired; and a Certificate of Insurance, proving that the subject of the transaction is protected.

Money Laundering – Frequently Asked Questions (continues)

“The 6th Amendment allows and requires counsel in criminal cases and the effective assistance of counsel is interfered with if the first thing the attorney does is to violate the ethics of confidentiality by becoming an investigator against the person who walked in for help.” Attorney Gerald Lefcourt.

How does one exploit heightened privacy when opening a Swiss Bank Account?

When one uses an attorney to open a Swiss Bank Account and that attorney stipulates that he is not an “asset manager,” a 2-story wall of privacy is thereby created. This is because Switzerland’s banking codes are super-imposed over the secrecy which is afforded by the attorney-client privilege.