Home » Blog Topics » 10 Biggest Money Laundering Schemes In History
As the classic scene in the cult hit “Office Space” illustrates, many people don’t really understand how money laundering works. While the characters in the movie resort to looking the term up in the dictionary, suffice to say that federal and international authorities, as well as criminals, have a pretty clear understanding already.
For criminals who want to spend the fruits of their illegal labor, money laundering is often the favored way to transition their illegal money to legal money. This process, which has come to be known as money laundering, takes many forms, often involving setting up “front” or “shell” businesses or transferring money to offshore accounts.
Here’s a look at the 10 biggest money laundering schemes in history.
HSBC
The biggest bank in Europe, HSBC, paid a $1.9 billion fine for failing to prevent drug cartels from using the bank to launder hundreds of millions of dollars. According to investigators, poor regulation at HSBC allowed the bank to serve as the chief money laundering conduit for a pair of drug cartels, one in Mexico and the other in Colombia. The two cartels combined shifted about $881 in drug money through the bank.
BCCI
The Bank of Credit and Commerce International, also known as BCCI, was in the early 1980s, one of the world’s largest banks. Investigations into the bank’s suspect processes and procedures eventually uncovered a raft of crimes, from money laundering to fraud to arms trading and prostitution. When all was said and done, BCCI was kaput and about $20 billion in value had evaporated.
Wachovia
A U.S. Drug Enforcement Agency investigation ensnared Wachovia, once a large, independent bank, in a money-laundering operation conducted by Mexican drug gangs. Billions of dollars in wire transfers, cash and travelers checks were uncovered, and Wachovia eventually settled the case, paying the U.S. government about $110 million in asset forfeiture. All told, it’s estimated that the amount of money laundered through Wachovia topped $350 billion, equivalent to one-third of the gross domestic product of Mexico.
Standard Chartered
Standard Chartered has long been entangled in money-laundering investigations, with multiple international agencies levying fines against the bank as recently as fall 2018. In the most recent allegations, Singapore authorities allege that Standard Chartered failed to prevent money laundering by terrorist groups and fined the bank and its related trust nearly $5 million. Standard Chartered has previously faced fines from U.S. authorities as well.
Nauru
In one example of the rare cases of entire nations being designated money launderers, Nauru is a tiny island near Australia that in the 1980s became a money-laundering haven for the Russian mob and al-Qaida. Before the country imposed tougher laws, it’s estimated that at least $70 billion in Russian mob money flowed through Nauru in a single year. At one time, Nauru’s privacy protections were even stronger than those in the notorious offshore money havens Switzerland and the Cayman Islands, making the tiny nation all the more attractive for criminals looking to conceal cash.
Al Capone
Credited by some with inventing the term money laundering by literally purchasing Laundromats to funnel his mob profits through, Chicago gangster Al Capone is perhaps the most famous money launderer in American history. Though he eventually was convicted of tax evasion, it’s estimated that Capone laundered upwards of $1 billion through various shady fronts. While Capone’s money laundering and other financial crimes were serious, the violence he perpetrated and encouraged in Chicago created chaos throughout the city, which is why the fact that his only conviction was finance-related is a difficult reality for many in the law-enforcement community.
Meyer Lansky
If Al Capone is the most famous money launderer in American history, he owes much of what he earned, or stole, to Meyer Lansky, who was at one time was thought of as the accountant to the mob. Lansky helped develop the criminal underworld of the American mafia and pioneered a technique to use Swiss banks to hide his stockpiles of cash. Lansky never faced serious criminal prosecution, and upon his death in the 1980s, investigators were unable to find the $300 million they believed Lansky had hidden away.
Paul Manafort
A short-lived campaign manager for then-presidential candidate Donald Trump, Paul Manafort’s legal situation is still developing, but Manafort has been convicted of multiple fraud charges and still faces accusations that he laundered more than $30 million in Russian money. Manafort remains jailed while the legal proceedings against him continue. Manafort and his associate Rick Gates, are accused of fudging financial documents and lying to accountants and tax preparers in order to shield millions of dollars from view.
Tom DeLay
A former majority leader in the U.S. House of Representatives, Tom DeLay was convicted of money laundering, though that conviction was overturned by an appeals court in 2013. The Republican congressman had been convicted a couple of years earlier of improperly funneling about $190,000 in corporate money through the Republican National Committee.
Liberty Reserve
Liberty Reserve was a predecessor to Bitcoin, with the company issuing a virtual currency around the world. Its founder, Arthur Budovsky, was sentenced to 20 years in prison after being convicted of using his company to conduct a huge, multinational money-laundering operation that included credit card and ID theft, Ponzi schemes and computer hacking. Before being shuttered by the U.S. government, Liberty Reserve had conducted transactions worth a combined $8 billion.
Conclusion
For those who make their money illegitimately, money laundering is a necessary way for them to avoid criminal prosecution while still spending their ill-gotten gains. But this multi-layered financial scheme is also what often brings them down in the end, as these huge sums of money are never secret for very long.
References
- Reuters, HSBC draws line under Mexican cartel case after five-years on probation. (2017.) Retrieved from https://www.reuters.com/article/us-hsbc-usa/hsbc-draws-line-under-mexican-cartel-case-after-five-years-on-probation-idUSKBN1E50YA
- The Guardian,
Files close on BCCI banking scandal. (2012.) Retrieved from https://www.theguardian.com/business/2012/may/17/files-close-bcci-banking-scandal - The Guardian, How a big US bank laundered billions from Mexico's murderous drug gangs. (2011.) Retrieved from https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs
- Reuters, Singapore fines Standard Chartered entities $4.9 million for money laundering breaches. (2018.) Retrieved from https://www.reuters.com/article/us-stanchart-singapore/singapore-fines-standard-chartered-entities-4-9-million-for-money-laundering-breaches-idUSKBN1GV0RJ
- The Guardian, Corruption, incompetence and a musical: Nauru's cursed history. (2018.) Retrieved from https://www.theguardian.com/world/2018/sep/04/corruption-incompetence-and-a-musical-naurus-riches-to-rags-tale
- Mental Floss, How Al Capone Gave Us the Term ‘Money Laundering’. (2017.) Retrieved from http://mentalfloss.com/article/502449/how-al-capone-gave-us-term-%E2%80%98money-laundering%E2%80%99
- Medium, From the laundromat to Wall Street: a history of money laundering. (2015.) Retrieved from
- https://medium.com/@alacergroup/from-the-laundromat-to-wall-street-a-history-of-money-laundering-c6a5407e785c
- CBS News,
Special counsel replies to Manafort sentencing memo, saying he didn't provide "complete and honest cooperation". (2019.) Retrieved from https://www.cbsnews.com/news/special-counsel-replies-to-manafort-sentencing-memo-saying-he-didnt-provide-complete-and-honest-cooperation/ - PBS, Paul Manafort, Rick Gates laundered more than $30 million, according to new Mueller indictment. (2018.) Retrieved from https://www.pbs.org/newshour/politics/former-trump-campaign-chair-paul-manafort-faces-new-tax-charges-in-mueller-probe
- USA Today, Texas court overturns Tom DeLay conviction. (2013.) Retrieved from https://www.usatoday.com/story/news/politics/2013/09/19/tom-delay-conviction-overturned-money-laundering/2837053/
- U.S. Department of Justice, Liberty Reserve Founder Sentenced to 20 Years For Laundering Hundreds of Millions of Dollars. (2016.) Retrieved from https://www.justice.gov/opa/pr/liberty-reserve-founder-sentenced-20-years-laundering-hundreds-millions-dollars
Need Criminal Defense Help?
For a Federal or Criminal Consultation, text me today at 1-617-905-1433 or use the form below for your consultation. I will offer you expert help and answer any specific questions you have about your case. I handle criminal defense cases throughout all areas of Massachusetts including Boston, Cambridge, Newton, Springfield, Quincy, Lowell, Worcester, Fall River and national for Federal matters.
Sure, discussing money laundering, especially in historical contexts, involves understanding various financial, legal, and criminal elements. From the HSBC scandal involving drug cartels to individuals like Al Capone and Paul Manafort accused of laundering significant amounts, these cases span different eras and methods.
Money laundering encompasses disguising the origins of illegally obtained money to make it appear legitimate. The methods often involve complex financial transactions through banks or businesses, transferring money across borders, or using virtual currencies.
-
HSBC: In this case, poor regulation at HSBC enabled it to be a conduit for drug cartels, allowing them to launder hundreds of millions of dollars. It's an example of a major financial institution being implicated in facilitating money laundering activities.
-
BCCI: The Bank of Credit and Commerce International was involved in various crimes, including money laundering, leading to its collapse and the loss of billions of dollars.
-
Wachovia: It was ensnared in a money-laundering operation by Mexican drug gangs, with billions laundered, a significant amount compared to Mexico's GDP.
-
Standard Chartered: Facing multiple international fines, this bank has been under scrutiny for its failure to prevent money laundering activities by terrorist groups.
-
Nauru: The tiny island became a haven for money laundering, allowing massive flows of illicit funds, even surpassing amounts seen in notorious offshore havens.
-
Individuals like Al Capone and Meyer Lansky: Notorious figures in history associated with money laundering, Capone's use of Laundromats to launder money coined the term, while Lansky was instrumental in using Swiss banks to hide cash.
-
Paul Manafort and Tom DeLay: Politically influential figures accused and, in some cases, convicted of money laundering, indicating how this crime isn't restricted to organized crime but can also involve high-profile individuals.
-
Liberty Reserve: A company involved in virtual currency and a precursor to Bitcoin, conducting a vast money-laundering operation before being shut down by the U.S. government.
Each case underscores the complexity and varied methods employed in money laundering schemes, whether through financial institutions, virtual currencies, or individual tactics. Understanding these cases involves comprehending financial systems, legal frameworks, and the evolving nature of criminal activities in the financial realm.
