Smurfs, Potatoes and Real Estate: Carl Vonderau on the Wild World of Money Laundering

 The winner of Rachel Zemach's THE BUTTERFLY CAGE is Pat S! Pat, please email Diana at  todd823diana at gmail for your copy!

 

JULIA SPENCER-FLEMING: Among the three classic "white shoe" professions - law, medicine, and banking - the last hasn't given us very many authors. There are loads of lawyers-turned-writers, and former doctors have been selling mysteries since Arthur Conan Doyle. But bankers? Not so much. Which is a shame, because I, like many of you, adore financial thrillers. This is why I was so excited to see Carl Vonderau had followed up his award-winning debut, Murderabilia, with Saving Myles, which deals with parents willing to do anything to save their son, including - you guessed it - money laundering...

Be sure to comment, because one lucky person will be winning a copy of SAVING MYLES!

 

 

 

 

 

 

I was a banker for many years and my books have all been financial thrillers. But that doesn’t make me an expert on money laundering. Sure, I’d heard about “smurfs.” 

In the nineties, smurfs ran from bank to bank and made $9,000 deposits. This was because banks had to report any cash deposits above $10,000 to the Treasury Department. 

Once at my bank in Montreal, a man came in from the Turks and Caicos and wanted our bank to hold his funds for an investment project in a mine somewhere in Northern Quebec. He said his money came from the Middle East and he showed us scrapbooks of pictures of him with Arab sheiks. When he found out my boss was involved with Kiwanis he said his goal in life was to help children. My boss told him we had to do an Interpol investigation and the conversation changed. The man tore up his resume and said he had tax issues. He would take himself out of the deal and referred us to his two local colleagues. Whereas he only spoke English, they spoke little besides French and knew almost nothing about what he was doing. We never found out where this money really came from or how he actually intended to use our bank..

 So how did I learn the ins and outs of laundering money? The first place I went to was an organization called the Association of Certified Anti-Money Laundering Specialists. They teach their members how to identify and prevent laundering. I enrolled in courses and even went to some meetings in San Diego. I was surrounded by bank employees, casino staff, and law enforcement people from the Treasury Department, District Attorney’s Office, and Homeland Security. I got some pretty weird looks when I told them I was an author. Maybe they thought I was gearing up to start my own money movement business. At least I could say I used to be a banker.

Thrillerfest also helped me. The FBI rep there connected me with two agents. I also knew another author who worked in the DEA and he connected me to his money laundering specialist. Little by little I’ve learned enough to be arrested if I put it into practice.

Here are the basics. There are three stages of money laundering: Placement, Layering, and Integration. Placement is when a criminal organization inserts funds into the financial system without raising suspicion. It is usually the most difficult phase of laundering. Banks note any amount of cash over $10,000, as well as any transaction that its suspicious. If someone transfers several million dollars from Europe or Asia to start a business, the bank receiving the funds will insist on knowing the history of where the money came from, as well as all backgrounds of the people involved.

At one of my meetings at ACAMS, a man from Homeland Security told me how the Sinaloa Cartel used to place all their USD drug cash.

They’d smuggle it out of the U.S. hidden in cars or other vehicles. Then they’d route it through hotels and money exchange houses to look like tourist money. The cartel would accumulate it and ship it in trucks to the U.S., declaring the funds at the border. Now they could legally deposit their cash in U.S. banks. There’s a reason there are money exchanging businesses on every corner in Tijuana.

 And how is this suspected money laundering reported? A bank is supposed to fill out Suspicious Transaction Reports and Suspicious Activity Reports (SARs) for anything that is questionable. For instance, some San Diego bank branches have received training on how to spot prostitutes making deposits for their pimps. They will fill out SARs when they see this.

FinCen, the Treasury Department’s Financial Crimes Enforcement Network, collects this information. There are huge fines if a bank misses reporting something that later turns out to be illegal. To protect them, FinCen has prohibited banks from informing their clients that they’ve reported them. You can imagine the result. There are thousands of SARs and STRs submitted each week. Then consider that FinCen offers open access to its database to more than 10,000 government users. With so much information, almost all of it is ignored. But if the FBI suspects someone, they will research them with FinCen. I can only wonder how FinCen will apply artificial intelligence to this mountain of information.

The second phase of money laundering is called layering. This involves moving the money around from entity to entity so no one can trace where it came from. One way is to transfer it from one company to another through commercial transactions. For instance a criminal organization can set up companies in the U.S. and Colombia. If the U.S. company has successfully placed cash in a U.S. bank, they can use that money to purchase a product in the U.S. and sell it to a company it secretly owns in Colombia. The Colombian company receives the product and sells it in Colombia. Voila. The money is back in Colombia. International trade has become one of the prime mechanisms for layering. One source estimated that 7% of U.S. trade involves money laundering.

And what products do these organizations choose to trade? Some of the most popular commodities are gold, diamonds, and oil. These are readily valued, highly liquid, and easily transported. Car parts are also quite common. They use art too. And here’s a strange one.

 Potatoes from Idaho. A drug cartel bought them with cash and exported the produce to Latin America. Anything can be used to layer money—like travelers checks, debit cards, gift cards, and the stock market. Or charities that make donations to fake charities in other countries.

The last stage of money laundering is integration, when cleaned money is reinvested. 

The Russians bought real estate in London, New York, and Florida. The Tijuana Cartel not only bought real estate but other businesses, as well. Enedina Arellano Felix was an accountant and helped her brothers launder money. After her brothers were arrested or killed, she became the head of the cartel and faded from sight. Instead of settling business disputes with violence—like her brothers—she forged alliances with other cartels and branched into other parts of the Mexican economy. She is supposed to have invested the family money in real estate, pharmacies and other legitimate businesses. Would she have avoided the largest market on the planet? I suspect that her family has lots of interests in the U.S. Enedina Arellano Felix knew a much less deadly way to build family wealth. 

With all this research I was able to put all three phases of money laundering into my book, Saving Myles. If you want to learn more and are coming to Bouchercon, drop into my spotlight presentation on Saturday at 8:00 am. I also have more information on my newsletters of July 5, 19, and August 1 on my website. You can even email me at CarlVonderauAuthor@gmail.com.

 

Have you had to deal with money laundering in your businesses? There are so many stories, and I’d love to hear yours.

 

When the FBI can’t help, an unassuming banker takes matters into his own hands to bring his son home

Wade, a respected banker in La Jolla, CA, and his estranged wife, Fiona, make the unbearable decision to send their teenage son, Myles, away to an expensive treatment center after a streak of harmful behavior. After a year of treatment, Myles comes home, seemingly rehabilitated. But soon, he sneaks off to Tijuana to buy drugs—and is kidnapped.

When the ransom call comes, Fiona is frantic and accepts help from Andre, the Quebecois whose charity Fiona runs. Wade is wary of Andre’s reputation and the bank he owns, but seeing no other way to secure a kidnap negotiator or the ransom, he swallows his doubts to get his son home.

In order to get the ransom money, Wade makes a deal with Andre—he’ll work for Andre’s bank in exchange for the cash. But as Wade races to rescue Myles before his kidnappers lose their patience, he realizes he’s wrapped up in more crime than just a kidnapping—he’s now indebted to a cartel.

 

Carl Vonderau grew up in Cleveland in a religious family that believed God could heal all illness. Maybe that’s why he went to college in California. After majoring in economics and dabbling in classical guitar, he ended up with a career in banking. Carl has lived and worked internationally and has managed to put his foot in his mouth in several languages. He brought his banking expertise to his debut thriller, Murderabilia, which won a Lefty, as well as to his forthcoming novel, Saving Myles. Carl is president of the San Diego chapter of Sisters in Crime. You can find out more about Carl and his books at his website, you can friend him on Facebook, follow him on Twitter as @CarlVonderau and see him on Instagram as @CarlVonderau.