Examples Of Using A Loan To Launder Money

Answer by Andy Zavoina:

Buy the CD with the laundered money, borrow against it to replace the dirty cash, and don't pay it back at all. Bank cashes CD and pays off loan. Customer has money from a loan.

Loans may also be used to add layers to the process of deception making the entire relationship more complicated, difficult to track and to hide cash as you noted, borrowing and repaying.

Answer by Hussam Al-Abed:

“Loan-back” The principle of this method is that someone borrows his own criminal funds, either directly or indirectly, without other people noticing it. This allows him to not only launder his funds but also generate tax benefit!It works like this: Dirty money, derived from criminal activities of Belgian Criminal A, is sent to a foreign bank account of Corporation B. Then, in Belgium, a new investment company C is incorporated. Criminal A is appointed as a director of Company C. Company C borrows money from the foreign company B and buys real estate in Belgium. The real estate is rented to third parties. Director (Criminal) A also rents an apartment in the building. With the funds generated by the rent, Company C pays off the loan to Corporation B, and the salary of the Director A. Criminal A now converted his dirty money in legal funds.

source: ACAMS

Jersey Deposits and Sham Loans case Cash collected in the US from street sales of drugs was smuggled Across the border to Canada where some was taken to currency Exchanges to increase the denomination of the notes and reduce the Bulk. Couriers were organized to hand carry the cash by air to London Where it was paid into a branch of a financial institution in Jersey. Enquiries in London by HM Customs and Excise revealed that internal Bank transfers had been made from the UK to Jersey where 14 Accounts had been opened in company names using local nominee Directors. On occasions, the funds were repatriated to North America With the origin disguised, in the form of sham loans to property Companies owned by the principals, either using the Jersey deposits as Collateral or by transferring the funds back to North America.

source: THE FINANCIAL INTELLIGENCE UNIT-Bahamas

Identifying Suspicious Transactions (Specific Indicators) related to Businesses who Provide Loans If you are involved in the business of providing loans or extending credit to individuals or corporations, consider the following indicators. Section Customer suddenly repays a problem loan unexpectedly.
Section Customer’s employment documentation lacks important details that would make it difficult for you to contact or locate the employer.
Section Customer has loans to or from offshore companies that are outside the ordinary course of business of the Customer.
Section Customer offers you large dollar deposits or some other form of incentive in return for favorable treatment on loan request.
Section Customer asks to borrow against assets held by another financial institution or a third party, when the origin of the assets is not known.
Section Loan transactions are entered into in situations where the Customer has significant assets and the loan transaction does not make economic sense.
Section Customer seems unconcerned with terms of credit or costs associated with completion of a loan transaction.
Section Customer applies for loans on the strength of a financial statement reflecting major investments in or income from businesses incorporated in countries known for highly secretive banking and corporate law and the application is outside the ordinary course of business for the Customer.

source: FINTRAC

Also please take a look at the 100 cases from The Egmont Group report, you can use all those 100 cases for Training!

Also FATF typologies reports 1996-2002 are a great resource for detailed Cases that is related to all methods of Moneylaundering.

First published on BankersOnline.com 6/16/03