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Division
of Investment and Export
PO Box 7970
Madison, WI 53707-7970
USA
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Vol.
8 #4, March 2009
Currency Swings Lead to Increased Money Laundering
 Rapid
and significant shifts in currency values over the last year are
prompting criminals to shift their assets into U.S. dollars before
their value in declining currencies deteriorates even further.
Since August, the euro, Russian ruble, British pound, Nigerian naira,
and South Korean won have all fallen by double digits compared to the
U.S. dollar. As a result, U.S. banks and businesses could be
seeing an influx of money from Russia, Europe, and other regions, and
should go beyond standard due diligence practices to evaluate customers
and transactions from these countries. Even transactions that
appear routine could involve front companies, money launderers, and tax
evaders.
The tactics organized crime groups employ to move their tainted funds
mirror many classic money laundering techniques, including trade
mispricing and bulk cash smuggling. In some cases, Russian mafia
members have set up “one day companies” to handle a
specific set of transactions, said the report.
Russia has strengthened its AML laws since first penalizing money
laundering in 1997, but has a host of regulatory deficiencies,
including gaps in obtaining the identity of the beneficial owners of
accounts, freezing the assets of terrorists and licensing money
remitters, according to a June 2008 report by the Paris-based Financial
Action Task Force, which sets global AML standards.
Capital flight in Russia’s 2008 third quarter, spurred by
plunging energy prices and the depreciating ruble, rose to more than
$130 billion, according to Russian Central Bank figures. As much as a
third of that derives from criminal origins, according a 2001 United
Nations Office for Drug Control and Crime Prevention report on Russian
Capitalism and Money Laundering.
Businesses should be looking out for new customers hailing from regions
they have “never had a relationship with before” and trying
to perform “large or unusual transactions.”
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