EXPOSÉ
AN OF HOW THE FINANCE INDUSTRY FACILITATES
CRIMINAL ACTIVITY, SUCH AS
DRUG TRAFFICKING, TERRORISM AND PIRACY In the first book to expose the role played by the international financial services industry in facilitating crime and laundering criminal property, one of the world’s leading anti-financial crime specialists scrutinises the vulnerability of banks, brokerages, trust companies and investment funds to criminal abuse.
CRIMINAL CAPITAL PRESENTS: • A new model to detect money laundering and curb the criminal abuse of the global financial system • Seven fascinating ‘scenarios’, showing the structures used to commit crimes and launder funds (for more, see next page)
CRIMINAL CAPITAL EXPLORES: • How criminals exploit weaknesses in the finance industry to commit crimes • The role the finance industry continues to play in drug trafficking, corruption, terrorism, human trafficking, piracy, tax evasion and sanctions busting • The fundamental flaws in the traditional model of money laundering relied upon by regulators, law enforcement and the finance industry which have left banks wide open to criminal abuse • Why the post-2008 crisis banking reforms have not curbed harmful behaviours in finance • The necessary steps that policy makers aren’t bold enough to take.
DECEMBER 2014 UK / JANUARY 2015 US 9781137337290 | £19.99 / $30 / $34.50 CAN HARDBACK I 234X156MM I 256PP
CRIMINAL CAPITAL EXAMINES THE ROLE OF THE FINANCIAL INDUSTRY IN THE COMMISSION OF SEVEN PREDICATE CRIMES: 1. DRUG TR
AFFICKING
The annu al retail m arket for il drugs has licit be staggerin en estimated at a g $320 bil lion – a su equivalen m t to aroun d 1% of g GDP. Dru lobal g dealers look their mou nds of cas ing to launder h employ variety of a me major fina thods, implicating ncial insti tutions ac the globe ro . One suc h example ss HSBC, at is least $88 1m American drug mon illion in South ey been laun dered thro is said to have ugh the g giant’s US lobal subsidiary .
2. BRIBERY & CORRUPTION A high proportion of Equatorial Guinea’s population lives on a dollar a day, yet the country’s corrupt former forestry minister racked up a multi-million dollar wealth, enjoying assets such as a 12-acre Malibu estate, a Michael Jackson ‘Bad Tour’ glove and Matisse artwork. A lengthy investigation found that the minister, along with several family members, harboured millions of his ill-gotten dollars in the now-defunct Riggs Bank.
4. HUMAN TRAFFICKING
6. SANCTION
S BUSTING
The esti ,000; by 20 05 was $150 0 2 i in es at ir p illion. Somal ed to $5.2 m al b o it had rocket e gl cally costs th . piracy specifi billion a year 18 $ ed at m ti es an economy borders and f money cross es of Large sums o planning stag e th at ts n u likewise bank acco m proceeds so n ra d an , an attack al financial into the glob ed over find a route ave been rais h s n o ti es u system. Q and terrorist ween piracy xities the links bet g the comple n ti h lig h ig h , financing ave yet to institutions h that financial and. fully underst
ANCING 5. TERRORISTwinFIN g awareness that terrorists are
The smuggling of migra nts and the trafficking of human beings are among the most prevalent and luc rative forms of organised cri me in the world, netti ng criminals billions every year. Th ere is relatively little awareness of these crimes within th e finance industry, wh ose controls are rarely capable of detecting proceeds de rived from these activities. In rec ent years Western Un ion agreed to stump up $94 millio n to settle a legal dispu te with the State of Arizona ov er whether the comp any was doing enough about th e use of its services by Mexican drug cartels and huma n traffickers to carry ou t crossborder money launderi ng.
In the past few years billi have been collectively ons of dollars in fin es p Standard Chartered aid out by the likes of , ING and Scotland Ro for breach es in legisla yal Bank of the provis tion prohib ion of fina iting ncial servic individuals es to sanc , companie tioned s and gove Intentiona rnments. lly deceivin go was consid ered by on ne particular US ban e Europea k to be a ‘lit nb tle white li e’ - an exp ank employee wider crisi ress s in attitud es in confo ion of the legislative rm and regula tory dema ing with nds.
3. PIRmAatCedY average ransom paid to10
There has been a gro l system in the preparation exploiting the standard financia tive and regulatory of their attacks. Despite legisla g blind spots relating to the progress, there are still alarmin is detected and diverted. manner in which terrorist money challenges, especially Banks are faced with enormous h other crimes, and the in view of the complex links wit uired to finance a major fact that the sums of money req As scrutiny is growing attack are actually very small. ations and remittance in the domain of charitable don ally seeking to sever ties systems, Barclays is controversi company over fears it may with a Somali money transfer terrorist financing. inadvertently implicate itself in
N al practice cause of the illeg 7. TAX ErsVarAeSdeIOnied billions a year be ci al finan al
rt by glob State coffe ed in no small pa at lit ci fa n, breakthroughs in io as ev of tax been significant ve ha e er th gh ou secrecy laws, and institutions. Alth asion strategies, ev x ta e at er lib de bank accounts the fight against declared offshore un g in ld ho s en tiz inues with ever the number of ci the practice cont , ns tio itu st in al ci ose. Banks which implicating finan octed for the purp nc co es ur ct ru st include UBS and more convoluted ating tax evasion lit ci e fa r fo g un st en a $2.6 billion fin have recently be been slapped with ng vi ha er tt la e Credit Suisse – th ng their dues. ens to evade payi tiz ci S U g tin sis for as
PROFESSIONAL
FINANCE
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