Miami Money Laundering 101

The “cocaine cowboys” have come and gone, but their money laundering schemes have taken root and
adapted.

In April, the U.S. Financial Crimes Enforcement Network (FinCEN) began special monitoring of about 700 Miami electronics exporters. The Geographic Targeting Order, GTO, was intended to help FinCEN learn more about a complicated process of legitimizing drug money known as trade-based money laundering.

While it’s a relatively new method of cleaning up dirty cash, the ultimate goal hasn’t changed: giving drug money a more palatable backstory.

“God bless this country, if you’re out spending bucks in this country you better have a legitimate source of income or you’re going to jail,” says Michael Levine, a former DEA agent, current expert trial witness and author of the book Deep Cover. “There’s just no way around it. The need for money laundering is critical when it comes to drug trafficking.”

Money laundering got a lot harder in 1970 when Congress passed a major piece of anti-laundering legislation called the Bank Secrecy Act. Among other things, the BSA required banks to report any cash transactions of $10,000 or more.

With those kinds of restrictions, Levine says, it became much more difficult to do something like buy a house with ill-gotten cash. “You immediately create a paper trail. You have to put your name down and suddenly: Where did that money come from? So you’re gambling if you buy a house for cash.”

Some launderers may try to avoid raising eyebrows by breaking up big cash transactions into smaller
amounts, in a process known as “structuring.”

“It would take a lot of effort,” says Ivan Garces, an anti-money-laundering specialist at Kaufman Rossin. “So if I wanted to, let’s say, deposit $100,000 and evade the reporting requirements, you might break it up into $9,000 transactions.”

Over time, South Florida launderers have turned to trade-based money laundering, a process that exploits trade relationships between exporters in the U.S. and retailers in Latin America.