Returning laundered state money proves difficult
A lead story in the Business Day section of the New York Times last week featured a close-up picture of a crystal-covered glove. The glove. Michael Jackson’s glove. For his right hand, of course.
It is a great visual hook for a fascinating story—a story about financial crime, money laundering, and the global scourge of kleptocracy. Kleptocracy is the colorful coinage created to describe the age-old problem of government officials who enrich their private bank accounts by the de facto theft of their nations’ wealth. (Think Panama Papers here.)
More than anything, though, this is a story about the daunting challenge of returning the seized assets of kleptocrats back to the countries in question—without that stolen laundered money immediately being stolen again by government officials and their family members—in AML lingo, people who are Politically Exposed Persons.
The Michael Jackson glove comes into the story because it is part of the trove of riches of alleged kleptocrats in the family that rules Equatorial Guinea, a nation known for a high risk of human trafficking, a high child-mortality rate, widespread poverty, and related problems. In contrast, its authoritarian ruling family privately enriches itself from profits of the nation’s oil fields and is alleged to launder much of those family riches abroad. The U.S. is currently trying to return $30 million seized from a member of the ruling Obiang family, but officials believe there are hundreds of millions more that should be seized.
As a part of the six-year-old Kleptocracy Asset Recovery Initiative, the U.S. Department of Justice has taken on major asset-recovery cases that are tied to money laundering operations that run elicit funds through the U.S. financial system. According to the Times, only a few nations have made asset recovery a priority due to the complexity and cost of investigations. Nations leading the effort include the U.S., Britain, Switzerland, Canada, and Luxembourg. The World Bank and the United Nations also try to support these efforts.
The criminal investigations and seizure of stolen assets is just the first mountain to climb, however. A subsequent goal is to return stolen assets to the citizens of the country of origin, but that often means returning hundreds of millions of dollars to governments riddled with other kleptocrats.
An alternative has been to seek out high quality charities that return the money to citizens through direct services in the country. This strategy has proven problematic, as well. The Times reports that some of these developing countries have few or no such charities run by their own citizens. And often both government leaders and citizens demand immediate return of seized assets to the government rather than charities because of memories of past colonialism pasts and a rejection of ‘patronizing’ attitudes by Western countries.
The story is a powerful read. And it highlights the scale and frequency of the problems of kleptocrats bleeding their countries of wealth—all while using financial institutions and nations’ financial systems to launder their stolen money through shell companies, real estate, fine art, and luxury living.
SURETY Eco: End-to-End AML/CFT Compliance
Ready for the best effectiveness and efficiency in high-performance AML? AML Partners’ SURETY Eco is your best AML/CFT software solution–and it offers end-to-end AML Compliance. AML Partners thrives on innovation in AML software solutions—innovations that deliver fully configurable software solutions that “Comply on the Fly.” To learn about SURETY Eco and its fully integrated CDD/KYC, transaction monitoring with optional 314a, and sanctions screening capabilities, call us today. We will show you how SURETY Eco adapts completely to your unique risk-based approach. SURETY Eco: The AML Software Ecosystem for end-to-end fully integrated AML/CFT Compliance.