Exchange transaction relates to laundered drug money and diamond smuggling
A foreign exchange transaction of a European currency into US dollars for a value of almost US$177,000 was reported to the FIU of an FATF member jurisdiction (Country A). At the time of the transaction, the individual, of Asian origin, gave the exchange office an address in another FATF country (Country B). This first transaction was soon followed by four more similar transactions. After several weeks, the total had already attained US$618,000. After a break of six months, the exchange transactions resumed. Over a four-month period, the intermediary appeared with large amounts in pesetas to be converted into dollars. The total amount of the transactions described in reports to the FIU amounted to more than US$1.3mn.
The information obtained from law enforcement demonstrated that the individual had no criminal record in Country A. Given that the case involved large amounts for which there existed no apparently legitimate economic justification, the FIU pursued the investigation. Several foreign FIUs were queried. One of them was able to provide useful information: the individual was known as a member of a group of drug traffickers who performed the same type of transactions in the country involved. Investigation of the members of this group was already in progress in this latter country. Secondly, it appeared that the address provided during the first contact with the financial institution was false. On the basis of these elements, the FIU decided to turn over the case file to the prosecutorial authority. The subsequent investigation showed that the individual had not been acting alone. For a number of years she had played a dominant role in money laundering transactions involving a total amount of around US$11.5mn.
The individual was arrested in the company of one of her accomplices and in possession of a large sum in US dollars. She acknowledged the retail foreign exchange transactions, as well as the illicit origin of the funds. According to her account, they were derived from illegal diamond trafficking. She was sentenced to four years in prison (two of which were suspended) and a fine of nearly US$1mn. The funds seized were confiscated, as well as the amounts exchanged; her accomplices were each sentenced to two years in prison (one of which was suspended).
This example clearly illustrates the importance of international co-operation and the exchange of information between FIUs and their foreign counterparts in the detection of money laundering transactions. It also demonstrates the necessity for financial institutions to continue sending suspicious transaction reports to the FIU, even when they do not at first seem to produce an immediate response from the authorities.