Laundering money: obscuring the link between the criminal and the crime.

Obscuring the link between the criminal and the crime

On 11 April 1996, Franklin Jurado, a Harvard-educated Colombian economist, pleaded guilty to a single count of money laundering in a New York federal court and was sentenced to seven and a half years in prison. Using the tools he learned at one of America's top universities, he moved $36 million in profits from cocaine sales in the United States, for the late Colombian drug lord Jose Santacruz-Londono, in and out of banks and companies in an enormous effort to make it appear legitimate.

Jurado purified the $36 million by wiring it out of Panama, through the offices of major financial institutions, to Europe. In three years, he opened more than 100 accounts in 68 banks in nine countries: Austria, Denmark, the United Kingdom, France, Germany, Hungary, Italy, Luxembourg and Monaco. He shifted assets between the various accounts and kept balances below $10,000 to avoid suspicion and investigation. Some of the accounts were opened in the names of Santacruz's mistresses and relatives, others using fictitious European-sounding names.

He established European front companies with the eventual aim of transferring the "clean" money back to Colombia to be invested in Santacruz's holdings, which included restaurants, construction companies, pharmacies and real estate. The scheme was interrupted when a bank failure in Monaco exposed suspicious accounts linked to Jurado. About the same time, in Luxembourg, the noise from a money-counting machine in Jurado's house prompted a neighbour to alert the local police. Empowered by new laws against money laundering, the police initiated a wiretap in April 1990, and Jurado was arrested two months later and convicted of money laundering in a Luxembourg court in 1992. Based on their investigations into Jurado's illegal activities, the United States authorities had him extradited from Luxembourg in 1994 to face federal charges for money laundering.

Jurado's case and others like it have been studied by law and drug enforcement officials, financial investigators, bankers and other experts worldwide, who are increasingly working together to clamp down on the ever-growing crime of money laundering. Jurado's case is also an example of how the high-level professional expertise is being employed in the service of crime.

The sinister nature of drug trafficking and the perpetrators of such activity cannot be overemphasized, according to Tony White, Chief of the Supply Reduction and Law Enforcement Section of the United Nations International Drug Control Programme (UNDCP). "They are neither heroes nor patriots, they are in it for the money and sometimes power. ... They do not waste a single second of their time worrying about the misery they inflict on others and upon society as a whole. ... Drug traffickers tend to be territorial by nature, whether they operate at the level of street gangs or as international organizations, but they are increasingly linking with one another to form wider networks. The vicious, treacherous nature of such criminals demand that they be dealt with by the full rigour of the law", he says.

The enormous profits made by those controlling the flow of illegal drugs are undoubtedly the lifeblood and sole end of illicit trafficking. Experts believe the illegal drug trade generates as much as $400 billion a year - worth nearly double the revenue of the global pharmaceutical industry or about ten times the sum of all official development assistance. However, money laundering is not linked exclusively to illegal drug trade, but is a necessary step in almost any criminal activity that yields profits. According to the 1997 World Drug Report, "the need to legitimize ill-gotten gains has grown in proportion to the expansion of the illicit drug industry and to the propensity of criminals to operate in the legitimate business world".

The International Monetary Fund (IMF) estimates the scale of money laundering at about 2 to 5 per cent of the global gross domestic product, and considers the crime one of the most serious issues facing the international financial community. The Executive Director of UNDCP, Pino Arlacchi, notes however that...