Colombian Prostitution And AML

Here’s a difficult area to investigate: money laundering from Colombian prostitution.

http://www.ibtimes.com/secret-service-prostitute-scandal-sheds-light-sex-business-colombia-photos-555126
Secret Service Prostitution Scandal (from IB Times)

It is difficult for the usual reasons: cash transactions, foreign jurisdiction, lax law enforcement, violent business rings… And then there is the US government. Well, the government agents who are their clients.

That’s right. If you’ve been following the news, various Federal agencies have faced issues with their agents paying for sex while on business trips in Colombia.


Disclosure: I am not against prostitution as an isolated concept. But the reality is that prostitution in most parts of the world primarily takes place because of poor economic conditions and violent human traffickers. Often, prostitution rings are run by the same people who run other illegal/illicit businesses, like drug cartels. So, the reality is that even for who are in favor of legal prostitution, or at least not opposed to it, should be against allowing prostitution to take place.


Chuck Rosenberg has been named to replace retiring head of the Drug Enforcement Agency Michelle Leonhart. Leonhart’s career is prematurely ending because of the Colombian Prostitution Scandal.

Scandal aside, this means that DEA agents were funding the very drug cartels they’ve been fighting. We should look at the opportunity this brings, however. The downside has already been done and, let’s hope, it doesn’t happen again, although we all know that it will happen again, if not at the DEA then at some other place. The opportunity is that we have a chance to follow the money our own has contributed to the cartels. And I really hope we are doing this. This is really the only benefit we get out of this.



About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is the author of the forthcoming book History of Money Laundering: How criminals got paid and got away.


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Stealing from an investigation about stealing

The News

Two federal agents are charged with stealing digital currency during the Silk Road investigation. Two secret agents were from the DEA and the Secret Service. The charges are wire fraud and money laundering.

http://www.occupy.com/sites/default/files/medialibrary/ross.jpg
Ross Ulbricht

About Silk Road

Silk Road was an underground online marketplace where everything and anything could be sold in secrecy using Bitcoin and other digital currency. Silk Road was run by a user named Dread Pirate Roberts, the famous character from the movie The Princess Bride. Silk Road was shut down in October 2013. Dread Pirate Roberts is presumed to be Ross Ulbricht, who was charged for conspiracy to commit drug trafficking and money laundering. Ulbricht denies that he is Dread Pirate Roberts.

Opinion

Cryptocurrencies, especially Bitcoin, will play a big role in transactions. Bitcoin, only because it is the most accepted cryptocurrency. Cryptocurrencies because their value is material economically. Transactions using cryptocurrency on markets like Silk Road provide privacy that the non-cash economy we live in no longer does. The cost of transaction is very small. There is little chance of hyper inflation due to over-creation of the currency. There are some major downsides of Bitcoins for the user as well, but for governments and financial institutions, the main issue is the lack of transparency. It is not that governments want to get rid of privacy. It’s just that where there is privacy, crime is more likely to take place.


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is the author of the forthcoming book History of Money Laundering: How criminals got paid and got away.


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