Trending: Doral Money Laundering and Weekly Update

 In Anti-Money Laundering, Political Corruption, Trending

Doral: The Money-Laundering Hub No One Has Heard About

Few outside of South Florida know much about the small, but exponentially growing suburb of Doral, located just a few miles north of downtown Miami, Florida. However, a growing trend has emerged that has seen small cities throughout the United States making national headlines at a greater rate than ever before due to their growth of under the radar drug activity and money laundering activities. According to an article published by USA Today earlier this week titled “This sunny Florida town has a shady reputation for fueling America’s illegal drug trade”, cited in BSA News Now on Thursday, April 6th, 2017, money laundering roots run deep in the city of Doral. One would not normally associate a mostly low-income community littered with commercial office buildings a hub for high-profile illicit financial activity, but the issue of dirty money tied to Colombian drug lords running rampant in this town dates back to the early 2000’s.

In 2002, authorities in Miami attempted a campaign to hinder money laundering in the area and bring to justice those facilitating the illegal activity before it grew into a large-scale problem, which federal prosecutors anticipated would occur. However, these attempts largely failed, leading to what prosecutors feared most: the turning of “Florida’s fastest-growing suburb into a money laundering haven that has empowered the largest criminal organizations in the Americas to hide their illicit profits and dominate the narcotics trade in the United States” (Sallah, 2017). With highly efficient laundering tactics employed, coupled with the growing heroin epidemic plaguing much of the United States, criminal groups are making a fortune off of their ability to smuggle narcotics from their respective countries into the United States and funnel their money out of the country without leaving much of a trace. The most commonly employed methods for money laundering include overseas bank wires and cash smuggling across the border, although there are numerous other methods that continue to be used successfully.

Overall, authorities have had little luck in shutting down storefronts and small businesses (such as the overly common cellphone outlets or computer stores) involved in money laundering in Doral, and it seems there is little that they can do to stop it. Additionally, although local law enforcement targeted this area in the early-2000’s, and again in 2012, they were unsuccessful in shutting down these export shops and apprehending the individuals behind them – although their findings did reveal just how vital these small shops are to the drug trade. According to the article, “In just three years, at least $25 million in drug money was funneled through 201 exporters by the police sting — just a fraction of the total number of businesses that were used to launder hundreds of millions in the past decade, according to records and former Drug Enforcement Administration (DEA) agents” (Sallah, 2017). The growth of money laundering in this area has mirrored the growth of the South Florida real estate market, as well as the demand for new technology in South American countries. These factors led to the culmination of the “black market peso exchange”, where drug organizations used exporters to launder their cash, making it far more difficult for authorities to track. In most cases, the drug money made in America is delivered from around the United States to the exporters located in Doral to pay for goods ordered by retail stores in Colombia. Once the retailers receive the goods, the cartels would be paid back. But rather than being paid in U.S. dollars, the funds would be paid in the form of pesos. By doing so, the retailer avoids fees and taxes that are normally paid to a supplier in the United States. The pesos are then sent to the cartels, which have by now succeeded in safely getting their money out of the United States.

Recently, the federal government, undoubtedly noticing the increased death rates stemming from opioid overdoses across the U.S., stepped in, replacing local law enforcement in trying to slow the money laundering activity taking place in Doral. This was done in large part through civil suits brought against exporters and export shops that were accused of pocketing drug money through the above practices. While effective in identifying and ultimately extraditing several key suspects involved in these drug cases, the vast majority of exporters in Doral are still in business. This is in part due to the failures of the federal government to ask for bank wires to be tracked as part of their 2013 initiative “for storefronts to reveal all cash deals of more than $3,000 and identify the people who turned over the money” (Sallah, 2017). This allowed for criminal groups to continue sending large amounts of funds to the accounts of exporters, continuing the wealthy cycle.

However, through the new legislation, prosecutors were able to gain a significant amount of information and evidence on drug cartels, eventually bringing a case against individuals with ties to the Mexican Sinaloa cartel. The current legislation, while not completely comprehensive, still has lead many to believe that the government will have a good chance to better deal with the issues found in Doral, and in other areas of the United States that are becoming hubs for drug money, in the near future. However, it is clear that unless the federal government begins to track bank transfers effectively, these small-scale laundering hubs will continue their growth throughout the U.S.

Weekly Roundup

Ex-Nigerian Oil Minister Faces Bribery Allegations

Earlier this week, former Nigerian oil minister Diezani Allison-Madueke was charged with money-laundering and corruption stemming from a bribery scandal that took place during the 2015 Nigerian presidential election. It is alleged that she paid “bribes totaling 264 million naira (nearly $1.4 million at the time) to three electoral officials the day before the March 2015 elections” (Adigun & Faul, 2017). Of the three officials who allegedly accepted bribes, only one has pleaded guilty to the allegations thus far – Christian Nwosu. These acts were for not however, as Muhammadu Buhari won the 2015 Nigerian presidential election ironically after strongly supporting an anti-corruption campaign, one that he has since implemented.

Allison-Madueke is also thought to have direct involvement with $20 billion of funds that went missing from oil receipts between 2010 and 2015 while she was a member of President Jonathan’s cabinet. She is the first minster from Jonathan’s cabinet to be charged in relation to these scandals.

Global RADAR will provide an update on this case and any additional charges in the weeks to come.

Lawmakers Pushing FATCA Repeal

Several prominent United States lawmakers have requested that President Donald Trump take action to repeal the Foreign Account Tax Compliance Act (FATCA) as soon as possible. The campaign to end FATCA stems from the unwanted requirement of financial institutions “to share information about Americans’ accounts worth more than $50,000”, which some believe to be an abuse of executive power (Ebeling, 2017). Leading the charge for the repeal are Senator Rand Paul (R-KY) and Representative Mark Meadows (R-NC).

FATCA was originally designed to stop offshore tax evasion, but has now been viewed as over-intrusive and a contributing factor in U.S. citizens renouncing their citizenship and moving abroad. In a statement made on the topic, Meadows stated “Over time, it’s become clear that FATCA goes well beyond what is permissible under Fourth Amendment protections and places a serious burden on taxpayers” (Ebeling, 2017).

With President Trump placing a premium on tax reform, lawmakers have viewed this as an opportune moment to lobby for the repeal of FATCA to be included in future tax reform legislation. Meadows and Paul will introduce legislation similar to that which they unsuccessfully issued to the last Congress.

1MDB Update

Although Malaysian authorities have been hesitant to cooperate with money laundering investigations led by Swiss authorities, Switzerland’s Attorney General is optimistic about the progress being made in the case. As part of his 2016 annual report, A.G. Michael Lauber says that with the help of Singapore, the United States, and others in sorting through countless bank documents and money laundering reports, he believes the open cases against two private Swiss banks involved in the 1MDB scandal – BSI and Falcon Bank – can finally be concluded.

In November of 2016, Malaysian officials initially “refused an appeal from Swiss authorities for help in gathering evidence into claims that a reported $4.8 billion was diverted from companies linked to the 1MDB fund” set up by Malaysian prime minister Najib Razak (Atkins & Vasagar, 2016). As of April 2017, their stance has remained the same, continuing to raise questions on the integrity of the country’s high-ranking officials. The 1MDB scandal, one that saw a misappropriation of billions of dollars of funds, is still currently under investigation in over six countries around the world.

 

Citations

Adigun, Bashir, and Michelle Faul. “Nigeria’s Ex-oil Minister Charged with Money-laundering.” ABC News. ABC News Network, 5 Apr. 2017. Web.

Ebeling, Paul. “Prominent US Lawmakers Urge President Trump to Repeal FATCA.” Live Trading News. 06 Apr. 2017. Web.

Inc., Midwest Communications. “Swiss Making Progress in 1MDB Case despite Malaysia’s Silence: Top Prosecutor.” KFGO. 5 Apr. 2017. Web.

Sallah, Michael. “This Sunny Florida Town Has a Shady Reputation for Fueling America’s Illegal Drug Trade.” USA Today. Gannett Satellite Information Network, 5 Apr. 2017. Web.

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  • Cinti

    I ve been saying that in Doral the older residents already established got their homes in normal prices, and now new comers , not all but 98%, of money that pays for insane home prices next to landfields, with no real values, no ocean front ,has to be drug money and sex money. Look around parents dealing drugs, family moms in prostitution rings… and that usually are people lacking principles and morals causing high crimes, more drugs into our schools etc… Now the city is no longer suburban allowing mass high density rental communities been built

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