The profile of a money launderer has changed. Long gone are the days when a lawyer would fly across the world to con bankers in opaque
financial centres into accepting a large transfer of funds from an unknown individual into a numbered bank account. The money launderers of the 90s and even 2000s know that the game has changed, but they were never quite able to tell us how, apart from a few general ideas about fraud, the use of technology and possibly working inside the financial sector already. That is, until now.
The modern day money launderer works from home in an affluent area of London, he provides laundering and secure communications services, advises clients on how to store documents and it appears that he is not overly concerned that law enforcement will catch up with him. His role takes in estate planning, consulting and financial services.
In a candid interview with the Weirderweb blog, an individual known online as StExo lifted the lid on how he manages to move large sums of illicitly earned cash for drug dealers, both online and off. He advertised his services until recently on the Silk Road hidden online marketplace, well known for openly selling drugs, drugs paraphernalia, codes to hack into banking systems, ATM card skimmers and copies of the Anarchist’s Cookbook. Silk Road provided StExo with an estimated US$4.5m of business until the Federal Bureau of Investigations (FBI) closed down Silk Road and arrested the man who they think operates it – Ross Ulbricht – in October. StExo laundered funds using Bitcoin, the currency used to fund transactions on Silk Road, but he sees no difference between using Bitcoin or any other currency instrument for laundering. The value transfer is the key to the laundering process. In his own words: “people can send me Bitcoins or bank transfer, heck even stocks, and I can put it out on the other end in whatever form they want whether it be a salary, a capital gain or whatnot. ”
Learning from the pros
StExo, according to the Weirderweb interview, is adept at understanding opaque financial language. His father was a tax accountant and this future launderer learned how to manoeuvre around the system by reading the books his father left at home. Working on accounts with his father, StExo spotted unusual patterns which he would later learn were hiding money laundering. The obvious scams which were easily spotted spurred him on to find better ways to hide dirty cash.
He likens the preparation for a laundry cycle to performing an audit.
“You have to have ready access to business accounts and scour through them and do some problem solving, just like you’re doing an audit and find the holes in payments, discrepancies in numbers and see how all the numbers interact with each other. Once you get past this stage of basic accountancy skills however is where knowledge suddenly disappears and is hard to get since launderers are extremely specialised in what they do with very few of them ever being caught. The real methods at play don’t surface usually, so you must get inventive.”
Set a launderer to catch a launderer
Speaking freely online about his personal life, StExo apparently admitted to living in London, but bragged that law enforcement would still be unable to find him. He also, rather presciently, claimed that Dread Pirate Roberts – Ross Ulbricht’s online pseudonym – was at greater risk of identification and arrest.
The man behind the laundry claims he can spot when law enforcement send him a mail by the language they use. They also stop replying once he asks probing questions about them, he claims, and is confident that they will never catch him or any launderer by attempting to entrap them with profiling by analysts. The only way to catch a launderer, he claims, is by using paying another launderer more money to entrap them.
StExo firmly believes that money launderers sit at the top of the pile – and are infallible. And what’s more, he has a business plan. Aside from advertising his services directly online, he is writing a book – a guide for the uninitiated on how to launder money without using his services. This could effectively take him out of the equation for a certain number of laundering transactions, but he does not seem too concerned about the lack of business.
KYC – the laundryman’s way
Applying a similar level of due diligence to his clients as a bank would, StExo ensures he knows a great deal about his potential customers before he takes them on.
“Often I know the area a vendor lives in, their employment history, education levels, the financial operations they have, long term goals etc,”
Knowing some information about the client helps StExo to build a laundry plan tailored to the client’s needs. The service provided is not dissimilar to that of any financial adviser, which takes into account the variables which would affect an investment plan. In his WeirderWeb interview, he quotes one example of advising someone with a pile of dirty cash on how best to set up a trust for their child and offers the client five different options which suit his circumstances.
The modern day laundryman only takes on clients who come with a cast iron reference, understandably, even at the consultation stage which can cost them anything from US$6,000 to upwards of $10,000. Using secure communications costs between $200 and $1,000. His rates depend on three factors – the mount of research required, the level of privacy needed by using secure communications, and how much StExo himself will have to get involved.
He spends a lot of time writing plans for laundering, which he offers to clients. Some require his own hand, others can be run by the client themselves. Some clients use him as a one off consultant, others employ him to look after their business accounts over the year, identifying loopholes and potential laundering opportunities.
His fees are around $3,000 per hour, which reflects the exclusivity of the service he provides.
He told WeirderWeb: “You’re lucky to even know a good launderer,” he explained, “so they’ll bend over backwards to meet whatever fee you charge them.”
Money launderers always spend a lot of time educating their clients on how to behave, how to handle their business in order to deflect attention of law enforcement. A known or suspected drug dealer will usually be on the police radar and under some form of surveillance, which involves looking for their front companies.
Humberto Aguilar is a Cuban American launderer who spent seven years in prison for cleaning money on behalf of Cuban cocaine traffickers in Miami, Florida. Aguilar regularly advised his clients to set up a legitimate business – such as a video movie rental shop – which ran normally and made money which they could then use to launder the proceeds of crime. The same holds true for the modern day laundry, although the techniques are a little more sophisticated.
StExo advises his clients to attend business classes and educate himself on accounting. Those who do not expose themselves when under investigation – as one client who ignored the guidance fell apart during a police investigation when he could not make sense of his firm’s financial records.
Rather than abandon his client to face the music and sully his own flawless reputation, StExo stepped in and, acting as the client’s accountant, talked a team of forensic auditors through the bogus accounts. The investigation into the client’s alleged connections to the illegal drugs trade – which were very real – lasted for a few weeks and was eventually dropped due to a lack of evidence.
Throw out the play-book
StExo claims he doesn’t have a play-book, or classic laundry methods which are often those touted by anti-money laundering specialists who advise the financial sector on how to spot a laundry in their institution. His success, he claims, stems from building each laundering plan from scratch which has produced diverse and ‘spectacular’ results.
“Good laundering takes years of practice, watching fellow laundering specialists, knowing techniques as opposed to just a single plan and most of all, a damn good poker face and quick thinking.”
StExo’s confidence stems from the fact that he has never been caught. He believes he is smarter than those charged with stopping people like him from cleaning the proceeds of drugs and arms trafficking and other illicit businesses.
The WeirderWeb interview dates from June 2013, when Silk Road was still thriving. SInce it was shut down in early October, StExo is probably regrouping, making sure he cannot be traced via the Silk Road messaging surface, and developing different laundry methods.
For the full low down on how StExo operated, read the WeirderWeb lengthy interview here.
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