DOJ Plans Assault Against Money Laundering

The Asset Forfeiture and Money Laundering Section within the Department of Justice is stepping up efforts to stop the flow of dirty money from Mexican drug cartels and other organized crime groups through financial institutions, and it will “home in on professional money launderers from such fields as law, accounting and money transfer” as reported by Joseph Palazzolo for The Wall Street Journal.

Earlier this year the Senate Permanent Subcommittee on Investigations released a report on pervasive money laundering “in recent years because of inadequate controls . . . at large American banks and unregulated American lawyers, real estate agents and lobbyists” as reported by Lynnley Browing for The New York Times:

The report recommends strengthening regulations against money laundering at banks and revoking exemptions for lawyers and other third parties from restrictions on money laundering in the USA Patriot Act.  It recommends that Congress pass laws requiring people who form corporations to disclose the true owners.

It is long past time to correct the abuses by gangsters who hide behind privately-held corporate fronts to shield their assets and launder their money.  The proposed new federal law on the subject should include the following which would apply across all fifty states: (1) abolish the use of nominee corporations; (2) require the disclosure of all directors, officers and shareholders which must be annually updated; (3) put corporate documents that are filed with the Secretary of State online; and (4) eliminate the attorney-client privilege in connection with the structural management of a company including its incorporation and organization.  For example, in some states, such as New York, real property can be held by a nominee corporation without the disclosure of its true owner, and often the fronts for these nominee corporations are attorneys.  Although this structural organization usually is for legitimate purposes and there is no wrongdoing by either the real parties in interest or the attorneys working on their behalf, the multiple levels of confidentiality afforded by the current system also can be exploited by mobsters for illicit purposes beyond the prying eyes of law enforcement.

In addition to making it tougher for organized crime to transact dirty business through nominee corporations, the following additional new laws are required in order to stop organized crime from participating in the economy: (1) the enactment of strict “know your customer” legislation which would require banks and private finance companies to run criminal background checks on all loan applicants, and prohibit them from lending to anyone – or any company with which they are involved — who previously has been convicted for financial fraud, drug trafficking or similar organized crimes; and (2) the creation of a  domestic “black list” for convicted organized crime figures — whether from drug cartels, traditional Mafia families, etc. — which would prohibit any commercial enterprise from conducting business with them.