GRC Professional - February 2015 Edition | Page 19

The fight against
organised crime
Crime organisations are becoming ingenious in their money-laundering methods. Daniel
Sheehan met with organised crime investigator and author, Duncan McNab, to discuss
organised crime and how they ensnare legitimate business into their crime networks.

T

he people who work in anti-money
laundering units of financial institutions rarely come to face-to-face
with the criminal enterprises they
work so hard to keep out of their banks. Yet the
work of financial institutions is having on impact on criminal business models, according to
Duncan McNab, an organised crime expert.
Duncan McNab is a former policeman and
private investigator who has followed organised crime gangs in Australia, Latin America
and Asia for decades. He has recently returned
from a trip to Mexico and Colombia, investigating the latest trends in Latin American organised crime.
The banks have cleaned up their act and it
is having an impact, says McNab. “The cash
exchanges in Mexico are a thing of the past.
The banks have been forced to improve their
systems, and criminals, as a result, are now
operating outside of the banking system. The
100 point check and other similar controls
have dramatically reduced the banks, as a
point of laundering.”
The banks have not always had such a positive influence. “Many banks have a history of
wilful negligence in this area,” says McNab.

The case load at the US Department of Justice
over the last five years supports McNab’s view.

The cash exchanges in Mexico are a
thing of the past.
The biggest case – in terms of money actually laundered – involved US bank Wachovia
(now owned by Wells Fargo). US authorities
uncovered billions of dollars in wire transfers,
traveller’s cheques and cash shipments through
Mexican exchanges into Wachovia accounts.
Wachovia was linked with the transfer of
an astonishing $378.4 billion of illicit funds
from currency exchange houses in Mexico
with which the bank did business. By today’s
standards, and from a regulator point of
view, Wachovia got off very lightly, fined just
$160 million for the breaches that occurred
back in 2011.

Many banks have a history of wilful
negligence in this area.
McNab says the case of Wachovia was particularly shocking and involved most of the
drug cartels in Latin America. “The Mexican

cartels operated a series of money change operations that were connected to the banks.
Once the money is changed to the US banks,
it became legitimate. The Mexican authorities were not asking any questions at their end
and the banks in the US didn’t ask any further
questions,” McNab says.
HSBC did not get off as lightly as Wachovia. In 2012, HSBC agreed to pay $1.9 billion
and enter into a five-year deferred-prosecution agreement to settle allegations, including
that it failed to catch at least $881 million in
drug-trafficking proceeds laundered through
its US bank.

The Mexican authorities were not
asking any questions at their end and
the banks in the US didn’t ask any
further questions
HSBC was accused of failing to monitor
more than $670 billion in wire transfers and
more than $9.4 billion in purchases of US currency from HSBC Mexico, allowing for money-laundering, prosecutors said.
Lack of proper controls allowed the
Sinaloa drug cartel in Mexico, and the
X
17