KYC360 Exclusive: Leveling the Uneven Playing Field from Which We Fight
27 Nov 2019

At times, we AML professionals in the private and public sectors that play by the rules have difficulty realizing that the “bad guys” at the highest levels of the criminal world have no rules. They have more resources and capabilities than we can conceptualize. Unless you’ve lived in that world, it’s hard to appreciate how criminal organizations control massive legitimate international enterprises. They not only control global conglomerates, but they also, in some instances, control key government officials.

When I worked undercover, I dealt with leaders of criminal enterprises who, to the rest of the world, appeared to be pillars of their communities. But when meeting with them privately behind closed doors and in the shadowy corners of five-star restaurants, they dropped their masks and revealed how they schemed their evil to control our real world.

Their tentacles reach into every sector of the business world. To appreciate how pervasively they influence our lives, I’ll address just one example of their many corrupt influences. Mafia leaders have significant control of the movement of goods in ports all over the world. This influence isn’t exclusive to remote lawless regions, it is an open secret in nations like Canada, where Italian/Canadian organized crime and biker gangs have controlled the ports in Montreal and other Canadian cities for decades. I know this reality first-hand, as evidenced by my testimony in Canadian Superior Court against Sabatino “Sammy” Nicolucci, a Canadian based member of the Sicilian Mafia who worked closely with the Cali Cartel and Asia’s triad groups. The Port of Montreal was their playground.

As the resources of organized criminal organizations grow, we have to face the reality that funding for the “good guys” to address those threats is not increasing and has perpetually been far less than what is reasonably needed. While I was a U.S. Federal Agent, I repeatedly heard the mantra, “Our budget was cut, but we’ll just have to do more with less.”

It is undeniable that more than 95% of the proceeds of crime generated around the globe each year is successfully laundered for criminal organizations despite the valiant efforts of AML professionals and law enforcement. This enables mafias to out-resource “the good guys” and secretly exploit key and fundamental resources.

Imagine the challenges faced by the “good guys” to safely monitor and control the shipment of cargo containers around the world. During 2018, the Port of New York & New Jersey handled 7.17-million cargo containers per year. That’s 19,670 per day, 819 per hour and 13 per minute. Now compare that to Shanghai, which handled 42-million cargo containers in 2018, or roughly 5 times the number handled by NY/NJ. Some companies that provide container shipping services estimate that 3% to 5% of shipments entering the U.S. are chosen for Customs examination. Although the probability of container inspection has grown in recent years, according to a March 2019 report by the U.S. Government Accountability Office (GAO), measures in place by Customs & Border Patrol (CBP) and the Department of Homeland Security (DHS) are full of holes.

To continue connecting the dots of this single maritime commerce dilemma created by the underworld, we have to recognize that wealthy cartels, especially in Mexico and Colombia, are working very closely with some of the world’s most lethal terrorist organizations. This fact has surfaced in prosecutions brought in many countries, including the U.S. and Canada. The cartel/terrorist marriage is crucial to illegal drug movements from Latin America to Europe—a path that starts in Venezuela, moves to francophone nations in West Africa, and involves assistance from resources in Middle East nations that support Hezbollah.  From those transshipment points, endless tons of illegal drugs are moved into Europe.

And now, the final dots of this line of threat leads to the ultimate question: “How long will it be before these sophisticated commercial shipping resources are used by the cartel-backed terrorists to smuggle something in cargo containers that is far more lethal than drugs and money?” That is my biggest nightmare.

The stacked deck held by the “bad guys”, only one card of which is their control of maritime resources, raises an important question: “How successful is our strategy in the wars against drugs, money laundering and corruption?” Make no mistake, the attack on the supply-side of the war on drugs is important to destabilize the command and control of the underworld, at least temporarily. Equally as important are the efforts by private sector AML professionals and law enforcement officials to root out and prosecute those involved in money laundering. Despite the daunting challenge, we cannot relent. But are we making a long-term difference?

Today, the rage is to improve artificial intelligence, design more effective software to catch suspicious transactions, and to assess massive fines on institutions. What else can we do? Can the treasuries of governments, which control funds acquired through AML-related fines and forfeitures, offer their capital to defray the cost of something that could truly make a difference? I think they can.

In the U.S., where I live, there is something these tens of billions in fines can productively cultivate. The U.S. has failed to recognize the power of putting massive resources on the demand-side of this fight. When I say that, I mean not only through drug education and drug treatment, but most importantly, through investing in economic opportunity for the large underprivileged segments of our society that can’t afford the education and career opportunities that should be everyone’s right.

Whether funding for this initiative comes from government treasuries, fined bad actors, or elsewhere, until we fund a meaningful demand-reduction initiative, we will never restrict the spigot of cartel fortunes or lift those otherwise imprisoned in the never-ending enrichment of cartels and self-destruction. We’ll simply keep chasing our tails in an uphill battle we’ll never win. Now is the time to think outside the box and make this happen.

Robert Mazur is president of KYC Solutions, Inc. and The New York Times bestselling author of ‘The Infiltrator,” a memoir of his life undercover as a money launderer.

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