China FATF lead investigations into money laundering

Money used to buy real estates and luxury vehicles

Findings of an investigation led by China reveals that misuse by the formal financial sector and purchasing of real estates and luxury goods are among the common money laundering trends and methods.

Other common trends identified by the investigation include use of new technologies to both launder and facilitate Illegal Wildlife Trade ( IWT), use of front companies and co- mingling of licit and illicit sector as well as use of informal money value systems.

RHINOS

In what is likely to have direct impact on Botswana’s wildlife, is the financial investigation into the Rhinoceros horn syndicate involving around 12 individuals operating in South Africa.

The accused and their associates unlawfully hunted and dehorned rhinoceros, and sold approximately seven rhinoceros and 14 horns for profit. The accused were also allegedly involved in robberies, housebreaking, corruption, kidnapping and murder.

The leader of this syndicate was a former police officer and the suspected corruption relates to the bribery of a park official to not arrest members of the syndicate in a National Park. The case was identified through proactive intelligence. Syndicate members used cash as the primary means of payment. They mostly laundered the proceeds through the cash purchase of properties and luxury vehicles worth around USD1 million. Authorities have charged the accused with illegal dealings in and possession of rhinoceros horn, illegal hunting of rhinoceros, corruption, murder, robbery, housebreaking, theft of rhinoceros horn, harbouring illegal immigrants, money laundering and racketeering. The case is ongoing.

Mid last year the Financial Action Task Force ( FATF) Chinese presidency identified tackling financial flows from the IWT as a priority issue. The FATF members supported the work and the plenary which Botswana was part of the three leading countries to investigate and develop a report on how to combat money laundering linked to IWT.

The investigation reveals that countries highlighted that criminals are relying on “established” methods to launder proceeds from IWT, including the placement and layering of funds through the formal financial sector. This shows the important role that financial institutions can play in detecting suspicious activity. In particular, countries reported that criminals involved in IWT are placing and layering funds through cash deposits under the guise of ( loans or payments), e- banking platforms and electronic payment services that are tied to a credit card or bank account, licensed money value transfer systems ( MVTS) and third- party wire transfers through banks. In order to conceal the sender and the receiver of the funds, and to avoid the country- specific threshold reporting by financial institutions, syndicates are relying on money mule accounts and low- value payments.

It said both small- scale and large- scale criminals involved in IWT often use shells and front companies to conceal payments and launder the proceeds of their illicit activities, further that countries identified that criminals are primarily using shell companies to facilitate transfer of value between syndicate members, between buyers and sellers, or to hold assets. At the same time, criminals use front companies, which generally conduct legitimate business simultaneously to the illegal activity, to both facilitate the movement of the wildlife itself and to co- mingle licit and illicit proceeds, thereby disguising the transfer of value.

Under the purchasing of the real estates and luxury goods it is said countries highlighted that criminals are also purchasing high- value goods, such as real estate and luxury items such as,