Compliance Blog

Written by Shari R. Pogach, Regulatory Paralegal

Using real world examples of criminal activity can be helpful when it comes to training your front line staff.  Real world examples are relatable and can be used to get folks talking and more importantly, perhaps thinking about what to look for when interacting with members on the front line.  Here are some resources that you might want to refer to for case examples.

The IRS has a section on its site with write-ups on money laundering investigations, Examples of Money Laundering Investigations - Fiscal Year 2013, here’s a sample:

 â€œOhio Business Owner Sentenced for Tax Evasion and Structuring Currency Deposits

On August 22, 2013, in Columbus, Ohio, Jon Scott Diamond, of Westerville, Ohio, was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $177,183 in restitution to the IRS. Prior to sentencing, Diamond paid $57,873 to the IRS.  In addition, Diamond agreed to forfeit his interest in a 2005 BMW 645ci. Diamond pleaded guilty on March 22, 2013, to income tax evasion and to knowingly engaging in a structured currency transaction. According to court documents, Diamond owned and operated Gem Ventures, LLC, dba Gem Skill Games, which was established in December 2005. During the years 2006 through 2008, Gem Ventures distributed computerized gaming machines in various bars and clubs in or around Columbus, Ohio. In order to play the gaming machines, bar patron’s had to insert cash into them. Diamond and/or his assistant visited each establishment weekly to collect the funds and print off the weekly receipt tickets on each gaming machine. They counted the cash at the bar, compared it to the receipt printout, and reimbursed the bars for the Jack Pot prize awards. Diamond split the remaining funds with the bar owners on a 60/40 basis.  They gave the bar owners receipts for their share of the split, and left the bars with the cash. Generally, Diamond deposited the cash collections each week into a business account in the name of Gem Ventures, LLC. Between 2006 and 2008, Diamond structured the cash deposits exceeding $1 million by making numerous cash deposits in amounts just under $10,000. Diamond knew that financial institutions were legally required to report transactions exceeding $10,000 and he knowingly structured the currency transactions. In addition, for the 2006 tax year, Diamond willfully attempted to evade and defeat approximately $97,044 of income taxes due and owing to the IRS by concealing income and failing to file a federal income tax return.” 

The FBI’s website also has write-ups moneylaundering and structuring, here’s a snippet from a case:

“In April 2013, Chavez pleaded guilty to a currency structuring charge and admitted that between July 2011 and August 2011, he structured currency transactions for the purpose of avoiding federal reporting requirements for deposits and withdrawals involving more than $10,000. According to his plea  agreement, Chavez committed this crime by making 37 cash deposits and withdrawals over a 55-day period as part of a pattern of illegal activity. In his plea agreement, Chavez admitted that the purpose of his structured deposits and withdrawals was to avoid reporting requirements and thus conceal his association with Varela and his support of the Varela DTO. Chavez also admitted brokering cocaine transactions for the Varela DTO and “cleaning” its drug money by structuring financial transactions. According to the plea agreement, in November 2011, Chavez attempted to broker a 20-kilogram cocaine transaction for the Varela DTO. Chavez has been in federal custody since April 2013.”

Of course there’s always the FinCEN publication, SAR Activity Reviews:By the Numbers, and Trends, Tips & Issues , Volumes 1-23.  FinCEN puts examples of law enforcement cases in the publication and their index lists the types of criminal activity covered. 

Lest we forget, if you’re a NAFCU member you also have the “Best of NAFCU’s BSA Blast Quizzes” as a training resource.  Each of the “best of” quizzes contains twenty-five questions and answer  scenarios on BSA issues.   

So now it’s time for my “shameless plug.”

BSA Blast. NAFCU’s October 2013 BSA Blastis now available for NAFCU members.  For your reading pleasure, this issue includes:

•  A New Jersey community bank’s downfall for ignoring money exchange house business risks; and
• TD Bank’s failure to detect and adequately and timely report suspicious activities in connection with a massive Ponzi scheme. 

And, naturally, the issue also includes the “Best of NAFCU’s BSA Blast Quizzes #4.”  Happy training!