The Sink – Crime, Terror And Dirty Money In The Offshore World


5 November 2007 Jeffrey Robinson


In an extract from his book, The Sink, Jeffrey Robinson describes how criminals have adapted to offshore.


Change was always inevitable.

At the beginning of 1999, a quiet, almost unnoticed but nevertheless watershed moment happened in England. A man named Ussama El-Kurd was sent to prison for 14 years.

The story made the papers, but only just, and then it was about how this man who'd treated his staff so abominably had laundered £70m through his Notting Hill bureau de change and, at least for a moment or two, was labelled Europe’s biggest money launderer.

"What makes El-Kurd notable is that he was the first person in Britain ever to be sent down for ‘outsourced money laundering'."

Whether or not he was Europe’s biggest money launderer is immaterial. Nor is there anything particularly remarkable about the way this 50-year-old man laundered money over a relatively short period of time, from April 1994 to November 1996. What makes him notable is that he was the first person in Britain ever to be sent down for ‘outsourced money laundering’.

Until El-Kurd, the only people who got done for money laundering were somehow involved with a drug or terrorist offence. El-Kurd was a guy who simply washed dirty money. He had nothing to do with the underlying offence that made the proceeds dirty.

"That case helped to reshape the way that the current money laundering laws are interpreted," explained now retired Detective Superintendent Terry Burke of what was the National Crime Squad’s money laundering unit.

"Before El-Kurd, through the mid-1980s and into the 1990s, if we knew you were a money launderer with no source of legitimate income, we couldn’t do anything unless we could prove that this money came from that pile of drugs. After El-Kurd, if the money is dirty, that’s enough, we don’t have to prove the crime behind it."

Which, he notes, was a sea change in the way the British police could deal with the financial aspects of crime. "In more than 20 years of working money laundering cases, this was the first time when we had what we need to really be effective."

Burke, then one of the most knowledgeable and experienced police officers in Europe on the subject of money laundering - and now working the same mean streets in the private sector, with American Express - had been in the field since long before it became chic.

PROCEEDS OF CRIME

"Back in the early 1980s we couldn’t go after the money because there were no money laundering laws. The courts wouldn’t let us do it. In the mid-1980s we got a law that required us to tie the money to drugs or terror. That was better than nothing and a bunch of us got stuck into some good investigations. But the bar and judiciary did not understand the new laws. We got some bad decisions and money laundering never became as effective here as it should have been."

By the mid-1990s some of those prosecutors were on the bench, younger prosecutors were being better trained and better decisions started coming down. In 2003, the UK finally had a workable Proceeds of Crime Act, which means the police could finally go after dirty money, prosecute money laundering offences effectively and seize dirty money to deprive villains of the fruits of their crimes.

"Today, the financial aspect becomes a key element of every operational strategy."

But to get to this point, a lot of work needed to be done behind the scenes. It began with a handful of people who understood money laundering. Three in particular stand out. Peter Vallance, then at the Home Office, Paul Evans then at HM Customs and Burke.

He modestly insists that it would have happened anyway, because its time had come, but modesty aside, it would not have happened as quickly or as well had those three not been in a position to help it happen.

In that sense, the tall, powerful Burke found himself in the right place at the right time for much of his career. He was one of the first officers to jump on the money laundering bandwagon having worked on the UK’s first major money laundering case. Dubbed ‘Operation Cougar’, it was the hunt for the money from the Brink’s Mat robbery in 1983. His job was to deal with the principal laundryman in the case — possibly one of the best money launderers of his era — Shaun Murphy.

An Irish-born accountant, Murphy sat in a shack on a beach in the Caribbean, forming companies for his clients in the BVI, using those companies to open accounts at banks on the Isle of Man, forming more companies in Antigua to open more accounts at Swiss banks in Panama. He then wired the money out through the Isle of Man, through Panama and into an account at a UK bank in the BVI, which he opened in the name of a Bahamian shell.

It was as good a method as any, except that after a while he got bored with it and hung a huge map of the world in his office so that he could make money trails even more difficult to follow by discovering all sorts of strange places. Part of the Murphy legend has it that for one client he registered 40 shells and opened 90 different bank accounts in 40 different places around the world. That client later dropped a Samsonite suitcase to him from a passing airplane, with $2.3m stuffed inside.

"Some of the same systems that Shaun employed are still being done today," Burke confirms. "Like back-to-back loans. It’s funny, but young officers look at something today and say, this is a new method, and I tell them, Shaun Murphy was doing that. Unfortunately, it makes me realise that we haven’t passed along our knowledge as well as we should have."

CLEAN UP

When he and a few of the other pioneers in the field - pioneering cops like Graham Saltmarsh, Charlie Hill, the late Tim Wren and Rowan Bosworth-Davies — tried to impart the knowledge they were gaining about money laundering, senior managers in law enforcement did not believe this was the way forward in fighting crime. They didn’t realise that if you want to dismantle an organised crime group, you can pick it apart at the seams by getting at the money and taking it away.

"In the old days," Burke goes on, "the only way you got evidence out of banks was if you knew someone there. Today, the financial aspect becomes a key element of every operational strategy. Whatever else we do, it’s also about the money and now, how we take that money away."

After a stint on the money laundering desk at the National Criminal Intelligence Service, Burke was seconded for a few years to Miami. There, along with his partner, Met detective Dick Marston, they joined forces with FBI special agent Ross Gaffney to form the WCCIT — the White-Collar Criminal Investigation Team — a group specifically aimed at offshore money laundering.

"Whatever else we do, it's also about the money and now, how we take that money away."

This was 1993, the heyday of the Medellin and Cali cartels. Drug money was raging through the islands and some people there were serious about trying to clean it up. Burke put a business plan and budget together and got the Foreign Office to help fund it. But WCCIT ran headfirst into the bureaucracy that is the FBI.

Burke shrugs. "They were interested in doing FBI cases that affected the islands. We wanted to put a British contingent in to work with the islands to get the information out and help the prosecution."

It wasn’t exactly oil and water because they managed to get a lot done, and there are still people in the islands who are totally supportive of WCCIT. The model remains today as one of the original public-private partnerships in the money laundering field.

But on more than one occasion, the Bureau dug in its corporate heels and good cases that might have come out of WCCIT, did not. The Caymans, for example, got very frustrated. They were happy to have British officers help them in an investigation, but they insisted that any evidence uncovered had to remain in the Caymans until the proper requests came through proper channels to share it. Burke and Marston were free to follow any leads off the island but the Caymanians did not want FBI agents dictating what should happen with evidence.

Those years running around the islands gave him a wealth of experience with offshore money laundering. "Law enforcement must be allowed to act on information when there are legitimate reasons to do so. As long as these places have the legislation to allow that, then they should be supported. However, if they don’t put the legislation in place, or they don’t enforce the legislation, or they put hurdles in the way, then the world community needs to isolate them. You can do that in a lot of ways. You can isolate them by saying no dollar deals, no sterling deals. But they have to understand that they have to co-operate and, I believe, that’s how strong you need to be."

It’s all the more important, he openly acknowledges, because London has for years been an important offshore centre for other countries. "And there is loads of criminal money sitting in the City of London. What makes the country workable, though, is that once you know the criminal money is here, a process exists to go after it."

NATIONAL CRIME SQUAD

At the National Crime Squad, Burke set up a unit specifically designed to deal with money laundering on a national basis. It was the first of its kind in the country. In its heyday, the team was 200 strong, around 70 per cent of the members being non-police.

"The idea was to build an intelligence-led police force which could go toe to toe with international criminal groups."

There were people from the financial industry, accountants, analysts and former financial investigators who added a huge amount of experience and energy to the process. He also put into place joint working groups with Customs and Immigration, so that the unit could provide financial investigative support for them.

He hoped the unit would become the model for all financial investigations in the future and, might well have been one of the foundations for a British version of the FBI. Burke was convinced that Britain would eventually see a national investigating agency to deal with major crime. And wasn’t at all surprised when, in 2006, the government created the Serious Organised Crime Agency (SOCA).

It united the investigative arms of HM Customs and the National Crime Squad, and wrapped them around the National Criminal Intelligence Service (NCIS). The idea was to build an intelligence-led police force which could go toe to toe with international criminal groups.

Unfortunately, in redesigning the horse, they created a camel with an elephant’s trunk. With all the good will that saw SOCA come into the world, it has become less a police force than a home for ex-spies, who run the show. And typical of spooks, who see the collection of intelligence as the means to the end, they don’t understand what some police officers like Burke have found out by investigating crime - following the money is the way lock up bad guys.

"Maybe it will take five years," Burke said at the time, talking about a British FBI. "Maybe it will take 10 years, but it will happen. It’s got to come."

And well it might. Some version of a national police force run by police officers is what’s always been needed. Instead, the mandarins came up the Serious Organised Crime Agency - as if there could ever be such a thing as un-serious organised crime.

Jeffrey Robinson is speaking at the Identity Matters event at The Langham Hotel on 20-21 November 2007. Further details can be found at www.identity-matters.co.uk.

This extract from The Sink - Crime, Terror And Dirty Money In The Offshore World has been updated by and is re-printed with the permission of Jeffrey Robinson © 2007