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The Use of Illegal and Disguised Instruments for Payments (Cash/E-money, Offshore Accounts, NGOs) by Organized Crime

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Football, Gambling, and Money Laundering

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Abstract

The study of how to prevent money laundering reveals the need to regulate various forms of payments made on the market. The inappropriate use of cash, e-money, offshore accounts, and nongovernmental organizations (NGOs) facilitates criminal activity. Thus, more adequate and coordinated ways to prevent money laundering must be studied.

For more information about illegal payments, see, DE SANCTIS, Fausto Martin. Money Laundering Through Art. A Criminal Judicial Perspective. Heidelberg: Springer International Publishing Switzerland, 2013.

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Notes

  1. 1.

    No. 2006.61.81.008647-8, 6th Federal Trial Court in São Paulo/Brazil, specialized on money laundering.

  2. 2.

    According to a 2013 article in The Economist, “Not all these havens are in sunny climes; indeed not all are technically offshore. Mr Obama likes to cite Ugland House, a building in the Cayman Islands that is officially home to 18,000 companies, as the epitome of a rigged system. But Ugland House is not a patch on Delaware (population 917,092), which is home to 945,000 companies, many of which are dodgy shells. Miami is a massive offshore banking centre, offering depositors from emerging markets the sort of protection from prying eyes that their home countries can no longer get away with. The City of London, which pioneered offshore currency trading in the 1950s, still specializes in helping nonresidents get around the rules. British shell companies and limited-liability partnerships regularly crop up in criminal cases. London is no better than the Cayman Islands when it comes to controls against money laundering. Other European Union countries are global hubs for a different sort of tax avoidance: companies divert profits to brass-plate subsidiaries in low-tax Luxembourg, Ireland and the Netherlands.” The Missing $ 20 Trillion: How to Stop Companies and People Dodging Tax, in Delaware as well as Grand Cayman, The Economist, Feb. 13, 2013, http://www.economist.com/news/leaders/21571873-how-stop-companies-and-people-dodging-tax-delaware-well-grand-cayman-missing-20.

  3. 3.

    Terry Goddard, How to Fix a Broken Border: Follow the Money, Tucson Sentinel, Oct. 13, 2012, http://www.tucsonsentinel.com/opinion/report/101312_goddard_border/how-fix-broken-border-follow-money/.

  4. 4.

    Something similar to what occurs in the Black Market Peso Exchange, which has long served international drug traffic, also applies to Brazil, with the establishment of the black market in reals. According to Resolution No. 13 of the Council for Financial Activities Control (COAF), factoring companies should report to COAF. The COAF considered important to make it possible to identify the owners and directors of factoring companies, perform due diligence on customers, and check whether internal controls are in place. The aforementioned Resolution was revoked because the Central Bank did not accredit factoring companies as financial institutions, and so they never applied for licenses or registration.

  5. 5.

    31 U.S.C. §§ 5361–67 (Supp. 2007).

  6. 6.

    According to Susan Ormand, “Although online gambling sites accept debit cards, checks, and wire transfers, the predominant form of payment is credit card. Some large banks and credit card companies, including Visa and Mastercard, have refused to transfer money to offshore betting accounts because of the potential for fraud, but bookmakers circumvented these efforts by encouraging bettors to use debit cards or payment services like PayPal, Net-Teller, or E-CashWorld. Conscious of these loopholes and the risk involved, many credit card companies have abandoned this extremely profitable market entirely.” Susan Ormand, Pending U.S. Legislation to Prohibit Offshore Internet Gambling May Proliferate Money Laundering, 10 Law & Bus. Rev. Am. 447 (2004), pp. 451–52.

  7. 7.

    Such cards are usually not listed among monetary instruments, nor are they otherwise subject to customs declarations, although they often exceed the limit established for a Suspicious Activity Report. Authorities appear oblivious to the need to monitor stored value cards. These innocent cards or instruments can be worth millions, yet authorities are not concerned with them. The cards closely resemble traditional credit cards, but provide access not to credit at a financial institution, but to a sum of money stored on the card, on a chip, or simply in an account accessible using the card (which sometimes even dispenses with the chip).

  8. 8.

    It is a digital representation of money that can be placed on a computer hard drive, smart card, or other device with memory, including cellular phones and other electronic communication devices.

  9. 9.

    See, Mark D. Schopper, Internet Gambling, Electronic Cash & Money Laundering: The Unintended Consequences of a Monetary Control Scheme, 5 Chap. L. Rev. 303 (2002), p. 304.

  10. 10.

    See, id., pp. 304, 314.

  11. 11.

    The bitcoin network began on January 3, 2009, with the issuance of the first Bitcoins by Satoshi Nakamoto. Owners transfer bitcoins by sending them to another bitcoin address using a client program or website for the purpose. The transfer is accomplished by digital signature and connected to the public encryption key of the next owner. Bitcoin records all data necessary to make the transaction valid in the block chain.

  12. 12.

    Bitcoin Security, http://www.snell-pym.org.uk/archives/2011/05/12/bitcoin-security/.

  13. 13.

    Jon Matonis, Thoughts on Bitcoin Laundering, May 13, 2011, http://themonetaryfuture.blogspot.com/2011/05/thoughts-on-bitcoin-laundering.html.

  14. 14.

    See, Mark D. Schopper, Internet Gambling, Electronic Cash & Money Laundering: The Unintended Consequences of a Monetary Control Scheme, 5 Chap. L. Rev. 303 (2002), p. 314.

  15. 15.

    www.nasconet.com. Accessed June 2, 2012.

  16. 16.

    In The Search for Greater Accountability of Nonprofit Organizations. Summary Charts: State Nonprofit Corporation Act Requirements and Audit Requirements for Charitable Organizations (document obtained on May 16, 2012, from Patrícia Lobaccaro, president and CEO of the BrazilFoundation Foundation).

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  1. Tribunal Regional Federal 3rd Region, Sao Paulo, Brazil

    Fausto Martin De Sanctis

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De Sanctis, F. (2014). The Use of Illegal and Disguised Instruments for Payments (Cash/E-money, Offshore Accounts, NGOs) by Organized Crime. In: Football, Gambling, and Money Laundering. Springer, Cham. https://doi.org/10.1007/978-3-319-05609-8_6

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