FOCUS ON MONEY LAUNDERING COMPLICATES PROCESS

WASHINGTON - With new banking regulations in place, money launderers
have found ways to disguise their activities.

The rented Learjet from Florida drops onto a little-used airfield on a
Caribbean tax-haven island. The passengers pop over to a shopping
center full of banks and deposit millions of dollars in a dummy
corporation's account, sometimes using rubber stamps of Minnie Mouse
and Goofy as signatures on deposit cards.

Then it's back to the plane, empty suitcases in hand. And back to the
cache of cash in the United States - until the next trip. Almost as
quickly, the bank in Anguilla has spirited the money abroad, perhaps
to New York, disguising the greenbacks' criminal origin.

It does not take a master of business administration to exploit the
system, says Kenneth Rijock, a former Miami lawyer who did two years
in a federal prison on a money-laundering conviction. He now is a
consultant to U.S. law enforcement agencies.

``Even a teenager could go down there, open up an anonymous account
and set up a business,'' he said. ``The problem with the Caribbean is
that we allow'' it to operate as a haven of criminal secrecy.

An estimated $57 billion is laundered every year, U.S.
officials say. Now in the news, with few details and no
charges, is one of the biggest money-laundering
operations ever in the United States: Federal investigators
say Russian gangsters have channeled up to $10 billion
through the Bank of New York, the 15th-largest bank in the
United States.

Money laundering has evolved since the days when Rijock made his trips
to the Caribbean and federal investigators put together the first
anti-money-laundering strike force in ``Operation Greenback'' in Miami
in 1980.

``That was the free-for-all time,'' said Albert Tellechea, a lawyer in
Orlando who was a federal prosecutor. ``People were walking into banks
with paper bags full of cash.''

In a typical operation, Rijock said, he would fly from Florida in a
rented jet owned by a World War II bomber pilot. The plane, destined
for a Caribbean island, would carry drug trafficker clients and bags
of cash.

On arrival, Rijock's party would meet with someone from a local
``cooperating'' bank, who would help smooth the way through customs.

The ride to the bank was short. The money was counted, checked for
counterfeit bills and deposited in an account in the name of a dummy
corporation set up by local lawyers.

The depositors were given signature cards, but they did not sign their
own names. In one case, Rijock recounted, two of them used rubber
stamps from a toy store with the images of Minnie Mouse and Goofy.
Certificates of deposit were issued.

The bank immediately sent the deposited cash by courier to its
correspondent bank in New York or London. Eventually, Rijock would
transfer the money to big banks in Europe, Asia or Latin America,
having successfully disguised its criminal source.

Lunch was next. The Barrel Stay, the eatery with the oceanforaging
owner on Anguilla's Sandy Ground Beach, was a particular favorite.

Now, with tighter laws, such as the requirement for banks to report
customers' cash transactions of $10,000 or more to federal
authorities, launderers have become more sophisticated.

``Each criminal group has different needs and ways to move their
financial assets,'' said Michael McDonald, a former senior special
agent in the IRS' Criminal Investigation Division.

For example, the rules have given rise to ``smurfing,'' the practice
of breaking down transactions into smaller amounts that do not have to
be reported. Instead of carrying bags of cash, money launderers
sometimes use bank drafts and wire transfers. They move illicit
profits through a series of bank accounts to make them appear to be
legitimate business proceeds.

New tricks include creating dummy corporations or avoiding banks by
using money transmitters such as Western Union and storefront
businesses that cash checks, sell money orders and traveler's checks,
and exchange foreign currency.

A complex new scheme called the ``black-market peso exchange system,''
which launders an estimated $5 billion a year in drug profits,
involves purchases of U.S. products - notably household appliances and
cigarettes - for export to Colombia.

Colombian peso brokers, who act as middlemen in the scheme, give
Colombian importers IOUs in exchange for pesos. The pesos are used to
buy U.S. dollars from drug cartels, providing the cartels with clean,
usable currency. Then, the brokers use the dollars to buy the goods
and smuggle them into Colombia on behalf of the importers, who thereby
avoid high government tariffs and taxes on foreign currency exchanges.

``It's a very hard thing to detect,'' Tellechea said. ``On its face,
it's a perfectly valid transaction.''