MAKING 'DIRTY' CASH CLEAN

Criminals Find Smart Ways Of Laundering Drug Money

VANCOUVER (CP) -- Money laundering occurs when criminals turn cash made
from illegal activities into "clean" money through what appear to be
legitimate business enterprises.

The issue arose last week when RCMP announced that a 20-month investigation
into marijuana trafficking and cocaine importing led to police executing
search warrants at various locations, including the offices of two
non-elected staff members at the B.C. legislature buildings.

"I can say that in general, the spread of organized crime just in the past
two years has been like a cancer on the social and economic well-being of
all British Columbians," RCMP Sgt. John Ward said.

"Today, the value of the illegal marijuana trade alone is estimated to be
worth in excess of $6 billion. We are seeing major increases in organized
crime-related murders, beatings, extortion, money laundering, and other
activity which touches many innocent lives."

Drug trafficking generates huge amounts of cash for organized crime, which
"launders" illegal profits to avoid prosecution, increase wealth and evade
taxes, according to an RCMP report on money laundering.

"The principal objective of money laundering is to convert cash to some
other form of asset, to conceal the illegal source or origin of cash
income," says the report by the RCMP proceeds of crime branch.

"Criminals eventually use these funds, ascribed to a 'legitimate' source,
which then cover the tracks of the illegitimate business that generated the
cash in the first place."Police say the amount of laundered money in
Canada's financial system is staggering.

"Drug trafficking alone generates billions of illegal dollars for criminal
organizations every year," the report said. "Although it is difficult to
pinpoint the exact amount, it is clear that the problem is vast."

According to the report, money laundering methods include:

- - SMURFING. Probably the most commonly used method, it involves many
individuals who deposit cash or buy bank drafts in amounts under $10,000.
This method is common to both Canada and the U.S. Deposits of more than
$10,000 have to be reported by banks.

- - BANK COMPLICITY. A co-opted bank employee facilitates illegal money
laundering.

- - CURRENCY EXCHANGES. They provide a service that permits buying foreign
currency that can be transported out of the country. Money can also be
wired to offshore bank accounts.

- - SECURITIES BROKERS. A stock broker can take large wads of cash and issue
securities in exchange.

- - ASSET PURCHASES WITH BULK CASH. Money launderers purchase such big-ticket
items as cars, boats, planes or real estate. In many cases, launderers may
use the asset but will distance themselves by having assets registered in
the name of a friend or trusted associate.

- - ELECTRONIC TRANSFER OF FUNDS. Wiring money from one city or country to
another. This can be done using "dummy" companies set up for money laundering.

- - POSTAL MONEY ORDERS. Cash is exchanged for money orders, which are then
shipped out of the country for deposit.