MAKING CRIME PAY: HOW TO LOCATE HIDDEN ASSETS (NO )

Transcription

1 MAKING CRIME PAY: HOW TO LOCATE HIDDEN ASSETS (NO )

2 TABLE OF CONTENTS I. INTRODUCTION About This Course...1 II. SECRET MONEY What Is Secret Money?...2 What Is the Underground Economy?...2 Escaping Taxation...3 Escaping Regulation...4 Escaping Prohibition...4 Corruption...4 What are the Vehicles of Secret Money?...4 Why is There a Demand for Secret Money?...5 International Undercover Activities and Secret Money...6 Insider Trading and Secret Money...7 Money Laundering and Secret Money...7 Tax Evasion and Secret Money...10 Review Questions...12 III. BEGINNING THE INVESTIGATION Lifestyle Indicators...18 Personal Characteristics...19 Lodging...19 Transportation...19 Leisure Activities...19 Financial Analysis...19 Vertical Analysis...20 Horizontal Analysis...21 Ratio Analysis...22 Profiles...23 The Personal Profile...23 Business Profile...30 Review Questions...36 IV. LOCATING ASSETS USING DIRECT METHODS On-Book Schemes...39 Three Types of On-Book Schemes...39 Tracing Suspected Illegal Payments...42 Off-Book Currency Schemes...44 Identifying the Source of Funds...45 Using an Inside Witness...46 Focusing on the Point of Receipt...46 i

3 IV. LOCATING ASSETS USING DIRECT METHODS (CONT.) Analyzing Bank Records...46 Types of Banks...47 Internal Bookkeeping Procedures...47 Retention of Records...47 Bank Documents to Be Examined...48 Obtaining Bank Records...59 Tracing Bank Transactions...61 Depositor...63 Deposit Ticket...63 Transit Items...63 On-Us...63 How to Investigate Bank Records...64 Gaining Access to Records by Financial Institution...69 Review Questions...72 V. LOCATING ASSETS USING INDIRECT METHODS Net Worth Analysis Method...75 Computing the Net Worth...76 Establish a Starting Point...77 Compute the Subject s Net Worth for Years One and Two...77 Compute the Subject s Net Worth...78 Subtract the Prior Year s Net Worth...78 Determine the Subject s Expenses...79 Determine the Amount of Income from Unknown Sources...79 Sources and Application of Funds (the Expenditures Method)...80 Computing the Sources and Application of Funds 80 Establish the Subject s Known Expenditures for the Relevant Year 80 Identify All Sources of Funds Available to the Subject 80 Determine the Difference Between Expenditures and Known Income 80 Expenditures...81 Sources of Funds...81 Bank Deposit Analysis Method...82 Computing the Bank Deposit Method...82 Total Deposits to all accounts...84 Total Funds from known sources...84 Review Questions...86 VI. SOURCES OF INFORMATION In-House Sources...87 Personnel Files...88 Other Company Records...88 Prior Audit and Investigative Files...88 ii

4 VI. SOURCES OF INFORMATION (CONT.) Disclosure Statements...88 The Right to Access Information...89 Freedom of Information Act (FOIA)...89 Fair Credit Reporting Act (FCRA)...90 Gramm-Leach-Bliley Act...93 Telephone Records and Privacy Protection Act...95 Privacy Act of Right to Financial Privacy Act...95 Driver s Privacy Protection Act...96 Health Insurance Portability and Accountability Act...96 Sources of Public Information...97 City Government...97 County Government...99 State Government Federal Government Where to Locate Records The Manual Search Public Records Providers Commercial Databases and Research Reference Services Directories Investigative and Law Enforcement Information Centers and Databases Accessing Information Through Computer Databases Limitations of Databases Commercial Online Services Using an Online Service to Find Information How to Locate People Using Online Records Obtaining Financial Information and Locating Assets Finding Legal Records Conducting Background Checks Records Service Companies Useful Websites Review Questions VII. COMMON HIDING PLACES Concealing Currency Currency Hoards Cashier s Checks and Traveler s Checks Deposits to Financial Institutions Investing Illegal Proceeds Financial Investments Securities and Commodities Business Investments iii

5 VII. COMMON HIDING PLACES (CONT.) Real Estate Investments Making Loans Friends and Relatives Business Associates Other Transfers/Gifts Gifts to Other Family Members Trusts Purchasing Assets/Spending Illegal Proceeds Buying Other Assets Pay Off Debts Spend It Red Flags Review Questions VIII. MONEY LAUNDERING Introduction Methods of Money Laundering Deposits to Financial Institutions Wire Transfers Securities Investments Insurance Policies Front Businesses Purchases of Gold and Diamonds Fictitious Identities Offshore Transactions The Mechanisms of Money Laundering The Cash Transaction System Business Transaction System Moving Between the Cash and Business Systems Federal and State Law USA PATRIOT Act of Office of Foreign Assets Control The Bank Secrecy Act Other Federal Laws Related to Money Laundering State Laws International Anti-Money Laundering Efforts The United Nations The Financial Action Task Force on Money Laundering The Egmont Group Review Questions iv

6 IX. OFFSHORE HAVENS Introduction Patterns of Secrecy Supply Tax Havens Types of Tax Havens Low Tax Havens Special Tax Havens The Role of Tax Havens Caribbean Islands Asia and Europe Case Study: Bank of Credit and Commerce International Locating Offshore Assets Moving Funds Offshore The Offshore Bank Account Methods of Moving Funds Offshore Moving Funds from Offshore Offshore Sources of Information Office of International Affairs Assistance Under Tax Conventions Programs for Exchanging Information Under the U.S. Bilateral Tax Treaty System Deposition by Stipulation, Notice, or Commission Review Questions X. RECOVERY OF ILL-GOTTEN GAINS Types of Forfeiture Cases Facilitation Versus Proceeds Forfeiture Statutes Background Criminal Forfeiture Civil Forfeiture Seven Questions the Prosecutor Will Want Answered Before Initiating a Forfeiture Action Evidentiary Considerations Close Proximity Means of Support Concealment Efforts and Commingled Funds Pre-Trial Statements Evasive Trial Testimony Basic Net Worth Analysis Civil Litigation Will a Judgment be Collectible? Review Questions v

7 XI. CONCLUSION SOLUTIONS TO REVIEW QUESTIONS FINAL EXAMINATION...E-1 vi