Some of the accountants who come to hear Humberto Aguilar talk about his days as a money launderer have ulterior motives. While most in the audience use his ‘tips on how to spot laundering’ for good, he says some will approach clients they have rumbled, saying ‘I know what you are doing. I want part of it’.
In some South American countries where Aguilar lectures, he believes over 10% of the audience are likely to be crooked.
But the problem is not restricted to the Americas. When he comes to London to address the Stop Money Laundering Conference next year, Aguilar wouldn’t be too surprised to encounter miscreants.
‘In the UK it’s very small, but believe me they are there,’ he confides. And having earned himself around $10m (£5.4m) – and seven years in jail – by ‘cleaning’ tainted drug money Aguilar is well qualified to spot laundering.
Born in Havana, his family fled communism for America in 1961 when he was eight. He grew up in New York and set his sights – ironically – on the legal profession, after watching Perry Mason on television.
In 1978 he graduated from the university of Florida and practiced law in Miami for 12 years – until his indictment for money laundering in 1990. ‘I practiced law representing drug dealers so I became really well acquainted with them and their world. I was enticed by the amount of money and the ease by which things could be done,’ he says.
‘It was a lot easier for them to get the drugs into the United States than to spend the money, because there’s a limited number of cars and houses you can buy with cash. I said “let me tackle this” and that’s how I got involved in money laundering,’ he says.
He began to move hundreds of millions of dollars into offshore accounts and enterprises that would protect the source and create such an elusive trail that the monies could be turned around and in a short time legitimately working within the US.
Ironically, he says he had gone straight by the time the authorities caught up with him, having decided $10m was enough. He was initially released after offering $5m in bail, which he promptly skipped. ‘I took off and I went to live in Spain for a couple of years until Interpol finally tracked me down and brought me back. And then I served altogether more than seven years,’ he says.
Because Aguilar had been a fugitive, he was not put in the ‘soft’ camps where most money launderers serve their time, but instead found himself behind bars – and double razor wire fences – alongside hardened criminals.
He counted a hit man, bank robbers and a corrupt judge among his neighbours. The hit man was ‘the nicest guy in the world’, he says.
His message for UK accountants tempted by money laundering, despite now facing up to 12 years in prison for failure to report the abuse, is simple: don’t.
‘If anyone wonders what it is to be a slave, prison is it. The worst thing is the lack of individuality, the lack of freedom. You get up when they tell you to get up, do the jobs they tell you to do. It’s the worst existence a human being can have. You are just a slave.’
Despite this, Aguilar says his legal expertise helped him to avoid the worst prison had to offer. ‘To have a lawyer in prison with you is like God being present in church with you,’ he says. He wrote 300 appeals for fellow inmates and proudly remembers getting two life sentences reduced to 22 years.
For someone now making $2,500 a pop on the money laundering conference circuit as a reformed man, Aguilar often seems fairly unrepentant. ‘I was wrong doing what I did but I still cannot, to be honest with you, understand who I hurt,’ he says.
He brushes off any suggestion that he caused suffering to victims of the cocaine that his activities helped to bring into the country.
‘I’ve never heard of anyone putting a gun to someone’s head and saying “take the cocaine or I’ll kill you”,’ he says.
Part of his anger is directed at the penal system, which he says made no attempt to rehabilitate him and even now strips him of civil rights including state-funded health care and the ability to vote.
After leaving prison Aguilar got a job in a hotel and worked his way from pushing trolleys to become manager.
His big break came when he went to persuade Charles Intriago, a leading money laundering expert who was organising a conference, to hire out rooms in his hotel.
‘We started talking so I gave him my resume and he was thrilled with it,’ says Aguilar. ‘I started doing lectures for him in South America and the US and I was a hit. For the first time, people were able to listen to someone who had cheated the system and was able to tell them this is what I did, how I did it, this is how you spot money launderers.’
Following the events of 11 September 2001, the war against laundering became a boom area. Aguilar found himself making money from laundering all over again, albeit under very different circumstances. ‘Because of the way that the 9/11 terrorists were financed, the biggest area of concern in the law is money laundering. If you Google money laundering conference right now you are going to get about two million sites,’ he says.
Even so, he believes more emphasis is required. ‘What we are doing in Iraq is killing Americans and wasting money. If we were working on finding out where (terrorists) are getting their money from, we could put a huge dent in it.’
Aguilar emphasises the difficult position accountants face in the fight against money laundering. ‘I think accountants are in the worst position because they are caught in the middle. When you are dealing with money laundering everyone is going to lie to the accountants: the lawyer, the client, the bankers.
‘If he’s got a hunch that it’s dirty he’s got a huge problem. He needs to be like a super detective. But how far do you investigate? Some accountants will say as long as it seems clean to me and my client tells me its clean and the bank tells me its clean and the company works and it exists I don’t have to worry. No, they do have to worry about it.’
His advice for accountants trying to spot money laundering is to ‘know your client’. ‘I mean actually know him. It almost sounds silly, but it really works. Know that the factory exists. Know that the business that your client says is an ongoing concern really exists. Send someone out to see that he really has a huge warehouse, that it’s not all fake.’
Other tricks include asking questions like: ‘Why is that guy wearing an expensive suit?’ and ‘How is a guy with that little education running a multimillion-dollar business’.
Often sheer scale can be a give away. ‘Any bright accountant can spot a money-laundering outfit. Nothing is as profitable as a drug concern. Nobody can generate the amount of money a drug concern does.’
With an estimated £25bn to £40bn laundered in the UK each year, it is a fact that much passes accountants by. Last month, a report by the anti-corruption group Transparency International slammed Britain as a haven for money laundering because of a failure to stamp down on front companies.
Aguilar describes the new regime introduced in the UK as ‘really rough’, though he points out that sentences are even harsher in the US. He recognises the pitfalls the more stringent regime creates for accountants.
‘You have innocent people who get caught up in nefarious schemes they didn’t know about, but that’s not an excuse any longer.
‘You are a professional, you hold yourself out to certain standards and if you can’t do the job, you are going away. I really feel sorry for the poor accountant who gets screwed. He goes to court and says “I didn’t know” and the judge says “you should have”.’
Aguilar’s top 10 tips for spotting a money launderer
1. Verify the actual identity of your clients and their ‘documented’ status. Are they who they say they are? When was the corporate entity formed and why has it done so little business in the initial years? Where did the initial funding come from?
2. Ask yourself why are they coming to your financial institution? What made you so desirable for this client?
3. Find out who they have done business with, and where and why this country is so ‘tempting’ for them at this point in time? Compare tax obligations from their place of origin to your own and ask what the benefits are to the client.
4. Most money launderers do not simply ‘drop by’ to open an account. Your institution has been studied and explored and someone has opened the door for the attack. Who sent them to you? Did you verify the letter of introduction was really given to a ‘legitimate client of good standing’?
5. What does the company actually do? It is often never discussed after the first meeting but why not require proof that the client is a legitimate businessman or woman? If they are from another country, why are they expanding to do business in your country?
6. Keep within the correct boundaries of a professional business relationship. No self-respecting money launderer is going to attack you on the first date. The launderer is going to try to seduce you, become your friend and meet your financial needs.
7. Ask the right questions during preliminary meetings. When I was a money launderer, I would be on guard and run away from any institution that asked too many questions.
8. Always tell clients that your institution would protect them because of your proactive mission to prevent money laundering. Warn him that you are looking for this type of client.
9. Ask yourself what prompted the client to modify his transaction patterns. Why are transfers or deposits escalating while the economy in his country is stable or flat?
10. It is not an easy task to spot a criminal. Spotting the launderer requires clear thinking and follow through. They don’t want to do business with someone who sees them as a ‘challenge’ and does their homework. Do not get complacent. Never assume that after several years this account is safe.