This Giant Beast That is the Global Economy (2019) s01e01 Episode Script
Money Laundering: A How to Guide
1
Money Laundering.
What is it?
Well, suppose that
I got all this money
from some sort of a
criminal enterprise.
Maybe I'm a drug kingpin
or an arms dealer.
Or maybe I'm a
lobbyist doing business
with shady foreign politicians.
No matter what I did to get it,
my money is now
tainted by my crime,
which makes it tricky to spend.
Money laundering is the process
of giving your dirty
cash a makeover
so that it appears legitimate
to bankers and retail stores.
That's a lot harder than it seems.
Best place to hide your
diamonds are in your scrotum.
There's a secret
international financial system
created just to help
criminals spend their money
without anyone knowing
the deplorable things
they did to get it.
And we're talking a lot of money.
Because most criminals aren't
dumb enough to declare it,
there's no way to
know the exact amount,
but it's likely bigger than
the world steel industry,
and possibly even the
world's food industry.
So where is this hidden economy?
It's right behind you,
and in front of you.
It's everywhere,
and I'm going to show
you how to spot it.
Whether you like it or not,
we're all connected by money.
I'm Kal Penn, exploring
this giant beast
that is the global economy.
We all know crime pays,
but how do bad guys
stash their cash?
Do criminals have their
very own bank of evil?
It's more like an informal
network of lawyers
who use accounting tricks
to keep dirty money
flying below the radar.
For decades, it was
all kept hush hush.
Then in 2015, the
curtain was pulled back
to reveal the industry's
shadiest methods.
Was there any shipping magnates
caught up in the Panama Papers?
Yeah, all of them.
- All of the shipping magnates?
- Seriously they are all in there.
Hamburg-based Jan Strozyk
was part of an international
team of reporters
that published stories
about a massive
financial data leak
that came to be known
as the Panama Papers.
It exposed hundreds of
thousands of secret companies
being used to hide
billions of dollars,
and Jan was one of the first
journalists to lay eyes on it.
I'm super curious about how
you got involved in all this.
I'm imagining like some
dude in a black trench coat
with a suitcase that's
connected to a handcuff,
and he's like
handing you something
and disappearing into the fog.
How did this all come to you?
There was a whistle-blower
that came to my colleague
and asked him if he was
interested in data leaks.
And in the end it turned out to be
the biggest data leak
journalists ever looked at.
We're talking about 11.5
million individual files.
And this was the first time ever
that someone outside of the
money laundering industry
was able to look at
what was going on there.
These files were the
confidential client records
of the law firm Mossack Fonseca,
and if you thought the
confessions in your secret diary
might be damaging, theirs
revealed how they helped
the criminally rich
launder dirty money.
Mossack Fonseca specialised
in setting up companies
so nobody can look
who is behind it.
They are called shell companies.
So if you have money that's
from a dubious source,
you can do your
business and nobody
could find out where
the money comes from.
So you would just go there
and on both side they would know
it's not good for the
business relationship
if everybody know
who's behind this.
Sure.
So they would not really
ask who the end client is.
They would just
set up the company.
In one case, there was a customer
and they used, like,
names from Harry Potter,
and they set up companies like
Azkaban and something.
I don't know.
That's the nerdiest
shit I've ever heard.
It is.
Are these drug cartels
that are laundering money?
Who's doing this?
They were doing business
with drug cartels,
mafia, doing business
with arms dealers,
and if we look at the
Panama Papers as a total,
we have almost 200
different countries.
Basically, every
country in the world
that's in some way implicated.
- That's crazy.
- Yeah, it is.
I mean there were a lot of arrests
after the initial publication,
and there's going to be a lot
more coming in the next years.
And there are hundreds
of people that are
probably sitting
at home and they're
a bit scared right now, I guess.
The Panama Papers revealed
rampant money laundering
all over the planet.
So far, prosecutors and
journalists have only processed
the tip of the iceberg,
and I wanna find out
just how deep it goes.
But I'm just an
actor-slash-TV host.
I've never been connected
to the seedy underbelly
of drugs or financial
crimes, so
In order to figure out how
money laundering works,
I'm gonna need a million dollars.
Thanks, Cody.
Perhaps you're wondering
what would stop
an aspiring money
launderer like me
from taking this bag of
money and depositing it
directly into the bank.
First of all, that
would actually just be
a super short episode, but
also, here's what would happen.
Next member, please.
I'd like to make
a deposit, please.
Okay, I'm gonna need you
to complete a deposit slip.
A million dollars?
Okay, because you're depositing
over 10 thousand dollars,
I'm gonna need to complete a
currency transaction report.
Interesting, okay.
What is the source of the money?
It kind of fell from the sky.
I know that sounds a little weird,
but it was, yeah.
Okay, that's what I'm gonna
have to write on your report.
And that's reported to
the federal government.
Okay, let me think
about it and come back.
If you don't deposit the money,
I still will need
to complete a SAR,
which is a Suspicious
Activity Report.
Either way, there's gonna
be some reporting done,
because you're carrying
around this amount of cash.
Is it easier if I
happen to find a receipt
for selling something?
Okay, thank you,
I'll think about it.
American banks have to
report all suspicious
cash transactions.
It's the law.
Apparently legitimate
business deals
rarely involve duffel
bags full of Benjamins.
Amanda, I need to talk to
you about completing a SAR.
Everything's fine, Amanda.
So, where do you go to find
out how to evade the law?
Easy, the place where
those laws are written,
our nation's capital,
Washington, DC,
where there are at
least a few good guys
fighting to keep
bad-guy money out.
Kerry Myers is a
veteran FBI hard-ass.
He segued from the bomb squad
to the anti-money laundering beat,
so maybe he can help
me make my money
look as harmless as we do.
This is not your first
time on a Segway, is it?
No, I was a bomb
technician with the FBI,
and we used to use Segways
when we would be in a bomb suit
to go down range so
we're not worn out
by the time we get there
- to do our job.
- That's awesome.
At the FBI, financial
investigation
is a part of every
crime you investigate.
There's always a
financial component.
So how would I launder money?
The easy answer is don't,
unless you wanna go to jail.
Sure.
But there are three steps
to money laundering:
placement, layering,
and integration.
Placement is when the
criminal takes the proceeds
of illegal activity,
and he goes in
and physically makes a deposit
into the financial institution.
Layering is, once the cash
is now into the system,
he wants to move it around
among different accounts,
maybe accounts of different banks
to make it harder to
trace and to further try
and hide its identity.
Integration is when the
money, after it's been moved
and layered through
different accounts,
is when the criminal pulls
the money out of the bank
and then uses it for a
legitimate transaction.
But, placement is the choke point,
because our laws are
designed to catch
the placement of the money
into the financial institution.
Oh, I know.
The trick is, trying to get it
into the financial institution
without a report being filed
with the Financial Criminal
Enforcement Network, FINCEN.
Think of it as a library.
That report stays at
FINCEN and law enforcement
can get every report that
any financial institution
has ever filed concerning
your activity with cash
or suspicious activity at
a financial institution.
There are all these regulations,
all this other reporting.
How would somebody
launder money, then?
If I wanted to launder money,
I would use a cash-based business.
A perfect example would
be a taxi cab company.
It's very difficult
for the government
to estimate whether
you had 10 fares today
or 20 fares today, and you
start taking the proceeds
of illegal activity,
commingling it with
the legitimate revenue
from a cash-based company
and start sliding it into
the financial system.
If I'm a bank, and you're
a taxi cab company,
and you make a deposit
every day with me
for six thousand dollars,
that's not going to
cause any alarms if one
day it's nine thousand,
or even one day it's 12 thousand.
Although I may file the report,
I'm not gonna be alarmed about it
because we have a history
of this taxi cab company
is consistently making
cash deposits every day
as a part of their revenue.
I've always dreamt of starting
a cross-fit doggie daycare.
I wish there was some
sort of how-to guide
for starting a money
laundering cash-based business.
Hi, I'm Benjamin,
owner and operator
of Ben's Cash-Only Businesses.
I'm a professional consultant,
and I can teach you to start
and run a cash
business, guaranteed.
How do I know you can run one?
Because I run several.
Have money and time on your hands?
Start a shell
corporation and use it
to invest in real estate.
Blossom into a florist.
I'm here to pick up the orchid.
Great.
Or even better, your corporation
can put money in art.
Oh, not in art, you dummy.
Bid on it.
Auctions are anonymous,
so they don't care
where the money came from.
I bought this painting
with my brand new
legitimate art business
that's not sketchy in any way.
In a couple years,
you can sell it again
through the same auction house,
and you can take that
clean money to the bank.
Know your business and keep
the government out of it.
Hey, how did all
this cash get here?
Selling flowers, of course.
The only thing criminal here
is the low cash-only prices.
So come on over to Ben's
Cash-Only Businesses.
The only question we ask
is why are you asking
so many questions?
With some of these businesses,
it could take years to
clean a lot of cash.
I've got to get rid of
it before the show ends.
I'm in Miami to meet
someone who knows
how to clean a lot
of cash quickly.
I was being considered
for a judgeship.
That's how secretive we were.
Nobody knew that I was a
trial lawyer during the day,
and I'd put on my mask and I
was a money launderer at night.
Back in the 80s, Humberto Aguilar
lived a double life,
defending criminals
as an attorney by day,
also becoming a criminal
by laundering their
money, also by day.
Until he got caught and
spent six years in prison.
So now I must ask you a question
about money laundering.
How did you do it?
Well, back when I was doing it,
most of the guys I worked
for transported cocaine.
Client came to me and said,
look, I got to problem.
I go, you got a lot of problems.
As soon as you said
that, I was like,
Well, okay, this seems
pretty normal so far.
And I said, okay,
what's your problem?
I got to take you, and
I go, okay, let's go.
So we went to this warehouse,
and it was a huge place,
bigger than this, full of boxes.
Okay, what's the problem?
He says, open a box.
What, what? Open a box.
So I open a box and
it's full of money.
Okay, and that one,
too, and that one?
Yes, okay, we've
got a big problem.
Yeah, it sounds like if you
had a whole warehouse
One warehouse?
I worked for a lot
of different people.
Oh, so this was
This wasn't just
one client one time.
No.
In the 1980s, Americans had quite
the appetite for cocaine.
And Miami was the entry
point for most of the supply.
The town's business was booming,
and dealers were swimming
in billions of dollars
of dirty cash.
My clients would say, look,
I need to use this money.
Because how many cars can I buy?
How many houses can I buy, cash?
And I said, oh, oh,
this is a challenge.
I created a plan, and
the plan was simply
get the money out,
get it overseas,
and bring it back legally.
How did you physically get
the money out of this country?
I would take these boats that went
to pick up the cocaine,
would go down to
South America empty.
And I said, wait,
I'm gonna use them.
So I would put the
money in these boats
to go down to South America
and end up in Panama,
and you have your people
waiting at the port
with guns to protect your cash.
So you get the money in Panama,
and you go to the bank,
and you find the banker.
And you start off slowly,
build the relationship.
You say, what kind
of watch you wear?
That's a Seico, no,
man, no, not my banker.
And you go and you
give him your Rolex.
Here's my Rolex, that's yours now.
And he looks at it, whoa,
30 thousand bucks, right?
Now, you own this
guy. You own him.
You say, okay, this is my
money. I wanna deposit it.
I'm gonna open this
account for this
corporation, always corporations.
You're gonna start
using shell companies.
Shell companies, they're
key to laundering
big sums of cash.
These corporate facades
exist only on paper
with no real business to speak of
aside from holding on to money
and moving assets around
without detection.
Think of money
laundering as a cigar.
Inside you have your
money, the tobacco.
Outside, you have
your shell company,
the wrapper that
conceals the tobacco.
The glue that holds
it all together
is your company's
board of directors.
These are people who
appear to run your company,
giving you total anonymity.
Once the wrapper is
sealed in a tidy package,
it's hard to look at
what's really inside.
And one of the
things I would do is,
when I went to Panama,
there's a couple
of whorehouses, I looked for
a different way of doing it,
no, it's whorehouses.
But the whorehouses are
good because they have IDs.
- Who has IDs?
- The girls.
All right, back up
- and talk me through
- We'll go back.
So you form a company
first. Who owns the company?
Oh, shit, these two
women own the company.
I've got their IDs, here.
You pay these whores two
hundred bucks to use their IDs.
They don't know what
you're doing with it,
they don't care, they
got two hundred bucks,
hey, I don't have to
sleep with anybody
for two hundred
bucks, that's great.
So there was never a
risk that they could go
to the bank and say, that's
my 10 million dollars?
There were always risks involved,
but the money's out of there soon.
In two, three weeks, I move
the money. Where does it go?
Switzerland, a wonderful place.
And they send a car,
and they pick you up,
and you've got the money
sitting there, and you're okay.
So they're just facilitating
your money laundering.
No, no, they're investment
Sure, yeah, okay, they're
facilitating their investment
in their new clients,
their new relationships.
I worked in government. I
know how these languages work.
It's wonderful, it is wonderful.
And then where would you move it?
Back here to invest it in Miami.
They all wanted their money
back to be able to use it.
And that was my job.
It's legitimately
coming from a legal bank
- under a corporation name?
- Yeah.
At the time, I honestly
didn't think it was illegal
in my mind and heart.
I knew it was, but hey, come on.
But you feel like it's
not hurting anybody.
It's not, look at Miami today.
No really, you look at
all these businesses
that are grown up.
They made Miami a grown-up city.
And people ask me,
well, what happened
to all the money that
was laundered in Miami?
Get up, you go on I-95,
you go over the overpass
that overlooks downtown,
and you look at all
these beautiful buildings.
You know what, that's the money.
So, I've got this bag of money.
What do I do with it?
First, get it out of the country.
Get it to Liechtenstein,
Guernsey, Cyprus.
It's probably one of the
dirtiest places in the world.
The island of Cyprus
is well situated
to be the premier money
laundering destination
for most of Europe and Asia.
I don't have a drug
boat like Humberto,
and the lawyers at Amazon
told me I couldn't wire money
like most real launderers do,
because it would be
criminally boring to watch.
So I'm taking my private plane.
Ladies and gentlemen, we'll be
touching down in Cyprus shortly.
Ladies and gentlemen,
we've arrived in Cyprus.
Cyprus has everything
that an international
traveller with large sums of
money could possibly desire.
- Hello.
- Hello, Mr Kal.
Welcome, sir, can I take the bags?
- No, thank you.
- Sure?
No, I'm fine, thank you.
Great weather, expansive beaches,
Russian karaoke, and
somehow less suspicious,
a massive financial
services industry.
How are you?
I'm fine. Welcome to Cyprus, sir.
Thank you. I'm excited to be here.
Oh, thank you.
First time in Cyprus.
It's a lovely place.
It seems like it, it's warm.
I've heard a lot of really
interesting things about it.
What is the purpose of your trip?
- Well, I
- Tourist?
I guess, I'm a tourist.
I also have some cash with me.
Cash.
And wanted to
Cleaning or laundering?
We can just talk about
that straight up?
We can call it that,
we don't have to
Of course, of course.
Okay, well, yeah, I'm
here to launder money
and set up a shell company.
Of course. It's the
paradise of money here.
Why is it the paradise of money?
First, because of the taxes.
We have low tax in Cyprus.
Otherwise, there is a lot
of accounting companies.
And we have a lot of Russians,
actually, to launder money.
Okay, so you're saying
a lot of Russians
come here to launder their money.
Yeah. I can be the company's
director if you want.
You can be the director
of my shell company?
Of course. If you
pay me good money.
More than the taxi.
Yeah?
So you said that you
have a lot of cash.
I do, so I have a lot
of cash with me, and
With you? You mean here now?
Yeah, here now.
How much?
Enough that I've
brought other people
with cameras in the cab with me.
Alright.
I'm a little I
have to be honest,
I'm a little surprised
that we're able
to talk so openly
about money laundering
and shell companies.
Is that, is that common,
or is that just because
you're an interesting guy?
It's common, but
it's just between us.
Okay.
Now let's get back to the money.
You didn't say how much you bring.
Well, so how much, how
much would your rate be?
No less than seven.
No less than seven hundred euros?
Thousand.
Oh, seven thousand euros, okay.
Hey, I'm trying to
negotiate here, man.
Cyprus's registrar of companies
is an enormous warehouse
storing all the island's
corporate registrations.
Here, there are paper
records for hundreds
of thousands of shell companies.
The sheer volume and
backlog of digitisation
makes any one of them
about as easy to find
as the Ark of the Covenant.
It's a good place to do
business, actually, here,
and if you keep an open mind,
there's great
potential in Limassol
because of the many foreign
companies, Russians, Germans.
Actually, the largest
Lately a lot of Israelis.
Even if my shell
company doesn't do
any real business,
I'll need to provide
an address for my
corporate records.
Andreas Solea has
the coolest moustache
I've seen since Miami, so
I will follow his advice.
Because he and his
daughter, Elisa,
run an office space
rental company,
and business is booming.
You have some offices that
you just have the desk.
- Lot of empty offices. Rented.
- Rented, empty offices rented.
Of course, rented,
because otherwise
that wouldn't be good for you.
We, as a company,
we don't actually
care what kind of job you do,
or why you need the office.
- It's not our business.
- We don't ask, actually.
We never ask what is
your kind of business.
It's your office. It's
your private office.
You can do whatever
you want with it.
You can do whatever
you want there.
Of course, in the
contracts it's written
not for illegal
purposes, but who knows?
Do you suspect that
some of your tenants
might be money laundering?
Money laundering?
Anybody can do whatever they
want. It's not our business.
- That's been clear.
- It's everywhere the same.
From Cyprus to United
States, to Russians
to Germans, to everywhere.
Those that they say, "Oh,
they don't do it in Germany,"
either they are lying
or they want to protect sort
of the image of their country.
Interesting.
There is everywhere
money laundering.
With the right lawyers
and accountants,
you can do a lot of things.
So what is the problem?
Everybody makes money from it.
So you're saying, it's
good for the economy.
But is there ever a
worry that the money
is coming from things like
terrorism or violence,
and that that's what sort
of propping up the economy?
Now it does.
Well, I didn't put
that idea in your head.
- Oh, you did, you did.
- Really?
Yes. It never passed
my mind, you know.
On the level we work
and our contacts
How do you say it? If you
don't mix with the chickens
then you don't become a
chicken. You know what I mean?
It seems turning a blind
eye to money laundering
in Cyprus is so
common that they have
their own weird chicken metaphor.
Am I alone in
thinking that there's
a whole lot of wilful
blindness happening here?
I need to find someone who sees
what's really going on.
Not everyone on Cyprus is
ignoring money laundering.
Hey, guys.
James Henry used to
serve the corporate beast
as chief economist
at McKinsey & Co,
but now he lances it towards
by investigating financial crimes.
He's part of a
network of journalists
working to uncover
trails of illicit money
that cross multiple
international borders.
Those trails often lead to Cyprus.
I'm working with journalists
in the Netherlands,
and the UK, and Cyprus.
And it's incredible to
see this new kind of
collaboration going on.
All right.
Oh, you fucker.
Countries like Cyprus sell
this kind of financial secrecy.
You know, it's an easy
business to set up,
you offer secret
companies and trusts.
You have lawyers
that are basically
willing to work for anybody.
The banks are willing
to take their money.
And this is a huge business,
so it sounds great.
But we're talking about
betting the future
of a country like
Cyprus on a sector
that's loaded down
with systemic risk.
And you also end up
with some clients
that you're not proud of.
Have there been any negative
consequences for this?
Yeah, so the financial
system here grew very fast
from 2004 until 2011.
The banks became like
900% of national income.
And by 2013, the whole
economy was taken down.
Whoa.
And since the 2013 crisis,
there's a whole set of
changes in the laws
that could make it
much harder to launder money
and to hide assets here.
But there's still a big grey area.
There's a lot of elasticity
in the enforcement.
The financial secrecy
industry is still
protecting money launderers.
It's protecting tax dodgers,
it's protecting kleptocrats
that are basically
Russian oligarchs
who accumulated huge fortunes
by basically looting Russia.
I assume things like
this continue to exist
because there's people
who enable these things.
You can imagine a kind
of Star Wars bar scene
where you have all
these various players
gathered around the same
kind of watering hole
which is the financial secrecy
provided by this industry.
It sounds like this cantina has
a pretty substantial cover charge.
I hope this bag of cash can
get me a seat at the bar.
Okay, so you're the expert.
So, how do I launder this
bag of money that I brought?
So one of the objectives
of money laundering
is always to have a good
story to make things
appear as if they came from
some legitimate source.
And real estate is one
of the easiest of those.
First step would
be to get a company
in whose name you will
own the real estate.
In Cyprus, we have about
two thousand lawyers,
and they can set up a company
that then becomes the
owner of your condo
or your property, and that way,
no one will really
understand that it's yours
if someone's looking for
your assets later on.
You can pay cash
for the real estate,
and when you go to sell
it, you have an explanation
for where the money came from.
You know, I didn't get
it from drug dealing,
I got it from real estate.
Okay, so I have to find a lawyer.
Yeah.
The multi-generational
Yiangou Law Firm
specialises in setting up
companies for foreigners.
They have a sterling reputation
and know the new laws well,
which may be why they're
the only Cyprus law firm
willing to let me bring in cameras
to witness how they
conduct business.
Not only are they gracious enough
to open their office for me,
they've also opened their kitchen.
This is amazing.
This is a very
common, let's say, lunch
that we have usually.
This is the common lunch?
You eat like this every day?
If I ate like this every day,
I would nap for a couple hours
and then go back to work.
Well, stay a few weeks in
Cyprus and you will adjust.
What kind of law do you
guys do for the most part?
Personally I've been dealing
with corporate matters.
Vangelis is an accountant auditor,
and Natalie is an administrator.
Cyprus has no raw material.
Has no industry.
Has no agriculture.
So that's why we developed
the lawyers, the
accountants, the bankers.
And then they try to find
business outside Cyprus.
George and his family have agreed
to walk me through the process
of finally starting
my own company.
I'm anxious to see
just how elastic
the new regulations are.
So do you have any specific name
in mind for your company?
Oh, that's a good questions.
The 69 Brothers.
The 69 very interesting name.
That's very specific.
- You like that?
- It's very specific.
He likes the 69 Brothers.
That's very specific.
It's very specific.
So basically now we're just going
to search into the
registrar record.
Okay, so she's
Googling 69 Brothers
She's searching whether
a similar name exists.
Well, actually, there
aren't any "69 Brothers"
registered as a company so.
The name's clear.
- You're ready to go.
- That's a good sign.
But there's also
the shelf companies,
the available ones.
And if you are okay
with using our nominee
officers, i.e. directors,
shareholders, then we skip
the whole registration part
and you can buy an
off-the-shelf company.
So I would be very curious
to hear about that.
Okay, I have printed the list.
Here are the companies
that we actually have now
with a ready-made structure.
People just use the
structure because
this information is
not publicly available.
So your name, it does
not appear anywhere.
This is very typical structure
that they use in Cyprus.
Wow, all right, so if
I pick one of these,
then what are the costs and
how quickly can it be set up?
So before we proceed
with the cost,
we need first to fill
out a questionnaire.
So you are going to establish
a company in which area?
Well, I assume
"Assume" is not a
good start, actually.
That's true, let me, okay
So like, what are the
more common reasons
that people will set up a company?
Basically for trading activities.
Or maybe a consulting company.
I think a consulting
company was the
Yeah, I mean, that could be a
- Would make sense.
- Consulting. Consulting.
Now we need to identify
if you're going to be
in the category of
politically exposed persons.
I worked in American
politics for a few years.
No big deal.
Does that mean I'm
politically exposed?
Yes, you can influence people.
Or you can have influence into
the general, let's say,
market or business.
So normally you should
be in this category.
Okay.
And your personal, let's
say, financial background?
Can you give us a little bit
where have you earned your money?
From which activities
specifically.
It fell from the sky.
So, Kal, I just wanted
to let you know
it seems suspicious.
We want to avoid
accepting a client
who is going to be involved
in any money laundering.
Okay, so this is a little more
complicated than I thought.
Many people believe
that it's quite easy
to incorporate a
company in Cyprus,
but things changed in
2012 to 2013, actually.
When the financial crisis
and the banking sector collapsed.
Now we need to follow
specific rules.
Things now are more strict.
Something feels off,
and not because I
just made a lawyer
say 69 Brothers on television.
This law firm says I can't
even take the first steps
to launder my million bucks,
but everyone else
says there are still
huge rivers of dirty money
flowing through Cyprus.
I need to find out
what happened during
the crisis in 2013 that
supposedly changed everything,
and for that, I'll need someone
who saw it all from the inside.
Panicos Demetriades
is the former governor
of the Central Bank of
Cyprus turned whistle blower.
I'd love to meet up and
find out what he knows,
but he's no longer here.
So it turns out that when
you fight money laundering
in one of the world's
top laundering economies,
you receive death threats,
and have to move your
family out of the country.
This place is pretty incredible.
It's my gateway to
Europe, basically.
The station, or the bar itself?
- The station.
- Is this real?
If I press this, they will know
I've never tried it.
You've never tried it?
I've never tried it.
No. Do you try it?
Oh, that was quick.
- Wow.
- How are you, sir?
- That's amazing.
- Cheers, by the way.
Cheers.
Cyprus has had a reputation
for being a place
where people can bring
a suitcase of money,
nobody would ask
where it was from.
You can set up a company.
Nobody would ask
anything other than,
here, give us a few bucks,
and here's your board,
here are your shareholders.
That used to be the case, I think.
That used to be the case
that people could do that.
But it has tightened up quite a
lot as a result of the crisis.
Ordinary law firms,
for example, in Cyprus
wouldn't even dare
to bend the law.
- Now? Okay.
- Now.
But those practises
is what, I feel,
eventually led to the
crisis of 2012-2013.
Remember what happened to the US
Back in 2008 and 2009
when major banks failed
and the government
bailed them out?
There was an Oscar-nominated
movie about it.
The government will purchase
125 billion dollars
in US bank stocks
over the coming days.
It's an investment.
Well, the same thing
happened to Cyprus in 2013,
except Cyprus was so flush
with dirty foreign money
that it's banking
system was 10 times
as large as the economy.
There was no way the
country could afford
the cost of bailing the banks out,
so there was something
called a bail in.
The banks seized 10% of their
largest depositors' accounts.
In exchange, those account holders
became partial
owners of the banks.
The new shareholders
are the depositors
whose deposits are turned
Converted into equity.
- Right.
- The interesting thing is
that it only affected
deposits above 100,000.
So only 4 percent of depositors
were affected by the bail-in.
So then who were
those four percent?
Russian and Ukrainian oligarchs.
- Wow, okay.
- It used to be the case
that it was very
hard to know how much
Russian and Ukrainian
money was in the system
- Okay.
- Because of banking secrecy.
Through the bail-in we
realised that 50% of the money
that was bailed in
belonged to Russians
like Viktor Vekselberg who is
allegedly very close to Mr Putin.
He's on the US sanctions list.
Okay, so that sounds problematic.
Yes.
Thank you very much.
Did those four percent of people
then have the controlling
stake in these banks?
Yes, of course. I mean, the
shareholders effectively decide
who is going to sit on the board.
And those people then make, what,
the policies of the
bank, the decisions?
Absolutely.
Why do people wanna
influence banks this way?
What can happen is that banks
can be looted from within.
If somebody controls the bank,
they can loot the assets,
and there's opportunities
there for tax evasion.
It's fertile ground,
effectively, for corruption.
Eventually when the bank of
Cyprus needed additional capital,
the bank attracted Wilbur Ross
to lead a group of investors
- I'm sorry, say that again.
- Wilbur Ross.
Wilbur Ross, the US
Commerce Secretary?
Your current absolutely.
Our commerce
secretary Wilbur Ross?
Wilbur Ross, the current
US Commerce Secretary?
Absolutely. Absolutely.
And he became a vice
chair of the bank
in 2014, I believe.
Wilbur Ross was on the
board until recently.
When he became Commerce
Secretary, he stepped down.
Nevertheless, two
major shareholders
were one politically
exposed American,
and one very politically
exposed Russian.
I'm gonna need the bottle
for what you just told me.
Is there really that
much more oversight now?
The rules are different for
different people, right?
So, some people
can bend the rules.
And for the benefit of
the big and the powerful,
and that's a danger
for the whole world,
not just for Cyprus, it's a
danger for everywhere, I think.
For Europe, for the United States.
Across the globe, rules
like those in Cyprus
crack down on the schmucks like me
trying to launder
a million dollars,
but the big guys, the
ones with a few billion,
well, it's easy to clean your
money if you run the bank.
There's more money going
through the illegal
shadow economy than ever,
but that money is in
the hands of a much
smaller and richer group.
Think of money laundering as
cheating on your maths exam.
You get all the answers
in some underhanded way,
and then try to pass it off
as your own legitimate hard work.
Cheating used to be
something anyone could do
if they put their lazy
maths-averse mind to it,
write formulas on your hand,
hide answers in your hat,
flirt with the nerdy kid
while you copy off him,
but all over the world,
schools caught on
to these flagrant methods of
cheating and cracked down.
That's like the money
laundering reforms
put in place around the world
over the last few decades.
Holy smokes, that's
a lot of reforms.
Cheating, for low-level
corrupt idiots
like these guys, became harder.
Now the people who can
get away with cheating
and money laundering are
the ones with connections,
wealth, and insight into
the sophisticated loopholes.
What's up, dick bags,
is this Griffin Hall?
Of course, it is,
my dad's Griffin.
So now, when it's time
to take the exam
Oh, is it test time?
Yo, teach, get over here.
You look good, you
been doing crunches
to get ready for my
dad's pool party?
- Yes.
- Let's see those abs.
His connections and
vast wealth incentivise
me to look away while I
maintain plausible deniability.
If anyone drags me in
front of an ethics board
about helping kids cheat,
I can say, of course not,
I was simply showing
the student my body.
And that's what the billionaires
and oligarchs are doing.
Rich connected
charmers like this guy
cheat and then graduate
into more connections
that make them even richer.
Ever wonder why the
shadiest rich kids
get ahead despite being
irrationally confident morons?
Here's a money laundering
problem for you.
Add laws that impact
low-level offenders,
subtract scrutiny for
high-level offenders
and those who own banks,
then divide the assets
amongst their friends.
What are you left with?
Pool party at Griffin's house.
I hate myself.
If money laundering
is now a luxury
reserved for the big fish,
I need to consult
a bona fide shark.
Felix Sater has been involved
in some shady businesses
with questionable characters,
but also some
well-respected businesses
with government connections.
He committed fraud
for the Russian mafia
and helped foil plots to
assassinate George W. Bush
and Colin Powell.
He also made a fortune
laundering money.
So maybe he knows
where a minnow like me
can clean a paltry
million dollars.
- You can head upstairs now.
- Thank you.
You're like the real-life most
interesting man in the world.
I should probably put out
a tequila or something.
Is tequila your drink of choice?
No, margaritas, but now I'm forced
to drink them out of plastic cups.
Earlier in Felix's
career, he stabbed a guy
with a margarita glass,
and that was just
the beginning of his adventures.
I went to Dubai to try to find out
how Al Qaeda was laundering
money through them.
And that's where I got into the
whole Bin-Laden hunting business.
I'm testifying on
Friday at Senate Intel
in front of Senator Feinstein.
The best place to hide your
diamonds are in your scrotum.
In your like, you just
tuck them underneath?
You tuck them right
underneath your balls.
That's amazing.
I had a very successful
career on Wall Street.
That ended really badly
over the margarita.
The guy I got into a fight with
wanted to drop the
charges, but the
district attorney
wasn't having it,
so I was convicted of assault.
The lawyer needed a hundred
thousand for the appeal.
I had a kid coming.
I had no money.
That's how I got
started on, what I call
the darker side of Wall Street.
I was making a lot
of money illegally,
and all that required
money laundering.
But at this point, my money
laundering days are way done.
For the last 20 years,
I've been trying
to pay back my debt for doing it.
I've worked with every
three-letter agency there is
in this country,
showing them every single
step of the way how it's done.
They've come to me,
they've asked me,
so I try to help them stop
both money laundering,
as well as theft of assets
and things of that nature.
Are there things that
we should be doing
collectively as a country
to prevent money laundering?
Yes, but the reality is we can try
to stop money laundering, but
you can never stop it 100%,
because the type of
controls that you would need
to put on to stop money laundering
will also choke the
financial system
to the point where it won't work.
Free flow of money, trade,
ease of us buying products
from somewhere, the easier
it is to conduct business,
the easier it is to money launder.
- Interesting.
- So that's why
money laundering
will always exist.
So what are the tops of the list
for money laundering right now?
Where are the easiest
places you can do it?
The funniest part is
that the largest amount
of laundered funds go in and
out of the United States.
Oh, wow, okay.
So all these countries
that hate America
like to keep their
money in America
because it's very safe and
nobody's gonna take it away
from them unless they get
caught doing something dirty.
That's why they
wanna buy cars here,
apartments, houses,
so we are number one
for laundered money.
Damn.
And in the United
States, the main conduit
of money laundering is Delaware.
What makes Delaware a place
where people launder money?
So Delaware has the
most corporate friendly
laws on the books, and
that's why most of the
publicly traded companies are
Delaware listed companies.
So for money laundering,
it's a go-to state.
I mean, I could literally
dial the phone right now
and within the next 30 seconds
we will have a Delaware
corp formed ready to go.
- Whoa.
- Yeah.
Delaware, the first state
to ratify the Constitution.
Delaware is so
business-minded that even
its state nickname,
The First State,
brags about how quickly
it processed paperwork.
What better place
to transform exotic
drug-dealing,
Ferrari driving money
into unremarkable buttoned
down Ford Fiesta money.
Delaware is laundered
money, the state.
I really struggled to start a
shell corporation in Cyprus,
but in Delaware, it's a snap,
and I don't even have
to go to Delaware.
I just hop online, fill
out a handful of questions,
and name my company.
Like Cyprus, the state
of Delaware is small
and doesn't have a
very diverse economy,
so its government
decided to become
the easiest state in the
country to set up a corporation,
and you don't even have to
pay Delaware state taxes
if you don't live there,
which is perfect,
because I've decided
on some other living arrangements.
But first, I'm gonna need
a whole lot more money.
Oh, shit.
Then I'm headed back
to Cyprus to buy enough
bank stock to become
a shareholder.
After that, it's easy.
All I have to do is bribe
the right government
And I can take full
advantage of the island's
luxury real estate market,
using my freshly cleaned
cash to buy a swanky pad.
Whoa, what a beautiful view.
I'm here with what our
lawyers have told us
to emphasise is a totally
legit real estate agency
that would never
knowingly sell a house
to a money launderer.
I think I'd like
to buy this house.
Can we set this up through a
company so that
nobody can find me?
Yes, yes. If you can
sign here, please.
Now I just wait for
someone to come along
to buy this house from me,
giving me clean cash to
use however I please.
Hotchi Chachi, that's
a lot of reforms.
86, 2018, do the maths.
I can't.
It's 20, it's 30
Impossible.
Do your test.
Money Laundering.
What is it?
Well, suppose that
I got all this money
from some sort of a
criminal enterprise.
Maybe I'm a drug kingpin
or an arms dealer.
Or maybe I'm a
lobbyist doing business
with shady foreign politicians.
No matter what I did to get it,
my money is now
tainted by my crime,
which makes it tricky to spend.
Money laundering is the process
of giving your dirty
cash a makeover
so that it appears legitimate
to bankers and retail stores.
That's a lot harder than it seems.
Best place to hide your
diamonds are in your scrotum.
There's a secret
international financial system
created just to help
criminals spend their money
without anyone knowing
the deplorable things
they did to get it.
And we're talking a lot of money.
Because most criminals aren't
dumb enough to declare it,
there's no way to
know the exact amount,
but it's likely bigger than
the world steel industry,
and possibly even the
world's food industry.
So where is this hidden economy?
It's right behind you,
and in front of you.
It's everywhere,
and I'm going to show
you how to spot it.
Whether you like it or not,
we're all connected by money.
I'm Kal Penn, exploring
this giant beast
that is the global economy.
We all know crime pays,
but how do bad guys
stash their cash?
Do criminals have their
very own bank of evil?
It's more like an informal
network of lawyers
who use accounting tricks
to keep dirty money
flying below the radar.
For decades, it was
all kept hush hush.
Then in 2015, the
curtain was pulled back
to reveal the industry's
shadiest methods.
Was there any shipping magnates
caught up in the Panama Papers?
Yeah, all of them.
- All of the shipping magnates?
- Seriously they are all in there.
Hamburg-based Jan Strozyk
was part of an international
team of reporters
that published stories
about a massive
financial data leak
that came to be known
as the Panama Papers.
It exposed hundreds of
thousands of secret companies
being used to hide
billions of dollars,
and Jan was one of the first
journalists to lay eyes on it.
I'm super curious about how
you got involved in all this.
I'm imagining like some
dude in a black trench coat
with a suitcase that's
connected to a handcuff,
and he's like
handing you something
and disappearing into the fog.
How did this all come to you?
There was a whistle-blower
that came to my colleague
and asked him if he was
interested in data leaks.
And in the end it turned out to be
the biggest data leak
journalists ever looked at.
We're talking about 11.5
million individual files.
And this was the first time ever
that someone outside of the
money laundering industry
was able to look at
what was going on there.
These files were the
confidential client records
of the law firm Mossack Fonseca,
and if you thought the
confessions in your secret diary
might be damaging, theirs
revealed how they helped
the criminally rich
launder dirty money.
Mossack Fonseca specialised
in setting up companies
so nobody can look
who is behind it.
They are called shell companies.
So if you have money that's
from a dubious source,
you can do your
business and nobody
could find out where
the money comes from.
So you would just go there
and on both side they would know
it's not good for the
business relationship
if everybody know
who's behind this.
Sure.
So they would not really
ask who the end client is.
They would just
set up the company.
In one case, there was a customer
and they used, like,
names from Harry Potter,
and they set up companies like
Azkaban and something.
I don't know.
That's the nerdiest
shit I've ever heard.
It is.
Are these drug cartels
that are laundering money?
Who's doing this?
They were doing business
with drug cartels,
mafia, doing business
with arms dealers,
and if we look at the
Panama Papers as a total,
we have almost 200
different countries.
Basically, every
country in the world
that's in some way implicated.
- That's crazy.
- Yeah, it is.
I mean there were a lot of arrests
after the initial publication,
and there's going to be a lot
more coming in the next years.
And there are hundreds
of people that are
probably sitting
at home and they're
a bit scared right now, I guess.
The Panama Papers revealed
rampant money laundering
all over the planet.
So far, prosecutors and
journalists have only processed
the tip of the iceberg,
and I wanna find out
just how deep it goes.
But I'm just an
actor-slash-TV host.
I've never been connected
to the seedy underbelly
of drugs or financial
crimes, so
In order to figure out how
money laundering works,
I'm gonna need a million dollars.
Thanks, Cody.
Perhaps you're wondering
what would stop
an aspiring money
launderer like me
from taking this bag of
money and depositing it
directly into the bank.
First of all, that
would actually just be
a super short episode, but
also, here's what would happen.
Next member, please.
I'd like to make
a deposit, please.
Okay, I'm gonna need you
to complete a deposit slip.
A million dollars?
Okay, because you're depositing
over 10 thousand dollars,
I'm gonna need to complete a
currency transaction report.
Interesting, okay.
What is the source of the money?
It kind of fell from the sky.
I know that sounds a little weird,
but it was, yeah.
Okay, that's what I'm gonna
have to write on your report.
And that's reported to
the federal government.
Okay, let me think
about it and come back.
If you don't deposit the money,
I still will need
to complete a SAR,
which is a Suspicious
Activity Report.
Either way, there's gonna
be some reporting done,
because you're carrying
around this amount of cash.
Is it easier if I
happen to find a receipt
for selling something?
Okay, thank you,
I'll think about it.
American banks have to
report all suspicious
cash transactions.
It's the law.
Apparently legitimate
business deals
rarely involve duffel
bags full of Benjamins.
Amanda, I need to talk to
you about completing a SAR.
Everything's fine, Amanda.
So, where do you go to find
out how to evade the law?
Easy, the place where
those laws are written,
our nation's capital,
Washington, DC,
where there are at
least a few good guys
fighting to keep
bad-guy money out.
Kerry Myers is a
veteran FBI hard-ass.
He segued from the bomb squad
to the anti-money laundering beat,
so maybe he can help
me make my money
look as harmless as we do.
This is not your first
time on a Segway, is it?
No, I was a bomb
technician with the FBI,
and we used to use Segways
when we would be in a bomb suit
to go down range so
we're not worn out
by the time we get there
- to do our job.
- That's awesome.
At the FBI, financial
investigation
is a part of every
crime you investigate.
There's always a
financial component.
So how would I launder money?
The easy answer is don't,
unless you wanna go to jail.
Sure.
But there are three steps
to money laundering:
placement, layering,
and integration.
Placement is when the
criminal takes the proceeds
of illegal activity,
and he goes in
and physically makes a deposit
into the financial institution.
Layering is, once the cash
is now into the system,
he wants to move it around
among different accounts,
maybe accounts of different banks
to make it harder to
trace and to further try
and hide its identity.
Integration is when the
money, after it's been moved
and layered through
different accounts,
is when the criminal pulls
the money out of the bank
and then uses it for a
legitimate transaction.
But, placement is the choke point,
because our laws are
designed to catch
the placement of the money
into the financial institution.
Oh, I know.
The trick is, trying to get it
into the financial institution
without a report being filed
with the Financial Criminal
Enforcement Network, FINCEN.
Think of it as a library.
That report stays at
FINCEN and law enforcement
can get every report that
any financial institution
has ever filed concerning
your activity with cash
or suspicious activity at
a financial institution.
There are all these regulations,
all this other reporting.
How would somebody
launder money, then?
If I wanted to launder money,
I would use a cash-based business.
A perfect example would
be a taxi cab company.
It's very difficult
for the government
to estimate whether
you had 10 fares today
or 20 fares today, and you
start taking the proceeds
of illegal activity,
commingling it with
the legitimate revenue
from a cash-based company
and start sliding it into
the financial system.
If I'm a bank, and you're
a taxi cab company,
and you make a deposit
every day with me
for six thousand dollars,
that's not going to
cause any alarms if one
day it's nine thousand,
or even one day it's 12 thousand.
Although I may file the report,
I'm not gonna be alarmed about it
because we have a history
of this taxi cab company
is consistently making
cash deposits every day
as a part of their revenue.
I've always dreamt of starting
a cross-fit doggie daycare.
I wish there was some
sort of how-to guide
for starting a money
laundering cash-based business.
Hi, I'm Benjamin,
owner and operator
of Ben's Cash-Only Businesses.
I'm a professional consultant,
and I can teach you to start
and run a cash
business, guaranteed.
How do I know you can run one?
Because I run several.
Have money and time on your hands?
Start a shell
corporation and use it
to invest in real estate.
Blossom into a florist.
I'm here to pick up the orchid.
Great.
Or even better, your corporation
can put money in art.
Oh, not in art, you dummy.
Bid on it.
Auctions are anonymous,
so they don't care
where the money came from.
I bought this painting
with my brand new
legitimate art business
that's not sketchy in any way.
In a couple years,
you can sell it again
through the same auction house,
and you can take that
clean money to the bank.
Know your business and keep
the government out of it.
Hey, how did all
this cash get here?
Selling flowers, of course.
The only thing criminal here
is the low cash-only prices.
So come on over to Ben's
Cash-Only Businesses.
The only question we ask
is why are you asking
so many questions?
With some of these businesses,
it could take years to
clean a lot of cash.
I've got to get rid of
it before the show ends.
I'm in Miami to meet
someone who knows
how to clean a lot
of cash quickly.
I was being considered
for a judgeship.
That's how secretive we were.
Nobody knew that I was a
trial lawyer during the day,
and I'd put on my mask and I
was a money launderer at night.
Back in the 80s, Humberto Aguilar
lived a double life,
defending criminals
as an attorney by day,
also becoming a criminal
by laundering their
money, also by day.
Until he got caught and
spent six years in prison.
So now I must ask you a question
about money laundering.
How did you do it?
Well, back when I was doing it,
most of the guys I worked
for transported cocaine.
Client came to me and said,
look, I got to problem.
I go, you got a lot of problems.
As soon as you said
that, I was like,
Well, okay, this seems
pretty normal so far.
And I said, okay,
what's your problem?
I got to take you, and
I go, okay, let's go.
So we went to this warehouse,
and it was a huge place,
bigger than this, full of boxes.
Okay, what's the problem?
He says, open a box.
What, what? Open a box.
So I open a box and
it's full of money.
Okay, and that one,
too, and that one?
Yes, okay, we've
got a big problem.
Yeah, it sounds like if you
had a whole warehouse
One warehouse?
I worked for a lot
of different people.
Oh, so this was
This wasn't just
one client one time.
No.
In the 1980s, Americans had quite
the appetite for cocaine.
And Miami was the entry
point for most of the supply.
The town's business was booming,
and dealers were swimming
in billions of dollars
of dirty cash.
My clients would say, look,
I need to use this money.
Because how many cars can I buy?
How many houses can I buy, cash?
And I said, oh, oh,
this is a challenge.
I created a plan, and
the plan was simply
get the money out,
get it overseas,
and bring it back legally.
How did you physically get
the money out of this country?
I would take these boats that went
to pick up the cocaine,
would go down to
South America empty.
And I said, wait,
I'm gonna use them.
So I would put the
money in these boats
to go down to South America
and end up in Panama,
and you have your people
waiting at the port
with guns to protect your cash.
So you get the money in Panama,
and you go to the bank,
and you find the banker.
And you start off slowly,
build the relationship.
You say, what kind
of watch you wear?
That's a Seico, no,
man, no, not my banker.
And you go and you
give him your Rolex.
Here's my Rolex, that's yours now.
And he looks at it, whoa,
30 thousand bucks, right?
Now, you own this
guy. You own him.
You say, okay, this is my
money. I wanna deposit it.
I'm gonna open this
account for this
corporation, always corporations.
You're gonna start
using shell companies.
Shell companies, they're
key to laundering
big sums of cash.
These corporate facades
exist only on paper
with no real business to speak of
aside from holding on to money
and moving assets around
without detection.
Think of money
laundering as a cigar.
Inside you have your
money, the tobacco.
Outside, you have
your shell company,
the wrapper that
conceals the tobacco.
The glue that holds
it all together
is your company's
board of directors.
These are people who
appear to run your company,
giving you total anonymity.
Once the wrapper is
sealed in a tidy package,
it's hard to look at
what's really inside.
And one of the
things I would do is,
when I went to Panama,
there's a couple
of whorehouses, I looked for
a different way of doing it,
no, it's whorehouses.
But the whorehouses are
good because they have IDs.
- Who has IDs?
- The girls.
All right, back up
- and talk me through
- We'll go back.
So you form a company
first. Who owns the company?
Oh, shit, these two
women own the company.
I've got their IDs, here.
You pay these whores two
hundred bucks to use their IDs.
They don't know what
you're doing with it,
they don't care, they
got two hundred bucks,
hey, I don't have to
sleep with anybody
for two hundred
bucks, that's great.
So there was never a
risk that they could go
to the bank and say, that's
my 10 million dollars?
There were always risks involved,
but the money's out of there soon.
In two, three weeks, I move
the money. Where does it go?
Switzerland, a wonderful place.
And they send a car,
and they pick you up,
and you've got the money
sitting there, and you're okay.
So they're just facilitating
your money laundering.
No, no, they're investment
Sure, yeah, okay, they're
facilitating their investment
in their new clients,
their new relationships.
I worked in government. I
know how these languages work.
It's wonderful, it is wonderful.
And then where would you move it?
Back here to invest it in Miami.
They all wanted their money
back to be able to use it.
And that was my job.
It's legitimately
coming from a legal bank
- under a corporation name?
- Yeah.
At the time, I honestly
didn't think it was illegal
in my mind and heart.
I knew it was, but hey, come on.
But you feel like it's
not hurting anybody.
It's not, look at Miami today.
No really, you look at
all these businesses
that are grown up.
They made Miami a grown-up city.
And people ask me,
well, what happened
to all the money that
was laundered in Miami?
Get up, you go on I-95,
you go over the overpass
that overlooks downtown,
and you look at all
these beautiful buildings.
You know what, that's the money.
So, I've got this bag of money.
What do I do with it?
First, get it out of the country.
Get it to Liechtenstein,
Guernsey, Cyprus.
It's probably one of the
dirtiest places in the world.
The island of Cyprus
is well situated
to be the premier money
laundering destination
for most of Europe and Asia.
I don't have a drug
boat like Humberto,
and the lawyers at Amazon
told me I couldn't wire money
like most real launderers do,
because it would be
criminally boring to watch.
So I'm taking my private plane.
Ladies and gentlemen, we'll be
touching down in Cyprus shortly.
Ladies and gentlemen,
we've arrived in Cyprus.
Cyprus has everything
that an international
traveller with large sums of
money could possibly desire.
- Hello.
- Hello, Mr Kal.
Welcome, sir, can I take the bags?
- No, thank you.
- Sure?
No, I'm fine, thank you.
Great weather, expansive beaches,
Russian karaoke, and
somehow less suspicious,
a massive financial
services industry.
How are you?
I'm fine. Welcome to Cyprus, sir.
Thank you. I'm excited to be here.
Oh, thank you.
First time in Cyprus.
It's a lovely place.
It seems like it, it's warm.
I've heard a lot of really
interesting things about it.
What is the purpose of your trip?
- Well, I
- Tourist?
I guess, I'm a tourist.
I also have some cash with me.
Cash.
And wanted to
Cleaning or laundering?
We can just talk about
that straight up?
We can call it that,
we don't have to
Of course, of course.
Okay, well, yeah, I'm
here to launder money
and set up a shell company.
Of course. It's the
paradise of money here.
Why is it the paradise of money?
First, because of the taxes.
We have low tax in Cyprus.
Otherwise, there is a lot
of accounting companies.
And we have a lot of Russians,
actually, to launder money.
Okay, so you're saying
a lot of Russians
come here to launder their money.
Yeah. I can be the company's
director if you want.
You can be the director
of my shell company?
Of course. If you
pay me good money.
More than the taxi.
Yeah?
So you said that you
have a lot of cash.
I do, so I have a lot
of cash with me, and
With you? You mean here now?
Yeah, here now.
How much?
Enough that I've
brought other people
with cameras in the cab with me.
Alright.
I'm a little I
have to be honest,
I'm a little surprised
that we're able
to talk so openly
about money laundering
and shell companies.
Is that, is that common,
or is that just because
you're an interesting guy?
It's common, but
it's just between us.
Okay.
Now let's get back to the money.
You didn't say how much you bring.
Well, so how much, how
much would your rate be?
No less than seven.
No less than seven hundred euros?
Thousand.
Oh, seven thousand euros, okay.
Hey, I'm trying to
negotiate here, man.
Cyprus's registrar of companies
is an enormous warehouse
storing all the island's
corporate registrations.
Here, there are paper
records for hundreds
of thousands of shell companies.
The sheer volume and
backlog of digitisation
makes any one of them
about as easy to find
as the Ark of the Covenant.
It's a good place to do
business, actually, here,
and if you keep an open mind,
there's great
potential in Limassol
because of the many foreign
companies, Russians, Germans.
Actually, the largest
Lately a lot of Israelis.
Even if my shell
company doesn't do
any real business,
I'll need to provide
an address for my
corporate records.
Andreas Solea has
the coolest moustache
I've seen since Miami, so
I will follow his advice.
Because he and his
daughter, Elisa,
run an office space
rental company,
and business is booming.
You have some offices that
you just have the desk.
- Lot of empty offices. Rented.
- Rented, empty offices rented.
Of course, rented,
because otherwise
that wouldn't be good for you.
We, as a company,
we don't actually
care what kind of job you do,
or why you need the office.
- It's not our business.
- We don't ask, actually.
We never ask what is
your kind of business.
It's your office. It's
your private office.
You can do whatever
you want with it.
You can do whatever
you want there.
Of course, in the
contracts it's written
not for illegal
purposes, but who knows?
Do you suspect that
some of your tenants
might be money laundering?
Money laundering?
Anybody can do whatever they
want. It's not our business.
- That's been clear.
- It's everywhere the same.
From Cyprus to United
States, to Russians
to Germans, to everywhere.
Those that they say, "Oh,
they don't do it in Germany,"
either they are lying
or they want to protect sort
of the image of their country.
Interesting.
There is everywhere
money laundering.
With the right lawyers
and accountants,
you can do a lot of things.
So what is the problem?
Everybody makes money from it.
So you're saying, it's
good for the economy.
But is there ever a
worry that the money
is coming from things like
terrorism or violence,
and that that's what sort
of propping up the economy?
Now it does.
Well, I didn't put
that idea in your head.
- Oh, you did, you did.
- Really?
Yes. It never passed
my mind, you know.
On the level we work
and our contacts
How do you say it? If you
don't mix with the chickens
then you don't become a
chicken. You know what I mean?
It seems turning a blind
eye to money laundering
in Cyprus is so
common that they have
their own weird chicken metaphor.
Am I alone in
thinking that there's
a whole lot of wilful
blindness happening here?
I need to find someone who sees
what's really going on.
Not everyone on Cyprus is
ignoring money laundering.
Hey, guys.
James Henry used to
serve the corporate beast
as chief economist
at McKinsey & Co,
but now he lances it towards
by investigating financial crimes.
He's part of a
network of journalists
working to uncover
trails of illicit money
that cross multiple
international borders.
Those trails often lead to Cyprus.
I'm working with journalists
in the Netherlands,
and the UK, and Cyprus.
And it's incredible to
see this new kind of
collaboration going on.
All right.
Oh, you fucker.
Countries like Cyprus sell
this kind of financial secrecy.
You know, it's an easy
business to set up,
you offer secret
companies and trusts.
You have lawyers
that are basically
willing to work for anybody.
The banks are willing
to take their money.
And this is a huge business,
so it sounds great.
But we're talking about
betting the future
of a country like
Cyprus on a sector
that's loaded down
with systemic risk.
And you also end up
with some clients
that you're not proud of.
Have there been any negative
consequences for this?
Yeah, so the financial
system here grew very fast
from 2004 until 2011.
The banks became like
900% of national income.
And by 2013, the whole
economy was taken down.
Whoa.
And since the 2013 crisis,
there's a whole set of
changes in the laws
that could make it
much harder to launder money
and to hide assets here.
But there's still a big grey area.
There's a lot of elasticity
in the enforcement.
The financial secrecy
industry is still
protecting money launderers.
It's protecting tax dodgers,
it's protecting kleptocrats
that are basically
Russian oligarchs
who accumulated huge fortunes
by basically looting Russia.
I assume things like
this continue to exist
because there's people
who enable these things.
You can imagine a kind
of Star Wars bar scene
where you have all
these various players
gathered around the same
kind of watering hole
which is the financial secrecy
provided by this industry.
It sounds like this cantina has
a pretty substantial cover charge.
I hope this bag of cash can
get me a seat at the bar.
Okay, so you're the expert.
So, how do I launder this
bag of money that I brought?
So one of the objectives
of money laundering
is always to have a good
story to make things
appear as if they came from
some legitimate source.
And real estate is one
of the easiest of those.
First step would
be to get a company
in whose name you will
own the real estate.
In Cyprus, we have about
two thousand lawyers,
and they can set up a company
that then becomes the
owner of your condo
or your property, and that way,
no one will really
understand that it's yours
if someone's looking for
your assets later on.
You can pay cash
for the real estate,
and when you go to sell
it, you have an explanation
for where the money came from.
You know, I didn't get
it from drug dealing,
I got it from real estate.
Okay, so I have to find a lawyer.
Yeah.
The multi-generational
Yiangou Law Firm
specialises in setting up
companies for foreigners.
They have a sterling reputation
and know the new laws well,
which may be why they're
the only Cyprus law firm
willing to let me bring in cameras
to witness how they
conduct business.
Not only are they gracious enough
to open their office for me,
they've also opened their kitchen.
This is amazing.
This is a very
common, let's say, lunch
that we have usually.
This is the common lunch?
You eat like this every day?
If I ate like this every day,
I would nap for a couple hours
and then go back to work.
Well, stay a few weeks in
Cyprus and you will adjust.
What kind of law do you
guys do for the most part?
Personally I've been dealing
with corporate matters.
Vangelis is an accountant auditor,
and Natalie is an administrator.
Cyprus has no raw material.
Has no industry.
Has no agriculture.
So that's why we developed
the lawyers, the
accountants, the bankers.
And then they try to find
business outside Cyprus.
George and his family have agreed
to walk me through the process
of finally starting
my own company.
I'm anxious to see
just how elastic
the new regulations are.
So do you have any specific name
in mind for your company?
Oh, that's a good questions.
The 69 Brothers.
The 69 very interesting name.
That's very specific.
- You like that?
- It's very specific.
He likes the 69 Brothers.
That's very specific.
It's very specific.
So basically now we're just going
to search into the
registrar record.
Okay, so she's
Googling 69 Brothers
She's searching whether
a similar name exists.
Well, actually, there
aren't any "69 Brothers"
registered as a company so.
The name's clear.
- You're ready to go.
- That's a good sign.
But there's also
the shelf companies,
the available ones.
And if you are okay
with using our nominee
officers, i.e. directors,
shareholders, then we skip
the whole registration part
and you can buy an
off-the-shelf company.
So I would be very curious
to hear about that.
Okay, I have printed the list.
Here are the companies
that we actually have now
with a ready-made structure.
People just use the
structure because
this information is
not publicly available.
So your name, it does
not appear anywhere.
This is very typical structure
that they use in Cyprus.
Wow, all right, so if
I pick one of these,
then what are the costs and
how quickly can it be set up?
So before we proceed
with the cost,
we need first to fill
out a questionnaire.
So you are going to establish
a company in which area?
Well, I assume
"Assume" is not a
good start, actually.
That's true, let me, okay
So like, what are the
more common reasons
that people will set up a company?
Basically for trading activities.
Or maybe a consulting company.
I think a consulting
company was the
Yeah, I mean, that could be a
- Would make sense.
- Consulting. Consulting.
Now we need to identify
if you're going to be
in the category of
politically exposed persons.
I worked in American
politics for a few years.
No big deal.
Does that mean I'm
politically exposed?
Yes, you can influence people.
Or you can have influence into
the general, let's say,
market or business.
So normally you should
be in this category.
Okay.
And your personal, let's
say, financial background?
Can you give us a little bit
where have you earned your money?
From which activities
specifically.
It fell from the sky.
So, Kal, I just wanted
to let you know
it seems suspicious.
We want to avoid
accepting a client
who is going to be involved
in any money laundering.
Okay, so this is a little more
complicated than I thought.
Many people believe
that it's quite easy
to incorporate a
company in Cyprus,
but things changed in
2012 to 2013, actually.
When the financial crisis
and the banking sector collapsed.
Now we need to follow
specific rules.
Things now are more strict.
Something feels off,
and not because I
just made a lawyer
say 69 Brothers on television.
This law firm says I can't
even take the first steps
to launder my million bucks,
but everyone else
says there are still
huge rivers of dirty money
flowing through Cyprus.
I need to find out
what happened during
the crisis in 2013 that
supposedly changed everything,
and for that, I'll need someone
who saw it all from the inside.
Panicos Demetriades
is the former governor
of the Central Bank of
Cyprus turned whistle blower.
I'd love to meet up and
find out what he knows,
but he's no longer here.
So it turns out that when
you fight money laundering
in one of the world's
top laundering economies,
you receive death threats,
and have to move your
family out of the country.
This place is pretty incredible.
It's my gateway to
Europe, basically.
The station, or the bar itself?
- The station.
- Is this real?
If I press this, they will know
I've never tried it.
You've never tried it?
I've never tried it.
No. Do you try it?
Oh, that was quick.
- Wow.
- How are you, sir?
- That's amazing.
- Cheers, by the way.
Cheers.
Cyprus has had a reputation
for being a place
where people can bring
a suitcase of money,
nobody would ask
where it was from.
You can set up a company.
Nobody would ask
anything other than,
here, give us a few bucks,
and here's your board,
here are your shareholders.
That used to be the case, I think.
That used to be the case
that people could do that.
But it has tightened up quite a
lot as a result of the crisis.
Ordinary law firms,
for example, in Cyprus
wouldn't even dare
to bend the law.
- Now? Okay.
- Now.
But those practises
is what, I feel,
eventually led to the
crisis of 2012-2013.
Remember what happened to the US
Back in 2008 and 2009
when major banks failed
and the government
bailed them out?
There was an Oscar-nominated
movie about it.
The government will purchase
125 billion dollars
in US bank stocks
over the coming days.
It's an investment.
Well, the same thing
happened to Cyprus in 2013,
except Cyprus was so flush
with dirty foreign money
that it's banking
system was 10 times
as large as the economy.
There was no way the
country could afford
the cost of bailing the banks out,
so there was something
called a bail in.
The banks seized 10% of their
largest depositors' accounts.
In exchange, those account holders
became partial
owners of the banks.
The new shareholders
are the depositors
whose deposits are turned
Converted into equity.
- Right.
- The interesting thing is
that it only affected
deposits above 100,000.
So only 4 percent of depositors
were affected by the bail-in.
So then who were
those four percent?
Russian and Ukrainian oligarchs.
- Wow, okay.
- It used to be the case
that it was very
hard to know how much
Russian and Ukrainian
money was in the system
- Okay.
- Because of banking secrecy.
Through the bail-in we
realised that 50% of the money
that was bailed in
belonged to Russians
like Viktor Vekselberg who is
allegedly very close to Mr Putin.
He's on the US sanctions list.
Okay, so that sounds problematic.
Yes.
Thank you very much.
Did those four percent of people
then have the controlling
stake in these banks?
Yes, of course. I mean, the
shareholders effectively decide
who is going to sit on the board.
And those people then make, what,
the policies of the
bank, the decisions?
Absolutely.
Why do people wanna
influence banks this way?
What can happen is that banks
can be looted from within.
If somebody controls the bank,
they can loot the assets,
and there's opportunities
there for tax evasion.
It's fertile ground,
effectively, for corruption.
Eventually when the bank of
Cyprus needed additional capital,
the bank attracted Wilbur Ross
to lead a group of investors
- I'm sorry, say that again.
- Wilbur Ross.
Wilbur Ross, the US
Commerce Secretary?
Your current absolutely.
Our commerce
secretary Wilbur Ross?
Wilbur Ross, the current
US Commerce Secretary?
Absolutely. Absolutely.
And he became a vice
chair of the bank
in 2014, I believe.
Wilbur Ross was on the
board until recently.
When he became Commerce
Secretary, he stepped down.
Nevertheless, two
major shareholders
were one politically
exposed American,
and one very politically
exposed Russian.
I'm gonna need the bottle
for what you just told me.
Is there really that
much more oversight now?
The rules are different for
different people, right?
So, some people
can bend the rules.
And for the benefit of
the big and the powerful,
and that's a danger
for the whole world,
not just for Cyprus, it's a
danger for everywhere, I think.
For Europe, for the United States.
Across the globe, rules
like those in Cyprus
crack down on the schmucks like me
trying to launder
a million dollars,
but the big guys, the
ones with a few billion,
well, it's easy to clean your
money if you run the bank.
There's more money going
through the illegal
shadow economy than ever,
but that money is in
the hands of a much
smaller and richer group.
Think of money laundering as
cheating on your maths exam.
You get all the answers
in some underhanded way,
and then try to pass it off
as your own legitimate hard work.
Cheating used to be
something anyone could do
if they put their lazy
maths-averse mind to it,
write formulas on your hand,
hide answers in your hat,
flirt with the nerdy kid
while you copy off him,
but all over the world,
schools caught on
to these flagrant methods of
cheating and cracked down.
That's like the money
laundering reforms
put in place around the world
over the last few decades.
Holy smokes, that's
a lot of reforms.
Cheating, for low-level
corrupt idiots
like these guys, became harder.
Now the people who can
get away with cheating
and money laundering are
the ones with connections,
wealth, and insight into
the sophisticated loopholes.
What's up, dick bags,
is this Griffin Hall?
Of course, it is,
my dad's Griffin.
So now, when it's time
to take the exam
Oh, is it test time?
Yo, teach, get over here.
You look good, you
been doing crunches
to get ready for my
dad's pool party?
- Yes.
- Let's see those abs.
His connections and
vast wealth incentivise
me to look away while I
maintain plausible deniability.
If anyone drags me in
front of an ethics board
about helping kids cheat,
I can say, of course not,
I was simply showing
the student my body.
And that's what the billionaires
and oligarchs are doing.
Rich connected
charmers like this guy
cheat and then graduate
into more connections
that make them even richer.
Ever wonder why the
shadiest rich kids
get ahead despite being
irrationally confident morons?
Here's a money laundering
problem for you.
Add laws that impact
low-level offenders,
subtract scrutiny for
high-level offenders
and those who own banks,
then divide the assets
amongst their friends.
What are you left with?
Pool party at Griffin's house.
I hate myself.
If money laundering
is now a luxury
reserved for the big fish,
I need to consult
a bona fide shark.
Felix Sater has been involved
in some shady businesses
with questionable characters,
but also some
well-respected businesses
with government connections.
He committed fraud
for the Russian mafia
and helped foil plots to
assassinate George W. Bush
and Colin Powell.
He also made a fortune
laundering money.
So maybe he knows
where a minnow like me
can clean a paltry
million dollars.
- You can head upstairs now.
- Thank you.
You're like the real-life most
interesting man in the world.
I should probably put out
a tequila or something.
Is tequila your drink of choice?
No, margaritas, but now I'm forced
to drink them out of plastic cups.
Earlier in Felix's
career, he stabbed a guy
with a margarita glass,
and that was just
the beginning of his adventures.
I went to Dubai to try to find out
how Al Qaeda was laundering
money through them.
And that's where I got into the
whole Bin-Laden hunting business.
I'm testifying on
Friday at Senate Intel
in front of Senator Feinstein.
The best place to hide your
diamonds are in your scrotum.
In your like, you just
tuck them underneath?
You tuck them right
underneath your balls.
That's amazing.
I had a very successful
career on Wall Street.
That ended really badly
over the margarita.
The guy I got into a fight with
wanted to drop the
charges, but the
district attorney
wasn't having it,
so I was convicted of assault.
The lawyer needed a hundred
thousand for the appeal.
I had a kid coming.
I had no money.
That's how I got
started on, what I call
the darker side of Wall Street.
I was making a lot
of money illegally,
and all that required
money laundering.
But at this point, my money
laundering days are way done.
For the last 20 years,
I've been trying
to pay back my debt for doing it.
I've worked with every
three-letter agency there is
in this country,
showing them every single
step of the way how it's done.
They've come to me,
they've asked me,
so I try to help them stop
both money laundering,
as well as theft of assets
and things of that nature.
Are there things that
we should be doing
collectively as a country
to prevent money laundering?
Yes, but the reality is we can try
to stop money laundering, but
you can never stop it 100%,
because the type of
controls that you would need
to put on to stop money laundering
will also choke the
financial system
to the point where it won't work.
Free flow of money, trade,
ease of us buying products
from somewhere, the easier
it is to conduct business,
the easier it is to money launder.
- Interesting.
- So that's why
money laundering
will always exist.
So what are the tops of the list
for money laundering right now?
Where are the easiest
places you can do it?
The funniest part is
that the largest amount
of laundered funds go in and
out of the United States.
Oh, wow, okay.
So all these countries
that hate America
like to keep their
money in America
because it's very safe and
nobody's gonna take it away
from them unless they get
caught doing something dirty.
That's why they
wanna buy cars here,
apartments, houses,
so we are number one
for laundered money.
Damn.
And in the United
States, the main conduit
of money laundering is Delaware.
What makes Delaware a place
where people launder money?
So Delaware has the
most corporate friendly
laws on the books, and
that's why most of the
publicly traded companies are
Delaware listed companies.
So for money laundering,
it's a go-to state.
I mean, I could literally
dial the phone right now
and within the next 30 seconds
we will have a Delaware
corp formed ready to go.
- Whoa.
- Yeah.
Delaware, the first state
to ratify the Constitution.
Delaware is so
business-minded that even
its state nickname,
The First State,
brags about how quickly
it processed paperwork.
What better place
to transform exotic
drug-dealing,
Ferrari driving money
into unremarkable buttoned
down Ford Fiesta money.
Delaware is laundered
money, the state.
I really struggled to start a
shell corporation in Cyprus,
but in Delaware, it's a snap,
and I don't even have
to go to Delaware.
I just hop online, fill
out a handful of questions,
and name my company.
Like Cyprus, the state
of Delaware is small
and doesn't have a
very diverse economy,
so its government
decided to become
the easiest state in the
country to set up a corporation,
and you don't even have to
pay Delaware state taxes
if you don't live there,
which is perfect,
because I've decided
on some other living arrangements.
But first, I'm gonna need
a whole lot more money.
Oh, shit.
Then I'm headed back
to Cyprus to buy enough
bank stock to become
a shareholder.
After that, it's easy.
All I have to do is bribe
the right government
And I can take full
advantage of the island's
luxury real estate market,
using my freshly cleaned
cash to buy a swanky pad.
Whoa, what a beautiful view.
I'm here with what our
lawyers have told us
to emphasise is a totally
legit real estate agency
that would never
knowingly sell a house
to a money launderer.
I think I'd like
to buy this house.
Can we set this up through a
company so that
nobody can find me?
Yes, yes. If you can
sign here, please.
Now I just wait for
someone to come along
to buy this house from me,
giving me clean cash to
use however I please.
Hotchi Chachi, that's
a lot of reforms.
86, 2018, do the maths.
I can't.
It's 20, it's 30
Impossible.
Do your test.