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How to Clean Dirty Money | The Business of Crime - YouTube
Channel: VICE
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<i>I was sued for economic espionage.</i>
[4]
<i>Iām sure I canāt
really talk about it.</i>
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<i>Who is Griffith?</i>
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Is he this devious, treasonous--
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<i>-Traitor.</i>
-Or somebody with
[12]
a little bit more passion
behind his motivations?
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I do want to conquer the world,
I really do.
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Like, nerd pride.
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In late 2019, American
research scientist Virgil Griffith
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was detained at Los Angeles
International Airport
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on charges relating to a trip
heād taken to North Korea
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earlier that year.
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Hi, my name is Virgil Griffith.
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Iāve never done a video
like this before, but...
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actually a video, period.
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But, I donāt know,
I was told to be myself,
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and I guess weāll see how it goes.
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Griffithās work centered on Ethereum,
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second only to Bitcoin as
the worldās largest cryptocurrency.
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Federal prosecutors allege
that the former hacker
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and self-anointed
ādisruptive technologistā
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had made a speech
at a crypto conference in Pyongyang
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on how to use the tech
to launder money
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and skirt the ever-tightening
financial sanctions
[60]
imposed on North Korea
over the past decade.
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The evidence didnāt look great.
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Heād previously texted a colleague
[66]
about the idea of setting up
an Ethereum network in the DPRK
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and had flown out
on a purchased diplomatic visa,
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having seen his initial
request knocked back.
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It still isnāt clear if this
eccentric crypto hacker
[79]
really was trying to launder money
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for the most vilified regime
in the world.
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This September, Griffith
finally faces trial in New York
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on charges of violating
international sanctions.
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If found guilty,
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he could spend
up to 20 years in prison.
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[The Business of Crime]
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Crime cannot thrive
in any major scale
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without the laundering of cash.
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We are facilitating corrupt dictators
from looting their countries.
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We are making drug dealers
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and drug suppliers across the world
ever more powerful.
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If they can't launder their cash,
they're going to have far less power.
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Money laundering is about
making illicitly-earned cash
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look like it came from
a legitimate source.
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It's hard to say exactly,
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but the United Nations Office
on Drugs and Crime estimates that
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anywhere between $800 billion
to $2 trillion of dirty cash
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is washed through the global economy
every year.
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Capitalism requires that this
dirty money flows around freely,
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and if it didn't, we could see
a serious economic decline.
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It doesnāt really matter
if youāre a pariah state
[146]
trying to contort itself around
the global financial system
[149]
or a two-bit drug dealer
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with a shoe box
stuffed with fivers under the bed,
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the fundamentals are the same.
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Whatever the scale, clean money
is always the only worthwhile money.
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But the process
of scrubbing it spotless
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isnāt always straightforward.
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Think of it as a three-part process.
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First, you need to place the money
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somewhere away
from its illicit origins.
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Imagine that shoe box of cash
deposited into a bank account
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in small enough increments
not to arouse suspicion.
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The second part is layering,
where you do multiple transactions,
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often through shell companies
and front companies,
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to disguise the origins of the money.
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And then thereās integration,
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when you actually put it
into a legitimate account,
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and then itās free to be used
as if it were legitimately obtained.
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If that sounds complicated,
well, itās sort of meant to.
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Successful laundering relies on
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muddying the waters of just where
that money started its journey.
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The easier it is to follow
the flow of capital
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back to the point of origin,
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the easier it is to get caught.
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Which is bad news for anyone
with a bag of dirty cash
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burning a hole in their pocket.
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Ken Rijock knows more
about this than most.
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Today, heās a financial
crime consultant,
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but in the late 80s, the high-flying
lawyer was a Miami-based middleman
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for some serious Colombian cartels
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and other top-level
organized criminals.
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At the peak of his operations,
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Ken would fly to the Caribbean
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with hundreds of thousands of dollars
in a tattered suitcase
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primed and ready to wash.
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But in Kenās view,
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things are worse now
than they ever were back then.
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With the rise of the internet assets,
itās so much easier.
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Instead of getting on a plane
and flying to a tax haven,
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you can sit in your office,
form an offshore company anonymously,
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and then move money electronically
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without exposing yourself by
taking a flight to a dodgy tax haven.
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This brings us
back to Virgil Griffith,
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or rather the very serious crimes
he's been accused of.
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Guilty or not,
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using crypto to launder money
maybe isnāt the smartest idea.
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Some experts have likened it to
pulling off a jewelry heist
[281]
but leaving a map to your apartment
at the scene of the crime.
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It is not a good idea
to commit crime with Bitcoin
[287]
because the moment
you have one single weak link
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in your operational security,
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all of your history is now exposed.
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Because of its very nature,
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it's a red flag to law enforcement.
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Because why would somebody
in a legitimate business
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all of a sudden be moving
cryptocurrency around?
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Itās also true that the vast scale
of the problem wouldnāt be possible
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without the complicity of legit
institutions across the world.
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When it comes to money laundering,
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thereās always hypocrisy at play.
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For instance, weirdo hackers
on ill-advised visits to North Korea
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are very bad and need
to be made examples of.
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But when it transpired in 2012
[328]
that HSBC had spent years
gleefully waving through
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hundreds of millions of Mexican
cartel money through its accounts,
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no one cared all that much.
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Banks are willing to pay the fines
necessary if they do get caught.
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They consider it to be
the cost of doing business.
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That means the largest
banks in the world
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pay multimillion dollar fines,
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but there are trillions
of dollars laundered.
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Not only do I think
the financial crisis
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meant that banks came to
somewhat rely on dodgy money
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coming in back then,
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I also think that the future
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is not looking good
for money laundering in the City.
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If anything, itās going to get worse.
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I recognize that there have been
some significant areas of failure.
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I have said before,
and I will say again,
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despite the best efforts
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and intentions of many
dedicated professionals,
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HSBC has fallen short
of our own expectations.
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The risk of actually being
prosecuted and going to jail
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for being instrumental
in laundering money
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is virtually nothing.
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The only effective punishment
that regulators can levy on a bank
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is the death penalty,
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thatās the loss of
the bankās license.
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If there were regulators
with intestinal fortitude in the US,
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they could have canceled
HSBC licenses in the United States.
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Financial crime can be
difficult to get excited about.
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It is, by definition, invisible.
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It comes wrapped in endless jargon,
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systems to learn,
acronyms to memorize.
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Drugs and murder
are easy to understand.
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These are names with a face.
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But money laundering
is just as corrosive to society.
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It's how ultraviolent drug lords
keep their money and power.
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Itās how repressive regimes succeed
in asset-stripping their countries.
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It's how corporations avoid tax
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and how terrorist networks
maintain their funding.
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And itās hard to point to a solution
to something so entrenched
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at every level of
the global financial system.
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So whatever happens
to Virgil Griffith,
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it wonāt spell even the beginning
of the end for money laundering.
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