Nonfinancial Businesses and Professions

Nonfinancial Businesses and Professions Casinos Casinos are among the most proficient cash-generating businesses. High rollers, big profits, credit facilities, and a variety of other factors combine to generate a significant amount of cash that flows from the casino, or “house,” to the players and back. Where gambling is legal, billions of dollars can readily flow between customers and a casino. Casinos and other businesses associated with gambling, such as bookmaking, lotteries, and horse racing, are associated with money laundering because they provide an excuse for recently acquired wealth with no apparent legitimate source. The services offered by casinos vary, depending on the jurisdictions in which they are located and the measures taken in those jurisdictions to control money laundering. Money laundering through casinos generally occurs in the placement and layering stage, for example, converting the funds to be laundered from cash to checks and using casino credit to add a layer of transactions before the funds are ultimately transferred out. A launderer can buy chips with cash generated from a crime and then request repayment by a check drawn on the casino’s account. Often, rather than requesting repayment by check in the casino where the chips were purchased with cash, the gambler claims to be traveling to another country in which the casino chain has an establishment, requests credit to be made available there, and then withdraws it in the form of a check in the other jurisdiction. Money launderers can also establish casino lines of credit and use illegitimately obtained funds as a repayment on the credit lines. FATF has reported that gaming businesses and lotteries are increasingly used by launderers. It gives examples of gambling transactions that enabled drug dealers to launder their money through casinos and other gambling establishments. One laundering technique connected with horse racing and gaming involves the person actually gambling the money to be laundered, but in such a way that he is reasonably sure of ultimately recovering his stake in the form of checks issued or funds transferred by the gambling or betting agency and reflecting verifiable winnings. This method makes it more difficult to prove the money laundering, because the person has actually received proceeds from gambling. Junkets, a form of casino-based tourism, also present significant money laundering risk, because junket participants largely rely on third parties, or junket operators, to move the funds across borders and through multiple casinos. This method creates layers of obscurity around the source of funds, ownership of the money, and the identities of the players. In some jurisdictions, casinos might enter into a contractual agreement with a junket operator to rent a private gaming room. In some situations, it is the junket operator, not the casino, that monitors player activity and issues and collects credit. Additionally, some jurisdictions allow junket operators to pool funds, which obscures the spending of individual customers. In certain regions, licensed junket operators act as fronts for junket operators in another country. The front operators supply players to a casino through the casino’s licensed junket companies, which might not qualify for a license in the country where the players will be gambling. Such unlicensed sub-junket operators can act as credit collectors and might have ties to organized crime networks. This poses serious risk and can lead a casino to engage in informal arrangements with junket operators that are inconsistent with AML/CFT policies. FATF recognizes that several jurisdictions do not require licensing of junket operators and their agents, further increasing the risks of money laundering. FATF emphasizes the need to ensure that junket operators are not under criminal influence and that financial transactions are transparent and subject to relevant AML/CFT measures. FinCEN and FATF have identified specific behaviors to watch for, including: • Attempts to evade AML reporting and recordkeeping requirements, such as: o A customer pays off a large credit debt, such as markers or bad checks, over a short period of time through a series of currency transactions, none of which exceeds the reportable threshold. o Two or more customers each purchase chips in small numbers, engage in minimal gaming, and then combine the funds to request a casino check for the chips presented. o A customer receives a payout in excess of $10,000, but requests currency of less than $10,000 and the balance paid in chips. He then redeems the remaining chips in amounts lower than the reporting threshold. • o A customer structures a transaction, often by involving another o When asked for identification, a customer reduces the number of chips customer, to avoid filing of a CTR or another tax form. presented for a cash-out to remain under the reportable threshold. Using the cashier's cage solely for its banking-like financial services, such as: o A customer wires funds derived from nongaming proceeds to or through a bank or nonbank financial organization located in a country that is not her residence or place of business. o A customer appears to use a casino as a temporary repository for funds by making frequent deposits into the casino account and, within a short period of time, requesting money transfers to a domestic or foreignbased bank account. • Minimal gaming activity without a reasonable explanation, such as: o A customer purchases a large number of chips, engages in minimal o A customer uses an established casino credit line to purchase chips, gaming, and then redeems the chips for a casino check. engages in minimal gaming, pays off the credit in currency, and redeems the chips for a casino check. o A customer makes a large deposit using small-denomination bills, withdraws it in chips at the table, engages in minimal play, and then exchanges the chips at the cage for large-denomination bills. o A customer inserts a high number of small-denomination bills into a slot machine, known as “bill stuffing,” engages in minimal or no play, and exchanges the voucher for large-denomination bills or requests a casino check for what appears to be a legitimate winning credit from a slot machine. o A customer frequently purchases chips with currency under a reportable threshold, engages in minimal play, and leaves the casino without cashing out the chips. o A customer transfers funds to a casino for deposit into a front money account, withdraws it in chips at a table, engages in minimal play, and then asks for the chips to be exchanged for a casino check. • Unusual gaming and transaction patterns, such as: o Two customers frequently bet large amounts to between them cover both sides of an even bet, such as betting both “red and black” or “odd and even” on roulette, betting both “with and against” the bank in baccarat and betting the “pass line” or “come line” and the “don’t pass line” and “don’t come line” in craps. o A customer routinely bets both sides of the same line for sporting events (i.e., betting both teams to win); the amount of overall loss to the customer is minimal, which is known as hedging. o A customer requests that a casino check be issued payable to third o A customer makes large deposits or pays off large markers with parties or without a specified payee. multiple instruments, such as cashier’s checks, money orders, traveler’s checks, and foreign drafts, in amounts of less than $3,000, indicating an attempt to avoid identification requirements. o A customer withdraws a large amount of funds from a deposit account and requests that multiple casino checks be issued, each less than $10,000. o A customer establishes a high-value deposit that remains dormant for an extended period of time and then withdraws or transfers the funds. The risk of money laundering arises not only from specific customer behaviors, but also from the types of customers casinos conduct business with. A player often builds a reputation as a high roller as long as they show big play, without being subject to the due diligence necessary to determine the source of funds. It is a serious mistake for casinos to allow play and accept the revenue without reasonably determining the source of a customer’s gaming funds. FinCEN expects US casinos to know the source of high rollers’ funds. Even when they are not explicitly required to determine the source of funds, it is recommended that casinos require more information from certain customers who engage in high-risk transactions, such as international wire transfers and large cash deposits, as part of a risk-based approach to AML/CFT. Through FinCEN, the US has become one of the most aggressive authorities on issuing AML program deficiency penalties to some of the largest casinos in the industry, for example: • Tinian Dynasty Hotel & Casino fined US$75 million (2015): The casino failed to develop and implement an AML program (i.e., no dedicated AML officer, failure to develop and implement AML policies and procedures, and no independent tests of the AML program). The casino failed to file thousands of CTRs, and its employees assisted wealthy VIP patrons in completing suspicious transactions, particularly structuring. • Caesars Palace fined US$9.5 million (2015): The casino “allowed some of the most lucrative and riskiest financial transactions to go unreported"; promoted private salons in the United States and abroad without appropriately monitoring transactions, such as wire transfers, for suspicious activity; and openly allowed patrons to gamble anonymously. • Sparks Nugget fined US$1 million (2016): The casino “had a systemic breakdown in its compliance program” and disregarded its compliance manager. Rather than file proper SARs, Sparks Nugget instructed the compliance manager to avoid interacting with regulatory auditors and prevented her from reviewing a copy of the completed regulatory exam report. • Artichoke Joe’s Casino (AJC) fined US$8million (2017): AJC senior managers were aware that loan sharks were conducting criminal activity through the card club and using AJC gaming chips for money laundering. They nonetheless failed to file any SARs, although on multiple occasions loan sharks had provided AJC chips to customers on the gaming floor in plain sight. AJC also failed to implement adequate internal controls. In addition to ensuring adequate recordkeeping and reporting requirements, casino AML/CFT programs should establish a process that enables the casino to reasonably determine sources of funds and allows CDD to be conducted at the time the funds are accepted, often with a customer already on the property and ready to game, rather than relying exclusively on an after-thefact back-of-house compliance investigation. Although the concept of on-demand enhanced KYC and source of fund questioning might be new to casinos, there are many ready-to-use tools developed specifically for the industry’s front-of-house operations. The most effective processes combine information from various international sources— criminal and judicial, securities and exchanges, financial, government and worldwide lists, political exposure, negative news, and business associations— with ID verification, making the due diligence possible directly from the front line of operations. Online casinos and gaming operations are increasingly prevalent. Online gaming is regulated in certain jurisdictions; however, many online gaming companies operate illegally. In the United Kingdom, the Gambling Commission requires a license for remote gambling when the business operates in the UK and any part of its gambling equipment is located in the UK, and when the equipment is located outside the UK, but the business operates through a British-facing business. Online gaming is also regulated in Antigua and Barbuda under the Interactive Gaming and Interactive Wagering Regulations, and companies are required to establish compliance programs. Nevertheless, online gambling provides an effective method of money laundering for cybercriminals, because transactions are conducted principally through credit and debit cards. Site operators are typically unregulated offshore organizations. This can affect financial organizations, because the internet gambling sites often have accounts in offshore banks that, in turn, use reputable domestic correspondent banks. Tracing the source and ownership of illegal money that moves through these accounts can be difficult for enforcement and regulatory agencies. Due to the inconsistent regulatory environment and susceptibility to cybercriminals, some credit card issuers do not allow the use of their credit cards for online gambling. Financial organizations screen merchant codes that identify the type of business accepting the credit card and transaction codes for “card not present” (i.e., the cardholder is not physically in the casino to process the transaction via a card reader). The bank can thus block internet gambling transactions. However, online gambling can be funded in numerous ways other than credit cards, such as prepaid cards, wire transfers, peer-topeer transfer, virtual currency, and mobile phone carrier billing. MONEYVAL, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, identified numerous potential typologies and red flag indicators for money laundering involving online gambling, including the following examples: • A money launderer colludes with an operator of an offshore online gambling operation and deposits funds obtained from criminal activities into the gambling account and then withdraws them as winnings. The website operator keeps a percentage of the proceeds as a commission. The launderer declares the winnings to the tax authorities and then uses the funds for legitimate purposes. • A money launderer deposits funds into an online gambling account using a stolen identity. He bets using the funds and receives payouts for the winnings or sustains acceptable losses. • A money launderer logs on to the gambling account from multiple countries. • A player is identified as a PEP. Casinos (Case example: Methods of money laundering) In 2019, the Australian Independent Liquor & Gaming Authority (ILGA) launched an inquiry into the operations of Crown Melbourne, an Australian land-based casino operator. ILGA alleged that Crown had actively facilitated money laundering on behalf of extremely wealthy Chinese gamblers since 2014. The inquiry highlighted the systemic failures of key AML controls such as accepting large cash deposits from Chinese nationals at cashier’s desks in a VIP room operated by a junket agency. Crown also incorporated shell companies to facilitate transactions from China that were not reported to the regulator, the Australian Transaction Reports and Analysis Centre. Whistleblowers leaked video of a cashier’s desk where a VIP customer exchanged bricks of loose cash, totaling hundreds of thousands of AUD, for high-value chips. Whistleblowers claimed similar transactions occurred regularly in Crown’s VIP rooms, one of which was operated independently by junket agents that recruited high-rolling gamblers from Macau. Crown used two shell corporations to enable VIP gamblers and junket agents to circumvent Chinese capital flight controls to credit casino accounts and settle gambling debts. There was evidence that international criminal gangs exploited these accounts to place proceeds of crime. Crown staff often aggregated multiple deposits in one entry to hide from the AML team the number and nature of transactions. Evidence of structuring included nearly 700 deposits made below reporting thresholds, often the same individual making multiple deposits at multiple branches on the same day. Customers were allowed to deposit cash at Commonwealth Bank of Australia without verifying identity or source of funds. Crown repeatedly failed to report transactions exceeding the AUD physical currency reporting threshold. Key takeaways • Casino cashiers can be exploited for placement. • Intermediaries, such as junket agents and shell companies, can be used to place, layer, and integrate funds through casino operations. • A VIP customer’s commercial value must not protect them from suspicion, scrutiny, or AML controls. Dealers in High-Value Items (Precious Metals, Jewelry, Art, etc.) The European Directives on money laundering provide a common framework for including trade in precious metals, such as gold and diamonds, and other high-value items, such as jewelry and art, within AML monitoring programs. The USA PATRIOT Act requires certain dealers in covered and finished goods, including precious metals, stones, and jewels, to establish AML programs. However, in many other jurisdictions, these industries are not regulated for money laundering control purposes. FATF released a report entitled Money Laundering/Terrorist Financing Risks and Vulnerabilities Associated with Gold, which reinforced prior typology reports. Gold has high intrinsic value in a relatively compact form that is easy to transport. It can be bought and sold simply and often anonymously for currency in most areas of the world. It is more readily accepted than precious stones, especially because it can be melted down into many different forms. Gold holds its value regardless of the form it takes—whether as bullion or as a finished piece of jewelry—and is thus often used to facilitate the transfer of wealth. For some societies, gold carries an important cultural or religious significance that adds to its demand. Following are two of the key findings from the report: 1. Gold is an extremely attractive vehicle for laundering money. It provides a way for criminals to convert their illicit cash into anonymous transferable assets. 2. The gold market is a target for criminal activity because it is lucrative. Understanding and knowing the various stages of the gold market and types of predicate offenses is critical in identifying money laundering. In industries that deal in high-value items, it is possible that transactions in a particular scheme have not taken place at all, but they are represented with false invoicing. The paperwork is then used to justify transferring funds to pay for the shipments. The false invoicing scheme, whether overbilling or underbilling for the reputed goods or services provided, is a common money laundering technique. The following transactions are also vulnerable and require additional attention: • Payments or returns to persons other than the owner: A transaction is suspicious if one person delivers precious metal for refining and asserts ownership of the metal and authority to sell it, but directs payments to be made to another person. It is possible that the “dealer in precious metal” is being used to transfer an asset not only from one form into another— unrefined gold to refined gold or money within the international finance system—but also from one person to another. • Precious metal pool accounts: These accounts are maintained by a small number of large and sophisticated precious metal companies and have worldwide scope. They receive and hold precious metal credits for a customer, which can be drawn on by that customer. The customer can request the return of the precious metals, the sale and return of monetary proceeds, or the delivery of precious metal to another person. Thus, a refining customer in one country can deliver gold scrap for refining, establish a gold credit in the refiner’s pool account system, and subsequently have delivery made by the refiner to another person, based upon that credit. The illegal trade of diamonds is an important factor in armed conflicts in certain areas of the world, and terrorist groups can use diamonds from these regions to finance their activities. Individuals and entities in the diamond sector have also been involved in complex diamond-related money laundering cases. As with gold, the simplest typology involving diamonds consists of the direct purchase of the gems with illegally obtained money. Regarding dealers in high-value items, FATF reports that common types of laundering activities include retail foreign exchange transactions, forged or fraudulent invoicing, commingling of legitimate and illicit proceeds in the accounts of diamond trading companies, and, in particular, international fund transfers among these accounts. Some of the detected schemes are covers for laundering the proceeds of illicit diamond trafficking. In others, diamond trading is used as a method for laundering the proceeds of other criminal activity. The multi-million-dollar fine art industry can also serve as a convenient money laundering vehicle. Anonymous agents at art auction houses bid millions of dollars for priceless works. Payment is later wired to the auction house by the agents’ principals from accounts in offshore havens. It is a convenient mechanism for money launderers. Art and antiques dealers and auctioneers can follow these tips to decrease their money laundering risks: • Require all art vendors to provide their names and addresses. Require them to sign and date a form that states that the item was not stolen and that they are authorized to sell it. • Verify the identities and addresses of new vendors and customers. Be suspicious of any item with an asking price that does not reflect its market value. • If there is reason to believe that an item was stolen, immediately contact the Art Loss Register, the world’s largest private database of stolen art, antiques, and collectibles. The database contains more than 700,000 items reported by law enforcement agencies, insurers, and individuals as being stolen. • Critically assess the situation when a customer asks to pay in cash. Avoid accepting cash payments unless there is a strong and reputable reason. • Be aware of money laundering regulations. • Appoint a senior staff member to whom employees can report suspicious activities. Use of precious metals and gems to launder money (Case example: Methods of money laundering) Operation Apex was a US multiagency operation that in 2020 targeted two US businesses and led to the arrest of 12 people. Individuals in the US, Hong Kong SAR, Mexico, Canada, and elsewhere were alleged to be members of the Wu gang, a transnational criminal organization engaged in wildlife trafficking, shark finning, drug trafficking, and money laundering using gold, precious metals, and diamonds. The Wu gang allegedly trafficked marijuana grown in California to other parts of the US and ran two companies involved in the illegal wildlife trade, particularly shark finning. Shark finning is legal in the US state of Florida, but not legal in the US state of California. The Wu gang used false documentation to establish and use a Florida shark fin business as a front for their California business, which shipped fins to Hong Kong. Fake invoices and paperwork were created to make it appear as though the Florida company was invoicing and financing the shark fin business. Couriers were paid shipping fees to take bundles of cash to be laundered. The proceeds from the shark finning and drug trafficking were deposited into third-party business accounts that dealt in gold, precious metals, and jewels to hide the illegal activities. The accounts were held in financial organizations located in the United States, Mexico, and Hong Kong SAR. Criminals often use precious metals and gems to launder money because they make it easy to transfer value across borders, they have high value in a compact form, they hold value over time, they are easily transported, their origins are difficult to trace, and they are easily exchanged for cash or used as currency. Authorities confiscated US$4 million from the bank accounts of the two US businesses, $US1 million in diamonds, and approximately US$3 million in gold, silver, and other precious metals. They also seized about 18,000 marijuana plants, 34.5 pounds of processed marijuana, multiple guns, and more than six tons of shark fins. Key takeaways Converting illicit proceeds into precious metals and gems is attractive to financial criminals because: • They have high value in a compact form, and their value tends to hold for long periods of time. • They are easy to transport, so value can be transferred across borders without customs declarations. • Their origins are difficult to trace. • They can be easily exchanged for cash or used as currency in most areas of the world. Use of precious metals to conceal drug proceeds (Case example: Methods of money laundering) In 2018, a US gold refinery, Elemetal LLC, pled guilty to a charge of failing to maintain an adequate AML compliance program, despite refining billions of dollars’ worth of gold from multiple countries. Elemetal had a designated compliance officer and an AML policy, but it failed to focus its associated activities on the specific risks of the precious metals industry. Due to its inadequate compliance program, Elemetal did not undertake basic KYC, customer due diligence (CDD), or enhanced due diligence (EDD) measures on its counterparties or establish the origin of the gold. Elemetal forfeited US$15 million; was subjected to a five-year probation period, during which it was banned from acquiring gold from outside of the US; and agreed to implement a court-approved compliance and ethics program. In 2015, the Financial Action Task Force (FATF) highlighted the AML risks inherent in the gold trade, due to its heavy reliance on cash as a method of exchange, the anonymity of the properties of gold making, and the extreme difficulty of tracing the origins of gold. US federal law requires precious metal dealers to maintain AML programs, recognizing the high risks of money laundering associated with gold. In 2018, Elemetal admitted that it had failed to implement an adequate AML compliance program, leading to significant KYC, CDD, and EDD failures. Elemetal had acquired gold from overseas suppliers, including those in Central America, South America, and the Caribbean. However, it had not obtained confirmation of the suppliers' identities or the source and origin of the gold, in contravention of the KYC requirements of the Bank Secrecy Act (BSA). Elemetal sourced gold from suppliers for which AML screening would likely have flagged suspicious activity. It also accepted gold from countries and customers where records indicated the gold was likely being smuggled across borders. Elemetal accepted gold from suppliers for whom criminality was suspected due to negative press indicating they were trading in illicit gold. Three former employees also pled guilty to importing illicit gold from South America into the US. These employees smuggled the illicit gold through an Elemetal subsidiary in Miami, falsified paperwork, and bribed South American officials. The three received prison sentences ranging from six to seven and a half years. Following the court case, Elemetal was removed from the London Bullion Market Association’s list of gold refiners, from which buyers typically select their suppliers. COMEX, the largest gold futures market in the world, also refused to take gold from Elemetal. Key takeaways • US federal law requires precious metal dealers to maintain robust AML programs. • AML risks inherent in the gold trade include heavy reliance on cash, anonymity, and difficulty tracing the source and origin of gold. • The BSA requires precious metals dealers to perform KYC on suppliers and identify the source and origin of metals. • In addition to KYC, AML programs must also implement Know Your Employee controls. • Failure to implement robust AML controls can lead to significant fines, loss of business, and reputational damage. Use of art to launder money (Case example: Methods of money laundering) For several reasons, criminals consider the world of fine art and antiquities an attractive avenue for money laundering. It is a market that often operates with anonymity, such as private sales with third parties. It involves high-value goods with prices that are open to manipulation and subjectivity, and funding sources can be opaque. The art world also is spread throughout multiple international markets and commonly uses intermediaries and offshore accounts. Historically, a lack of regulation and supervision has been used to legitimize criminal activity in this market. However, as increased regulation has made traditional methods of money laundering more difficult, the art world has attracted money launderers. There have been relatively few criminal convictions for money laundering in art and antiquities, but there have been several high-profile trials for theft and fraud in these markets. The art market has attracted the attention of regulators, and global authorities have enacted laws to prevent its misuse by organized criminals and terrorists. In 2016, US biodiesel businessman Philip Rivkin pled guilty in Houston, Texas, to laundering US$78 million through many avenues, including purchasing over 2,000 pieces of art. He was sentenced to 10 years imprisonment and fined US$138 million in restitution and forfeiture. Investigators determined that Rivkin’s company Green Diesel was not in fact producing biodiesel, but merely selling certificates and defrauding its customers. Rivkin sold falsified energy credits to large companies. With the proceeds, he bought a collection of photography worth over US$15 million, using the art to legitimize his income. The Panama Papers scandal—the 2016 leak of millions of files from an offshore law firm—suggested connections between art and money laundering by identifying suspicious shell companies that were investing in high-value art. A 2020 US Senate investigation determined that, within months of the US imposing sanctions on the Russian brothers Arkady and Boris Rotenberg, they illegally spent more than US$18 million on art in the US using shell companies linked to Russian oligarchs to evade sanctions. The US, through the Anti-Money Laundering Act of 2020, has designated art markets as high-risk environments for money laundering and terrorist financing, as have the UK and the EU. These countries have promoted prevention through enhanced supervision and regulatory requirements. The EU, in response to the Fifth Directive regarding money laundering, released the Responsible Art Market Initiative, a set of guidelines on combatting money laundering and terrorist financing in the art market. As of January 2020, the Directive puts art market participants in the same category as financial institutions and estate agents. They now must register with regulators, perform due diligence on buyers and sellers, and take a risk-based approach to prevent money laundering. Art dealers and associated financial services must understand money laundering methods and recognize red flags and the potential risks to their businesses. Many have invested in technology to assist with performing CDD, verification, and appropriate risk assessments. Still, the responsibility for due diligence remains with the art market participants. Key takeaways • Art markets are high risk. They are linked to serious criminal and terrorist offenses, due to the perceived anonymity of transactions, high value, and international movement of goods. • Shell companies are often used to enhance secrecy. • Governments have introduced primary and secondary legislation to regulate and enforce money laundering and terrorist financing standards across the art markets, including the following: • o The Responsible Art Market Initiative o The Anti-Money Laundering Act of 2020 o The EU Fifth Directive Art market participants are expected to understand the anti-money laundering requirements and are personally liable for noncompliance. Travel Agencies and Websites Travel agencies and their websites can also be used by money launderers to mix illegal funds with clean money to make the illegal funds appear legitimate, by providing a reason to purchase high-priced airline tickets, hotels, and other vacation expenses. Money laundering can occur in travel agencies and through their websites in the following ways: • Purchasing an expensive airline ticket for another person who then asks for a refund • Paying for services in installments that are actually structured wire transfers in amounts small enough to avoid recordkeeping requirements, a method used especially by criminals from foreign countries • Establishing tour operator networks with false bookings and documentation to justify significant payments from foreign travel groups Travel agencies (Case example: Methods of money laundering) In 2015, Indonesian militant suspect Gigih Rahmat Dewe opened a travel agency on Bintan Island, Indonesia, as a cover for the terrorist organization the Islamic State of Iraq and Syria (ISIS). The agency was initially funded by US$2,800 provided by Dewe’s handler, Bahrun Naim, an ISIS operative in Syria who was known to have been involved in several terrorist plots in Indonesia. The travel agency’s mission was to facilitate the safe travel of terrorists to their assignments, provide a legitimate cover for money laundering, and generate revenue to fund terrorist attacks. The plan only worked for a few months before the Indonesian National Police’s counter-terrorism squad arrested Dewe and his accomplices for planning an attack on the Marina Bay Sands, a luxury hotel in Singapore. Small travel agencies, especially in developing countries, are cash-intensive businesses that offer the same opportunities as other cash-intensive businesses to money launderers and terrorists. They also offer opportunities for terrorists to address logistical challenges, such as planning travel for terrorists and entering false identities into travel arrangements, all while limiting the risk of detection. ISIS created the travel agency in Indonesia to facilitate safe travel for terrorists and avoid detection. As cash-intensive businesses, travel agencies also provide the ability to commingle legitimate and illegitimate funds and therefore launder money. This method can be used during all three stages of money laundering, because travel arrangements can be paid for in cash or by third parties and later refunded by known airlines or hotel chains in wire transfers. This transfer of funds would raise minimal suspicion at recipient banks. Payments are overseen by the criminals controlling the travel agency, so the cash and thirdparty payments can be hidden. Key takeaways • Travel agencies are cash-intensive businesses. • Travel agencies solve logistics problems for terrorists. • Travel agencies can allow the use of false identities. • Travel agencies can be used to commingle legitimate and illegitimate fund. • Travel agencies can be used in all three stages of money laundering. Vehicle Sales The vehicle sales industry includes sellers and brokers of new vehicles, such as automobiles, trucks, and motorcycles; new aircraft, including fixed-wing airplanes and helicopters; new boats and ships; and used vehicles. Money laundering risks, methods, and red flags in the vehicle sales industry include: • Structuring cash deposits below the reporting threshold • Purchasing vehicles with sequentially numbered checks or money orders • Trading in vehicles and conducting successive transactions of buying and selling new and used vehicles to produce complex layers of transactions • Accepting third-party payments, particularly from jurisdictions with ineffective money laundering controls Most money laundering cases involving vehicle dealers have one common element: the unreported use of currency to pay for the automobiles. Cases have also occurred in which car dealers laundered money by allowing drug dealers to trade in cars for less expensive models and to be paid in checks, not cash, for the difference. In one such down-trading money laundering scheme, a drug dealer traded in his US$37,000 Porsche for a US$17,000 Ford Bronco. The car dealer allowed the down-trade, knowing that the customer was a drug dealer, in violation of the anti-money laundering law. Luxury vehicles (Case example: Methods of money laundering) In May 2019, a US federal court sentenced John D. Leontaritis, a resident of Texas, to 20 years in federal prison. He was convicted of drug trafficking and money laundering violations that were committed from 2013 to 2017 in Texas. A jury had found Leontaritis guilty of conspiracy to possess drugs with the intent to distribute, the distribution of methamphetamine, and conspiracy to commit money laundering. The latter offense included using his luxury car dealership to launder the proceeds of drug sales for the benefit of a sprawling interstate drug trafficking network. Leontaritis was the owner and operator of Vanderhall Exotics of Houston LLC, which specialized in exotic luxury automobiles. He used his car dealership to launder drug money for a large Houston-based drug trafficking organization that smuggled drugs from Mexico into the US. Leontaritis knowingly laundered drug profits through his business by regularly accepting cash payments from known drug dealers in exchange for highvalue vehicles. As part of the conspiracy, Leontaritis used fraudulent dealer invoices to hide the true identities of the buyers from law enforcement and the Internal Revenue Service and failed to report cash payments for vehicles. The conspiracy operated for many years and involved hundreds of kilograms of Mexican-origin methamphetamine. Leontaritis laundered millions of dollars through the dealership before his criminal enterprise was dismantled by the US Organized Crime Drug Enforcement Task Force. Key takeaways • Cash-intensive businesses, such as car dealerships, are particularly vulnerable to money laundering. • Fraudulent invoices can be used to hide buyers’ identities. • The purchase of luxury vehicles and other assets can be used to place large amounts of illicit money into the financial system seemingly legitimately. Gatekeepers: Notaries, Accountants, Auditors, and Lawyers Many professionals have the ability to either block or facilitate the entry of illegitimate money into the financial system, including lawyers, accountants, company formation agents, auditors, and other financial intermediaries. The responsibilities of such gatekeepers include identifying clients, conducting due diligence on their clients, maintaining records about their clients, and reporting suspicious client activities. Some of these obligations also prohibit gatekeepers from informing, or “tipping off,” clients who are the subject of SARs. Violations can subject gatekeepers to prosecution, fines, and even imprisonment. In European Union countries and several others, mandatory anti-money laundering duties apply to gatekeepers. FATF’s 40 Recommendations (see the chapter “Anti-Money Laundering/Countering the Financing of Terrorism Compliance Programs” for more on the Recommendations) also cover independent lawyers, legal professionals, and other gatekeepers. FATF identified the following functions provided by lawyers, notaries, accountants, and other professionals as the most useful to potential money launderers: • Creating and managing corporate vehicles and other complex legal arrangements, such as trusts, which might obscure the links between the proceeds of a crime and the perpetrator • Buying or selling property: Property transfers can serve as the cover for illegal fund transfers (layering stage) or the final investment of proceeds after they pass through the initial laundering process (integration stage). • Performing financial transactions: These professionals might carry out various financial operations on behalf of a client (e.g., issuing and cashing checks, making deposits, withdrawing funds from accounts, engaging in retail foreign exchange operations, buying and selling stock, and sending and receiving international funds transfers). • Providing financial and tax advice: Criminals with large amounts of money to invest might pose as legitimate businesspeople to minimize tax liabilities or place assets out of reach in order to avoid future liabilities. • Providing introductions to financial organizations • Undertaking certain litigation • Setting up and managing charities Criminals often use legal professionals to give the appearance of respectability in order to dissuade questioning or suspicion from financial organizations and to create an added step in the chain of any possible investigations. Additionally, legal professionals might deliberately misuse a client’s legitimate accounts to conduct transactions without the client’s knowledge. The FATF report also describes five categories of red flag indicators of money laundering or terrorism financing: 1. Characteristics of the client: • Overly secretive • Uses an agent or an intermediary or avoids personal contact without a logical reason • Reluctant to provide or refuses to provide information or documents usually required to enable the execution of a transaction • Holds or has previously held a senior public position or has professional or family ties to such individuals • Known to have been the subject of investigation for an acquisitive crime (i.e., one in which the offender derives material gain from the crime, such as theft or embezzlement) • Known to have ties to criminals • Shows unusual interest and asks repeated questions on the procedures for applying ordinary standards 2. Characteristics of the involved parties: • Native to, residents in, or incorporated in a high-risk country • Connected without an apparent business reason; that is, tied in a way that generates doubts as to the real nature of the transaction • Appear in multiple transactions over a short period of time • Incapacitated or under legal age, with no logical explanation for their involvement • Attempt to disguise the real owner or parties to the transaction • Not directing the transaction, (i.e., the person directing the operation is not one of the formal parties to the transaction) • Do not appear to be suitable representatives 3. Characteristics of the source of funds: • Provided using unusual payment arrangements • Collateral located in a high-risk jurisdiction • Represents a significant increase in capital for a recently incorporated company, including foreign capital, without a logical explanation • Represents unusually high capital in comparison with similar businesses • Stems from a security transferred with an excessively high or low price attached • Stems from large financial transactions that cannot be justified by the corporate purpose 4. Characteristics of the lawyer: • Located at a significant distance from the client or transaction without a legitimate or economic reason • Little or no experience in providing the specific services needed • Being paid substantially higher than usual fees without a legitimate reason • Frequently changed by the client, or the client has multiple legal advisors without legitimate reason • Provides services previous refused by another professional 5. Characteristics of the retainer: • Transactions that are unusual with regard to the type of operation and the transaction’s typical size, frequency, or execution • Transactions that do not correspond to the client’s normal business activities and show that he does not have a suitable knowledge of the nature, object, or purpose of the professional performance requested • Creation of complicated ownership structures or structures with involvement of multiple jurisdictions without a legitimate or economic reason • Client transaction history with no documentation to support company activities • Inconsistencies and unexplained last-minute changes to instructions • No sensible commercial, financial, or tax reason for the transactions or increased complexity that unnecessarily results in higher taxes or fees • Exclusively keeping documents or other goods, or holding large deposits or otherwise using the client account without provision of legal services • Abandoned transactions without concern for fee level or after the receipt of funds • Power of attorney sought for the administration or disposal of assets under unusual circumstances without logical reason • Litigation that is settled too easily or quickly with little or no involvement of legal professional retained • Requests for payments to third parties without substantiating reason or corresponding transaction The issue of requiring attorneys to be gatekeepers in the AML/CFT area can be controversial, given the fact that attorneys have confidential relationships with their clients. Various alternatives have been discussed and debated, including: • Deferring regulation until adequate education is conducted • Imposing internal controls and due diligence duties on lawyers regarding unprivileged communications • Using a joint government-private sector body to regulate lawyers who engage in financial activities, requiring registration with and regulation by an agency • Devising a new hybrid approach, such as through guidance notes and best practices standards from FATF Gatekeeper issues in the United States are focused on the scope of the requirements, particularly the definition of the financial transactions to which reporting requirements apply. Many regulators within the United States want the scope to coincide with the European Union Directive, which requires EU members to ensure that obligations are imposed on a wide range of professionals, including auditors, attorneys, tax advisors, real estate agents, and notaries. The extraterritorial reach of several existing US initiatives subject lawyers who conduct international transactions to various requirements. Gatekeepers (Case example: Role of gatekeepers in facilitating money laundering) The Organisation for Economic Co-operation and Development (OECD) publication, Ending the Shell Game: Cracking Down on the Professionals Who Enable Tax and White-Collar Crimes, highlights that, “White collar crimes like tax evasion, bribery, and corruption are often concealed through complex legal structures and financial transactions facilitated by lawyers, accountants, financial institutions and other ‘professional enablers’ of such crimes.” The report was issued to ensure that professional service providers are aware of their responsibilities to identify, report, and avoid money laundering risks and to provide strategies for countries to take action against criminals who abuse their positions to conceal and facilitate illegal activity. In January 2019, UK lawyer Ross McKay was sentenced to prison for seven years, stripped of his license to practice, and required to pay £1,450 in costs for helping organized criminals launder money via mortgage fraud. McKay also suffered personal consequences. He damaged his reputation, lost his livelihood, and left a wife and three young children with no financial support for the time he was in prison. The majority of professional service providers in gatekeeping positions, such as lawyers, accountants, and financiers, play an important role in the financial system and offer valuable legitimate services. However, because these professionals provide a veneer of respectability and offer a level of knowledge and skill that criminals might not possess, they are often engaged and employed by criminals to facilitate their illegal activities. In fact, a criminal organization’s business typically mirrors that found in a legitimate environment. Some gatekeepers unwittingly assist in this illegal activity. However, in some cases, they are complicit in facilitating and concealing their clients’ criminal activities. McKay was a “go-to,” or preferred, lawyer for criminals because he did not conduct basic KYC checks, including understanding the nature of the client’s business, inquiring about the source of funds, or understanding connections between the parties and transactions. McKay conducted more than 80 criminal transactions that helped a buy-tolease landlord use illicit money to fraudulently build a £10.8 million property empire. McKay committed mortgage fraud by disguising the source of funds for property deposits and used nominee names instead of the names of the legitimate purchasers on mortgage applications. McKay also was the in-house lawyer for a loan company that was a front to launder criminal proceeds. The company belonged to a crime lord who was convicted of drug dealing. McKay admitted that he knew the property transactions were being made to launder money and that he was deliberately dishonest in facilitating them. Key takeaways • Lawyers, accountants, financiers, and other "professional enablers” can abuse their positions to facilitate financial crimes via seemingly legitimate means. • Professional service providers need to be aware of their responsibilities to identify, report, and avoid money laundering risks. • Professional service providers need to ensure that they understand all the laws and regulations that apply to them, particularly when involved in multijurisdictional business. • Professional enablers who commit crimes can be imprisoned and will likely be unable to operate again within their chosen profession. Role of Gatekeepers (Case example: Special skills) An attorney was convicted by a jury of conspiracy to commit money laundering. The attorney had helped to invest his client’s drug proceeds by forming a corporation in the name of the client’s wife and arranging a loan from the corporation to another (noncriminal) client. He then drafted a fake construction work contract, making the repayment of the loan appear to be payment for construction work performed by the company. He also drew up a promissory note, which the wife signed, but he did not provide copies of the note to either party. The attorney also advised his client how to deposit the cash from the loan without triggering reporting requirements. The appeals court upheld the attorney’s conviction but remanded him for resentencing after finding that the district court abused its discretion by not applying a sentencing enhancement based on the attorney’s use of special skills (i.e., legal skills) in committing the offenses of conviction. Key takeaways • Gatekeepers can help disguise the source of illicit funds so they appear to originate from a legitimate business activity, such as a sale or loan. • Money laundering schemes facilitated by gatekeepers can involve multiple parties, some of whom might not be aware of their own involvement. • The special skills of gatekeepers enable them to help their clients evade detection using sophisticated money laundering schemes. Investment and Commodity Advisors Commodity futures and options accounts are vehicles that could be used to launder illicit funds. What are they? • Commodities: Goods such as food, grains, and metals that are usually traded in large amounts on a commodities exchange, typically through futures contracts • Futures/futures contracts: Contracts to buy or sell a set quantity of a commodity at a future date at a set price • Options/options contracts: Contracts that create the right, but not the obligation, to buy or sell a set quantity of something, such as a share or commodity, at a set price after a set expiration date • Commodity pool: A combination of funds from various investors to trade in futures or options contracts • Omnibus accounts: Accounts held by one futures commission merchant (FCM) for another, in which case transactions of multiple account holders are combined, and their identities are unknown to the holding FCM Commodity trading advisors (CTAs) engage in the business of advising others, either directly or indirectly, regarding the value or advisability of trading futures contracts, commodity options, and swaps. They issue analyses and other reports concerning trading futures and commodity options and are also responsible for trading managed futures accounts. By directing such accounts, CTAs are in a unique position to observe activity that might suggest money laundering. As such, they need to be aware of what types of activities indicate potential laundering and terrorist financing and should implement compliance programs to detect and deter such activities. Other professionals with similar responsibilities include: • Commodity pool operator: Operator or solicitor of funds for a commodity pool, which combines funds from members and trades futures or options contracts • Futures commission merchant (FCM): A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution • Introducing broker-dealer in commodities (IB-C): A firm or person that solicits and accepts orders for commodity futures from customers but does not accept funds. IB-Cs can be guaranteed or independent: o Guaranteed introducing broker-dealer: An IB-C with an exclusive written agreement with a futures commission merchant, which obligates the FCM to assume responsibility for the IB-C’s performance o Independent introducing broker-dealer: An IB-C who is subject to minimum capital and financial reporting requirements, and who may introduce accounts to any FCM • Investment advisor: Provides advice on securities and investments and manages client assets The investment and commodity advising industry is susceptible to money laundering in the following ways: • Withdrawal of assets through transfers to unrelated accounts or high-risk jurisdictions • Frequent additions to or withdrawals from accounts • Clients invest via checks drawn on, or wire transfers from, accounts of third parties with no relation to them • Clients request custodial arrangements that allow them to remain anonymous • Transfers of funds to the investment advisor, followed by transfers to accounts at other institutions that suggest a layering scheme • CTAs or other professionals invest illegal proceeds for a client • Movement of funds to disguise their origin Trust and Company Service Providers Trust and company service providers (TCSPs) are gatekeepers who set up trusts between parties and provide certain legal and administrative functions for corporations. According to the FATF report Guidance for a Risk-Based Approach for Trust and Company Service Providers, TCSPs include any person or business that provides any of the following services to third parties: • Acting as an agent on behalf of legal persons to form a company • Acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons • Providing a registered office, business address, or correspondence for a company, partnership, or any other legal person or arrangement • Acting as (or arranging for another person to act as) a trustee of an express trust • Acting as (or arranging for another person to act as) a nominee shareholder for another person The FATF report emphasizes the need for TCSPs to obtain detailed information on customers and the need for them to understand the source of funds and the general purpose of the structures they create for their clients’ benefit. In addition, TCSPs should always be able to identify the beneficial owners and controlling persons for an account. The FATF report also points out that some jurisdictions regulate TCSPs like lawyers, meaning that clients can request confidentiality, thus putting TCSPs in potential conflict with AML guidelines. Additionally, in some jurisdictions, lawyers and other professionals fulfill the role that TCSPs play elsewhere, i.e., creating and administering trusts and companies to manage client assets (such as homes and cars) in jurisdictions other than those in which they live. Although the vast majority of companies and trusts are used for legitimate purposes, the types of legal relationships formed by TCSPs are commonly used in money laundering schemes. FATF’s report identifies the following vulnerabilities and red flags for the TCSP industry: • Unknown or inconsistent application of regulatory guidelines regarding identification and reporting requirements • Limited market restriction on practitioners to ensure adequate skills, competence, and integrity • Inconsistent recordkeeping across the industry • Potential for TCSPs to operate in an unlicensed environment • Potential for a TCSP’s CDD to be performed by other financial organizations, depending on the jurisdictional requirements Potential indicators of money laundering in the TCSP industry include: • Transactions that require the use of complex and opaque legal entities and arrangements • The payment of consultancy fees to shell companies established in other jurisdictions or jurisdictions known to have a market in the formation of numerous shell companies • The use of TCSPs in jurisdictions that do not require TCSPs to capture, retain, or submit to competent authorities’ information on the beneficial ownership of corporate structures formed by them • The use of legal persons and legal arrangements established in jurisdictions with weak or absent AML/CFT laws and/or poor record of supervision and monitoring of TCSPs • The use of legal persons or legal arrangements that operate in jurisdictions with strict secrecy laws • Multiple intercompany loan transactions or multijurisdictional wire transfers that have no apparent or legal purpose According to Transparency International, a global coalition working to end the injustice of corruption, it is important to focus on service providers, rather than the company or trust, because the latter is merely the tool through which money launderers operate. A company owned by criminals cannot protect itself, but service providers can, through diligence, reduce the risk of abusing the vehicles with which they have a relationship. For this reason, it is important for countries to regulate service providers. Regulations should stipulate how the service provider conducts its business, including how directors selected by the provider meet their obligations as trustees or trusteeships. Gibraltar was the first jurisdiction to bring these activities under regulatory control by enacting legislation in 1989. Other offshore jurisdictions either have introduced some form of regulatory control or will in the future. Regulations are not uniform; they range from a simple minimum capitalization requirement to full regulatory oversight. Often, the scope of the legislation is limited, excluding certain types of activities. Sometimes, the legislation bars regulators from gaining access to client files without client permission or a court order, thereby making checks on the adequacy of the license holder’s CDD provisions extremely difficult. Furthermore, although some jurisdictions include service providers within their AML regulations—for example, by making compliance with the regulations a condition of licensing—many do not, leaving service providers free of any AML duties beyond those imposed upon the general public. According to Transparency International, because of these differing standards, individuals seeking to use a company or trust for criminal purposes can simply select a jurisdiction that lacks requirements or has only inadequate ones. Real Estate The real estate sector is frequently used in money laundering activities. Investing illicit capital in real estate is a classic method of laundering illicit funds, particularly in countries with political, economic, and monetary stability. Escrow accounts, generally maintained by real estate agents, brokers, and other fiduciaries, are designed to hold funds entrusted to someone for protection and proper disbursement. Countless real estate and business deals are closed every day using escrow funds. They are attractive to money launderers because of the many diverse transactions that can pass through them in any deal; escrow accounts can facilitate the movement of funds by cashier’s checks, wire transfers, and company checks to seemingly legitimate individuals and companies. Given the high levels of activity expected in escrow accounts, money launderers can disguise illegal activity in an account while appearing to operate it legally. Although cash purchases of real estate are becoming more prevalent, many transactions involve the deposit of a large check from the mortgagee, in addition to checks and cash required from the buyer at closing. A money laundering title insurance agent can make multiple deposits of cash on a given day at several banks in amounts under the currency reporting threshold, credited to different, nonexistent closings. The deposits appear to be typical business activities, but they might represent the steady accumulation of funds for the purchase of real property by a person wishing to hide the origin of funds. Ultimately, monies could be paid outright by the escrow agent as cashier’s checks obtained by the agent as wire transfers, or as corporate or escrow checks to straw men or shell corporations. Each closing also entails numerous routine disbursements for payment of the proceeds to the seller, payoff of the mortgage, real estate commissions, taxes, satisfaction of liens, and other payments. To a bank and other observers, the disbursement of funds at a closing might appear to be one legitimate set of transactions. Money laundering can be easily hidden because the size and volume of routine escrow account activity smooths out the “spikes” (i.e., the ups and downs in an account) and multiple deposits associated with money laundering. The reverse situation can also occur in the real estate industry. A money launderer might find a cooperative property seller who agrees to a reported purchase price well below the actual value of the property and then accepts the difference in unreported cash. For example, a money launderer could purchase a $2 million property for $1 million and secretly give the balance to the cooperative seller. After holding the property for a time, the launderer could sell it for its true value of $2 million. In the loan-back money laundering method, a criminal provides an associate with a specific amount of illegitimate money. The associate then provides a loan or mortgage back to the trafficker for the same amount, with all the necessary loan or mortgage documentation. This creates the appearance that the trafficker’s funds are legitimate. The scheme is reinforced through legitimately scheduled payments made on the loan by the traffickers. FinCEN published Suspected Money Laundering in the Real Estate Industry, an assessment based on analysis of SAR filings. The report makes a distinction between fraudsters and money launderers. Lenders are likely to file a SAR when they are the target of failed or successful mortgage fraud schemes that threaten their organization’s revenues. However, it can be extremely difficult to detect mortgage loan fraud perpetrated by money launderers, because money launderers project the image of legitimacy by integrating illicit funds through regular and timely payments. For example, only approximately 20 percent of SAR filings associated with the residential real estate industry reportedly described suspected structuring and/or money laundering. The Australian Transaction Reports and Analysis Centre (AUSTRAC) identified real estate as a significant money laundering channel in Australia. According to the brief, real estate is an attractive channel for laundering illicit funds because: • It can be purchased with cash. • The ultimate beneficial ownership can be disguised. • It is a relatively stable and reliable investment. • Value can be increased through renovations and improvements. Money laundering through real estate can be relatively uncomplicated compared with other methods and requires little planning or expertise. Large sums of criminal proceeds can be integrated into the legitimate economy through real estate investments in the placement and layering phases. Properties can also be sold for a profit or retained for residential, investment, or vacation purposes in the integration phase. In Australia, common money laundering methods involving real estate include: • Using third-party straw buyers described as "cleanskins" • Using loans and mortgages as a cover for laundering, which might involve lump sum cash repayments to integrate illicit funds into the economy • Manipulating property values to disguise undisclosed cash payments through overvaluing, undervaluing, or flipping through successive sales to increase value • Structuring cash deposits used for the purchase • Generating rental income to legitimize illicit funds • Conducting criminal activity, such as the production of cannabis or synthetic drugs, at the purchased property • Using illicit cash to make property improvements to increase the value and profits at sale • Using front companies, shell companies, trusts, and other company structures to hide beneficial ownership and obvious links to criminals • Using gatekeepers, such as real estate agents, conveyancers, and solicitors, to conceal criminal involvement, complicate the money laundering process, and provide a veneer of legitimacy to the transaction • Investing by overseas-based criminals to conceal assets and avoid confiscation from authorities in their home jurisdiction The report cites methods for detecting money laundering through real estate when transactions intersect with the regulated AML/CFT sector, such as when transactions involve financial organizations in the form of loans, deposits, and withdrawals. It also outlines red flags that should prompt further monitoring and examination, particularly when multiple indicators are present. These red flags include: • Various uses of cash to aggregate funds for property purchase, down payment, and loan repayment • Multiple purchases and sales in a short period of time, possibly involving property overvaluation, undervaluation, or straw buyers • Use of offshore lenders • Unknown sources of funds for purchase, such as incoming foreign wires in which the originator and beneficiary customer are the same • Ownership being the customer’s only link to the country in which the real estate is being purchased In its five-part Towers of Secrecy series published in 2015, The New York Times pierced the secrecy of more than 200 shell companies that have owned condominiums at the Time Warner Center, a high-end property located in the heart of Manhattan. In the investigative series, the newspaper found that nearly one-half of the most expensive residential properties are purchased through shell companies throughout the United States. At the Time Warner Center, non-Americans own 37 percent of the condos, at least 16 of whom have been the subject of governmental inquiries, including for housing and environmental fraud. These owners have included government officials and close associates of officials from Russia, Colombia, Malaysia, China, Kazakhstan, and Mexico. They primarily used limited liability companies for the purchases. Often, signatures on the property documents were illegible, blank, or signed by a lawyer with the lawyer’s contact information registered. The paper states that there are no legal requirements for the real estate industry in the United States to identify beneficial owners or examine their backgrounds. In 2016 (subsequent to The New York Times series), FinCEN began issuing a series of geographic targeting orders (GTOs) to help law enforcement identify individuals acquiring luxury residential properties through limited liability companies and other opaque structures without the use of bank financing. During the 180 days of each outstanding GTO, US title insurance companies are required to identify the natural people behind shell companies used to pay all cash for high-end residential real estate in specified US metropolitan areas that exceed specified dollar amounts prescribed for each area. It is important to note that, in this context, “all cash” refers to transactions that do not involve traditional financing; it does not necessarily refer to the use of physical cash.