Our Locations:
Los Angeles, Nashville, London

[email protected]
(714) 637-0193  |  (310) 737-8510

Los Angeles, Nashville London
[email protected]
(714) 637-0193|  (310) 737-8510

FAQ’s

FAQ’s

Why The Michael Agency?
CONSULTATION IS WITHOUT OBLIGATION.

Our investigative personnel have deep law enforcement investigative backgrounds, strong business acumen, extensive private sector experience and the skill sets that bring quick results.

If there is an issue we can help with, please feel free to contact us.

What is The Michael Agency Difference?
The Michael Agency provides unparalleled service to Fortune 50, 100 and 500 corporations, legal community, the entertainment industry, high profile figures, and private citizens.

Below is the difference that benefits our clients:

  1. Investigators accumulated expertise from most prestigious law enforcement agencies in the world; Los Angeles Police Department, Los Angeles County Sheriff’s Department, New York Police Department, Federal Bureau of Investigation, United States Secret Service, United States Marshals Special Operations Group, Royal Canadian Mounted Police, and New Scotland Yard.
  2. Absolute knowledge of federal and state laws, court procedures and prosecutorial thresholds.
  3. Investigative Subject Matter Experts.
  4. Conducted investigations in 5 continents.
  5. Efficiency: Experience and global resources equate to cost-effectiveness for the client.
  6. Reliability: Our results are 100% reliable in either civil litigations or criminal proceedings.
  7. Consultation Without Obligation-GUARANTEED.

 

Photographing Celebrity Children
HARASSMENT-SECTION 11414 OF THE CALIFORNIA PENAL CODE
Under existing California law, any person who intentionally
harasses a child or ward under the age of 16 of any person
because of that person’s employment (public official/celebrity)
is guilty of a misdemeanor, punishable by imprisonment in county
jail, not exceeding 1 year or by a fine not exceeding $10,000.00
or both.
A second conviction would require a fine not exceeding
$20,000.00 and imprisonment in county jail.
Harassment means knowing and willful conduct directed at a
specific child or ward, that seriously alarms, annoys, torments
or terrorizes the child or ward during any actual or attempted
recording of the child’s or ward’s image or voice without the
written consent of the legal guardian.
By definition, HARASSMENT is following the child’s or ward’s
activities or by lying in wait.

 

California Anti-Paparazzi Law
California Civil Code 1708.8
The nation’s first civil ANTI-PAPARAZZI law protected
celebrities against physical invasion of privacy where a
trespass occurred, and constructive invasion of privacy where no
trespass occurred but audio or video enhancing devices were used
to violate a reasonable expectation of privacy.
Expanded in 2005, it punished paparazzi for assaults and
altercations to photograph celebrities and denied photographers
the right to profit from images illegally taken during
intrusions.
                     CALIFORNIA CRIMINAL LAW
If paparazzi use aggressive tactics to capture pictures, they
will be charged criminally with one or more of the following:
  1. Assault: An unlawful attempt, coupled with a present ability to commit a violent injury on the person of another.
  2. Assault With a Deadly Weapon: Assault on a person with a deadly weapon or with force likely to cause great bodily injury (weapon must not be a firearm)by use of blunt instruments like clubs, baseball bats, or rocks and cars or even a camera.
  3. Battery: Any willful and unlawful use of force or violence upon the person of another.
  4. Conspiracy: An agreement or intent between two or more persons to engage jointly in a criminal act. A conspiracy occurs when two paparazzi plan a trespass to get a photo of a celebrity’s home.
  5. False Imprisonment: Unlawful violation of the freedom of movement of another.
  6. Stalking: Criminal activity comprising credible threats, repeated following and harassing of another person with intent to instill fear or injury.
  7. Trespass: Unlawful intrusion that interferes with a person or property. (e.g., stalking a celebrity’s children while at school, using a telephoto lens to take photos of celebrities while sunbathing at home, or attending a private funeral and taking pictures)
Foreign Corrupt Practices Act

The past twenty years, many major U.S. corporations have moved operations outside the continental borders and the five territories that are permanently inhabited: Puerto Rico, U.S. Virgin Islands, Guam, Northern Mariana Island and American Samoa.

As characterized during investigations conducted by the United States Securities Exchange Commission and Department of Justice, paying bribes to foreign government officials was the only way to do business.

  1. In 1977, the Foreign Corrupt Practices Act (FCPA) became law. It explicitly prohibits U.S. firms and individuals from paying bribes to foreign officials in furtherance of any business deal. The FCPA places no minimum amount for the punishment of a bribery payment.FCPA applies to actions that occur worldwide and is intended to deter corruption and abuse of powers. The FCPA’s authority includes oversight of activities of publicly traded companies as well as their directors, officers, shareholders, agents, and employees. Includes working through third parties, such as consultants and partners in a joint venture.
  2. Accurate recording keeping of assets is required to ensure only correctly authorized transactions were taken. Internal controls must be put into place to assure regulators that transactions were accounted for properly.
  3. Securities Exchange Commission and the Department of Justice jointly enforce the FCPA.
  4. Violators face substantial sanctions and penalties to include fines double the amount of the benefit expected from the bribery. Corporate entities would be forced to accept oversight of an independent party to ensure compliance. Individuals could face imprisonment for up to five years.
  5. Civil action could be sought against the responsible person to include employees, stockholders, officers, directors, and third parties.
California Consumer Privacy Act
On June 28, 2018, Governor Jerry Brown signed into law, the California Consumer Privacy Act (CCPA), which will take effect on JANUARY 1, 2020.

Definition of Personal Information: Information that identifies, relates to, describes, is capable of being associated with, or could be reasonably linked, directly or indirectly with a particular consumer or household.

Examples: account name, unique identifies, IP address, email address, commercial information including records of property, biometric data, internet activity-including: browsing history, search history, and information regarding interactions with websites, applications or advertisements. Professional or employment-related information and inferences are drawn from any of the above-listed information to create consumer profiles.

**Personal information under the law does not include publicly available information**

Access and Opt-out Rights for California Consumers:

  1. Right to Data Access: Consumers have the right to request categories of personal information, and the specific pieces of personal information collected. Upon receipt of a verifiable request, the business shall promptly provide the data and must be delivered free of charge either electronically or by mail.
  2. Right to Deletion: Consumers have the right to have any personal information once a verifiable consumer request is received. **Data doesn’t need to be deleted if it is necessary to maintain for the following:
    1. Completing a transaction
    2. Detecting security incidents
    3. Preventing fraud or
    4. Internal uses reasonably aligned with consumer expectations.
  3. Right to Know Where Data is Collected From and to Whom it is Sold: Upon a verifiable consumer request the business must:
    1. Reveal categories of personal information collected
    2. Categories of sources from which personal information is collected
    3. The business or commercial purposes for collecting or selling personal information
    4. Categories of third parties which the personal information is shared
    5. Specific pieces of personal information collected **Third parties will be prohibited from selling a consumer’s information which has been sold to a third party by a business unless the consumer has received explicit notice and an opportunity to Opt Out**
  4. Requirements on Children’s and Teen’s Data: Prohibits businesses from selling data of consumers that they have actual knowledge are under 16 or if they received written authorization. (Under the age of 13, must receive authorization from a parent or guardian.)
  5. Non-discrimination: Prohibits businesses from discriminating against consumers for exercising any right created by the CCPA. **The law allows differential pricing or quality where it is reasonably related to the value provided by the consumer’s data. I.E., allows businesses to offer financial incentives for the collection, sales, or deletion of personal information, provided the incentives are not unreasonable, coercive or usurious in nature**

Requirements for Businesses
**All receipts of notices by consumers must be acted upon within 45 days**

  1. Businesses must make two methods available for consumers to exercise their rights
    1. Toll-free telephone number
    2. Website

EXCEPTIONS TO DATA COLLECTION

Doesn’t restrict the ability of a business to:

  1. Comply with federal, state or local laws
  2. Comply with a civil, criminal, or regulatory investigations
  3. Cooperate with law enforcement
  4. Exercise or defend legal claims
  5. Collect, use, retain, sell or disclose personal information that is de-identified or in the aggregate or
  6. Collect or sell personal information that takes place wholly outside California
Internal Investigations in Overseas Workplaces
Internal investigations of employee misconduct take a well-defined approach. Exporting U.S. investigatory practices raises unexpected hurdles of foreign workplace laws.

In the United States, investigations have become high-profile and big business. Most corporate investigations were streamlined and fast until the era of Sarbanes-Oxley, Dodd-Frank and close scrutiny of corporate compliance and ethics. By today’s standards, internal investigations are generally slow and at times costly.

The best tip is investigatory tools forged in the United States do not always work well abroad.

U.S. multinationals involved in cross-border internal investigations always want to export their sophisticated mixed bag of American investigative strategies when dealing with such laws at the Foreign Corrupt Practices Act, Terrorism Financing Rules, Trade Sanctions Laws, Alien Tort Claims Statute, International violations of Sarbanes-Oxley and Dodd-Frank, and the U.K. Bribery Act of 2010 (which can reach U.S.-bases employers).

Below are legal challenges to overseas internal investigations:

  • Attorney-client privilege abroad as contrasted with the privilege in the U.S.
  • Foreign blocking statutes and international data protection laws on U.S. litigation “e-discovery.”
  • Contrasts between the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.
  • U.S. bank secrecy laws in the cross-border context.
  • Suspicious Activity Reports: Of infractions committed abroad and self-reporting to U.S. government agencies.
  • Overseas whistleblower denunciations under the U.S. Dodd-Frank whistleblower, bounty program and the extraterritorial reach of U.S. Sarbanes-Oxley reporting procedures.
  • U.S. deferred and non-prosecution agreements in cross-border matters.
  • Prosecutorial cooperation with enforcement agencies, parallel criminal investigations in foreign jurisdictions and cross-jurisdictional settlements of criminal charges.
  • Credit for foreign corporate compliance programs under U.S. criminal sentencing guidelines.

First and foremost, a U.S. investigator conducting a “local” investigation abroad must comply with the local host country law, as well as U.S. law.

U.S. investigators may need to investigate not only the “extraterritorial” charge under U.S. federal law but also far more claims under foreign local laws that do not trigger exposure under U.S. laws.

Companies based in Australia, Canada, and England have adopted U.S.-like investigative practices.

In some parts of the world, an internal investigation is mandatory as in Austria, Chile, Costa Rico, India, Japan, South Africa, and Venezuela. In Europe, some issues to consider is the local law, union representation, rules of evidence and admissibility.

Conducting internal investigations overseas isn’t the end of protective measures for the American company doing business there. Tweaking an investigative program for overseas internal matters will eliminate frustrations, conflicts and make it easier to conduct an internal investigation.

        1. Implement a Code of Conduct: Prohibit all acts the company has a compelling reason to prohibit such as; insider trading, environmental crime, conflict of interests, bribery/payments violations, intellectual property infractions, audit/accounting impropriety, discrimination/harassment, and other offenses. Without a Code of Conduct, the employee may be able to argue he did nothing wrong.
        2. Launch a Whistleblower Hotline: By law, U.S. publicly traded and foreign private issuers must make available report “procedures” for the confidential, anonymous submission by employees of complaints and concerns regarding questionable accounting or auditing matters. The global whistleblower hotline must always comply with the U.S. and foreign laws. Example: in Europe, whistleblower hotlines are complex. Europeans invoke their data protection laws to rein in American-style anonymous hotlines. Germany, the Netherlands and other European Union members require consulting with the employees before launching a hotline. Belgium, France, and Germany require government filings that disclose hotlines. Spain, Portugal, and France prohibit employers from accepting anonymous whistleblower calls. Hong Kong requires employees to consent to a whistleblower hotline.
        3. Build Channels for Overseas Data Exports: A U.S. company conducting internal investigations inevitably sends (exports) data back to U.S. headquarters with personal information that identifies overseas employees-whistleblowers, a person of interest and witnesses. Data protection (privacy) laws in Europe and some parts of Latin America and Asia prohibit exporting employee data with first building data export channels. In Europe those channels are called, “model contractual clauses,” “safe harbor,” “binding corporate rules.” and “employee consent.”
        4. Grant Necessary Data Subject Access: American investigators keep their files confidential while safeguarding the integrity of the investigation and protecting witnesses and whistleblowers. To the contrary, in Europe, Argentina, Canada, Hong Kong, Israel, Japan, Mexico, and Uruguay require “data controllers” such as employers to turn personal data including notes, reports, and files over to the targets of the investigations and witnesses identified in the records if they ask to see them. This is done because in the countries mentioned, employees and witnesses enjoy rights to the investigative files so they can request deletion or rectification of information that identifies them. If an American investigator doesn’t comply with the laws in the mentioned companies, they will be arrested and prosecuted in addition to a hefty fine.
        5. Disclose Investigation Procedures: Countries with data protection laws require employers disclose to the location data protection authority and to employee data subjects of an internal investigation.
        6. Appoint an investigator or investigation team: Retain someone familiar with applicable law, jurisdictional issues and competency in conducting investigations, no conflict of interests or could be a witness. Include someone on the team with language fluency and expertise in the subject matter.
        7. Impose Immediate Discipline If Necessary: Many times, the local law requires a 24-hour notification before an employee is disciplined. That seems contrary to the American investigative culture. Most European countries need notification to the necessary labor authorities immediately if the employee is terminated.
        8. Define Investigation Scope and Draft an Investigative Plan: Don’t include the scope but define the goal and set boundaries in conducting the investigation. In establishing an overseas investigation factor like the allegation, logistical, linguistic and geographic barriers. As mentioned, some European countries where a whistleblower allegation is anonymous, anonymity itself restricts the scope of the investigation-under data protection law, an anonymous tip is less credible and weaker probable cause for conducting a broad internal investigation leading to employee discipline. All plans should be reviewed by a lawyer.
        9. Comply with Investigatory Procedure Laws: Under American law, a nongovernment employer’s internal investigation isn’t a matter of criminal procedure because there is no state action. In some countries in Eastern Europe, local criminal procedure laws can restrict, even prohibit lawyers from conducting internal investigations.
        10. Research Local Substantive Law: The local laws may conflict with U.S. law. In contrast, in Dubai, an American businessman was found guilty of making bribes and sentenced to prison. At the same time, the U.S. government sought to defend him.
        11. Safeguard Confidentiality: Limit who receives the investigative information within a company because applicable local law may require it. Even if the norm if in the United States was to distribute the information pass several persons, i.e., human resources, general counsel.
        12. Secure Legal Advice and Attorney-Client Privilege: This should be done before an investigation is considered. If the applicable local law allows it, impose right away. Some countries, like China, don’t recognize the Attorney-Client Privilege.
        13. Account for U.S. Government Enforcement Issues: If conducting an overseas investigation, the local law is always to be taken into account, even if there is pressure to produce, transfer or record interviews. If under local law, that can’t be done. It’s a delicate balance, but the U.S. government won’t be spending time in jail, the investigator would.
        14. Safeguard Disclosures to and from Experts: Contractually commit to uphold confidentiality and applicable data laws. Safeguard the attorney-client privilege over disclosures to experts.
        15. Impose an Enforceable Litigation Hold: Destruction of documents relevant to litigation is common in U.S. domestic lawsuits. A best practice in overseas investigations is to require employees to recognize data laws overseas.
        16. Secure Evidence Within Management’s Physical Custody: Collect and preserve documents and electronic files relevant to the investigation without breaking into employee-held data and systems.
        17. Gather Evidence Outside Management’s Physical Custody: Employer reservation-of-right- to search policies are as vital internationally as they are stateside. A key issue would be whether the employer had previously forbidden local staff from using company-owned computers/systems for even incidental personal use.

Interviewing Witnesses Outside the U.S.:

        1. Verify Sources: Whether a whistleblower or complainant, verify if the accuser will stand by the accusations. Confirm the source of the allegations and seek corroborating evidence and witnesses. Generally, an investigation into an anonymous whistleblower tip doesn’t allow as in-depth an investigations from an unverified source.
        2. Neutralize or Demilitarize Interrogations: Coax out information with a softer touch. Directing accusatory statements will cause the person to not talk.
        3. Instruct Witnesses to Cooperate as Permissible: Only if local law allows it.
        4. Comply with Consultation and Representation Rules: If labor unions must be notified, do so. Don’t force an employee to breach ethics rules.
        5. Notify Target and Witness of Their Rights: In America, it isn’t required because police interview/interrogation laws don’t apply. In other countries, a witness or employee must be advised of their rights under the applicable law.
        6. Give Upjohn Warnings, Demand Witness Confidentiality and Conduct Interviews Legally: In the United States, employees and witness should always be given their Upjohn warnings, which tells each employee or witness that the investigator represents the employer and may be covered by confidentiality obligations, but overseas they must be told that the content of the interview could be given to third parties of the investigation, i.e., representation of the accused would receive the documents. Investigators conducting investigations should always keep the investigation confidential, regardless.

Communications, Discipline and Remedial Measures in an Overseas Investigation: After evidence is collected and interviews completed, decide on the investigation findings. Address discipline and remedial measures. These steps must be consistent with the results and with applicable employment, data protection, and criminal laws. Then report on the findings.

 

        1. When an investigation uncovers financial impropriety, money losses or violations comply with the Foreign Corrupt Practices Act (FCPA) accounting as well as SOX accounting mandates and foreign Generally Accepted Accounting Principles.
        2. Report to Upper Management: Limit the circle of upper management receiving investigative briefings or reports.
        3. Implement Post-Investigative Discipline: Correct the wrongdoing and impose discipline consistent with investigative findings and upper-management agreement.
Surveillance - What You Need to Know

The reason to use surveillance would be to gather actionable intelligence to support legal proceedings both civil and criminal and monitor post-termination activities.

The use of the right surveillance has saved lives and corporations and individuals billions of dollars collectively.Four types could be utilized in an investigation, where intelligence on a subject or subjects is needed.

Many times there are circumstances where a person has displayed behavior that is alarming and potentially dangerous. At the moment there weren’t enough overt acts to have the person arrested or to support a restraining order or providing information to make crucial corporate decisions.

They are Stationary, Aerial, Electronic, and Mobile.

Stationary provides minimal intelligence. That depends if the investigators have a vantage point. The major weakness in using stationary is how inflexible it can be and once the subject leaves a location intelligence gathering stops.

Aerial provides an overview from above the ground. It isn’t cost effective, because you would need a fixed wing, helicopter or drone, plus investigators on the ground providing a detailed description. To identify an individual, license plates and street addresses is virtually impossible. The follow-up investigation in using a drone, for example, is time-consuming. A drone would need to be at street level to obtain descriptions of people, cars and building addresses. It has its advantages, but the impracticality of it is outweighed.

Electronic is to wiretap or overhear conversations through the use of malware. Only federal, state and municipal law enforcement agencies have that ability with a signed search warrant by a judge. The criminal penalties for engaging in such activities amount to dozens of years in federal or state prison.

Mobile surveillance is when investigators operate covertly,following someone in an urban or rural setting. Mobile surveillance is legal in every State of the Union and in other countries. As long as investigators don’t trespass to obtain information, there are no issues.

Mobile surveillance expertise to the investigator that didn’t have a background before obtaining their license is extraordinarily complicated and dangerous. It takes years for an investigator to master the art of surveillance. The ability to anticipate and react in split seconds is something that a person without years of experience doesn’t have.

The simplest explanation would be to look in your rearview or side view mirrors and notice the traffic around you appears to be normal. Someone with limited experience always overdrives and reveals their presence, by being too close and driving erratically. At that point it isn’t surveillance, it’s following someone. Once they know, they are being followed any inappropriate, deviant or illegal behavior would stop.

To obtain the kind of experience needed to be competent in surveillance requires constant exposure week in and week out for years. Former law enforcement professionals that worked in extended assignments that caused for mobile surveillance gained valuable experience with skills that transfer to the civilian world.

Finally, the reason to have investigators in the field that know how to surveil is civil exposure to the client. There has been civil case law where investigators overdrove, and that resulted in severe accidents and liability exposure to the client.

When looking for a company that advertises surveillance ask questions about the experience of those providing the service.

Such as: Where did the investigators working my case gain their experience? How many years of surveillance experience do they have? How many surveillance cases does your company work in a given year?

When those questions are asked, the response should come comfortably and confidently.

 

Cyber Kidnapping

The crime of kidnapping had been solely a state crime until 1932. What changed that was the kidnapping of Charles Augustus Lindbergh Jr., the 20-month-old son of Charles and Ann Lindbergh.

Young Charles was kidnapped during the night of March 1, 1932, from his bedroom at the Lindbergh compound in Hopewell Township, New Jersey. At the time, kidnapping was not a federal offense.  Young Charles’ kidnapping was investigated by the New Jersey State Police.

At the time, the Federal Bureau of Investigation had established field offices across the United States. J. Edgar Hoover, the director of the F.B.I., offered manpower in the running down of leads and the use of the most advanced forensic laboratory in the United States. Reluctantly, the New Jersey State Police allowed agents to accompany detectives during the investigation.

Two months later, young Charles’ murdered body was discovered buried on the Lindbergh estates’ property.

At the time Charles Lindbergh Sr. was a national treasure, and the kidnapping and murder of his child prompted the United States Congress to pass legislation making it a federal crime to kidnap a person and cross state lines. Known as the FederalKidnapping Act-18 U.S. Code, 120(a)(1), popularly known as the Lindbergh Law or Little Lindberg Law was effective on June 22, 1932.

For decades law enforcement across the globe investigated crimes of kidnapping at state and federal levels in a traditional manner. That changed twenty years ago when criminals from Mexico introduced a new type of “kidnapping.”

American law enforcement received calls where a relative was allegedly kidnapped in Mexico, and the kidnapper demanded money or the person would be killed. Law enforcement would contact their sources in Mexico and learn, the person that was allegedly kidnapped wasn’t. A hoax had taken place to get a quick buck from an honest person.

An example that exists to this day: The criminal would place a call, and the conversation generally started like this, “We have your (relative) and want money. If you don’t cooperate, we will kill them.” The person receiving the call would get instructions on where to wire the money and sometimes, where to meet someone who would take it from them. The caller was so convincing, there wasn’t an alternative but to send the money.

The end result was, there wasn’t a kidnapping, it was a hoax. The calls continued, and people gave money because they didn’t have an easy way to confirm that the relative in question was indeed kidnapped.

Over the years, this type of activity has been called Virtual Kidnapping, Cyber Kidnapping, or Digital Kidnapping. It has been adopted by many types of organized criminal enterprises and individuals seeking to make a quick buck without the possibility of being arrested and prosecuted.

Unless a person was physically taken against their will, there technically isn’t a kidnapping. What occurs is an effort by some scam artists to create fear and act upon it. Depending on the state, the crime falls under the title of “Extortion or Theft by Fraud, Deceit or Trick.”

The person that receives the call, many times isn’t given enough time to verify the status of their friend or relative that was allegedly kidnapped. So, to be on the safe side, they wire the money or meet at a designated location.

The real issue is how to handle the call. Most times they will call and say we have your child, friend, or relative. The scam artist many times has no personal knowledge about who they are calling. They may state your daughter is with them, but you don’t have a daughter.

Get the information on where to send the money, then immediately call the person that allegedly is kidnapped to check on their status. Once you determine that there is no kidnapping, contact your local law enforcement to report the incident.

 

Money Laundering

Money Laundering Part 1

Part 1 will cover to include: a definition, a brief history, and the instruments of money laundering. We will help you have a solid, basic knowledge of what money laundering is all about.

Part 2 will cover how to combat money laundering.

Definition

Money laundering is the process of making large amounts of money generated by a criminal activity appear to have come from a legitimate source. The money from criminal activity is considered dirty, and the process “launders” it to make it look clean.

Brief History

The history of money laundering is as old as man and crime.

It is a cliché, “Crime Doesn’t Pay,” but the truth of the matter is, crime does pay and if you’re good at it, lucrative is an understatement.

Money laundering has been glamorized on television and in the movies.

Individuals or organized criminal groups, involved in a variety of criminal activity will generate significant sums of money, which equates to huge profits. These individuals or organizations go to great lengths to disguise illegal origin. Hiding the source is critical because it enables individuals or organizations to enjoy without detection from law enforcement and financial institutions, and most importantly, the taxman.

The source of the illegal activity could have a legitimate purpose but was manipulated and resulted in financial gain that was not revealed and concealed from being correctly taxed.

Then there are the sources that are illegal such as illegal arms sales, smuggling illegal or legal goods cross the border without documentation, activities of organized crime, to include; drug trafficking, prostitution rings, embezzlement, insider trading, bribery, and computer fraud schemes are a small number known to the public.

Criminals will not only disguise the source but change the form or move funds to a place where they are less likely to attract attention.

The very nature of laundering ill-gotten gains weighs heavily on the economies of nations.

The exact amount of money laundered in the world is not known, but there were projects undertaken by two respectable anti-money laundering organizations: United Nations Office on Drugs and Crime and the Financial Action Task Force and its 40 countries membership estimated between 3.6 % and 5.2% of the worlds’ total Gross Domestic Product is attributed to money laundering.

Instruments of Money Laundering

Money Services Businesses (MSBs) are non-bank money transmitters that provide a full range of financial products and services.

The below four identified instruments have exploded within the past fifteen years as it pertains to money laundering operations across the globe.

The sheer volume and accessibility of these instruments make them attractive to money launderers operating in nearly every part of the world.

Western Union runs the largest non-bank money transmitter network in the world with more than 225,000 agent locations in 195 countries and territories worldwide.

  1. CHECK CASHERS: Money launderers use check-cashing businesses to launder funds via third-party checking. To do that, a launderer will make daily visits to small businesses to purchase checks made out to that business by uninvolved third parties. By selling these checks to the launderer, the business benefits by receiving immediate cash, avoiding bank or check-cashing fees, income tax, and passing on the risk of bad checks to the launderer. The launderer pays for the check using illicit cash and then redeems the checks without causing the filing of a Currency Transaction Report (CRT) by not taking payment in cash. Launderers sometimes purchase check-cashing businesses outright, so checks can be deposited directly into the launderer’s bank account without a CTR being filed. Check cashing companies engaged in laundering via third party checks being deposited make up the remainder with dirty cash. Illicit check cashers may arouse suspicion by removing bills in large denominations. To avoid scrutiny, launderers will send endorsed third party checks out of the country to be cashed or deposited. When these checks are cashed or deposited at foreign banks, the U.S. bank my take note and during the clearing process file a Suspicious Activities Report.
  2. Currency Exchangers: Also referred to as: currency dealers, money exchangers, and bureaux de changes provide conversion of banknotes of one country for that of another. They are abused by launderers during the placement state of money laundering. Although currency exchange poses a less severe risk, companies such as “Casas de Cambio” play a significant role in money laundering operations, particularly for narcotics trafficking organizations. Casas de Cambio currency exchange offices are located along the U.S. border with Mexico from California to Texas. There are over 1,000 exchange offices that are located in retail facilities such as gas stations, and travel agencies are located. They are unregistered and noncompliant with SAR reporting requirements and suspected of being the primary non-bank money laundry mechanism in the southwest border area. Typical Casas de Cambio locations launder as much as $5 million per month, on behalf of drug traffickers. Most of the Casas de Cambio locations are run from mobile or temporary situations such as pickup trucks, trailers, sheds, and even telephone booth. The U.S. based Casas de Cambio locations maintain close relationships with their Mexican counterparts to facilitate fund transfers. 
  3. MONEY ORDERS: 830 million money orders valued at over $100 billion are issued annually. The money order industry is small as compared to other MSBs but easier to access. Eighty percent of all money orders are issued by the USPS, Western Union, and Traveler’s Express/MoneyGram. The remaining 20% are issued by smaller, regional companies scattered throughout the United States. Money Orders can be issued in high-dollar denominations and replaceable if lost. Anonymity is a major attraction to launderers. They are issued anonymously for amounts under $3,000.00. Most sellers/issuers do not have any relationship with their customers and very little if any information is required to purchase a money order. Without the “Original” information, it can be impossible for law enforcement to detect patterns of unlawful activity by a group or individual, or to track suspicious transactions to their source or recipient. There is a lack of regulatory oversights involving money orders. In amounts of $3,000.00 or more, by a given individual during a business day transaction reports are required. Most money order businesses will only sell amounts no greater than $2,000.00 to avoid the reporting process.
  4. Stored Value Cards: Referred to as “Prepaid Cards.” The term stored value cards can cover a variety of uses and technologies. Some cards have embedded data processing chips, some have a magnetic stripe, and some cards have an access number or password. Stored cards are characterized as operating within either an “open” or “closed” system. Open system cards can be used to connect to global debit and A.T.M. networks. An Open System car typically can be reloaded, allowing the cardholder to add value. Closed System Cards are limited in that they can only used to buy goods or services from a merchant issuing the card. The vulnerabilities for Stored Value Cards evolve around the liberal to no limits on the amount of cash that can be loaded on the card. The cards are easily transported without drawing attention to law enforcement. A recent law enforcement investigation out of New York identified hundreds of cards, loaded with tens of thousands of dollars.
Money Laundering Part 2

MONEY LAUNDERING PART 2

How to Combat It

In Part One, we discussed the instruments of money laundering.

In this FAQ entry, we talk about combating the sophisticated crime of Money Laundering.

In a perfect world, institutions cooperate with all aspects of combating a problem that grows exponentially every year. With that in mind, we discuss how that would look in a perfect world.

Due Diligence: It involves knowing the customer, always obtaining information on the proposed transaction and verifying the information through identification and certificates.

The credentials used for the process is updated as appropriate, i.e., presenting new forms of identification upon expiration. If those forms of identification are not processed, then policy wouldn’t allow any transaction until resolved.

Traceability of Transactions: All transactions, regardless of the amounts shall be recorded as to ensure traceability. For that reason, the below-listed information is necessary:

  1. Names of customers, their addresses, names of authorized signatories, and proxies involved in case of a legal entity.
  2. Identify number and other personally identified information.
  3. Legal domicile/residence.
  4. Information on the amounts of the transactions, the currencies concerned, and nature of the transaction.
  5. Information on the amounts used for the transactions.
  6. Point in time of the transactions and name of the recipient of funds if applicable.

Due Diligence for Individuals:

Involves pertinent gathering information about the customer to include:

  1. Name
  2. Identification Number
  3. Legal Domicile
  4. Telephone Number: business, home, cellular if available
  5. Place of birth and nationality
  6. Employment, position within the company, name of employer and information on a customer’s residence if different from legal domicile

Customers prove their identity by showing valid personal identifications issued and recognized to include: passport, driver’s license, or identification card. The personal identification shall not be expired and shall include a photograph.

**To eliminate ambiguity, payment cards are no valid personal identification**

Due Diligence for Legal Entities/Corporations:

Legal entities are required to provide information on their:

  1. Registered Company Name
  2. Registration Number
  3. Legal Domicile
  4. Activities
  5. Telephone
  6. Legal form identifying information gathered on the board of directors, owners/shareholders, and parties authorized to sign for the legal entity.

Due Diligence for Directors, Managing Directors, and Authorized Signatories: These individuals shall provide verifiable identification.

Information on Proposed Transactions: Directors, Managing Directors, and Authorized Signatories seeking to establish a lasting business relationship shall provide forthcoming details about proposed transactions, before the start of business. A special questionnaire about future business transactions is designed and completed by the parties above.

In the absence of an individual that would do business with the financial entity, extreme measures would be in place to verify the absent person’s identity. The pieces of identification are verified in advance, and watermarks and other embedded identifiers should be in place. Many financial entities have implemented voice recognition, and the phrases repeated for recognition are changed randomly for security purposes.

Estate Security - Trained vs. Untrained

It has been determined security is required to ensure the safety of the client and his family — next and most important, who will protect those assets at all cost-effectively.

Hiring plain clothes or uniform security guards with the state-mandated 40 hours of training to include classroom certification and firearms training or the “biggest and baddest” don’t under any circumstance provide the result sought.

Protecting human life requires professionals with nerves of steel.

Professionals that have encountered unpredictable behavior from dangerous persons daily.

Professionals that have the experience to either escalate or de-escalate any scenario without causing harm to those they swore to protect.

Estate Security is more than staging a security guard either inside, or outside the property perimeter.

The Michael Agency, Estate Security Protection Specialists, are trained in C.P.R., Basic Emergency Medicine, E.V.O.C. (Emergency Vehicle Operations Course), Counter-Surveillance Detection, Close-Quarters Combat, Martial Arts, Close Protection, a strong working knowledge of the law and experts in situations that become tactical.

Uniformed, plainclothes, or the biggest and baddest security guards, whether armed or unarmed, lack the training and experience to counter an attack.

It is the belief of many that the mere presence of someone large, in a uniform or plainclothes with an earpiece, will stop a deterrent. The results, if favorable, falls into the category of lucky. Lucky that they or the client didn’t get harmed.

Lack of training tends to cause those with the responsibility of protecting a person; their family and property will overreact, exposing everyone to extreme liability.

The Michael Agency’s Estate Security Protection Specialists have military or law enforcement backgrounds with formalized training from their respective agencies, or a private sector accredited program. Every Protection Specialist is licensed to carry concealed weapons.

The Michael Agency, Estate Security Protection Specialists, has provided services in all 50 States and five continents.

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