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THE ASSOCIATED PRESS
Feds: Insurance Helps Launder Drug Money
December 6, 2002
MIAMI (AP) -- Colombian drug cartels conceived an elaborate scheme that converted more than $80 million in cocaine profits to clean cash by moving money through life insurance policies, authorities said.
The technique used by the drug traffickers to hide the source of their ill-gotten income was disclosed Thursday in a federal indictment of five Colombians.
The use of life insurance purchases highlights gaps in international financial regulations intended to cripple drug money laundering in legitimate financial transactions.
Officials said the case underscores the need for a greater focus on stronger oversight of insurance sales to prevent abuse. The United States has been tightening regulations to prevent both terrorists and traffickers from laundering money.
``There are no limits to which drug traffickers and their money laundering accomplices will go to hide and clean their illegal drug profits,'' U.S. Customs Service Commissioner Robert Bonner said.
The drug traffickers opened more than 250 investment-grade insurance accounts in the finance haven of Isle of Man off Britain and elsewhere, authorities said. Drug profits flowed from banks in Mexico, Latvia and Hong Kong to banks in Florida, New Jersey, New York, Puerto Rico and Texas, the indictment said.
An undisclosed Miami insurance investment company handled much of the business for one reputed trafficker, Rodrigo Jose Murillo, the indictment said. Murillo was indicted Thursday in the money laundering conspiracy scheme. He also was charged in San Diego in September in a 13-ton cocaine seizure from a ship.
Investigators have tracked dirty money through insurance companies before, and international agencies have been cooperating more and more. But Charles Intriago, publisher of the online newsletter Money Laundering Alert, said Friday this was the first case he has seen of traffickers directing large-scale insurance laundering.
``That's the uncommon thing, but it comes at a timely moment,'' he said. ``They've been a huge industry that has been under the money laundering radar screen since the beginning.''
The Patriot Act passed after last year's terrorist attacks expanded anti-laundering programs to the insurance industry for the first time. The Treasury Department issued two sets of proposed regulations this fall to treat insurance companies more like banks, which have been required for years to report large and suspicious transactions.
The laundering conspiracy indictment charges Murillo used five- and six-digit wire transfers to ship money from foreign to U.S. banks. About $2 million of the $80 million in suspicious money was tracked from banks in Mexico and Latvia to a Bank of America account in Murillo's name in Fort Lauderdale, authorities said.
The money was destined for investment-grade insurance accounts on the Isle of Man and elsewhere. Traffickers were willing to pay 25 percent penalties to cash out the policies early, authorities said. The loss is slightly more than the going rate charged by black market launderers.
The defendants laundered drug profits with ease by getting pre-signed forms for early withdrawals and charging premiums to the dirty money accounts in exchange for cash reimbursements, investigators charged.
Investigators in the United States, Colombia, Panama, Britain and the Isle of Man were part of the two-year probe. Drug and money seizures totaled nearly $32 million.
Murillo's earlier indictment in San Diego accuses him of moving cocaine by ship from Colombia to Mexico and then by fast boats and land routes to U.S. destinations. His son Alexander Murillo was charged with him in the laundering indictment. The three other defendants owned or worked for a Colombian insurance brokerage.
At least three of the indicted Colombians are in custody and face extradition to Miami. Colombia banned the extradition of citizens to the United States until the late 1990s but has shown increasing willingness to ship out drug suspects.