Best Defender Bytes:

October 3, 2014

Geographic Targeting Order Issued By FinCEN Aims At Money Laundering For Drug Cartels In Los Angeles Fashion District

Filed under: California Defense Attorney — fayarfa @ 1:22 am

LOS ANGELES – Federal authorities today announced that the Financial Crimes Enforcement Network (FinCEN) has issued a Geographic Targeting Order (GTO) that imposes additional reporting and recordkeeping obligations on most of the businesses located in the Los Angeles Fashion District. The GTO will enhance law enforcement’s ongoing efforts to identify and pursue cases against persons and businesses engaged in money laundering that benefits international drug cartels.

The GTO, which will go into effect on October 9, was sought by the United States Attorney’s Office for the Central District of California as part of a sweeping investigation targeting the illicit movement of U.S. currency to Mexico and Colombia on behalf of prominent drug trafficking organizations. The Justice Department is working with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the Internal Revenue Service’s Criminal Investigation Division to fight money laundering schemes designed to allow international drug cartels in Central America and South America to reach drug proceeds generated in the United States.

A series of investigations have revealed evidence that money laundering activities and violations of the Bank Secrecy Act (BSA) are pervasive throughout the Los Angeles Fashion District, which includes more than 2,200 businesses. Much of the money laundering is conducted through Black Market Peso Exchange schemes – also known as trade-based money laundering – in which drug money in the United States is converted into goods that are shipped to countries such as Mexico, where the goods are sold and money in the form of local currency goes to the drug trafficking organizations.

There are approximately 2,300 businesses that are being served with notice of today’s order, including garment and textile stores, transportation companies, travel agencies, perfume stores, electronic stores (including those that only sell cell phones), shoe stores, lingerie stores, flower/silk flower stores, beauty supply stores, and stores bearing “import” or “export” in their name.

On September 10, more than 1,000 federal, state and local law enforcement officials were in the Fashion District, where they executed dozens of search warrants and arrest warrants linked to businesses suspected to be engaged in money laundering schemes (see:http://www.justice.gov/usao/cac/Pressroom/2014/117.html). Criminal investigations have uncovered evidence that many of these businesses are routinely accepting bulk cash Black Market Peso Exchange schemes on behalf of drug trafficking organizations based in Mexico and Colombia. During last month’s enforcement action, authorities seized more than $90 million in currency. The cash was found at various residences and businesses stored in file boxes, duffel bags, backpacks and even in the trunk of a Bentley. Another approximately $45 million was seized in the form of property and bank accounts.

“This order requires nearly every business in the Fashion District to report any instance in which they receive at least $3,000 in cash, and failure to comply with the order could lead to a criminal indictment,” said Acting United States Attorney Stephanie Yonekura. “My office sought the unprecedented order from FinCEN with the goal of shutting down the flow of dirty money to foreign drug cartels – a huge problem that has contaminated the Fashion District.”

Claude Arnold, special agent in charge for HSI Los Angeles, commented: “Last month, in a matter of hours, HSI special agents seized tens of millions of dollars in cash from individuals with business interests in L.A.’s garment district. That’s a mindboggling amount of money and it makes it abundantly clear the scale of criminal activity we’re up against. International drug cartels generate billions of dollars a year in profits, but all that cash is virtually worthless unless traffickers can find a way to funnel it clandestinely back into the monetary system. Unscrupulous companies that help the cartels cover their financial tracks are contributing in a major way to the devastation wrought by the international drug trade and they will be held to answer for their actions.”

Richard Weber, Chief of IRS - Criminal Investigation, said: “Individuals who laundered money through the fashion industry will now be hard pressed to continue their criminal activities. The issuance of this Geographic Targeting Order will assist law enforcement agencies in ferreting out money launderers from this trade industry and will help to preserve a strong local economy.”

FinCEN Director Jennifer Shasky Calvery stated: “This GTO illustrates that FinCEN will not shy away from using each and every one of its authorities to disrupt drug cartel activity. FinCEN’s expertise goes far beyond collecting the BSA data. Our own analysis of thousands of BSA filings played a critical role in the recent takedown, as well as ongoing law enforcement operations. And the additional information collected through FinCEN’s GTO will only increase our ability to track and dismantle these criminal organizations.”

The GTO will take effect on October 9, 2014 and will remain in effect for 180 days. Affected businesses in the Los Angeles Fashion District should review the Order to understand their reporting obligations. Covered businesses with questions about today’s order should contact the FinCEN Resource Center at 800-767-2825.

Central District of California DOJ / Release No. 14-132 / October 02, 2014

2 Comments »

  1. This was actually discussed a while ago and I was for it initially. Over time though it became apparent that the total community was getting involved with this project. Archiving this would be best for everyone.

    Comment by camden services — November 18, 2015 @ 6:26 pm

  2. Interesting topic but I’m not sure that I agree with you. Things like this have chanbged the way the web was formed and created. Is it really as simple as changing out the direction and watching the web change?

    Comment by enrich financial — November 18, 2015 @ 6:35 pm

RSS feed for comments on this post. TrackBack URL

Leave a comment

Powered by WordPress