Officials claim that, including the five payments made by the undercover agent, Bell Helicopter accepted 25 third-party wire transfers and one domestic third-party check from 16 different sources to pay for the $1.5 million helicopter. “The … remitters of these … payments have no discernible relationship with the purchasers of the defendant helicopter,” note government court documents seeking forfeiture of the helicopter.
That’s a classic BMPE pattern. And although a helicopter is an unusually big-ticket item, the BMPE shows little discrimination among types of goods. Common items purchased in bulk include computer equipment, cigarettes, liquor, electronics, home appliances, auto parts, precious metals, and footwear. The investigation that led to Bell’s bank account also resulted in seizures from the accounts of public companies, including Intel, Ingram Micro, Microdata Solutions, Federal-Mogul, Merrill Lynch, and SED International. “It’s the ultimate nexus between crime and commerce, using global trade to mask global money-laundering,” notes Kelly.
Indeed, what made the Bell case particularly embarrassing was that the company had recently received a $130 million contract from the U.S. government for retrofit kits to upgrade 42 Vietnam-era Iroquois heavy- lift helicopters (“Hueys”). The State Department donated the helicopters to Colombia as part of Plan Colombia, a massive aid program designed to help the country combat coca growers and drug traffickers.
Traditionally, of course, money-laundering has been a problem for banks, not manufacturers. Just last year, high-profile laundering scandals at Bank of New York and Citibank sparked renewed congressional scrutiny of the banking industry, notes former Assistant U.S. Attorney and money-laundering expert Betty Santangelo, now a partner at New York law firm Schulte, Roth & Zabel LLP. This February, a highly publicized Senate report noted that the U.S. bank accounts held by offshore financial institutions are still a major source of laundered money.
Congressional scrutiny is nothing new for banks. Individual account activity has been monitored since the Bank Secrecy Act of 1970 required that banks report any cash transaction over $10,000. In 1986, Congress specifically made money-laundering a crime. And in 1992, the Annunzio- Wyley Anti-Money-Laundering Act authorized the Treasury Department to require money-laundering compliance programs at banks.
The rise of the BMPE as an alternative laundering channel is clear evidence that this approach worked. But law enforcement officials insist that similar tactics will not be applied to nonbank businesses. “Our focus was not to try to impose more regulation on the business community,” says U.S. Customs special agent Allan J. Doody, whose testimony in 1997 first brought the BMPE to the attention of Congress. To date, the only similar reporting regulation for U.S. companies has been IRS Form 8300. Companies must file this form whenever they receive payments exceeding $10,000 in cash or cash equivalents, says Matt Magnone, the former district counsel for the Internal Revenue Service in New Jersey. Wire transfers, he adds, are not considered a cash equivalent.
Instead of regulations, Doody and other officials emphasize voluntary cooperation, and praise the aggressive anti-money-laundering programs at such companies as General Electric and Whirlpool. That’s probably a pragmatic approach for the government to take outside the homogeneous banking industry. Whirlpool senior counsel Debra Clawson says the rhetoric of regulation was common in early congressional hearings, “but, frankly, I think they realize they can’t do that. The distribution channels for each industry are very different.”