Doody agrees. “To come up with two or three regulations to resolve this thing would be extremely difficult,” he says.
Bank controls failed to protect Bell Helicopter, which apparently relied on them for protection when it wrote the contract for the helicopter sale with Carranza’s representative in Colombia. “We required that the money be in amounts greater than $10,000 and come from established U.S. banks,” explains Bell spokesman Michael Cox. “We believed that existing U.S. policies served to help protect us, and that the bank has a responsibility to check that.”
In court documents, Bell attorneys also note that Regions Bank should have stopped the funds long before they got to Bell’s account, “because Regions Bank knowingly transferred to Bell funds which it knew were transferred in violation of the money-laundering statutes.”
Although they wouldn’t comment directly on the pending Bell case, officials at several federal agencies scoff at the idea that Bell could have considered this a normal transaction. “When a U.S. company receives payment for its exports in the form of wire transfers, checks, or cash from third parties with no connection to the underlying transaction, alarm bells should go off,” notes Kelly. “This is not how standard business deals are done.”
IN THE KNOW?
Indeed, while they plead for industry cooperation, the agencies involved in drug enforcement are taking a more jaundiced view of companies that claim ignorance as a defense.
In October 1997, former peso broker “Ms. Doe” testified before a House banking subcommittee about the staggering number of well-known companies that had received drug money as payments. Concealed behind a screen and with her voice electronically distorted, she named such companies as Sony, Procter & Gamble, John Deere, Whirlpool, Ford, Kenworth, Johnny Walker, Swatch, Merrill Lynch, and Reebok. “These companies were paid with U.S. currency generated by narcotics trafficking,” she testified. “They may not have been aware of the source of this money, but they accepted payments from me without questioning who I was or the source of the money.”
But when does accepting payments without question constitute participation in money-laundering? This is the crux of the debate between federal prosecutors and corporations. To seize payments in a company’s bank account, “all the government has to do is prove that they are drug proceeds,” says Lester M. Joseph, assistant chief of the Asset Forfeiture and Money Laundering section of the Department of Justice. Companies can sue for the return of the money on the grounds that they didn’t know its source, he notes, but “the burden of proof of ‘innocent ownership’ is on the company.” In legal parlance, that means the company had to prove it was not “willfully blind.”
Willful blindness, explains Santangelo, “means the company showed a reckless disregard in setting up its procedures, or didn’t pay enough attention to them.” Increasingly, government prosecutors agree to return some percentage of forfeited funds to first-time offenders if the company signs a consent decree stating that its executives and employees understand how the BMPE works. Repeat offenders face certain prosecution. But even without a consent decree, says Joseph, “if the red flags are there and a company consciously chooses to disregard them, the government can establish knowledge.”