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Is data transparency the answer to tackling financial crime?

Money laundering is a problem around the world. Photographer: REUTERS/Stringer/Files
Money laundering is a problem around the world. Photographer: REUTERS/Stringer/Files

The inaugural Thomson Reuters ‘Financial Crime Conversations’ event showed how data transparency is helping to expose money laundering across the globe and tackle financial crime. 

At the first event in the Thomson Reuters ‘Financial Crime Conversations’ series, Paul Radu, Executive Director of the Organized Crime and Corruption Reporting Project (OCCRP), discussed his team’s investigative work to expose money laundering and lobbying across the globe.

David Craig, President of Financial and Risk at Thomson Reuters, set the tone for the evening. “The objective of this series of financial crime conversations is to better connect all of us with the impact of crime and remind us why we combat it.” he said.

“We’re a long way from Mexico for instance, but as we speak, drug trafficking continues to devastate communities and undermine the rule of law, when more than 200,000 people have been killed. Both the drugs and the money generated by the sale of drugs connects us to these communities, to their victims, and the families.”

Watch now — Financial Crime Conversation – The Laundromats Exposed Pt. 1

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What is the Organized Crime and Corruption Reporting Project (OCCRP)?

The OCCRP is an investigative reporting platform formed by 40 non-profit investigative centers, major regional news organizations and journalists around the globe, which works to expose organized crime and corruption.

Its work has seen $5.735 billion in assets frozen or seized by governments, with 84 criminal investigations and government inquiries launched.

The organization’s first investigation looked at ‘The Criminal Services Industry’, a network of formation agents, bankers, accountants and lawyers acting in the service of crime and corrupt politicians.

Watch now — Financial Crime Conversation – The Laundromats Exposed Pt. 2

The project exposed companies in New Zealand involved in large-scale money laundering, but also helped the group develop a reporting strategy designed to tackle the convoluted task of following an organized crime money trail.

tackling financial crime, keynote Paul Radu
Keynote Paul Radu, OCCRP, talking at the event

Spreading the word to tackle financial crime

The OCCRP chose to publish the investigation, which was unusual at the time, and to attach a database of suspected corrupt organisations involved in financial crime.

By attaching the database, they were able to provide far more information than could fit into a single article.

The Russian laundromat exposed

For example, the group received a tip from a small business owner in Romania who claimed that one of the listed organizations stole half a million dollars from him.

The report of this fraud led to a police investigation of the company and a subpoena of their banking records.

The OCCRP was then able to access the court case and access two years’ worth of transactions – including transactions with the Mexico drug cartel Sinaloa.

Financial Crime Conversation event photo
Financial Crime Conversation: Question from the audinace

The laundromats of financial crime

While investigating the first financial fraud scheme (also known as ‘Global Laundromats’), the organization realized the same laundering scheme was used by criminal organizations around the world.

The analysis of one of the bank accounts involved showed that the same company used this bank account for channeling money from criminals in Russia, Vietnam, Ukraine and China, and, in addition, even Mexican drug cartels.

All of the groups were, in fact, using the same accounts, the same companies and the same set up to launder illicit funds.

Laundromat highlights crisis in transparency of company ownership

Tackling financial crime, Paul Radu and Axel Threlfall
Interview with Paul Radu, OCCRP and Axel Threlfall, Editor-at-Large, Reuters

Stopping the money laundering machine

What strategies should be used to resolve the problem? The OCCRP relies on a mix of data, local knowledge, and a new approach.

Their approach to stopping the laundromats has been a collaborative one, getting as many people involved as possible.

In this way, with more manpower resources available, the issue can be tackled by each person concentrating on investigating a small part of a network.

The OCCRP follows trails, extracting patterns from previous work, from indictments or various other sources.

Watch video — Committed to helping global business fight financial crime

These financial crime patterns are matched against data sets to identify organized crime and corruption, even where it doesn’t know it exists.

Addressing the audience about what they could do to help, Radu said: “You are all very skilled in investigating financial structures, following the money, following the company, following the bank.

I would love if you would put a little bit of your time into helping an activist or an investigative reporter, assisting someone in putting out a database that you might have used years ago and can publish, or a due diligence report that is not bounded by secrecy.”

To find out more, check out risk.thomsonreuters.com for the next Financial Crime Conversation that will take place on 23 January 2018 and will focus on tax evasion.

Thomson Reuters World-Check

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