Up close with money laundering expert Kenneth Rijock

By DALJIT DHESI

Evidently, it takes one to catch one. Nothing excites Kenneth Rijock more than to stop money launderers – and he was once one of them. He says it gives him great satisfaction to nab those who “legalise” ill-gotten gains, thus curbing these illegal activities from spreading across borders.

“Busting these wicked people and making sure they are punished by upholding the rule of law is what I intend to do in my life,” he says.

“By pursuing this noble journey, I feel like I am paying back for what I did as a money launderer. At the same time, I like to help financial institutions worldwide and their compliance officers, who lack adequate knowledge, to combat this menace.’’

Rijock is a financial crime consultant with World-Check, an international risk management firm that advises banks and government agencies on financial crime.

Drawing on his experience operating outside the law, Rijock has become a leading money laundering expert. He has written over 4,000 articles on the subject and other financial crimes, and is also author of the Confessions of A Money Launderer series, a feature on the World-Check website.

Apart from this, he regularly lectures around the world on emerging threats and money laundering tradecraft. He was in Kuala Lumpur recently to speak at a conference on financial crime and terrorism financing.

Into the dark side

Rijock was lured into the dark world of money launderers by the usual enticements: greed, the company of women and a quick way to make big bucks. And yet he had no peace of mind because of the constant fear of getting caught by the authorities or being killed by crime lords.

His clients then included South American cocaine kingpins, with whom he has travelled with large amounts of cash to tax havens in the Caribbeans, Europe and other places.

It is a lonely and dangerous profession, he recalls, as one cannot lead a normal life with a family. A money launder is always obsessed with the job – the threats and pitfalls, and the success and failure of the operations. Although money laundering is a white-collar crime, the people one deals with can be violent criminals.

“It’s a one-way ticket to hell and it’s hard to leave once you are stuck in it. The way out is either imprisonment or death. I got the former,’’ he adds.

Rijock was in the army for a few years, and had served in Cambodia and Vietnam. He then studied history and law. It was when he was a bank lawyer in Miami that Rijock spent 10 years in money laundering. He was arrested and sentenced to four years in jail.

After getting out of prison, he joined World-Check, where his job involves detecting emerging threats in financial crime and money laundering, finding out the latest techniques, and ensuring the clients know how to spot such activities.

Rijock says it is not that difficult to launder money as the current detection systems still have loopholes and the compliance officers looking for the culprits do not know enough about the crime.

Money launderers are usually professionals with a deep knowledge of law and finance and are often more savvy and skilled than the compliance officers, he notes.

According to international body Financial Action Task Force, about US$1.5 trillion illegal funds are laundered each year worldwide.

“There are three distinct phases of money laundering. If the first phase is undetectable, then it is difficult to prosecute the suspects because of the lack of evidence to show that the money obtained is from criminal profits,” Rijock explains.

“The first phase is known as placing. Here the ‘dirty’ money is placed in the global financial system. The second phase – called layering – takes place when the money from the financial system is moved to maybe, a tax haven, to disguise its origin. Lastly, integration takes place when a purchase is made.’’

According to World-Check, more than 3,000 institutions, including over 90% of the world’s largest banks and 200 enforcement and regulatory agencies, rely on its database of known heightened-risk individuals and businesses.

The clients use the information to screen their customers, associates, transactions and employees for potential risk. This database is updated daily in real time by World-Check’s international research team and is derived from hundreds of thousands of public sources.

Coverage includes money launderers, fraudsters, terrorists and sanctioned entities, plus individuals and businesses from over a dozen other categories.

No rest

Rijock says money launderers work seven days a week and basically every hour of the day to ensure that their trade is perfected. The advent of the Internet has made money laundering more rampant because it makes the necessary information readily available.

Imaginative and patient, money launderers have an edge over the banks because they are prepared to work at awkward hours like 4am and late on Fridays, when most of the banks’ compliance officers have gone home for the weekend.

Rijock says compliance officers need to be educated and trained on how to tackle financial crimes. At the same time, the technology that drives money laundering detection systems needs to be constantly upgraded.

However, banks find it difficult to halt the incidence of money laundering because some of them are reluctant to invest in sophisticated systems. This is particularly so before the 9/11 terrorist attacks. However, the introduction of the Patriot Act in the United States has changed this.

Rijock points out that foreign banks doing business with US banks are on the same level as the latter in terms of compliance with best banking practices.

Still, the banks cannot afford to let their guard down. Money launderers are constantly looking for what he describes as “old wine in new bottles”. In other words, they seek new techniques or modify existing money laundering systems so as to avoid detection.

Asked whether it is easy to launder money in Malaysia, Rijock says: “People traditionally launder money through tax havens. Malaysia is not a tax haven. A tax haven is where the government makes a lot of money from the formation of corporations and from the banking business. The government does not enforce money laundering laws nor does it question the source of the illegal funds.

“Malaysia, on the other hand, has a legitimate business structure and does not solely depend on offshore funds. It has a sound tax system unlike the zero-tax jurisdictions prevalent in tax havens.”

Rijock now spends his free time mostly travelling to give talks on money laundering. Last year, he lectured in 30 countries. Apart from working, which he loves, he also cycles and does other outdoor activities.

But he admits that he does not have much time for himself as he is busy tracking financial criminals. He loves tropical places and food as it reminds him of his home base of Miami in Florida, the United States.

Source: The Star