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Snapshot of Money Laundering Investigations

The Anchorage Daily News recently profiled an IRS supervisor who leads a nine person IRS team to investigate money laundering by narcotics sellers in Alaska. Business leaders will note that IRS investigates ordinary transactions because money launderers use ordinary transactions to conceal their ownership of assets purchased with the proceeds of illegal drug sales. Note that the most drug sellers don't pay income tax.  In effect, the federal government is subsidizing every illegal drug seller they don't catch, which is most of them.

In FY 2003, the Federal government only convicted 831 persons for money laundering, only 1.2 percent of all federal criminal convictions. IRS was responsible for 782 of those cases.

While there are only a small number of successful prosecutions, the costs to business to comply with anti-money laundering paperwork is enormous. The government requires enormous numbers of reports to be filed. In 2003, 12,506,035 currency transactions reports were filed -- just one of ten types of currency or suspicious activity reports that need to be filed.   An enormous net of suspicion is spread quite widely -- 285,814 suspicious activity reports were filed just in 2003 alone. Yet only 1590 investigations were initiated that year. Hundreds of thousands of businesses and individuals are listed as suspicious by IRS, but don't know it -- yet. Your business could easily be among them.  Or perhaps someone with whom you have done business is a suspect, and you are in danger of being accused of being part of the conspiracy.

The war on drugs encourages criminals to inform on innocent associates as part of their plea bargain for a reduced sentence. See "Snitch" by PBS Frontline.

The IRS money laundering investigations in support of drug prohibition are identified in the White House anti-drug budget as part of Interagency Crime and Drug Enforcement at $ 580.6 million for FY 2005.