NCJ Number
151447
Date Published
1994
Length
28 pages
Annotation
Asian drug traffickers use various money laundering methods to move drug proceeds; one of the most frequently used money laundering methods in Asia is the Chinese underground banking system (UBS) which is used to transmit both operating funds and profits.
Abstract
Asian drug traffickers employ different techniques, depending on whether they are transmitting money from the United States to Asia or within Asia. When sending funds from the United States to Asia, drug traffickers often elect to use simple but effective methods, such as bulk smuggling, converting cash to checks or money orders, and transferring money by wire. When moving money between Asian countries, drug traffickers frequently employ more sophisticated techniques, including invoice manipulation, letters of credit, front companies, and gold and gem smuggling. For Asian drug traffickers, the Chinese UBS offers several advantages over the official banking system. The UBS provides anonymity, there is no official paper trail for law enforcement authorities to follow, the UBS is faster than official banks, and the UBS offers low cost and convenience. Although the UBS is misused by drug traffickers, it is used legitimately and routinely by many Asian ethnic groups. Further, the UBS has a long history which predates conventional banking systems and is based on family trust. Controlling the UBS through legislation is not likely, since the enactment of money laundering legislation focuses on legitimate banks and financial institutions. Ultimately, the effective regulation of UBS abuses depends on changing attitudes toward compartmentalizing criminal activities. Moving money to purchase drugs and integrating drug proceeds into the legitimate economy represent criminal activities as serious as drug trafficking itself. Figures and photographs