If you go down to the woods today

You know how I advocate admitting when you don’t know something?  Well, I must confess that I do not always follow my own advice….  There is a particular concept that I have never understood, and I have always been too ashamed to say so and ask for an explanation.  Despite my cowardice, the gods have smiled on me, and today the hitherto-unknown-but-henceforth-adored website L.A.NOW has solved the mystery for me.  No, it’s not why a nice English girl like Katie Holmes would marry the nut-fest that is Tom Cruise – that particular conundrum remains unravelled.  It is this: just how does the Black Market Peso Exchange work?

Bit of background: there is a business in LA called the Angel Toy Company.  Its owners have just been sent to prison for laundering money for Colombian and Mexican drug traffickers via the BMPE.  And here’s the lovely, clear, unforgettable explanation from the sainted reporter Dalina Castellanos out there in sunny SoCal: “Colombian and Mexican clients dropped cash off at the company’s downtown headquarters or deposited it directly into the company’s bank accounts.  The cash entered the legitimate financial system through numerous deposits into accounts held by a legitimate business in the US.  The money is returned to drug traffickers when actual goods, like teddy bears, are exported to the foreign countries and sold to generate local ‘clean’ money.”  And you know what: I really, actually, honestly, finally get it.  Which just goes to show that you can never be certain where knowledge will come from; I’ve read dozens of learned explanations of the BMPE, some with very fancy flowcharts, but it’s taken the teddy bears to make it clear.

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2 Responses to If you go down to the woods today

  1. Paul Coleman says:

    Excellent case study. Not so much regarding the Black Market Peso Exchange (which in itself is still very interesting) but more so about
    1) $8m laundered over four years in cash and no cash deposit over $10,000 – that equates to a single credit of approx $7,000 cash each day. That defeats the argument I so often get “nobody launders small amounts”
    2) Scheme was cleverly designed to co-mingle funds and fly under the radar.
    3) Did the bank spot anything? Nothing is reported about that aspect, but in KYC terms the fact that a manufacturing company had so many small cash customers must have been regarded as unusual. Surely they would be selling to stores and distributors.
    4) One of the other articles on the same case refers to heavy cash withdrawals – in one month $450,000. Again why would a Teddy Bear manufacturer need to draw so much cash – surely no supplier would accept cash payments of such magnitude.

    The whole case highlights the need to “Know your customer” and “Know His Business”



  2. Many thanks, Paul – this is an excellent example of how to create a case study out of an interesting story that would get staff attention. I was talking about exactly this in my post on 8 February – “Insatiable blood-sucking monsters”. Staff get bored with hearing about drug dealers, but tell them about a crooked teddy-bear business and they’ll remember all the details!
    Best wishes from Susan

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