How Money Laundering Actually Works | How Crime Works | Insider

My name is Robert Mazur. I spent two years undercover laundering tens of millions of dollars for Pablo Escobar's cartel. This is how crime works.

Money laundering enables cartels to produce the most lethal thing that they produce around the world, and that's corruption. It enables them to be able to control countries, presidents of countries. Operation C-Chase was a multiagency task force to prosecute the biggest money launderers of the Medellín cartel.

Most of the people I dealt with were high-level drug traffickers who had hundreds of millions of dollars. I'm doing this interview in silhouette because two agencies and an intelligence agency informed me that the Medellín cartel issued a contract on my life. I spent a year and a half putting together what I think is one of the more sophisticated fronts used in undercover.

I built the persona of Robert Musella. I dressed the part. Certainly had the lifestyle.

Drve a Rolls-Royce, Mercedes, Jaguar. I was embedded in real businesses. Had an air charter service with a private jet.

We had a jewelry chain with 30 locations on the East Coast. A lot of cash goes through the Diamond District every single day. So if you've got those kinds of businesses, you have a very good excuse for where the cash came from.

I was embedded in an investment company, a mortgage-brokerage business, and even a brokerage firm with a seat on the New York Stock Exchange. And then I and my partner began a two-year infiltration of the Medellín cartel and the banks that were supporting them. One of the keys to doing undercover work is to build your undercover persona to have as many traits as you do in common.

Robert Musella was from Staten Island. I'm from Staten Island. Robert Musella was a businessman.

I have a business background. I didn't fake accents, fake anything. I was always just me.

The first person I met that was working within the Medellín cartel is a gentleman by the name of Gonzalo Mora, a small-time money launderer who had an import-export business. But the capacity he had to launder was probably limited to about $50,000 a week at best. We had my partner, Emir, deal with him and simply say, "Listen, my boss handles a lot of this, but he never wants to meet you.

He wants to stay in the shadows. But if you could ever convince him to come out of the shadows, the rivers would open and you'd be able to launder untold amounts of money. " By the end of that six months, Gonzalo Mora was banging on the door to meet me.

You know, it's always best to play hard to get. I also knew these people have a sixth sense. If you're afraid of a dog, they know that.

You're the first one they bite. I didn't want to get bit, so I knew that I would be working against myself and undermining my cause if I showed any fear whatsoever. And I told him eventually, "Listen, I have to get these people to understand that they need to let me invest some of their money.

Your only responsibility is to introduce me to them. If I succeed, we'll even do business bigger. " He felt compelled to make the introductions, and then I started to climb up the ladder, to meet bigger and bigger people.

You know, money launderers, like I played the role of, are basically operating what's called the black-money market. It's an informal banking system that's made available to people who operate through the underground. So, as a black-money-market operator, I have a supply of dollars.

My supply comes from drug traffickers. Now I have to find people who have a demand for dollars. People who want to buy dollars are oftentimes importers around the world who otherwise have to go through their central bank and spend 25% of their money to officially get dollars.

I could sell it to them for 10%. My traffickers, in many instances, wanted Colombian pesos. So the best people I could sell those dollars to were Colombian importers.

All I have to do is swap. So, I have supply clients, traffickers, and demand clients. But most often the money would wind up into bank accounts controlled by the cartel, in Panama, and from there they distributed around the world wherever they wanted to hide it.

Well, sometimes the money had to be used to buy planes. Like, there was a guy, his responsibility was acquiring the aircraft and trucks and things like that that the cartel needed. So he basically was the buyer of the cartel's air force.

So I dealt with him because he needed money in order to buy the specific planes they were looking for which were Rockwell 1000s and Rockwell 980s Some money is smuggled out of the United States down to Colombia, and it's used to make payoffs to people in the military or prosecutors or politicians or whoever's help they need to buy. Most of the money's in five, 10s, and 20s. That's because people using illegal drugs buy it with five, 10s, and 20s.

That gets collected by people who have a responsibility here for the cartels to do nothing other than collect money. They try not to have traffickers and money handlers in the same place. Too much asset to potentially be lost.

So, the dollars generally would come to me in suitcases, duffle bags, boxes. New York was a key point. Get a million, $2 million per delivery.

I generally had runners who picked it up and brought it. You don't usually get the guy who really controls the safe on the street. The way it works is we get the information from Gonzalo Mora.

So he might give us a phone number in the form of an invoice number. He might say that, you know, "You need to get in touch with Guapo, and he's going to have 250 boxes. It's $250,000.

" They generally like to meet in a public area, so it might be at a McDonald's. They sit down. Not much gets said.

Pushes the keys across the table. "It's in the trunk. " Emir goes and gets the money.

It's usually wrapped in rubber bands in blocks of $5,000 and $10,000, dependent upon denominations. A lot of people say, "Wow, isn't it tempting? You've got all these millions and millions of dollars, and it's in cash.

" There's unfortunately been people in just about every agency that has fallen victim into a slippery slope of greed. My motivation was information became my heroin. If I couldn't get the next big piece of information and I couldn't risk more than I did to get the last piece of information, I felt as though I wasn't accomplishing my mission.

Yeah, I was addicted, but I was addicted to information. Layering is a process by which a series of corporations, usually offshore entities, are used to continue to receive what initially started off maybe as a suitcase full of cash. The way we layered, the money would first be put into a certificate of deposit in Luxembourg in the name of an offshore entity.

That money was used by the bank as collateral for a loan in a different part of the world. So let's say the loan was in Paris and that was to a Gibraltar corporation. And then that Gibraltar corporation would transfer the funds to Panama and then from there to accounts controlled by the drug traffickers.

And so the purpose that you use layering for is to just confuse the route in which the money is being moved. In order for anyone to trace the money backward, you have to first pierce the corporate veil in Panama and bank secrecy laws. Then you have to pierce the same in France.

Then you have to pierce the same in Luxembourg. You know, a lot of times what they do if they don't want to deal with a person like me, they will use an army of couriers, call them Smurfs, the little blue guys, Smurfs running all over. We kind of dubbed them Smurfs because let's say there's 10 of them.

Their job every day is to go to meet with their money contact, and that guy may have $500,000 in the trunk, and each of them gets $50,000 and a map that tells them where it is locally they can go to use cash to buy MoneyGrams, cashier's checks, money orders, traveler's checks. They'll buy a money order for $987. 25 to try to make it look like it's for a payment.

Leave the payee blank. They generally don't want to buy anything over $3,000. So at the end of the day, $500,000 that filled the trunk was now a stack maybe 8 inches high of money orders, traveler's checks.

There were times when those were offered to me to then take it from there and launder it. That was safety for them because we were not having direct contact with their main money people. We were just getting a FedEx box with $500,000 in money orders.

I think the biggest deposit was somewhere around $2. 1 million. There was a time that I met in Paris with Pablo Escobar's main lawyer, a guy the name of Santiago Uribe, and some other people that worked directly with Pablo.

He'd sent Uribe to assess our money-laundering processes. And at the end of that meeting, we came to an agreement we would receive, in a relatively short period of time, $100 million that they wanted to put into a nest egg in Europe in case they had to flee. So, when we get back from Europe, we started getting deliveries.

A million in the morning, $2 million in the afternoon. I had told the people who were doing surveillance that they needed to be really careful and we needed to try to keep it as light as we could because they would have countersurveillance out there. And one of the people who I dealt with, a person who met with Pablo Escobar often, told me, "Make sure your people look on the street for gringos," white guys, "who are in their late 20s, early 30s, in good shape, wearing jeans, pullover shirts with collars, solid color, jogging shoes, fanny packs.

That's where their guns are hidden. Those are los feos. " The ugly ones.

That's informally what people in the cartel called the feds. So, I never used to want to go into an office, but this was getting very important. So I met with the people who were going to do the surveillance, and there was a room full of gringos with jeans, pullover shirts that were solid with collars, and they had fanny packs.

And I tried to convince them that that was a uniform that everybody was looking for, but egos are such in law enforcement that sometimes people don't want to take that advice. So, anyway, the surveillance got burned, and the next thing that happened is that my partner, Emir Abreu, received a phone call from Gonzalo Mora. And in the background was a screaming voice of Gerardo Moncada, Pablo Escobar's main manager, who was screaming that Musella, I, had to be a DEA undercover agent because they saw all the feds there, and all deals from here on were off.

And I had to talk myself out of that. I guess the point is that there are a lot of different moving parts to these undercover operations, and it's pretty easy for any one of us to do something that might potentially endanger somebody else on the team. All of the traffickers said to me, you know, "I love your money-laundering system, but the end payout is US dollar checks from accounts that are in the United States.

We want you to open up US dollar accounts in Panama. " Panama uses the US dollar more than it does its own currency. They know that secrecy is big in Panama by corporations, by banks.

It's harder for DEA to get the information concerning the accounts. But what they told me also was, "Listen, we want your accounts in Panama because we own Gen. Manuel Noriega, and he will not touch any of your accounts because you're with us.

" So now I have to open up an account in Panama. I happened to be driving past a branch in Tampa of the Bank of Credit and Commerce International, the seventh-largest privately held bank in the world. There was a big gold sign.

Because I would've never walked in there if it wasn't for that. And they said, "Well, we'll give you a meeting if you can give us a résumé. " I had a fully verifiable résumé, and I had bank accounts with millions of dollars in it, all of which the bank in particular wanted to see before they opened up to me and explained to me how they laundered money for many people in organized crime.

And I said to him, "All of my clients are from Medellín, Colombia. They operate businesses here in the States that are very sensitive, and it's my job to very cautiously help them to move capital across borders. " He goes, "Well, that's the black-money market.

We have plenty of customers who deal in that business. " He said, "Yeah, Panama's where you want to be. " There's a lot of hands in which these checks go through, and sometimes mistakes can be made.

And in fact, that's the way I got really inside the Bank of Credit and Commerce International. That got me into the inner circle of dirty officers in BCCI, and then I went on to meet more than a dozen of them. The No.

1 person who managed my accounts, a gentleman by the name of Amjad Awan. He managed accounts for people who ran countries, for Manuel Noriega. He helped launder Noriega's drug profits from the protection he sold to the Medellín cartel.

And during that time we recorded about 1,200 conversations, all of which were used as the cornerstones of the prosecution of not just drug traffickers and money launderers, but senior officials of the Bank of Credit and Commerce International. I needed to coax the conversations into the areas where I was exposing their true intent, their involvement in criminality. I couldn't allow them to dance around issues.

You have to try to get a way to have the conversation. So one of the things that I used during that time frame, one of the most famous businessmen at the time in the late '80s was a guy by the name of Lee Iacocca. He ran Chrysler.

Everybody knew who he was. And so when I would talk to people, especially at the bank, I would say, "If my clients came in this room, you might mistake them as being Lee Iacocca. The big difference is they don't sell cars.

They sell coke. " I dealt with dirty bankers. I dealt with lawyers in Switzerland who formed corporations to hide the source of our funds.

I dealt with attorneys in Panama, people who ran financial-service corporations that do nothing other than form tens of thousands of corporations for people all over the world. They provide nominee directors that hide the beneficial ownership of accounts and the control of corporations. All of these people are intermediaries who the underworld counts on.

There were other people, real money launderers at that time, who were sending what they claimed to be precious metals in and out of the United States, which actually was lead that was covered by gold, and that was their cover for why they were depositing cash and were not bashful about it. Talking to the bank and saying, "This is a cash-generating business. " If you have enough that's believable, it's amazing how quickly they'll convince themself that you are who you say you are.

June of 1988. I was told that it would be the first week of October that the operation would be taken down. I've got two years' worth of work to do, and I gotta get it done in about three months.

So many times these undercover operations result in indictments, but the bad guys, they're in countries that do not offer extradition. Colombia was one. Someone suggested, "Well, why don't we have some kind of a personal event?

" One of the agents said, "Well, they obviously appear to like Bob. How about a wedding? " So we put this together for a supposed wedding in Innisbrook, which is a country club.

This got personal. In some instances, children of future defendants were part of the wedding. Wives.

And the night before, one of my informants went around to the defendants and said, "Hey, Bob doesn't know this. We're going to have a bachelor party. The cars will be here soon.

" The arrest team's there. They arrest them. Everybody was in disbelief.

And the case concluded with the arrest of about 85 individuals, the collection of fines and forfeitures of about $600 million, and the seizure of about 3,000 pounds of cocaine. Ultimately, the bank imploded on the night of the arrests. You know, it was all high fives.

They wanted to go out and have a celebratory gathering. I wanted nothing to do with that whatsoever. I was emotionally exhausted.

I first learned about the contract on my life about 30 days after the undercover operation. Operation C-Chase was over. The longest trial lasted six months.

I was on the witness stand. I could see the hatred in their eyes, even more so in the eyes of their family members who were there. No doubt, they didn't see me as a person who was just doing their job.

They saw me as a person who tricked them. But I never tricked anybody into doing anything other than trusting me. Nobody in there did anything that they hadn't done before.

After I testified, my family and I rented a motor home. We went into the mountains, got away from everybody, and tried to heal. There was a pager number, an 800 number, that they could call.

The office could call and leave me a message, and occasionally I would check, and I got word that the jury had convicted every single person of virtually all accounts. I went back to the campsite by a river and just sat there thinking about it. And it occurred to me that it was so surreal that I had done the same things that the bankers had done, and I was getting awards, and they were about to go to jail for a long time.

And I don't take what I did lightly. Some people think it's a sign of weakness. I did drop a tear or two that day.

I kind of think that was good, because I want a government with conscience. I don't want people high-fiving. It's unfortunate, but the law-enforcement community and the private sector responsible for trying to attack money laundering have been highly unsuccessful.

The United Nations on Drgs and Crime estimates that roughly $400 billion is generated each year from the sale of illegal drugs. What I really do believe needs to be done, you have to understand, there are two different sides of banking. There's the sales side and the compliance side.

Sales side brings in the accounts. Compliance, in an unhealthy bank, does the background to make sure they're not dealing with a bad guy. That needs to be brought together.

I'm suggesting it only on accounts that have $5 million or more that have been received in a year. I think that the account relationship manager that brought the account in should have to file with the bank a sworn statement affirming that they've asked certain questions. Questions that if you ask them would expose whether or not it is an account that's being run by front people.

Those questions don't get asked, and they don't get asked now because the sales side always tells the compliance side, "If I ask those questions, we won't get this business because they don't want to answer those questions. " You know, we have a joint terrorism task force run by the FBI, but it's also participated in by I don't know how many hundred agencies. There should be a joint money-laundering task force that does the exact same thing.

There has been an evolution of cryptocurrency. There are people who've been involved in the drug world who have used cryptocurrency. Unlike cash, you can follow crypto.

The other problem you have with crypto is you only need to look at Bitcoin and see that unlike the US dollar, its value is not stable. I don't think it's really ready for the big time in the drug world. What is big?

Gold refining in the Middle East, Dubai. That's big. I retired from undercover work after the second operation when I almost got killed, and that was in the late '90s.

I'm extraordinarily grateful to have the platform from which I get the opportunity to speak, and that platform is first a book called "The Infiltrator" that became a New York Times bestseller and the basis for a film by the same name starring Bryan Cranston. And then subsequently, a book I wrote this past year came out called "The Betrayal," a nonfiction book about the second undercover operation that I did. But as long as I've got that platform, I'm going to do everything I can to try to share information that can in some way try to help us with the problem we face with this massive illegal drug problem in our country and around the world.