NCJ Number
201589
Date Published
2000
Length
11 pages
Annotation
This paper describes various types of "sting" and undercover operations in the United States and the United Kingdom that have been used to counter money laundering schemes.
Abstract
The justification for sting operations in money laundering cases was explained in United States v. Foster. The court observed that "Money laundering is a crime of subterfuge and concealment. Bank records alone reveal little, if any, information if the alleged laundering is as sophisticated as is alleged in this case. Undercover operations, therefore, can be an essential tool in tying seemingly innocuous bank entries to criminal activity." There are two types of money laundering stings: "stinging the launderer" and "stinging the criminal entrepreneur." In the first type of operation, police officers pretend to be criminals and ask for their "proceeds of crime" to be laundered. In the second type of sting, sometimes referred to as a "reverse sting," undercover police pretend to be launderers and invite criminals to use their "laundering service." U.S. law enforcement agencies use sting operations to target any entry point that is being knowingly used to introduce proceeds of crime into the financial system. Such entry points may include car dealerships, restaurants, bookmakers, check-cashing services, pawn shops, and even churches. U.S. money laundering stings often begin with an informant initiating a relationship with the defendant, followed by an undercover agent later substituting for the informant. Other issues discussed regarding U.S. undercover operations are laundering referrals, cross-border stings, the recording of conversations, and the duration of operations. In the United Kingdom, sting operations could be mounted with the objective of prosecuting defendants for an offense of failing to disclose knowledge or suspicion of the laundering of drug trafficking proceedings. Sting operations could also be conducted with the objective of prosecuting defendants for the major laundering offenses of acquisition, possession or use of the proceeds of drug trafficking or criminal conduct; assisting another to retain the benefit of drug trafficking or criminal conduct; and concealing or transferring the proceeds of drug trafficking or criminal conduct. If not properly controlled, sting operations may involve coercion, intimidation, or persuasion of a person not otherwise predisposed to commit an offense. Sting operations should be based on a reasonable indication that the subject is engaging in, has engaged in, or is likely to engage in illegal activity of a similar type. This paper also discusses the use of informants, the expense of sting operations, difficulties with representations, and international criticism. In conclusion, the paper advises that sting and undercover operations should not be overused, or launderers will begin to anticipate them.