1 00:00:05,674 --> 00:00:08,260 (bouncing horn music) 2 00:00:08,302 --> 00:00:10,304 - [Kal] Money Laundering. 3 00:00:10,345 --> 00:00:12,055 What is it? 4 00:00:12,097 --> 00:00:13,807 Well, suppose that I got all this money 5 00:00:13,849 --> 00:00:16,643 from some sort of a criminal enterprise. 6 00:00:16,685 --> 00:00:20,022 Maybe I'm a drug kingpin or an arms dealer. 7 00:00:20,063 --> 00:00:22,941 Or maybe I'm a lobbyist doing business 8 00:00:22,983 --> 00:00:24,318 with shady foreign politicians. 9 00:00:24,359 --> 00:00:25,986 No matter what I did to get it, 10 00:00:26,028 --> 00:00:28,530 my money is now tainted by my crime, 11 00:00:28,572 --> 00:00:30,657 which makes it tricky to spend. 12 00:00:30,699 --> 00:00:33,035 (splashing) 13 00:00:34,203 --> 00:00:35,579 Money laundering is the process 14 00:00:35,621 --> 00:00:37,414 of giving your dirty cash a makeover 15 00:00:37,456 --> 00:00:41,126 so that it appears legitimate to bankers and retail stores. 16 00:00:41,168 --> 00:00:43,045 That's a lot harder than it seems. 17 00:00:43,086 --> 00:00:46,757 - Best place to hide your diamonds are in your scrotum. 18 00:00:46,799 --> 00:00:49,551 - [Kal] There's a secret international financial system 19 00:00:49,593 --> 00:00:52,054 created just to help criminals spend their money 20 00:00:52,095 --> 00:00:54,056 without anyone knowing the deplorable things 21 00:00:54,097 --> 00:00:55,724 they did to get it. 22 00:00:55,766 --> 00:00:57,684 And we're talking a lot of money. 23 00:00:59,895 --> 00:01:02,731 Because most criminals aren't dumb enough to declare it, 24 00:01:02,773 --> 00:01:05,108 there's no way to know the exact amount, 25 00:01:05,150 --> 00:01:08,529 but it's likely bigger than the world steel industry, 26 00:01:08,570 --> 00:01:11,365 and possibly even the world's food industry. 27 00:01:11,406 --> 00:01:13,951 So where is this hidden economy? 28 00:01:13,992 --> 00:01:16,954 It's right behind you, and in front of you. 29 00:01:16,995 --> 00:01:18,497 It's everywhere, 30 00:01:18,539 --> 00:01:21,291 and I'm going to show you how to spot it. 31 00:01:23,335 --> 00:01:27,089 Whether you like it or not, we're all connected by money. 32 00:01:27,130 --> 00:01:30,342 I'm Kal Penn, exploring this giant beast 33 00:01:30,384 --> 00:01:33,637 that is the global economy. 34 00:01:36,723 --> 00:01:38,225 We all know crime pays, 35 00:01:38,267 --> 00:01:40,686 but how do bad guys stash their cash? 36 00:01:40,727 --> 00:01:43,355 Do criminals have their very own bank of evil? 37 00:01:45,315 --> 00:01:47,609 It's more like an informal network of lawyers 38 00:01:47,651 --> 00:01:49,695 who use accounting tricks to keep dirty money 39 00:01:49,736 --> 00:01:51,989 flying below the radar. 40 00:01:52,030 --> 00:01:54,366 For decades, it was all kept hush hush. 41 00:01:54,408 --> 00:01:57,703 Then in 2015, the curtain was pulled back 42 00:01:57,744 --> 00:02:01,874 to reveal the industry's shadiest methods. 43 00:02:01,915 --> 00:02:04,668 (boat horn) 44 00:02:04,710 --> 00:02:06,503 - Was there any shipping magnates caught up in the Panama Papers? 45 00:02:06,545 --> 00:02:08,505 - Yeah, all of them. 46 00:02:08,547 --> 00:02:10,799 - All of the shipping magnates? - Seriously they are all in there. 47 00:02:12,509 --> 00:02:15,053 - Hamburg-based Jan Strozyk was part of an international 48 00:02:15,095 --> 00:02:16,722 team of reporters that published stories 49 00:02:16,763 --> 00:02:18,682 about a massive financial data leak 50 00:02:18,724 --> 00:02:21,768 that came to be known as the Panama Papers. 51 00:02:21,810 --> 00:02:25,439 It exposed hundreds of thousands of secret companies 52 00:02:25,480 --> 00:02:27,983 being used to hide billions of dollars, 53 00:02:28,025 --> 00:02:31,403 and Jan was one of the first journalists to lay eyes on it. 54 00:02:31,445 --> 00:02:33,488 I'm super curious about how you got involved in all this. 55 00:02:33,530 --> 00:02:36,491 I'm imagining like some dude in a black trench coat 56 00:02:36,533 --> 00:02:38,702 with a suitcase that's connected to a handcuff, 57 00:02:38,744 --> 00:02:40,787 and he's like handing you something 58 00:02:40,829 --> 00:02:43,498 and disappearing into the fog. How did this all come to you? 59 00:02:43,540 --> 00:02:46,376 - There was a whistleblower that came to my colleague 60 00:02:46,418 --> 00:02:49,296 and asked him if he was interested in data leaks. 61 00:02:49,338 --> 00:02:51,340 And in the end it turned out to be 62 00:02:51,381 --> 00:02:54,968 the biggest data leak journalists ever looked at. 63 00:02:55,010 --> 00:02:58,180 We're talking about 11.5 million individual files. 64 00:02:58,221 --> 00:03:00,599 And this was the first time ever 65 00:03:00,641 --> 00:03:03,185 that someone outside of the money laundering industry 66 00:03:03,226 --> 00:03:06,021 was able to look at what was going on there. 67 00:03:06,063 --> 00:03:09,399 - [Kal] These files were the confidential client records 68 00:03:09,441 --> 00:03:11,860 of the law firm Mossack Fonseca, 69 00:03:11,902 --> 00:03:14,237 and if you thought the confessions in your secret diary 70 00:03:14,279 --> 00:03:17,407 might be damaging, theirs revealed how they helped 71 00:03:17,449 --> 00:03:20,619 the criminally rich launder dirty money. 72 00:03:20,661 --> 00:03:23,288 - Mossack Fonseca specialized in setting up companies 73 00:03:23,330 --> 00:03:26,124 so nobody can look who is behind it. 74 00:03:26,166 --> 00:03:28,210 They are called shell companies. 75 00:03:28,251 --> 00:03:30,712 So if you have money that's from a dubious source, 76 00:03:30,754 --> 00:03:33,173 you can do your business and nobody 77 00:03:33,215 --> 00:03:34,925 could find out where the money comes from. 78 00:03:34,967 --> 00:03:36,385 So you would just go there 79 00:03:36,426 --> 00:03:38,053 and on both side they would know 80 00:03:38,095 --> 00:03:40,263 it's not good for the business relationship 81 00:03:40,305 --> 00:03:42,683 - if everybody know who's behind this. - Sure. 82 00:03:42,724 --> 00:03:45,894 So they would not really ask who the end client is. 83 00:03:45,936 --> 00:03:47,771 They would just set up the company. 84 00:03:47,813 --> 00:03:50,232 In one case, there was a customer 85 00:03:50,273 --> 00:03:52,192 and they used, like, names from Harry Potter, 86 00:03:52,234 --> 00:03:55,904 and they set up companies like Azkaban and something. I don't know. 87 00:03:55,946 --> 00:03:57,447 - That's the nerdiest shit I've ever heard! 88 00:03:57,489 --> 00:03:59,700 - It is! 89 00:03:59,741 --> 00:04:01,243 - Are these drug cartels that are laundering money? 90 00:04:01,284 --> 00:04:02,619 Who's doing this? 91 00:04:02,661 --> 00:04:05,122 - They were doing business with drug cartels, 92 00:04:05,163 --> 00:04:07,749 mafia, doing business with arms dealers, 93 00:04:07,791 --> 00:04:10,961 and if we look at the Panama Papers as a total, 94 00:04:11,003 --> 00:04:12,963 we have almost 200 different countries. 95 00:04:13,005 --> 00:04:14,631 Basically, every country in the world 96 00:04:14,673 --> 00:04:16,425 that's in some way implicated. 97 00:04:16,466 --> 00:04:18,635 - That's crazy! - Yeah, it is. 98 00:04:18,677 --> 00:04:20,220 I mean there were a lot of arrests 99 00:04:20,262 --> 00:04:22,222 after the initial publication, 100 00:04:22,264 --> 00:04:24,683 and there's going to be a lot more coming in the next years. 101 00:04:24,725 --> 00:04:27,102 And there are hundreds of people that are 102 00:04:27,144 --> 00:04:30,397 probably sitting at home and they're a bit scared right now, I guess. 103 00:04:30,439 --> 00:04:33,108 - [Kal] The Panama Papers revealed rampant money laundering 104 00:04:33,150 --> 00:04:34,276 all over the planet. 105 00:04:38,155 --> 00:04:40,824 So far, prosecutors and journalists have only processed 106 00:04:40,866 --> 00:04:42,451 the tip of the iceberg, 107 00:04:42,492 --> 00:04:45,245 and I wanna find out just how deep it goes. 108 00:04:45,287 --> 00:04:47,748 But I'm just an actor-slash-TV host. 109 00:04:47,789 --> 00:04:50,667 I've never been connected to the seedy underbelly 110 00:04:50,709 --> 00:04:53,795 of drugs or financial crimes, so... 111 00:04:53,837 --> 00:04:55,756 In order to figure out how money laundering works, 112 00:04:55,797 --> 00:04:57,299 I'm gonna need a million dollars. 113 00:04:57,340 --> 00:04:59,259 (thud) 114 00:05:00,677 --> 00:05:01,970 Thanks, Cody. 115 00:05:06,600 --> 00:05:07,809 (phone ringing) 116 00:05:09,853 --> 00:05:12,022 Perhaps you're wondering what would stop 117 00:05:12,064 --> 00:05:13,982 an aspiring money launderer like me 118 00:05:14,024 --> 00:05:16,276 from taking this bag of money and depositing it 119 00:05:16,318 --> 00:05:17,736 directly into the bank. 120 00:05:19,321 --> 00:05:21,156 First of all, that would actually just be 121 00:05:21,198 --> 00:05:24,659 a super short episode, but also, here's what would happen. 122 00:05:25,660 --> 00:05:27,871 - Next member, please. 123 00:05:27,913 --> 00:05:29,706 - I'd like to make a deposit, please. 124 00:05:29,748 --> 00:05:32,459 - Okay, I'm gonna need you to complete a deposit slip. 125 00:05:34,628 --> 00:05:35,837 A million dollars? 126 00:05:38,131 --> 00:05:41,593 Okay, because you're depositing over 10 thousand dollars, 127 00:05:41,635 --> 00:05:44,805 I'm gonna need to complete a currency transaction report. 128 00:05:44,846 --> 00:05:46,431 - Interesting, okay. 129 00:05:46,473 --> 00:05:48,600 - What is the source of the money? 130 00:05:48,642 --> 00:05:50,310 - It kind of fell from the sky. 131 00:05:50,352 --> 00:05:51,812 I know that sounds a little weird, 132 00:05:51,853 --> 00:05:55,649 but it was, yeah. 133 00:05:55,690 --> 00:05:59,444 - Okay, that's what I'm gonna have to write on your report. 134 00:05:59,486 --> 00:06:02,739 And that's reported to the federal government. 135 00:06:02,781 --> 00:06:06,993 - Okay, um, let me think about it and come back. 136 00:06:07,035 --> 00:06:08,411 - If you don't deposit the money, 137 00:06:08,453 --> 00:06:10,622 I still will need to complete a SAR, 138 00:06:10,664 --> 00:06:12,958 which is a Suspicious Activity Report. 139 00:06:12,999 --> 00:06:15,335 Either way, there's gonna be some reporting done, 140 00:06:15,377 --> 00:06:17,879 because you're carrying around this amount of cash. 141 00:06:17,921 --> 00:06:21,925 - Is it easier if I happen to find a receipt 142 00:06:21,967 --> 00:06:24,553 for selling something? 143 00:06:27,264 --> 00:06:30,517 Okay, um, thank you, I'll think about it. 144 00:06:30,559 --> 00:06:32,894 American banks have to report all suspicious 145 00:06:32,936 --> 00:06:34,312 cash transactions. 146 00:06:34,354 --> 00:06:36,398 It's the law. 147 00:06:36,439 --> 00:06:38,066 Apparently legitimate business deals 148 00:06:38,108 --> 00:06:40,152 rarely involve duffel bags full of Benjamins. 149 00:06:40,193 --> 00:06:42,279 - Amanda, I need to talk to you about completing a SAR. 150 00:06:42,320 --> 00:06:43,822 - Everything's fine, Amanda. 151 00:06:49,744 --> 00:06:53,248 So, where do you go to find out how to evade the law? 152 00:06:53,290 --> 00:06:55,667 Easy, the place where those laws are written, 153 00:06:55,709 --> 00:07:00,046 our nation's capital, Washington, D.C., 154 00:07:00,088 --> 00:07:02,048 where there are at least a few good guys 155 00:07:02,090 --> 00:07:04,551 fighting to keep bad-guy money out. 156 00:07:07,721 --> 00:07:10,807 Kerry Myers is a veteran FBI hard-ass. 157 00:07:10,849 --> 00:07:12,601 He segued from the bomb squad 158 00:07:12,642 --> 00:07:14,728 to the anti-money laundering beat, 159 00:07:14,769 --> 00:07:16,229 so maybe he can help me make my money 160 00:07:16,271 --> 00:07:18,648 look as harmless as we do. 161 00:07:18,690 --> 00:07:20,775 This is not your first time on a Segway, is it? 162 00:07:20,817 --> 00:07:23,320 - No, I was a bomb technician with the FBI, 163 00:07:23,361 --> 00:07:27,699 and we used to use Segways when we would be in a bomb suit 164 00:07:27,741 --> 00:07:29,743 to go down range so we're not worn out 165 00:07:29,784 --> 00:07:31,161 by the time we get there 166 00:07:31,203 --> 00:07:32,454 - to do our job. - That's awesome. 167 00:07:32,495 --> 00:07:34,289 - At the FBI, financial investigation 168 00:07:34,331 --> 00:07:36,917 is a part of every crime you investigate. 169 00:07:36,958 --> 00:07:38,460 There's always a financial component. 170 00:07:38,501 --> 00:07:41,338 - So how would I launder money? 171 00:07:41,379 --> 00:07:43,506 - The easy answer is don't, unless you wanna go to jail. 172 00:07:43,548 --> 00:07:45,175 - (laughs) Sure. 173 00:07:45,217 --> 00:07:46,760 - But there are three steps to money laundering: 174 00:07:46,801 --> 00:07:48,678 placement, layering, and integration. 175 00:07:48,720 --> 00:07:53,141 Placement is when the criminal takes the proceeds 176 00:07:53,183 --> 00:07:55,268 of illegal activity, and he goes in 177 00:07:55,310 --> 00:07:58,521 and physically makes a deposit into the financial institution. 178 00:07:58,563 --> 00:08:02,359 Layering is, once the cash is now into the system, 179 00:08:02,400 --> 00:08:04,861 he wants to move it around among different accounts, 180 00:08:04,903 --> 00:08:06,696 maybe accounts of different banks 181 00:08:06,738 --> 00:08:09,783 to make it harder to trace and to further try 182 00:08:09,824 --> 00:08:12,202 and hide its identity. 183 00:08:12,244 --> 00:08:15,789 Integration is when the money, after it's been moved 184 00:08:15,830 --> 00:08:17,707 and layered through different accounts, 185 00:08:17,749 --> 00:08:20,377 is when the criminal pulls the money out of the bank 186 00:08:20,418 --> 00:08:23,380 and then uses it for a legitimate transaction. 187 00:08:23,421 --> 00:08:25,215 But, placement is the choke point, 188 00:08:25,257 --> 00:08:27,509 because our laws are designed to catch 189 00:08:27,550 --> 00:08:31,346 the placement of the money into the financial institution. 190 00:08:31,388 --> 00:08:32,597 - [Kal] Oh, I know. 191 00:08:36,268 --> 00:08:38,270 - The trick is, trying to get it 192 00:08:38,311 --> 00:08:41,940 into the financial institution without a report being filed 193 00:08:41,982 --> 00:08:46,820 with the Financial Criminal Enforcement Network, FINCEN. 194 00:08:46,861 --> 00:08:48,697 Think of it as a library. 195 00:08:48,738 --> 00:08:51,658 That report stays at FINCEN and law enforcement 196 00:08:51,700 --> 00:08:54,536 can get every report that any financial institution 197 00:08:54,577 --> 00:08:58,290 has ever filed concerning your activity with cash 198 00:08:58,331 --> 00:09:01,126 or suspicious activity at a financial institution. 199 00:09:02,711 --> 00:09:04,212 - There are all these regulations, 200 00:09:04,254 --> 00:09:05,630 all this other reporting. 201 00:09:05,672 --> 00:09:07,007 How would somebody launder money, then? 202 00:09:07,048 --> 00:09:08,591 - If I wanted to launder money, 203 00:09:08,633 --> 00:09:09,968 I would use a cash-based business. 204 00:09:10,010 --> 00:09:12,887 A perfect example would be a taxi cab company. 205 00:09:12,929 --> 00:09:15,473 It's very difficult for the government 206 00:09:15,515 --> 00:09:17,892 to estimate whether you had 10 fares today 207 00:09:17,934 --> 00:09:22,105 or 20 fares today, and you start taking the proceeds 208 00:09:22,147 --> 00:09:24,357 of illegal activity, commingling it with 209 00:09:24,399 --> 00:09:27,652 the legitimate revenue from a cash-based company 210 00:09:27,694 --> 00:09:30,780 and start sliding it into the financial system. 211 00:09:30,822 --> 00:09:33,533 If I'm a bank, and you're a taxi cab company, 212 00:09:33,575 --> 00:09:36,161 and you make a deposit every day with me 213 00:09:36,202 --> 00:09:39,664 for six thousand dollars, that's not going to 214 00:09:39,706 --> 00:09:42,959 cause any alarms if one day it's nine thousand, 215 00:09:43,001 --> 00:09:44,961 or even one day it's 12 thousand. 216 00:09:45,003 --> 00:09:46,338 Although I may file the report, 217 00:09:46,379 --> 00:09:48,465 I'm not gonna be alarmed about it 218 00:09:48,506 --> 00:09:51,217 because we have a history of this taxi cab company 219 00:09:51,259 --> 00:09:53,928 is consistently making cash deposits every day 220 00:09:53,970 --> 00:09:56,056 as a part of their revenue. 221 00:09:56,097 --> 00:09:57,182 - [Kal] I've always dreamed of starting 222 00:09:57,223 --> 00:09:59,434 a cross-fit doggie daycare. 223 00:09:59,476 --> 00:10:01,686 I wish there was some sort of how-to guide 224 00:10:01,728 --> 00:10:05,857 for starting a money laundering cash-based business. 225 00:10:05,899 --> 00:10:08,276 - Hi, I'm Benjamin, owner and operator 226 00:10:08,318 --> 00:10:10,570 of Ben's Cash-Only Businesses. 227 00:10:10,612 --> 00:10:12,322 I'm a professional consultant, 228 00:10:12,364 --> 00:10:14,574 and I can teach you to start 229 00:10:14,616 --> 00:10:17,952 and run a cash business, guaranteed. 230 00:10:17,994 --> 00:10:20,205 How do I know you can run one? 231 00:10:20,246 --> 00:10:22,832 Because I run several. 232 00:10:22,874 --> 00:10:25,335 Have money and time on your hands? 233 00:10:25,377 --> 00:10:28,922 Start a shell corporation and use it... 234 00:10:28,963 --> 00:10:30,673 to invest in real estate. 235 00:10:31,883 --> 00:10:33,843 Blossom into a florist. 236 00:10:33,885 --> 00:10:35,387 - I'm here to pick up the orchid. 237 00:10:35,428 --> 00:10:38,723 - Great. - (ka-ching) 238 00:10:38,765 --> 00:10:43,561 Or even better, your corporation can put money in art. 239 00:10:43,603 --> 00:10:46,272 Oh, not in art, you dummy. 240 00:10:46,314 --> 00:10:47,732 Bid on it. 241 00:10:47,774 --> 00:10:50,068 Auctions are anonymous, so they don't care 242 00:10:50,110 --> 00:10:51,820 where the money came from. 243 00:10:51,861 --> 00:10:53,696 I bought this painting with my brand new 244 00:10:53,738 --> 00:10:57,575 legitimate art business that's not sketchy in any way. 245 00:10:57,617 --> 00:11:00,120 In a couple years, you can sell it again 246 00:11:00,161 --> 00:11:02,122 through the same auction house, 247 00:11:02,163 --> 00:11:07,210 and you can take that clean money to the bank. 248 00:11:07,252 --> 00:11:10,505 Know your business and keep the government out of it. 249 00:11:10,547 --> 00:11:13,800 - Hey, how did all this cash get here? 250 00:11:13,842 --> 00:11:15,927 - Selling flowers, of course. 251 00:11:15,969 --> 00:11:18,054 The only thing criminal here 252 00:11:18,096 --> 00:11:20,598 is the low cash-only prices. 253 00:11:20,640 --> 00:11:23,977 So come on over to Ben's Cash-Only Businesses. 254 00:11:24,018 --> 00:11:27,188 The only question we ask is why are you asking 255 00:11:27,230 --> 00:11:28,523 so many questions? 256 00:11:30,525 --> 00:11:34,487 (rhythmic bass and drum music) 257 00:11:39,868 --> 00:11:41,619 - [Kal] With some of these businesses, 258 00:11:41,661 --> 00:11:44,330 it could take years to clean a lot of cash. 259 00:11:44,372 --> 00:11:47,459 I've gotta get rid of it before the show ends. 260 00:11:47,500 --> 00:11:49,210 I'm in Miami to meet someone who knows 261 00:11:49,252 --> 00:11:52,464 how to clean a lot of cash quickly. 262 00:11:52,505 --> 00:11:54,716 - I was being considered for a judgeship. 263 00:11:54,757 --> 00:11:56,801 That's how secretive we were. 264 00:11:56,843 --> 00:11:58,720 Nobody knew that I was a trial lawyer during the day, 265 00:11:58,761 --> 00:12:02,390 and I'd put on my mask and I was a money launderer at night. 266 00:12:02,432 --> 00:12:05,226 - Back in the 80s, Humberto Aguilar 267 00:12:05,268 --> 00:12:07,854 lived a double life, defending criminals 268 00:12:07,896 --> 00:12:10,982 as an attorney by day, also becoming a criminal 269 00:12:11,024 --> 00:12:13,735 by laundering their money, also by day. 270 00:12:13,776 --> 00:12:16,279 Until he got caught and spent six years in prison. 271 00:12:20,325 --> 00:12:24,621 So now I must ask you a question 272 00:12:24,662 --> 00:12:26,039 about money laundering. 273 00:12:26,080 --> 00:12:27,415 How did you do it? 274 00:12:27,457 --> 00:12:29,083 - Well, back when I was doing it, 275 00:12:29,125 --> 00:12:32,420 most of the guys I worked for transported cocaine. 276 00:12:32,462 --> 00:12:35,173 Client came to me and said, look, I gotta problem. 277 00:12:35,215 --> 00:12:36,883 I go, you got a lot of problems. 278 00:12:36,925 --> 00:12:38,384 - As soon as you said that, I was like, 279 00:12:38,426 --> 00:12:40,094 Well, okay, this seems pretty normal so far. 280 00:12:40,136 --> 00:12:42,347 - And I said, okay, what's your problem? 281 00:12:42,388 --> 00:12:44,307 I gotta take you, and I go, okay, let's go. 282 00:12:44,349 --> 00:12:46,726 So we went to this warehouse, and it was a huge place, 283 00:12:46,768 --> 00:12:48,978 bigger than this, full of boxes. 284 00:12:49,020 --> 00:12:49,979 Okay, what's the problem? 285 00:12:50,021 --> 00:12:52,065 He says, open a box. 286 00:12:52,106 --> 00:12:53,525 What, what? Open a box! 287 00:12:53,566 --> 00:12:55,401 So I open a box and it's full of money. 288 00:12:55,443 --> 00:12:58,238 Okay, and that one, too, and that one? 289 00:12:58,279 --> 00:13:00,198 Yes, okay, we've got a big problem. 290 00:13:00,240 --> 00:13:02,575 - Yeah, it sounds like if you had a whole warehouse... 291 00:13:02,617 --> 00:13:04,035 - One warehouse? 292 00:13:04,077 --> 00:13:05,286 I worked for a lot of different people. 293 00:13:05,328 --> 00:13:07,163 - Oh, so this was... (laughs) 294 00:13:07,205 --> 00:13:09,040 This wasn't just one client one time. 295 00:13:09,082 --> 00:13:11,000 - No. 296 00:13:12,835 --> 00:13:15,088 - [Kal] In the 1980s, Americans had quite 297 00:13:15,129 --> 00:13:16,464 the appetite for cocaine. 298 00:13:18,633 --> 00:13:21,511 And Miami was the entry point for most of the supply. 299 00:13:25,098 --> 00:13:27,058 The town's business was booming, 300 00:13:27,100 --> 00:13:30,270 and dealers were swimming in billions of dollars 301 00:13:30,311 --> 00:13:32,063 of dirty cash. 302 00:13:33,147 --> 00:13:36,359 (car peeling out) 303 00:13:36,401 --> 00:13:38,695 - My clients would say, look, I need to use this money. 304 00:13:38,736 --> 00:13:40,113 'Cause how many cars can I buy? 305 00:13:40,154 --> 00:13:41,990 How many houses can I buy, cash? 306 00:13:42,031 --> 00:13:44,659 And I said, oh, oh, this is a challenge. 307 00:13:44,701 --> 00:13:47,537 I created a plan, and the plan was simply 308 00:13:47,579 --> 00:13:50,748 get the money out, get it overseas, 309 00:13:50,790 --> 00:13:53,334 and bring it back legally. 310 00:13:53,376 --> 00:13:55,753 - How did you physically get the money out of this country? 311 00:13:55,795 --> 00:13:58,214 - I would take these boats that went 312 00:13:58,256 --> 00:14:00,717 to pick up the cocaine, 313 00:14:00,758 --> 00:14:03,845 would go down to South America empty. 314 00:14:03,886 --> 00:14:06,431 And I said, wait, I'm gonna use 'em. 315 00:14:06,472 --> 00:14:08,141 So I would put the money in these boats 316 00:14:08,182 --> 00:14:11,060 to go down to South America and end up in Panama, 317 00:14:11,102 --> 00:14:13,605 and you have your people waiting at the port 318 00:14:13,646 --> 00:14:15,940 with guns to protect your cash. 319 00:14:15,982 --> 00:14:17,734 So you get the money in Panama, 320 00:14:17,775 --> 00:14:19,611 and you go to the bank, and you find the banker. 321 00:14:19,652 --> 00:14:22,530 And you start off slowly, build the relationship. 322 00:14:22,572 --> 00:14:24,949 You say, what kind of watch you wear? 323 00:14:24,991 --> 00:14:28,328 That's a Seico, no, man, no, not my banker. 324 00:14:28,369 --> 00:14:30,872 And you go and you give him your Rolex. 325 00:14:30,913 --> 00:14:32,790 Here's my Rolex, that's yours now. 326 00:14:32,832 --> 00:14:35,543 And he looks at it, whoa, 30 thousand bucks, right? 327 00:14:35,585 --> 00:14:39,005 Now, you own this guy. You own him. 328 00:14:39,047 --> 00:14:41,507 You say, okay, this is my money. I wanna deposit it. 329 00:14:41,549 --> 00:14:44,594 I'm gonna open this account for this corporation, always corporations. 330 00:14:44,636 --> 00:14:47,055 You're gonna start using shell companies. 331 00:14:47,096 --> 00:14:50,433 - [Kal] Shell companies, they're key to laundering 332 00:14:50,475 --> 00:14:52,018 big sums of cash. 333 00:14:52,060 --> 00:14:55,146 These corporate facades exist only on paper 334 00:14:55,188 --> 00:14:56,981 with no real business to speak of 335 00:14:57,023 --> 00:14:58,858 aside from holding on to money 336 00:14:58,900 --> 00:15:01,194 and moving assets around without detection. 337 00:15:01,235 --> 00:15:03,696 Think of money laundering as a cigar. 338 00:15:03,738 --> 00:15:06,032 Inside you have your money, the tobacco. 339 00:15:06,074 --> 00:15:08,076 Outside, you have your shell company, 340 00:15:08,117 --> 00:15:10,662 the wrapper that conceals the tobacco. 341 00:15:10,703 --> 00:15:12,538 The glue that holds it all together 342 00:15:12,580 --> 00:15:14,374 is your company's board of directors. 343 00:15:14,415 --> 00:15:17,001 These are people who appear to run your company, 344 00:15:17,043 --> 00:15:18,920 giving you total anonymity. 345 00:15:18,961 --> 00:15:21,381 Once the wrapper is sealed in a tidy package, 346 00:15:21,422 --> 00:15:23,591 it's hard to look at what's really inside. 347 00:15:25,259 --> 00:15:26,886 - And one of the things I would do is, 348 00:15:26,928 --> 00:15:28,805 when I went to Panama, there's a couple 349 00:15:28,846 --> 00:15:33,393 of whorehouses, I looked for a different way of doing it, 350 00:15:33,434 --> 00:15:35,269 no, it's whorehouses. 351 00:15:35,311 --> 00:15:38,856 But the whorehouses are good because they have IDs. 352 00:15:38,898 --> 00:15:40,650 - Who has IDs? - The girls. 353 00:15:42,402 --> 00:15:43,986 - All right, back up 354 00:15:44,028 --> 00:15:45,947 - and talk me through-- - We'll go back. 355 00:15:45,988 --> 00:15:48,783 So you form a company first. Who owns the company? 356 00:15:48,825 --> 00:15:52,620 Oh, shit, these two women own the company. 357 00:15:52,662 --> 00:15:54,747 I've got their IDs, here. 358 00:15:54,789 --> 00:15:58,167 You pay these whores two hundred bucks to use their IDs. 359 00:15:58,209 --> 00:15:59,877 They don't know what you're doing with it, 360 00:15:59,919 --> 00:16:01,421 they don't care, they got two hundred bucks, 361 00:16:01,462 --> 00:16:02,922 hey, I don't have to sleep with anybody 362 00:16:02,964 --> 00:16:04,465 for two hundred bucks, that's great. 363 00:16:04,507 --> 00:16:06,342 - So there was never a risk that they could go 364 00:16:06,384 --> 00:16:08,845 to the bank and say, that's my 10 million dollars? 365 00:16:08,886 --> 00:16:11,681 - There were always risks involved, 366 00:16:11,723 --> 00:16:13,474 but the money's out of there soon. 367 00:16:13,516 --> 00:16:16,310 In two, three weeks, I move the money. Where does it go? 368 00:16:16,352 --> 00:16:18,813 Switzerland, a wonderful place. 369 00:16:18,855 --> 00:16:21,733 And they send a car, and they pick you up, 370 00:16:21,774 --> 00:16:24,068 and you've got the money sitting there, and you're okay. 371 00:16:24,110 --> 00:16:26,279 - So they're just facilitating your money laundering. 372 00:16:26,320 --> 00:16:28,948 - No, no, they're investment-- 373 00:16:28,990 --> 00:16:31,117 - Sure, yeah, okay, they're facilitating their investment 374 00:16:31,159 --> 00:16:34,662 in their new clients, their new relationships. 375 00:16:34,704 --> 00:16:36,706 I worked in government. I know how these languages work. 376 00:16:36,748 --> 00:16:39,250 - It's wonderful, it is wonderful. 377 00:16:39,292 --> 00:16:41,210 - And then where would you move it? 378 00:16:41,252 --> 00:16:43,171 - Back here to invest it in Miami. 379 00:16:43,212 --> 00:16:45,840 They all wanted their money back to be able to use it. 380 00:16:45,882 --> 00:16:47,300 And that was my job. 381 00:16:47,341 --> 00:16:49,177 - It's legitimately coming from a legal bank 382 00:16:49,218 --> 00:16:51,304 - under a corporation name? - Yeah. 383 00:16:51,345 --> 00:16:54,682 At the time, I honestly didn't think it was illegal 384 00:16:54,724 --> 00:16:56,184 in my mind and heart. 385 00:16:56,225 --> 00:16:58,269 I knew it was, but hey, come on. 386 00:16:58,311 --> 00:16:59,520 - [Kal] But you feel like it's not hurting anybody. 387 00:16:59,562 --> 00:17:02,190 - It's not, look at Miami today. 388 00:17:02,231 --> 00:17:05,067 No really, you look at all these businesses 389 00:17:05,109 --> 00:17:06,319 that are grown up. 390 00:17:06,360 --> 00:17:07,987 They made Miami a grown-up city. 391 00:17:08,029 --> 00:17:09,822 And people ask me, well, what happened 392 00:17:09,864 --> 00:17:12,200 to all the money that was laundered in Miami? 393 00:17:12,241 --> 00:17:15,828 Get up, you go on I-95, you go over the overpass 394 00:17:15,870 --> 00:17:17,330 that overlooks downtown, and you look at all 395 00:17:17,371 --> 00:17:19,540 these beautiful buildings. 396 00:17:19,582 --> 00:17:21,083 You know what, that's the money. 397 00:17:21,125 --> 00:17:24,629 - So, I've got this bag of money. 398 00:17:24,670 --> 00:17:26,214 What do I do with it? 399 00:17:26,255 --> 00:17:27,507 - First, get it out of the country. 400 00:17:27,548 --> 00:17:33,012 Get it to Liechtenstein, Guernsey, Cyprus. 401 00:17:33,054 --> 00:17:35,807 It's probably one of the dirtiest places in the world. 402 00:17:35,848 --> 00:17:38,184 - [Kal] The island of Cyprus is well situated 403 00:17:38,226 --> 00:17:40,561 to be the premier money laundering destination 404 00:17:40,603 --> 00:17:42,021 for most of Europe and Asia. 405 00:17:45,024 --> 00:17:46,818 I don't have a drug boat like Humberto, 406 00:17:46,859 --> 00:17:49,612 and the lawyers at Amazon told me I couldn't wire money 407 00:17:49,654 --> 00:17:51,364 like most real launderers do, 408 00:17:51,405 --> 00:17:54,367 because it would be criminally boring to watch. 409 00:17:54,408 --> 00:17:57,870 So I'm taking my private plane. 410 00:17:57,912 --> 00:18:02,083 - Ladies and gentlemen, we'll be touching down in Cyprus shortly. 411 00:18:02,124 --> 00:18:05,294 Ladies and gentlemen, we've arrived in Cyprus. 412 00:18:05,336 --> 00:18:07,213 - [Kal] Cyprus has everything that an international 413 00:18:07,255 --> 00:18:10,299 traveler with large sums of money could possibly desire. 414 00:18:10,341 --> 00:18:12,677 - Hello. - Hello, Mr. Kal. 415 00:18:12,718 --> 00:18:14,095 Welcome, sir, can I take the bags? 416 00:18:14,136 --> 00:18:15,346 - No, thank you. - Sure? 417 00:18:15,388 --> 00:18:16,597 - No, I'm fine, thank you. 418 00:18:16,639 --> 00:18:19,267 Great weather, expansive beaches, 419 00:18:19,308 --> 00:18:23,020 Russian karaoke, and somehow less suspicious, 420 00:18:23,062 --> 00:18:25,439 a massive financial services industry. 421 00:18:28,150 --> 00:18:29,318 - [Kal] How are you? 422 00:18:29,360 --> 00:18:31,445 - I'm fine. Welcome to Cyprus, sir. 423 00:18:31,487 --> 00:18:33,573 - Thank you. I'm excited to be here. 424 00:18:33,614 --> 00:18:34,907 - Oh, thank you. 425 00:18:34,949 --> 00:18:36,284 - First time in Cyprus. 426 00:18:36,325 --> 00:18:37,577 - It's a lovely place. 427 00:18:37,618 --> 00:18:39,662 - It seems like it, it's warm. 428 00:18:39,704 --> 00:18:41,414 I've heard a lot of really interesting things about it. 429 00:18:41,455 --> 00:18:43,666 - What is the purpose of your trip? 430 00:18:45,209 --> 00:18:47,044 - Well, I, uh... - Tourist? 431 00:18:47,086 --> 00:18:48,462 - I guess, I'm a tourist. 432 00:18:48,504 --> 00:18:51,465 I also have some cash with me. 433 00:18:51,507 --> 00:18:52,550 - Cash. 434 00:18:52,592 --> 00:18:55,261 - And wanted to... 435 00:18:55,303 --> 00:18:57,179 - Cleaning or laundering? 436 00:18:57,221 --> 00:18:58,764 - We can just talk about that straight up? 437 00:18:58,806 --> 00:18:59,849 We can call it that, we don't have to... 438 00:18:59,891 --> 00:19:01,392 - Of course, of course. 439 00:19:01,434 --> 00:19:02,685 - Okay, well, yeah, I'm here to launder money 440 00:19:02,727 --> 00:19:04,061 and set up a shell company. 441 00:19:04,103 --> 00:19:07,607 - Of course. It's the paradise of money here. 442 00:19:07,648 --> 00:19:08,733 - Why is it the paradise of money? 443 00:19:08,774 --> 00:19:10,151 - First, because of the taxes. 444 00:19:10,192 --> 00:19:12,612 We have low tax in Cyprus. 445 00:19:12,653 --> 00:19:17,366 Otherwise, there is a lot of accounting companies. 446 00:19:17,408 --> 00:19:21,495 And we have a lot of Russians, actually, to launder money. 447 00:19:21,537 --> 00:19:23,247 - Okay, so you're saying a lot of Russians 448 00:19:23,289 --> 00:19:24,916 come here to launder their money. 449 00:19:24,957 --> 00:19:27,960 - Yeah. I can be the company's director if you want. 450 00:19:28,002 --> 00:19:29,462 - You can be the director of my shell company? 451 00:19:29,503 --> 00:19:32,506 - Of course. If you pay me good money. 452 00:19:32,548 --> 00:19:33,591 More than the taxi. 453 00:19:33,633 --> 00:19:34,884 - Yeah? 454 00:19:34,926 --> 00:19:36,510 - So you said that you have a lot of cash. 455 00:19:36,552 --> 00:19:38,930 - I do, so I have a lot of cash with me, and uh... 456 00:19:38,971 --> 00:19:40,514 - With you? You mean here now? 457 00:19:40,556 --> 00:19:42,475 - Yeah, here now. 458 00:19:42,516 --> 00:19:43,893 - How much? 459 00:19:43,935 --> 00:19:45,645 - Enough that I've brought other people 460 00:19:45,686 --> 00:19:47,313 with cameras in the cab with me. 461 00:19:47,355 --> 00:19:48,981 - Alright. 462 00:19:49,023 --> 00:19:51,275 - I'm a little-- I have to be honest, 463 00:19:51,317 --> 00:19:52,777 I'm a little surprised that we're able 464 00:19:52,818 --> 00:19:55,154 to talk so openly about money laundering 465 00:19:55,196 --> 00:19:56,572 and shell companies. 466 00:19:56,614 --> 00:19:58,532 Is that, uh, is that common, 467 00:19:58,574 --> 00:20:00,493 or is that just 'cause you're an interesting guy? 468 00:20:00,534 --> 00:20:02,870 - It's common, but it's just between us. 469 00:20:02,912 --> 00:20:05,998 - Okay. 470 00:20:06,040 --> 00:20:08,042 - Now let's get back to the money. 471 00:20:08,084 --> 00:20:09,835 You didn't say how much you bring. 472 00:20:09,877 --> 00:20:14,423 - Well, so how much, uh, how much would your rate be? 473 00:20:14,465 --> 00:20:15,883 - No less than seven. 474 00:20:15,925 --> 00:20:17,343 - No less than seven hundred euros? 475 00:20:17,385 --> 00:20:18,594 - Thousand. 476 00:20:18,636 --> 00:20:20,888 - Oh, seven thousand euros, okay! 477 00:20:20,930 --> 00:20:23,432 Hey, I'm trying to negotiate here, man. 478 00:20:25,309 --> 00:20:29,563 Cyprus's registrar of companies is an enormous warehouse 479 00:20:29,605 --> 00:20:32,191 storing all the island's corporate registrations. 480 00:20:32,233 --> 00:20:35,528 Here, there are paper records for hundreds 481 00:20:35,569 --> 00:20:38,406 of thousands of shell companies. 482 00:20:38,447 --> 00:20:41,325 The sheer volume and backlog of digitization 483 00:20:41,367 --> 00:20:43,786 makes any one of them about as easy to find 484 00:20:43,828 --> 00:20:45,162 as the Ark of the Covenant. 485 00:20:47,373 --> 00:20:50,501 - It's a good place to do business, actually, here, 486 00:20:50,543 --> 00:20:53,754 and if you keep an open mind, 487 00:20:53,796 --> 00:20:56,716 there's great potential in Limassol 488 00:20:56,757 --> 00:21:02,013 because of the many foreign companies, Russians, Germans. 489 00:21:02,054 --> 00:21:03,764 Actually, the largest... 490 00:21:03,806 --> 00:21:05,683 - Lately a lot of Israelis. 491 00:21:07,476 --> 00:21:09,020 - [Kal] Even if my shell company doesn't do 492 00:21:09,061 --> 00:21:11,230 any real business, I'll need to provide 493 00:21:11,272 --> 00:21:13,858 an address for my corporate records. 494 00:21:13,899 --> 00:21:16,736 Andreas Solea has the coolest mustache 495 00:21:16,777 --> 00:21:20,448 I've seen since Miami, so I will follow his advice. 496 00:21:20,489 --> 00:21:22,158 Because he and his daughter, Elisa, 497 00:21:22,199 --> 00:21:24,452 run an office space rental company, 498 00:21:24,493 --> 00:21:25,703 and business is booming. 499 00:21:28,873 --> 00:21:31,292 - You have some offices that you just have the desk. 500 00:21:31,333 --> 00:21:36,088 - Lot of empty offices. Rented. - Rented, empty offices rented. 501 00:21:36,130 --> 00:21:38,174 - Of course, rented, 'cause otherwise that wouldn't be good for you. 502 00:21:38,215 --> 00:21:42,803 - We, as a company, we don't actually care what kind of job you do, 503 00:21:42,845 --> 00:21:44,597 or why you need the office. 504 00:21:44,638 --> 00:21:46,098 - It's not our business. - We don't ask, actually. 505 00:21:46,140 --> 00:21:48,184 - We never ask what is your kind of business. 506 00:21:48,225 --> 00:21:50,811 It's your office. It's your private office. 507 00:21:50,853 --> 00:21:52,313 - You can do whatever you want with it. 508 00:21:52,354 --> 00:21:54,065 - You can do whatever you want there. 509 00:21:54,106 --> 00:21:56,233 Of course, in the contracts it's written 510 00:21:56,275 --> 00:21:59,361 not for illegal purposes, but who knows? 511 00:21:59,403 --> 00:22:02,656 - Do you suspect that some of your tenants 512 00:22:02,698 --> 00:22:04,492 might be money laundering? 513 00:22:04,533 --> 00:22:06,202 - Money laundering? 514 00:22:06,243 --> 00:22:09,371 - Anybody can do whatever they want. It's not our business. 515 00:22:09,413 --> 00:22:11,832 - That's been clear. - It's everywhere the same. 516 00:22:11,874 --> 00:22:15,711 From Cyprus to United States, to Russians 517 00:22:15,753 --> 00:22:18,214 to Germans, to everywhere. 518 00:22:18,255 --> 00:22:22,051 Those that they say, "Oh, they don't do it in Germany," 519 00:22:22,093 --> 00:22:24,970 either they are lying... 520 00:22:25,012 --> 00:22:29,850 or they want to protect sort of the image of their country. 521 00:22:29,892 --> 00:22:32,478 - Interesting. - There is everywhere money laundering. 522 00:22:32,520 --> 00:22:35,189 With the right lawyers and accountants, 523 00:22:35,231 --> 00:22:37,066 you can do a lot of things. 524 00:22:37,108 --> 00:22:38,734 So what is the problem? 525 00:22:38,776 --> 00:22:40,528 - [Elisa] Everybody makes money from it. 526 00:22:40,569 --> 00:22:43,114 - So you're saying, it's good for the economy. 527 00:22:43,155 --> 00:22:45,574 But is there ever a worry that the money 528 00:22:45,616 --> 00:22:48,536 is coming from things like terrorism or violence, 529 00:22:48,577 --> 00:22:50,704 and that that's what sort of propping up the economy? 530 00:22:52,665 --> 00:22:55,376 - Now it does. 531 00:22:55,417 --> 00:22:56,794 - Well, I didn't put that idea in your head. 532 00:22:56,836 --> 00:22:58,170 - Oh, you did, you did. - Really? 533 00:22:58,212 --> 00:23:01,507 - Yes. It never passed my mind, you know. 534 00:23:01,549 --> 00:23:04,468 - On the level we work and our contacts... 535 00:23:04,510 --> 00:23:08,556 How do you say it? If you don't mix with the chickens 536 00:23:08,597 --> 00:23:11,225 then you don't become a chicken. You know what I mean? 537 00:23:11,267 --> 00:23:14,603 - [Kal] It seems turning a blind eye to money laundering 538 00:23:14,645 --> 00:23:16,814 in Cyprus is so common that they have 539 00:23:16,856 --> 00:23:18,482 their own weird chicken metaphor. 540 00:23:20,693 --> 00:23:22,319 Am I alone in thinking that there's 541 00:23:22,361 --> 00:23:25,406 a whole lot of willful blindness happening here? 542 00:23:25,447 --> 00:23:26,699 I need to find someone who sees 543 00:23:26,740 --> 00:23:27,867 what's really going on. 544 00:23:36,250 --> 00:23:39,211 Not everyone on Cyprus is ignoring money laundering. 545 00:23:39,253 --> 00:23:41,338 Hey, guys. 546 00:23:41,380 --> 00:23:44,216 James Henry used to serve the corporate beast 547 00:23:44,258 --> 00:23:46,886 as chief economist at McKinsey & Co, 548 00:23:46,927 --> 00:23:48,429 but now he lances it towards 549 00:23:48,470 --> 00:23:51,348 by investigating financial crimes. 550 00:23:51,390 --> 00:23:52,933 He's part of a network of journalists 551 00:23:52,975 --> 00:23:55,352 working to uncover trails of illicit money 552 00:23:55,394 --> 00:23:58,480 that cross multiple international borders. 553 00:23:58,522 --> 00:24:00,858 Those trails often lead to Cyprus. 554 00:24:04,320 --> 00:24:05,821 - I'm working with journalists in the Netherlands, 555 00:24:05,863 --> 00:24:07,990 and the UK, and Cyprus. 556 00:24:08,032 --> 00:24:10,618 And it's incredible to see this new kind of 557 00:24:10,659 --> 00:24:13,412 collaboration going on. 558 00:24:13,454 --> 00:24:14,580 - All right. 559 00:24:14,622 --> 00:24:16,457 Oh, you fucker! 560 00:24:16,498 --> 00:24:19,919 (laughter and splashing) 561 00:24:22,671 --> 00:24:26,091 - Countries like Cyprus sell this kind of financial secrecy. 562 00:24:26,133 --> 00:24:27,885 You know, it's an easy business to set up, 563 00:24:27,927 --> 00:24:30,596 you offer secret companies and trusts. 564 00:24:30,638 --> 00:24:33,057 You have lawyers that are basically 565 00:24:33,098 --> 00:24:34,850 willing to work for anybody. 566 00:24:34,892 --> 00:24:36,810 The banks are willing to take their money. 567 00:24:36,852 --> 00:24:39,772 And this is a huge business, so it sounds great. 568 00:24:39,813 --> 00:24:41,815 But we're talking about betting the future 569 00:24:41,857 --> 00:24:43,901 of a country like Cyprus on a sector 570 00:24:43,943 --> 00:24:46,654 that's loaded down with systemic risk. 571 00:24:46,695 --> 00:24:48,822 And you also end up with some clients 572 00:24:48,864 --> 00:24:50,991 that you're not proud of. 573 00:24:51,033 --> 00:24:53,702 - [Kal] Have there been any negative consequences for this? 574 00:24:53,744 --> 00:24:57,623 - Yeah, so the financial system here grew very fast 575 00:24:57,665 --> 00:25:01,252 from 2004 until 2011. 576 00:25:01,293 --> 00:25:05,756 The banks became like 900% of national income. 577 00:25:05,798 --> 00:25:09,176 And by 2013, the whole economy was taken down. 578 00:25:09,218 --> 00:25:11,011 - Whoa. 579 00:25:11,053 --> 00:25:14,932 - And since the 2013 crisis, there's a whole set of 580 00:25:14,974 --> 00:25:17,476 changes in the laws that could make it 581 00:25:17,518 --> 00:25:22,606 much harder to launder money and to hide assets here. 582 00:25:22,648 --> 00:25:25,150 But there's still a big gray area. 583 00:25:25,192 --> 00:25:28,112 There's a lot of elasticity in the enforcement. 584 00:25:28,153 --> 00:25:30,030 The financial secrecy industry is still 585 00:25:30,072 --> 00:25:32,241 protecting money launderers. 586 00:25:32,283 --> 00:25:34,743 It's protecting tax dodgers, it's protecting kleptocrats 587 00:25:34,785 --> 00:25:36,578 that are basically Russian oligarchs 588 00:25:36,620 --> 00:25:39,957 who accumulated huge fortunes by basically looting Russia. 589 00:25:39,999 --> 00:25:41,625 - I assume things like this continue to exist 590 00:25:41,667 --> 00:25:44,003 because there's people who enable these things. 591 00:25:44,044 --> 00:25:46,797 - You can imagine a kind of Star Wars bar scene 592 00:25:46,839 --> 00:25:48,757 where you have all these various players 593 00:25:48,799 --> 00:25:51,176 gathered around the same kind of watering hole 594 00:25:51,218 --> 00:25:54,555 which is the financial secrecy provided by this industry. 595 00:25:56,265 --> 00:25:57,558 - [Kal] It sounds like this cantina has 596 00:25:57,599 --> 00:26:00,436 a pretty substantial cover charge. 597 00:26:00,477 --> 00:26:02,396 I hope this bag of cash can get me a seat at the bar. 598 00:26:02,438 --> 00:26:04,523 Okay, so you're the expert. 599 00:26:04,565 --> 00:26:07,901 So, how do I launder this bag of money that I brought? 600 00:26:07,943 --> 00:26:09,903 - So one of the objectives of money laundering 601 00:26:09,945 --> 00:26:12,573 is always to have a good story to make things 602 00:26:12,614 --> 00:26:15,492 appear as if they came from some legitimate source. 603 00:26:15,534 --> 00:26:18,162 And real estate is one of the easiest of those. 604 00:26:18,203 --> 00:26:20,122 First step would be to get a company 605 00:26:20,164 --> 00:26:24,501 in whose name you will own the real estate. 606 00:26:24,543 --> 00:26:27,004 In Cyprus, we have about two thousand lawyers, 607 00:26:27,046 --> 00:26:28,672 and they can set up a company 608 00:26:28,714 --> 00:26:31,342 that then becomes the owner of your condo 609 00:26:31,383 --> 00:26:33,927 or your property, and that way, 610 00:26:33,969 --> 00:26:35,846 no one will really understand that it's yours 611 00:26:35,888 --> 00:26:38,849 if someone's looking for your assets later on. 612 00:26:38,891 --> 00:26:41,310 You can pay cash for the real estate, 613 00:26:41,352 --> 00:26:44,688 and when you go to sell it, you have an explanation 614 00:26:44,730 --> 00:26:46,482 for where the money came from. 615 00:26:46,523 --> 00:26:47,858 You know, I didn't get it from drug dealing, 616 00:26:47,900 --> 00:26:49,777 I got it from real estate. 617 00:26:49,818 --> 00:26:52,154 - [Kal] Okay, so I have to find a lawyer. 618 00:26:52,196 --> 00:26:53,322 - Yeah. 619 00:26:59,453 --> 00:27:01,580 - [Kal] The multi-generational Yiangou Law Firm 620 00:27:01,622 --> 00:27:05,209 specializes in setting up companies for foreigners. 621 00:27:05,250 --> 00:27:07,169 They have a sterling reputation 622 00:27:07,211 --> 00:27:08,962 and know the new laws well, 623 00:27:09,004 --> 00:27:12,132 which may be why they're the only Cyprus law firm 624 00:27:12,174 --> 00:27:13,509 willing to let me bring in cameras 625 00:27:13,550 --> 00:27:16,178 to witness how they conduct business. 626 00:27:16,220 --> 00:27:17,471 Not only are they gracious enough 627 00:27:17,513 --> 00:27:19,056 to open their office for me, 628 00:27:19,098 --> 00:27:20,224 they've also opened their kitchen. 629 00:27:20,265 --> 00:27:23,519 (bright music) 630 00:27:23,560 --> 00:27:25,145 This is amazing. 631 00:27:25,187 --> 00:27:26,814 - This is a very... 632 00:27:26,855 --> 00:27:29,316 common, let's say, lunch that we have usually. 633 00:27:29,358 --> 00:27:31,235 - [Kal] This is the common lunch? 634 00:27:31,276 --> 00:27:33,612 You eat like this every day? If I ate like this every day, 635 00:27:33,654 --> 00:27:36,532 I would nap for a couple hours and then go back to work. 636 00:27:36,573 --> 00:27:40,285 - Well, stay a few weeks in Cyprus and you will adjust. 637 00:27:41,412 --> 00:27:44,706 (European string music) 638 00:27:48,502 --> 00:27:50,212 - What kind of law do you guys do for the most part? 639 00:27:50,254 --> 00:27:53,507 - Personally I've been dealing with corporate matters. 640 00:27:53,549 --> 00:27:55,801 Vangelis is an accountant auditor, 641 00:27:55,843 --> 00:27:57,845 and Natalie is an administrator. 642 00:27:57,886 --> 00:28:00,097 - Cyprus has no raw material. 643 00:28:00,139 --> 00:28:02,349 Has no industry. Has no agriculture. 644 00:28:02,391 --> 00:28:04,059 So that's why we developed 645 00:28:04,101 --> 00:28:06,770 the lawyers, the accountants, the bankers. 646 00:28:06,812 --> 00:28:10,190 And then they try to find business outside Cyprus. 647 00:28:11,316 --> 00:28:12,860 - [Kal] George and his family have agreed 648 00:28:12,901 --> 00:28:14,778 to walk me through the process 649 00:28:14,820 --> 00:28:16,738 of finally starting my own company. 650 00:28:16,780 --> 00:28:18,949 I'm anxious to see just how elastic 651 00:28:18,991 --> 00:28:20,492 the new regulations are. 652 00:28:20,534 --> 00:28:22,703 - So do you have any specific name 653 00:28:22,744 --> 00:28:24,663 in mind for your company? 654 00:28:24,705 --> 00:28:25,873 - Oh, that's a good questions. 655 00:28:25,914 --> 00:28:30,085 Um, The 69 Brothers. 656 00:28:30,127 --> 00:28:32,254 - The 69... very interesting name. 657 00:28:32,296 --> 00:28:33,672 - That's very specific. 658 00:28:33,714 --> 00:28:35,174 - You like that? - It's very specific. 659 00:28:35,215 --> 00:28:36,300 - He likes the 69 Brothers. 660 00:28:36,341 --> 00:28:37,468 - That's very specific. 661 00:28:38,969 --> 00:28:40,179 - It's very specific. 662 00:28:40,220 --> 00:28:42,514 - So basically now we're just going 663 00:28:42,556 --> 00:28:45,476 to search into the registrar record. 664 00:28:45,517 --> 00:28:48,312 - Okay, so she's Googling 69 Brothers... 665 00:28:48,353 --> 00:28:52,191 - She's searching whether a similar name exists. 666 00:28:52,232 --> 00:28:54,985 - Well, actually, there aren't any "69 Brothers" 667 00:28:55,027 --> 00:28:57,404 registered as a company so.. 668 00:28:57,446 --> 00:28:59,448 the name's clear. 669 00:28:59,490 --> 00:29:02,117 - [Natalie] You're ready to go. - That's a good sign. 670 00:29:02,159 --> 00:29:03,577 - but there's also the shelf companies, 671 00:29:03,619 --> 00:29:04,953 the available ones. 672 00:29:04,995 --> 00:29:07,122 And if you are okay 673 00:29:07,164 --> 00:29:11,001 with using our nominee officers, i.e. directors, 674 00:29:11,043 --> 00:29:14,880 shareholders, then we skip the whole registration part 675 00:29:14,922 --> 00:29:17,591 and you can buy an off-the-shelf company. 676 00:29:17,633 --> 00:29:19,176 - So I would be very curious to hear about that. 677 00:29:19,218 --> 00:29:21,303 - Okay, I have printed the list. 678 00:29:21,345 --> 00:29:26,725 - Here are the companies that we actually have now 679 00:29:26,767 --> 00:29:29,770 with a ready-made structure. 680 00:29:29,811 --> 00:29:32,272 People just use the structure because 681 00:29:32,314 --> 00:29:35,234 this information is not publicly available. 682 00:29:35,275 --> 00:29:38,028 So your name, it does not appear anywhere. 683 00:29:38,070 --> 00:29:41,782 This is very typical structure that they use in Cyprus. 684 00:29:41,823 --> 00:29:44,368 - Um, wow, all right, so if I pick one of these, 685 00:29:44,409 --> 00:29:48,622 then what are the costs and how quickly can it be set up? 686 00:29:48,664 --> 00:29:50,290 - So before we proceed with the cost, 687 00:29:50,332 --> 00:29:52,709 we need first to fill out a questionnaire. 688 00:29:52,751 --> 00:29:56,004 So you are going to establish a company in which area? 689 00:29:57,005 --> 00:29:59,299 - Well, I assume, uh... 690 00:29:59,341 --> 00:30:01,260 - "Assume" is not a good start, actually. 691 00:30:01,301 --> 00:30:02,844 - That's true, let me, okay... 692 00:30:05,430 --> 00:30:07,808 - So like, what are the more common reasons 693 00:30:07,849 --> 00:30:10,102 that people will set up a company? 694 00:30:10,143 --> 00:30:13,105 - Basically for trading activities. 695 00:30:13,146 --> 00:30:14,898 Or maybe a consulting company. 696 00:30:14,940 --> 00:30:16,483 - I think a consulting company was the... 697 00:30:16,525 --> 00:30:18,068 - Yeah, I mean, that could be a... 698 00:30:18,110 --> 00:30:20,696 - Would make sense. - Consulting. Consulting. 699 00:30:20,737 --> 00:30:24,366 - Now we need to identify if you're going to be 700 00:30:24,408 --> 00:30:26,535 in the category of politically exposed persons. 701 00:30:26,577 --> 00:30:30,372 - I worked in American politics for a few years. 702 00:30:30,414 --> 00:30:32,541 - (Hail to the Chief plays) - No big deal. 703 00:30:32,583 --> 00:30:34,376 Does that mean I'm politically exposed? 704 00:30:34,418 --> 00:30:36,712 - Yes, you can influence people. 705 00:30:36,753 --> 00:30:39,381 Or you can have influence into 706 00:30:39,423 --> 00:30:42,050 the general, let's say, market or business. 707 00:30:42,092 --> 00:30:45,220 So normally you should be in this category. 708 00:30:45,262 --> 00:30:49,975 - Okay. - And your personal, let's say, financial background? 709 00:30:50,017 --> 00:30:53,895 Can you give us a little bit where have you earned your money? 710 00:30:53,937 --> 00:30:56,523 From which activities specifically. 711 00:30:56,565 --> 00:30:58,191 - It fell from the sky. 712 00:31:04,823 --> 00:31:06,867 - So, Kal, I just wanted to let you know... 713 00:31:06,908 --> 00:31:09,661 it seems suspicious. 714 00:31:11,163 --> 00:31:13,498 We want to avoid accepting a client 715 00:31:13,540 --> 00:31:16,168 who is going to be involved in any money laundering. 716 00:31:16,209 --> 00:31:18,170 - Okay, so this is a little more complicated than I thought. 717 00:31:18,211 --> 00:31:20,881 - Many people believe that it's quite easy 718 00:31:20,922 --> 00:31:23,258 to incorporate a company in Cyprus, 719 00:31:23,300 --> 00:31:28,597 but things changed in 2012 to 2013, actually. 720 00:31:28,639 --> 00:31:30,223 When the financial crisis 721 00:31:30,265 --> 00:31:32,100 and the banking sector collapsed. 722 00:31:32,142 --> 00:31:34,561 Now we need to follow specific rules. 723 00:31:34,603 --> 00:31:37,731 Things now are more strict. 724 00:31:39,608 --> 00:31:41,151 - [Kal] Something feels off, 725 00:31:41,193 --> 00:31:42,778 and not because I just made a lawyer 726 00:31:42,819 --> 00:31:44,905 say 69 Brothers on television. 727 00:31:44,946 --> 00:31:47,616 This law firm says I can't even take the first steps 728 00:31:47,658 --> 00:31:49,076 to launder my million bucks, 729 00:31:49,117 --> 00:31:51,453 but everyone else says there are still 730 00:31:51,495 --> 00:31:54,331 huge rivers of dirty money flowing through Cyprus. 731 00:31:54,373 --> 00:31:56,124 I need to find out what happened during 732 00:31:56,166 --> 00:31:59,544 the crisis in 2013 that supposedly changed everything, 733 00:31:59,586 --> 00:32:01,046 and for that, I'll need someone 734 00:32:01,088 --> 00:32:03,632 who saw it all from the inside. 735 00:32:03,674 --> 00:32:06,176 Panicos Demetriades is the former governor 736 00:32:06,218 --> 00:32:10,055 of the Central Bank of Cyprus turned whistle blower. 737 00:32:10,097 --> 00:32:13,016 I'd love to meet up and find out what he knows, 738 00:32:13,058 --> 00:32:14,142 but he's no longer here. 739 00:32:20,190 --> 00:32:22,484 So it turns out that when you fight money laundering 740 00:32:22,526 --> 00:32:25,028 in one of the world's top laundering economies, 741 00:32:25,070 --> 00:32:26,863 you receive death threats, 742 00:32:26,905 --> 00:32:28,949 and have to move your family out of the country. 743 00:32:34,663 --> 00:32:37,290 This place is pretty incredible. 744 00:32:37,332 --> 00:32:40,502 - It's my gateway to Europe, basically. 745 00:32:40,544 --> 00:32:41,878 - The station, or the bar itself? 746 00:32:41,920 --> 00:32:45,424 - (laughs) The station. - Is this real? 747 00:32:45,465 --> 00:32:47,467 - If I press this, they will know-- - I've never tried it. 748 00:32:47,509 --> 00:32:50,303 - You've never tried it? - I've never tried it. No. Do you try it? 749 00:32:52,556 --> 00:32:53,640 - Oh, that was quick. 750 00:32:53,682 --> 00:32:54,891 - Wow. - How are you, sir? 751 00:32:54,933 --> 00:32:56,977 - That's amazing. - Cheers, by the way. 752 00:32:57,018 --> 00:32:58,812 - Cheers. - (clink) 753 00:32:58,854 --> 00:33:01,606 - Cyprus has had a reputation for being a place 754 00:33:01,648 --> 00:33:03,692 where people can bring a suitcase of money, 755 00:33:03,734 --> 00:33:05,902 nobody would ask where it was from. 756 00:33:05,944 --> 00:33:07,612 You can set up a company. 757 00:33:07,654 --> 00:33:10,949 Nobody would ask anything other than, 758 00:33:10,991 --> 00:33:14,327 here, give us a few bucks, and here's your board, 759 00:33:14,369 --> 00:33:15,662 here are your shareholders. 760 00:33:15,704 --> 00:33:17,622 - That used to be the case, I think. 761 00:33:17,664 --> 00:33:20,917 That used to be the case that people could do that. 762 00:33:20,959 --> 00:33:24,880 But it has tightened up quite a lot as a result of the crisis. 763 00:33:24,921 --> 00:33:27,799 Ordinary law firms, for example, in Cyprus 764 00:33:27,841 --> 00:33:31,636 wouldn't even dare to bend the law. 765 00:33:31,678 --> 00:33:33,638 - Now? Okay. - Now. 766 00:33:33,680 --> 00:33:36,266 But those practices is what, I feel, 767 00:33:36,308 --> 00:33:39,144 eventually led to the crisis of 2012-2013. 768 00:33:39,186 --> 00:33:40,812 - [Kal] Remember what happened to the U.S. 769 00:33:40,854 --> 00:33:44,775 Back in 2008 and 2009 when major banks failed 770 00:33:44,816 --> 00:33:46,610 and the government bailed them out? 771 00:33:46,651 --> 00:33:48,779 There was an Oscar-nominated movie about it. 772 00:33:48,820 --> 00:33:50,197 - [Announcer] The government will purchase 773 00:33:50,238 --> 00:33:52,908 125 billion dollars in U.S. bank stocks 774 00:33:52,949 --> 00:33:54,117 over the coming days. 775 00:33:54,159 --> 00:33:56,328 - It's an investment. 776 00:33:56,369 --> 00:33:58,705 - [Kal] Well, the same thing happened to Cyprus in 2013, 777 00:33:58,747 --> 00:34:01,666 except Cyprus was so flush with dirty foreign money 778 00:34:01,708 --> 00:34:04,044 that it's banking system was 10 times 779 00:34:04,085 --> 00:34:06,254 as large as the economy. 780 00:34:06,296 --> 00:34:07,881 There was no way the country could afford 781 00:34:07,923 --> 00:34:09,508 the cost of bailing the banks out, 782 00:34:09,549 --> 00:34:11,968 so there was something called a bail in. 783 00:34:12,010 --> 00:34:15,931 The banks seized 10% of their largest depositors' accounts. 784 00:34:15,972 --> 00:34:17,974 In exchange, those account holders 785 00:34:18,016 --> 00:34:20,185 became partial owners of the banks. 786 00:34:22,854 --> 00:34:25,357 The new shareholders are the depositors 787 00:34:25,398 --> 00:34:29,611 whose deposits are turned-- converted into equity. 788 00:34:29,653 --> 00:34:31,196 - Right. - The interesting thing is 789 00:34:31,238 --> 00:34:34,032 that it only affected deposits above 100,000. 790 00:34:34,074 --> 00:34:37,244 So only 4 percent of depositors were affected by the bail-in. 791 00:34:37,285 --> 00:34:38,912 - So then who were those four percent? 792 00:34:38,954 --> 00:34:41,039 - Russian and Ukrainian oligarchs. 793 00:34:41,081 --> 00:34:43,750 - Wow, okay. - It used to be the case 794 00:34:43,792 --> 00:34:45,502 that it was very hard to know how much 795 00:34:45,544 --> 00:34:47,629 Russian and Ukrainian money was in the system... 796 00:34:47,671 --> 00:34:49,464 - Okay. - because of banking secrecy. 797 00:34:49,506 --> 00:34:52,634 Through the bail-in we realized that 50% of the money 798 00:34:52,676 --> 00:34:54,970 that was bailed in belonged to Russians 799 00:34:55,011 --> 00:34:57,180 like Viktor Vekselberg who is 800 00:34:57,222 --> 00:34:59,015 allegedly very close to Mr. Putin. 801 00:34:59,057 --> 00:35:01,685 He's on the US sanctions list. 802 00:35:01,726 --> 00:35:04,855 - Okay, so that sounds problematic. - Yes. 803 00:35:04,896 --> 00:35:06,606 - (ding) - (liquid pouring) 804 00:35:06,648 --> 00:35:07,732 - Thank you very much. 805 00:35:08,984 --> 00:35:10,569 Did those four percent of people 806 00:35:10,610 --> 00:35:12,487 then have the controlling stake in these banks? 807 00:35:12,529 --> 00:35:15,448 - Yes, of course. I mean, the shareholders effectively decide 808 00:35:15,490 --> 00:35:16,741 who is going to sit on the board. 809 00:35:16,783 --> 00:35:18,785 - And those people then make, what, 810 00:35:18,827 --> 00:35:20,996 the policies of the bank, the decisions? 811 00:35:21,037 --> 00:35:24,082 - Absolutely. - Why do people wanna influence banks this way? 812 00:35:24,124 --> 00:35:27,127 - What can happen is that banks can be looted from within. 813 00:35:27,168 --> 00:35:28,795 If somebody controls the bank, 814 00:35:28,837 --> 00:35:30,630 they can loot the assets, 815 00:35:30,672 --> 00:35:33,049 and there's opportunities there for tax evasion. 816 00:35:33,091 --> 00:35:36,011 It's fertile ground, effectively, for corruption. 817 00:35:36,052 --> 00:35:38,388 (ding, ding) 818 00:35:38,430 --> 00:35:41,975 Eventually when the bank of Cyprus needed additional capital, 819 00:35:42,017 --> 00:35:44,603 the bank attracted Wilbur Ross 820 00:35:44,644 --> 00:35:46,605 to lead a group of investors... 821 00:35:46,646 --> 00:35:48,356 - I'm sorry, say that again. - Wilbur Ross. 822 00:35:48,398 --> 00:35:49,441 - Wilbur Ross, the U.S. Commerce Secretary? 823 00:35:49,482 --> 00:35:51,192 - Your current... absolutely. 824 00:35:51,234 --> 00:35:53,320 - Our commerce secretary Wilbur Ross? 825 00:35:53,361 --> 00:35:56,156 - Wilbur Ross, the current U .S. Commerce Secretary? - Absolutely. Absolutely. 826 00:35:56,197 --> 00:35:58,617 And he became a vice chair of the bank 827 00:35:58,658 --> 00:36:00,619 in 2014, I believe. 828 00:36:00,660 --> 00:36:02,621 Wilbur Ross was on the board until recently. 829 00:36:02,662 --> 00:36:05,707 When he became Commerce Secretary, he stepped down. 830 00:36:05,749 --> 00:36:07,667 Nevertheless, two major shareholders 831 00:36:07,709 --> 00:36:10,086 were one politically exposed American, 832 00:36:10,128 --> 00:36:12,297 and one very politically exposed Russian. 833 00:36:14,007 --> 00:36:15,508 - (ding, ding, ding) - I'm gonna need the bottle 834 00:36:15,550 --> 00:36:17,594 for what you just told me. 835 00:36:17,636 --> 00:36:20,263 Is there really that much more oversight now? 836 00:36:20,305 --> 00:36:23,934 - The rules are different for different people, right? 837 00:36:23,975 --> 00:36:25,518 So, some people can bend the rules. 838 00:36:25,560 --> 00:36:28,146 And for the benefit of the big and the powerful, 839 00:36:28,188 --> 00:36:29,814 and that's a danger for the whole world, 840 00:36:29,856 --> 00:36:32,943 not just for Cyprus, it's a danger for everywhere, I think. 841 00:36:32,984 --> 00:36:35,779 For Europe, for the United States. 842 00:36:35,820 --> 00:36:38,990 - [Kal] Across the globe, rules like those in Cyprus 843 00:36:39,032 --> 00:36:41,034 crack down on the schmucks like me 844 00:36:41,076 --> 00:36:43,370 trying to launder a million dollars, 845 00:36:43,411 --> 00:36:46,581 but the big guys, the ones with a few billion, 846 00:36:46,623 --> 00:36:51,753 well, it's easy to clean your money if you run the bank. 847 00:36:51,795 --> 00:36:54,005 There's more money going through the illegal 848 00:36:54,047 --> 00:36:57,092 shadow economy than ever, but that money is in 849 00:36:57,133 --> 00:37:00,845 the hands of a much smaller and richer group. 850 00:37:00,887 --> 00:37:02,722 (bell ringing) 851 00:37:02,764 --> 00:37:05,183 - Think of money laundering as cheating on your math exam. 852 00:37:05,225 --> 00:37:07,769 You get all the answers in some underhanded way, 853 00:37:07,811 --> 00:37:09,437 and then try to pass it off 854 00:37:09,479 --> 00:37:12,273 as your own legitimate hard work. 855 00:37:12,315 --> 00:37:14,109 Cheating used to be something anyone could do 856 00:37:14,150 --> 00:37:16,861 if they put their lazy math-averse mind to it, 857 00:37:16,903 --> 00:37:18,780 write formulas on your hand, 858 00:37:18,822 --> 00:37:20,991 hide answers in your hat, 859 00:37:21,032 --> 00:37:23,827 flirt with the nerdy kid while you copy off of him, 860 00:37:23,868 --> 00:37:25,829 but all over the world, schools caught on 861 00:37:25,870 --> 00:37:28,498 to these flagrant methods of cheating and cracked down. 862 00:37:28,540 --> 00:37:30,458 That's like the money laundering reforms 863 00:37:30,500 --> 00:37:32,961 put in place around the world over the last few decades. 864 00:37:36,381 --> 00:37:40,260 Holy smokes, that's a lot of reforms. 865 00:37:40,301 --> 00:37:42,095 Cheating, for low-level corrupt idiots 866 00:37:42,137 --> 00:37:44,180 like these guys, became harder. 867 00:37:44,222 --> 00:37:45,849 Now the people who can get away with cheating 868 00:37:45,890 --> 00:37:47,892 and money laundering are the ones with connections, 869 00:37:47,934 --> 00:37:51,062 wealth, and insight into the sophisticated loopholes. 870 00:37:51,104 --> 00:37:54,149 - What's up, dick bags, is this Griffin Hall? 871 00:37:54,190 --> 00:37:56,067 Of course, it is, my dad's Griffin. 872 00:37:57,527 --> 00:38:00,071 - So now, when it's time to take the exam... 873 00:38:00,113 --> 00:38:01,281 - Oh, is it test time? 874 00:38:01,322 --> 00:38:03,116 Yo, teach, get over here. 875 00:38:05,869 --> 00:38:08,496 You look good, you been doing crunches 876 00:38:08,538 --> 00:38:10,957 to get ready for my dad's pool party? 877 00:38:10,999 --> 00:38:14,377 - Yes. - Let's see those abs. 878 00:38:16,838 --> 00:38:18,882 - His connections and vast wealth incentivize 879 00:38:18,923 --> 00:38:22,552 me to look away while I maintain plausible deniability. 880 00:38:22,594 --> 00:38:24,471 If anyone drags me in front of an ethics board 881 00:38:24,512 --> 00:38:25,764 about helping kids cheat, 882 00:38:25,805 --> 00:38:27,599 I can say, of course not, 883 00:38:27,640 --> 00:38:29,684 I was simply showing the student my body. 884 00:38:34,355 --> 00:38:37,275 And that's what the billionaires and oligarchs are doing. 885 00:38:37,317 --> 00:38:39,402 Rich connected charmers like this guy 886 00:38:39,444 --> 00:38:41,571 cheat and then graduate into more connections 887 00:38:41,613 --> 00:38:43,031 that make them even richer. 888 00:38:43,073 --> 00:38:44,741 Ever wonder why the shadiest rich kids 889 00:38:44,783 --> 00:38:48,328 get ahead despite being irrationally confident morons? 890 00:38:48,369 --> 00:38:50,246 Here's a money laundering problem for you. 891 00:38:50,288 --> 00:38:52,248 Add laws that impact low-level offenders, 892 00:38:52,290 --> 00:38:54,334 subtract scrutiny for high-level offenders 893 00:38:54,375 --> 00:38:56,544 and those who own banks, 894 00:38:56,586 --> 00:38:58,505 then divide the assets amongst their friends. 895 00:38:58,546 --> 00:38:59,923 What are you left with? 896 00:38:59,964 --> 00:39:01,257 Pool party at Griffin's house. 897 00:39:03,259 --> 00:39:04,427 I hate myself. 898 00:39:07,263 --> 00:39:08,598 (screams) 899 00:39:14,813 --> 00:39:16,773 - [Kal] If money laundering is now a luxury 900 00:39:16,815 --> 00:39:18,358 reserved for the big fish, 901 00:39:18,399 --> 00:39:20,902 I need to consult a bonafide shark. 902 00:39:24,948 --> 00:39:27,992 Felix Sater has been involved in some shady businesses 903 00:39:28,034 --> 00:39:29,661 with questionable characters, 904 00:39:29,702 --> 00:39:31,788 but also some well-respected businesses 905 00:39:31,830 --> 00:39:33,581 with government connections. 906 00:39:33,623 --> 00:39:35,708 He committed fraud for the Russian mafia 907 00:39:35,750 --> 00:39:39,045 and helped foil plots to assassinate George W. Bush 908 00:39:39,087 --> 00:39:40,839 and Colin Powell. 909 00:39:40,880 --> 00:39:43,716 He also made a fortune laundering money. 910 00:39:43,758 --> 00:39:46,010 So maybe he knows where a minnow like me 911 00:39:46,052 --> 00:39:47,762 can clean a paltry million dollars. 912 00:39:49,264 --> 00:39:51,391 - You can head upstairs now. - Thank you. 913 00:39:53,309 --> 00:39:56,271 You're like the real-life most interesting man in the world. 914 00:39:56,312 --> 00:39:58,481 - I should probably put out a tequila or something. 915 00:39:58,523 --> 00:40:00,150 - Is tequila your drink of choice? 916 00:40:00,191 --> 00:40:01,860 - No, margaritas, but now I'm forced 917 00:40:01,901 --> 00:40:03,444 to drink them out of plastic cups. 918 00:40:03,486 --> 00:40:05,697 - (laughs) 919 00:40:05,738 --> 00:40:07,699 Earlier in Felix's career, he stabbed a guy 920 00:40:07,740 --> 00:40:09,909 with a margarita glass, and that was just 921 00:40:09,951 --> 00:40:12,245 the beginning of his adventures. 922 00:40:12,287 --> 00:40:15,540 - I went to Dubai to try to find out 923 00:40:15,582 --> 00:40:18,001 how Al Qaeda was laundering money through them. 924 00:40:18,042 --> 00:40:21,921 And that's where I got into the whole Bin-Laden hunting business. 925 00:40:21,963 --> 00:40:24,591 I'm testifying on Friday at Senate Intel 926 00:40:24,632 --> 00:40:26,467 in front of Senator Feinstein. 927 00:40:26,509 --> 00:40:28,428 The best place to hide your diamonds are in your scrotum. 928 00:40:28,469 --> 00:40:30,471 - In your like, you just tuck 'em underneath? 929 00:40:30,513 --> 00:40:32,432 - You tuck 'em right underneath your balls. 930 00:40:32,473 --> 00:40:34,017 - That's amazing. 931 00:40:34,058 --> 00:40:35,894 - I had a very successful career on Wall Street. 932 00:40:35,935 --> 00:40:39,439 That ended really badly over the margarita. 933 00:40:39,480 --> 00:40:42,192 The guy I got into a fight with 934 00:40:42,233 --> 00:40:44,235 wanted to drop the charges, but the district attorney wasn't having it, 935 00:40:44,277 --> 00:40:46,946 so um, I was convicted of assault. 936 00:40:46,988 --> 00:40:49,240 The lawyer needed a hundred thousand for the appeal. 937 00:40:49,282 --> 00:40:51,367 I had a kid coming. I had no money. 938 00:40:51,409 --> 00:40:53,912 That's how I got started on, what I call 939 00:40:53,953 --> 00:40:55,496 the darker side of Wall Street. 940 00:40:55,538 --> 00:40:57,415 I was making a lot of money illegally, 941 00:40:57,457 --> 00:40:59,751 and all that required money laundering. 942 00:40:59,792 --> 00:41:03,630 But at this point, my money laundering days are way done. 943 00:41:03,671 --> 00:41:05,256 For the last 20 years, I've been trying 944 00:41:05,298 --> 00:41:07,258 to pay back my debt for doing it. 945 00:41:07,300 --> 00:41:11,137 I've worked with every three-letter agency there is 946 00:41:11,179 --> 00:41:13,056 in this country, 947 00:41:13,097 --> 00:41:16,684 showing them every single step of the way how it's done. 948 00:41:16,726 --> 00:41:18,478 They've come to me, they've asked me, 949 00:41:18,519 --> 00:41:21,606 so I try to help them stop both money laundering, 950 00:41:21,648 --> 00:41:24,525 as well as theft of assets and things of that nature. 951 00:41:24,567 --> 00:41:26,861 - Are there things that we should be doing 952 00:41:26,903 --> 00:41:31,115 collectively as a country to prevent money laundering? 953 00:41:31,157 --> 00:41:33,534 - Yes, but the reality is we can try 954 00:41:33,576 --> 00:41:36,871 to stop money laundering, but you can never stop it 100%, 955 00:41:36,913 --> 00:41:39,290 because the type of controls that you would need 956 00:41:39,332 --> 00:41:41,501 to put on to stop money laundering 957 00:41:41,542 --> 00:41:44,545 will also choke the financial system 958 00:41:44,587 --> 00:41:46,673 to the point where it won't work. 959 00:41:46,714 --> 00:41:50,885 Free flow of money, trade, ease of us buying products 960 00:41:50,927 --> 00:41:54,013 from somewhere, the easier it is to conduct business, 961 00:41:54,055 --> 00:41:55,139 the easier it is to money launder. 962 00:41:55,181 --> 00:41:56,557 - Interesting. - So that's why 963 00:41:56,599 --> 00:41:58,434 money laundering will always exist. 964 00:41:58,476 --> 00:41:59,727 - So what are the tops of the list 965 00:41:59,769 --> 00:42:01,396 for money laundering right now? 966 00:42:01,437 --> 00:42:02,772 Where are the easiest places you can do it? 967 00:42:02,814 --> 00:42:04,482 - The funniest part is that the largest amount 968 00:42:04,524 --> 00:42:08,903 of laundered funds go in and out of the United States. 969 00:42:08,945 --> 00:42:11,990 - Oh, wow, okay. - So all these countries that hate America 970 00:42:12,031 --> 00:42:14,117 like to keep their money in America 971 00:42:14,158 --> 00:42:16,035 because it's very safe and nobody's gonna take it away 972 00:42:16,077 --> 00:42:17,870 from them unless they get caught doing something dirty. 973 00:42:17,912 --> 00:42:20,164 That's why they wanna buy cars here, 974 00:42:20,206 --> 00:42:23,835 apartments, houses, so we are number one 975 00:42:23,876 --> 00:42:25,878 for laundered money. 976 00:42:25,920 --> 00:42:27,422 - Damn. 977 00:42:27,463 --> 00:42:30,341 - And in the United States, the main conduit 978 00:42:30,383 --> 00:42:33,511 of money laundering is Delaware. 979 00:42:33,553 --> 00:42:36,764 - What makes Delaware a place where people launder money? 980 00:42:36,806 --> 00:42:41,436 - So Delaware has the most corporate friendly 981 00:42:41,477 --> 00:42:44,105 laws on the books, and that's why most of the 982 00:42:44,147 --> 00:42:47,650 publicly traded companies are Delaware listed companies. 983 00:42:47,692 --> 00:42:50,611 So for money laundering, it's a go-to state. 984 00:42:50,653 --> 00:42:52,780 I mean, I could literally dial the phone right now 985 00:42:52,822 --> 00:42:54,574 and within the next 30 seconds 986 00:42:54,615 --> 00:42:58,036 we will have a Delaware corp formed ready to go. 987 00:42:58,077 --> 00:43:00,038 - Whoa. - Yeah. 988 00:43:00,079 --> 00:43:01,789 - [Kal] Delaware, the first state 989 00:43:01,831 --> 00:43:04,125 to ratify the Constitution. 990 00:43:04,167 --> 00:43:06,336 Delaware is so business-minded that even 991 00:43:06,377 --> 00:43:08,504 its state nickname, The First State, 992 00:43:08,546 --> 00:43:11,215 brags about how quickly it processed paperwork. 993 00:43:11,257 --> 00:43:12,967 What better place to transform exotic 994 00:43:13,009 --> 00:43:16,054 drug-dealing, Ferrari driving money 995 00:43:16,095 --> 00:43:20,058 into unremarkable buttoned down Ford Fiesta money. 996 00:43:20,099 --> 00:43:24,604 Delaware is laundered money, the state. 997 00:43:24,645 --> 00:43:28,066 I really struggled to start a shell corporation in Cyprus, 998 00:43:28,107 --> 00:43:29,859 but in Delaware, it's a snap, 999 00:43:29,901 --> 00:43:33,071 and I don't even have to go to Delaware. 1000 00:43:33,112 --> 00:43:35,782 I just hop online, fill out a handful of questions, 1001 00:43:35,823 --> 00:43:37,492 and name my company. 1002 00:43:37,533 --> 00:43:39,869 Like Cyprus, the state of Delaware is small 1003 00:43:39,911 --> 00:43:41,913 and doesn't have a very diverse economy, 1004 00:43:41,954 --> 00:43:43,581 so its government decided to become 1005 00:43:43,623 --> 00:43:46,959 the easiest state in the country to set up a corporation, 1006 00:43:47,001 --> 00:43:49,003 and you don't even have to pay Delaware state taxes 1007 00:43:49,045 --> 00:43:50,630 if you don't live there, 1008 00:43:50,671 --> 00:43:52,548 which is perfect, because I've decided 1009 00:43:52,590 --> 00:43:54,759 on some other living arrangements. 1010 00:43:54,801 --> 00:43:57,929 But first, I'm gonna need a whole lot more money. 1011 00:43:59,222 --> 00:44:00,640 Oh, shit. 1012 00:44:00,681 --> 00:44:02,809 Then I'm headed back to Cyprus to buy enough 1013 00:44:02,850 --> 00:44:04,602 bank stock to become a shareholder. 1014 00:44:04,644 --> 00:44:06,312 After that, it's easy. 1015 00:44:06,354 --> 00:44:09,357 All I have to do is bribe the right government-- 1016 00:44:09,399 --> 00:44:11,401 (beep) 1017 00:44:11,442 --> 00:44:13,986 And I can take full advantage of the island's 1018 00:44:14,028 --> 00:44:15,822 luxury real estate market, 1019 00:44:15,863 --> 00:44:18,783 using my freshly cleaned cash to buy a swanky pad. 1020 00:44:20,827 --> 00:44:23,663 Whoa, what a beautiful view. 1021 00:44:23,704 --> 00:44:25,498 I'm here with what our lawyers have told us 1022 00:44:25,540 --> 00:44:27,291 to emphasize is a totally legit real estate agency 1023 00:44:27,333 --> 00:44:28,751 that would never knowingly sell a house 1024 00:44:28,793 --> 00:44:30,211 to a money launderer. 1025 00:44:30,253 --> 00:44:32,547 I think I'd like to buy this house. 1026 00:44:32,588 --> 00:44:35,633 Can we set this up through a company so that nobody can find me? 1027 00:44:35,675 --> 00:44:39,137 - Yes, yes. If you can sign here, please. 1028 00:44:39,178 --> 00:44:41,764 - [Kal] Now I just wait for someone to come along 1029 00:44:41,806 --> 00:44:43,433 to buy this house from me, 1030 00:44:43,474 --> 00:44:48,396 giving me clean cash to use however I please. 1031 00:44:48,438 --> 00:44:51,357 (electronic music) 1032 00:45:33,941 --> 00:45:36,277 - Hotchi Chachi, that's a lot of reforms. 1033 00:45:36,319 --> 00:45:40,156 86, 2018, do the math. 1034 00:45:40,198 --> 00:45:41,908 I can't. 1035 00:45:41,949 --> 00:45:43,743 It's 20, it's 30-- 1036 00:45:43,784 --> 00:45:45,661 impossible. 1037 00:45:46,662 --> 00:45:47,705 Do your test.