1 00:00:05,631 --> 00:00:08,217 (bouncing horn music) 2 00:00:08,259 --> 00:00:10,261 - [Kal] Money Laundering. 3 00:00:10,302 --> 00:00:12,012 What is it? 4 00:00:12,054 --> 00:00:13,764 Well, suppose that I got all this money 5 00:00:13,806 --> 00:00:16,600 from some sort of a criminal enterprise. 6 00:00:16,642 --> 00:00:19,979 Maybe I'm a drug kingpin or an arms dealer. 7 00:00:20,020 --> 00:00:22,898 Or maybe I'm a lobbyist doing business 8 00:00:22,940 --> 00:00:24,275 with shady foreign politicians. 9 00:00:24,316 --> 00:00:25,943 No matter what I did to get it, 10 00:00:25,985 --> 00:00:28,487 my money is now tainted by my crime, 11 00:00:28,529 --> 00:00:30,614 which makes it tricky to spend. 12 00:00:30,656 --> 00:00:32,992 (splashing) 13 00:00:34,160 --> 00:00:35,536 Money laundering is the process 14 00:00:35,578 --> 00:00:37,371 of giving your dirty cash a makeover 15 00:00:37,413 --> 00:00:41,083 so that it appears legitimate to bankers and retail stores. 16 00:00:41,125 --> 00:00:43,002 That's a lot harder than it seems. 17 00:00:43,043 --> 00:00:46,714 - Best place to hide your diamonds are in your scrotum. 18 00:00:46,756 --> 00:00:49,508 - [Kal] There's a secret international financial system 19 00:00:49,550 --> 00:00:52,011 created just to help criminals spend their money 20 00:00:52,052 --> 00:00:54,013 without anyone knowing the deplorable things 21 00:00:54,054 --> 00:00:55,681 they did to get it. 22 00:00:55,723 --> 00:00:57,641 And we're talking a lot of money. 23 00:00:59,852 --> 00:01:02,688 Because most criminals aren't dumb enough to declare it, 24 00:01:02,730 --> 00:01:05,065 there's no way to know the exact amount, 25 00:01:05,107 --> 00:01:08,486 but it's likely bigger than the world steel industry, 26 00:01:08,527 --> 00:01:11,322 and possibly even the world's food industry. 27 00:01:11,363 --> 00:01:13,908 So where is this hidden economy? 28 00:01:13,949 --> 00:01:16,911 It's right behind you, and in front of you. 29 00:01:16,952 --> 00:01:18,454 It's everywhere, 30 00:01:18,496 --> 00:01:21,248 and I'm going to show you how to spot it. 31 00:01:23,292 --> 00:01:27,046 Whether you like it or not, we're all connected by money. 32 00:01:27,087 --> 00:01:30,299 I'm Kal Penn, exploring this giant beast 33 00:01:30,341 --> 00:01:33,594 that is the global economy. 34 00:01:36,680 --> 00:01:38,182 We all know crime pays, 35 00:01:38,224 --> 00:01:40,643 but how do bad guys stash their cash? 36 00:01:40,684 --> 00:01:43,312 Do criminals have their very own bank of evil? 37 00:01:45,272 --> 00:01:47,566 It's more like an informal network of lawyers 38 00:01:47,608 --> 00:01:49,652 who use accounting tricks to keep dirty money 39 00:01:49,693 --> 00:01:51,946 flying below the radar. 40 00:01:51,987 --> 00:01:54,323 For decades, it was all kept hush hush. 41 00:01:54,365 --> 00:01:57,660 Then in 2015, the curtain was pulled back 42 00:01:57,701 --> 00:02:01,831 to reveal the industry's shadiest methods. 43 00:02:01,872 --> 00:02:04,625 (boat horn) 44 00:02:04,667 --> 00:02:06,460 - Was there any shipping magnates caught up in the Panama Papers? 45 00:02:06,502 --> 00:02:08,462 - Yeah, all of them. 46 00:02:08,504 --> 00:02:10,756 - All of the shipping magnates? - Seriously they are all in there. 47 00:02:12,466 --> 00:02:15,010 - Hamburg-based Jan Strozyk was part of an international 48 00:02:15,052 --> 00:02:16,679 team of reporters that published stories 49 00:02:16,720 --> 00:02:18,639 about a massive financial data leak 50 00:02:18,681 --> 00:02:21,725 that came to be known as the Panama Papers. 51 00:02:21,767 --> 00:02:25,396 It exposed hundreds of thousands of secret companies 52 00:02:25,437 --> 00:02:27,940 being used to hide billions of dollars, 53 00:02:27,982 --> 00:02:31,360 and Jan was one of the first journalists to lay eyes on it. 54 00:02:31,402 --> 00:02:33,445 I'm super curious about how you got involved in all this. 55 00:02:33,487 --> 00:02:36,448 I'm imagining like some dude in a black trench coat 56 00:02:36,490 --> 00:02:38,659 with a suitcase that's connected to a handcuff, 57 00:02:38,701 --> 00:02:40,744 and he's like handing you something 58 00:02:40,786 --> 00:02:43,455 and disappearing into the fog. How did this all come to you? 59 00:02:43,497 --> 00:02:46,333 - There was a whistleblower that came to my colleague 60 00:02:46,375 --> 00:02:49,253 and asked him if he was interested in data leaks. 61 00:02:49,295 --> 00:02:51,297 And in the end it turned out to be 62 00:02:51,338 --> 00:02:54,925 the biggest data leak journalists ever looked at. 63 00:02:54,967 --> 00:02:58,137 We're talking about 11.5 million individual files. 64 00:02:58,178 --> 00:03:00,556 And this was the first time ever 65 00:03:00,598 --> 00:03:03,142 that someone outside of the money laundering industry 66 00:03:03,183 --> 00:03:05,978 was able to look at what was going on there. 67 00:03:06,020 --> 00:03:09,356 - [Kal] These files were the confidential client records 68 00:03:09,398 --> 00:03:11,817 of the law firm Mossack Fonseca, 69 00:03:11,859 --> 00:03:14,194 and if you thought the confessions in your secret diary 70 00:03:14,236 --> 00:03:17,364 might be damaging, theirs revealed how they helped 71 00:03:17,406 --> 00:03:20,576 the criminally rich launder dirty money. 72 00:03:20,618 --> 00:03:23,245 - Mossack Fonseca specialized in setting up companies 73 00:03:23,287 --> 00:03:26,081 so nobody can look who is behind it. 74 00:03:26,123 --> 00:03:28,167 They are called shell companies. 75 00:03:28,208 --> 00:03:30,669 So if you have money that's from a dubious source, 76 00:03:30,711 --> 00:03:33,130 you can do your business and nobody 77 00:03:33,172 --> 00:03:34,882 could find out where the money comes from. 78 00:03:34,924 --> 00:03:36,342 So you would just go there 79 00:03:36,383 --> 00:03:38,010 and on both side they would know 80 00:03:38,052 --> 00:03:40,220 it's not good for the business relationship 81 00:03:40,262 --> 00:03:42,640 - if everybody know who's behind this. - Sure. 82 00:03:42,681 --> 00:03:45,851 So they would not really ask who the end client is. 83 00:03:45,893 --> 00:03:47,728 They would just set up the company. 84 00:03:47,770 --> 00:03:50,189 In one case, there was a customer 85 00:03:50,230 --> 00:03:52,149 and they used, like, names from Harry Potter, 86 00:03:52,191 --> 00:03:55,861 and they set up companies like Azkaban and something. I don't know. 87 00:03:55,903 --> 00:03:57,404 - That's the nerdiest shit I've ever heard! 88 00:03:57,446 --> 00:03:59,657 - It is! 89 00:03:59,698 --> 00:04:01,200 - Are these drug cartels that are laundering money? 90 00:04:01,241 --> 00:04:02,576 Who's doing this? 91 00:04:02,618 --> 00:04:05,079 - They were doing business with drug cartels, 92 00:04:05,120 --> 00:04:07,706 mafia, doing business with arms dealers, 93 00:04:07,748 --> 00:04:10,918 and if we look at the Panama Papers as a total, 94 00:04:10,960 --> 00:04:12,920 we have almost 200 different countries. 95 00:04:12,962 --> 00:04:14,588 Basically, every country in the world 96 00:04:14,630 --> 00:04:16,382 that's in some way implicated. 97 00:04:16,423 --> 00:04:18,592 - That's crazy! - Yeah, it is. 98 00:04:18,634 --> 00:04:20,177 I mean there were a lot of arrests 99 00:04:20,219 --> 00:04:22,179 after the initial publication, 100 00:04:22,221 --> 00:04:24,640 and there's going to be a lot more coming in the next years. 101 00:04:24,682 --> 00:04:27,059 And there are hundreds of people that are 102 00:04:27,101 --> 00:04:30,354 probably sitting at home and they're a bit scared right now, I guess. 103 00:04:30,396 --> 00:04:33,065 - [Kal] The Panama Papers revealed rampant money laundering 104 00:04:33,107 --> 00:04:34,233 all over the planet. 105 00:04:38,112 --> 00:04:40,781 So far, prosecutors and journalists have only processed 106 00:04:40,823 --> 00:04:42,408 the tip of the iceberg, 107 00:04:42,449 --> 00:04:45,202 and I wanna find out just how deep it goes. 108 00:04:45,244 --> 00:04:47,705 But I'm just an actor-slash-TV host. 109 00:04:47,746 --> 00:04:50,624 I've never been connected to the seedy underbelly 110 00:04:50,666 --> 00:04:53,752 of drugs or financial crimes, so... 111 00:04:53,794 --> 00:04:55,713 In order to figure out how money laundering works, 112 00:04:55,754 --> 00:04:57,256 I'm gonna need a million dollars. 113 00:04:57,297 --> 00:04:59,216 (thud) 114 00:05:00,634 --> 00:05:01,927 Thanks, Cody. 115 00:05:06,557 --> 00:05:07,766 (phone ringing) 116 00:05:09,810 --> 00:05:11,979 Perhaps you're wondering what would stop 117 00:05:12,021 --> 00:05:13,939 an aspiring money launderer like me 118 00:05:13,981 --> 00:05:16,233 from taking this bag of money and depositing it 119 00:05:16,275 --> 00:05:17,693 directly into the bank. 120 00:05:19,278 --> 00:05:21,113 First of all, that would actually just be 121 00:05:21,155 --> 00:05:24,616 a super short episode, but also, here's what would happen. 122 00:05:25,617 --> 00:05:27,828 - Next member, please. 123 00:05:27,870 --> 00:05:29,663 - I'd like to make a deposit, please. 124 00:05:29,705 --> 00:05:32,416 - Okay, I'm gonna need you to complete a deposit slip. 125 00:05:34,585 --> 00:05:35,794 A million dollars? 126 00:05:38,088 --> 00:05:41,550 Okay, because you're depositing over 10 thousand dollars, 127 00:05:41,592 --> 00:05:44,762 I'm gonna need to complete a currency transaction report. 128 00:05:44,803 --> 00:05:46,388 - Interesting, okay. 129 00:05:46,430 --> 00:05:48,557 - What is the source of the money? 130 00:05:48,599 --> 00:05:50,267 - It kind of fell from the sky. 131 00:05:50,309 --> 00:05:51,769 I know that sounds a little weird, 132 00:05:51,810 --> 00:05:55,606 but it was, yeah. 133 00:05:55,647 --> 00:05:59,401 - Okay, that's what I'm gonna have to write on your report. 134 00:05:59,443 --> 00:06:02,696 And that's reported to the federal government. 135 00:06:02,738 --> 00:06:06,950 - Okay, um, let me think about it and come back. 136 00:06:06,992 --> 00:06:08,368 - If you don't deposit the money, 137 00:06:08,410 --> 00:06:10,579 I still will need to complete a SAR, 138 00:06:10,621 --> 00:06:12,915 which is a Suspicious Activity Report. 139 00:06:12,956 --> 00:06:15,292 Either way, there's gonna be some reporting done, 140 00:06:15,334 --> 00:06:17,836 because you're carrying around this amount of cash. 141 00:06:17,878 --> 00:06:21,882 - Is it easier if I happen to find a receipt 142 00:06:21,924 --> 00:06:24,510 for selling something? 143 00:06:27,221 --> 00:06:30,474 Okay, um, thank you, I'll think about it. 144 00:06:30,516 --> 00:06:32,851 American banks have to report all suspicious 145 00:06:32,893 --> 00:06:34,269 cash transactions. 146 00:06:34,311 --> 00:06:36,355 It's the law. 147 00:06:36,396 --> 00:06:38,023 Apparently legitimate business deals 148 00:06:38,065 --> 00:06:40,109 rarely involve duffel bags full of Benjamins. 149 00:06:40,150 --> 00:06:42,236 - Amanda, I need to talk to you about completing a SAR. 150 00:06:42,277 --> 00:06:43,779 - Everything's fine, Amanda. 151 00:06:49,701 --> 00:06:53,205 So, where do you go to find out how to evade the law? 152 00:06:53,247 --> 00:06:55,624 Easy, the place where those laws are written, 153 00:06:55,666 --> 00:07:00,003 our nation's capital, Washington, D.C., 154 00:07:00,045 --> 00:07:02,005 where there are at least a few good guys 155 00:07:02,047 --> 00:07:04,508 fighting to keep bad-guy money out. 156 00:07:07,678 --> 00:07:10,764 Kerry Myers is a veteran FBI hard-ass. 157 00:07:10,806 --> 00:07:12,558 He segued from the bomb squad 158 00:07:12,599 --> 00:07:14,685 to the anti-money laundering beat, 159 00:07:14,726 --> 00:07:16,186 so maybe he can help me make my money 160 00:07:16,228 --> 00:07:18,605 look as harmless as we do. 161 00:07:18,647 --> 00:07:20,732 This is not your first time on a Segway, is it? 162 00:07:20,774 --> 00:07:23,277 - No, I was a bomb technician with the FBI, 163 00:07:23,318 --> 00:07:27,656 and we used to use Segways when we would be in a bomb suit 164 00:07:27,698 --> 00:07:29,700 to go down range so we're not worn out 165 00:07:29,741 --> 00:07:31,118 by the time we get there 166 00:07:31,160 --> 00:07:32,411 - to do our job. - That's awesome. 167 00:07:32,452 --> 00:07:34,246 - At the FBI, financial investigation 168 00:07:34,288 --> 00:07:36,874 is a part of every crime you investigate. 169 00:07:36,915 --> 00:07:38,417 There's always a financial component. 170 00:07:38,458 --> 00:07:41,295 - So how would I launder money? 171 00:07:41,336 --> 00:07:43,463 - The easy answer is don't, unless you wanna go to jail. 172 00:07:43,505 --> 00:07:45,132 - (laughs) Sure. 173 00:07:45,174 --> 00:07:46,717 - But there are three steps to money laundering: 174 00:07:46,758 --> 00:07:48,635 placement, layering, and integration. 175 00:07:48,677 --> 00:07:53,098 Placement is when the criminal takes the proceeds 176 00:07:53,140 --> 00:07:55,225 of illegal activity, and he goes in 177 00:07:55,267 --> 00:07:58,478 and physically makes a deposit into the financial institution. 178 00:07:58,520 --> 00:08:02,316 Layering is, once the cash is now into the system, 179 00:08:02,357 --> 00:08:04,818 he wants to move it around among different accounts, 180 00:08:04,860 --> 00:08:06,653 maybe accounts of different banks 181 00:08:06,695 --> 00:08:09,740 to make it harder to trace and to further try 182 00:08:09,781 --> 00:08:12,159 and hide its identity. 183 00:08:12,201 --> 00:08:15,746 Integration is when the money, after it's been moved 184 00:08:15,787 --> 00:08:17,664 and layered through different accounts, 185 00:08:17,706 --> 00:08:20,334 is when the criminal pulls the money out of the bank 186 00:08:20,375 --> 00:08:23,337 and then uses it for a legitimate transaction. 187 00:08:23,378 --> 00:08:25,172 But, placement is the choke point, 188 00:08:25,214 --> 00:08:27,466 because our laws are designed to catch 189 00:08:27,507 --> 00:08:31,303 the placement of the money into the financial institution. 190 00:08:31,345 --> 00:08:32,554 - [Kal] Oh, I know. 191 00:08:36,225 --> 00:08:38,227 - The trick is, trying to get it 192 00:08:38,268 --> 00:08:41,897 into the financial institution without a report being filed 193 00:08:41,939 --> 00:08:46,777 with the Financial Criminal Enforcement Network, FINCEN. 194 00:08:46,818 --> 00:08:48,654 Think of it as a library. 195 00:08:48,695 --> 00:08:51,615 That report stays at FINCEN and law enforcement 196 00:08:51,657 --> 00:08:54,493 can get every report that any financial institution 197 00:08:54,534 --> 00:08:58,247 has ever filed concerning your activity with cash 198 00:08:58,288 --> 00:09:01,083 or suspicious activity at a financial institution. 199 00:09:02,668 --> 00:09:04,169 - There are all these regulations, 200 00:09:04,211 --> 00:09:05,587 all this other reporting. 201 00:09:05,629 --> 00:09:06,964 How would somebody launder money, then? 202 00:09:07,005 --> 00:09:08,548 - If I wanted to launder money, 203 00:09:08,590 --> 00:09:09,925 I would use a cash-based business. 204 00:09:09,967 --> 00:09:12,844 A perfect example would be a taxi cab company. 205 00:09:12,886 --> 00:09:15,430 It's very difficult for the government 206 00:09:15,472 --> 00:09:17,849 to estimate whether you had 10 fares today 207 00:09:17,891 --> 00:09:22,062 or 20 fares today, and you start taking the proceeds 208 00:09:22,104 --> 00:09:24,314 of illegal activity, commingling it with 209 00:09:24,356 --> 00:09:27,609 the legitimate revenue from a cash-based company 210 00:09:27,651 --> 00:09:30,737 and start sliding it into the financial system. 211 00:09:30,779 --> 00:09:33,490 If I'm a bank, and you're a taxi cab company, 212 00:09:33,532 --> 00:09:36,118 and you make a deposit every day with me 213 00:09:36,159 --> 00:09:39,621 for six thousand dollars, that's not going to 214 00:09:39,663 --> 00:09:42,916 cause any alarms if one day it's nine thousand, 215 00:09:42,958 --> 00:09:44,918 or even one day it's 12 thousand. 216 00:09:44,960 --> 00:09:46,295 Although I may file the report, 217 00:09:46,336 --> 00:09:48,422 I'm not gonna be alarmed about it 218 00:09:48,463 --> 00:09:51,174 because we have a history of this taxi cab company 219 00:09:51,216 --> 00:09:53,885 is consistently making cash deposits every day 220 00:09:53,927 --> 00:09:56,013 as a part of their revenue. 221 00:09:56,054 --> 00:09:57,139 - [Kal] I've always dreamed of starting 222 00:09:57,180 --> 00:09:59,391 a cross-fit doggie daycare. 223 00:09:59,433 --> 00:10:01,643 I wish there was some sort of how-to guide 224 00:10:01,685 --> 00:10:05,814 for starting a money laundering cash-based business. 225 00:10:05,856 --> 00:10:08,233 - Hi, I'm Benjamin, owner and operator 226 00:10:08,275 --> 00:10:10,527 of Ben's Cash-Only Businesses. 227 00:10:10,569 --> 00:10:12,279 I'm a professional consultant, 228 00:10:12,321 --> 00:10:14,531 and I can teach you to start 229 00:10:14,573 --> 00:10:17,909 and run a cash business, guaranteed. 230 00:10:17,951 --> 00:10:20,162 How do I know you can run one? 231 00:10:20,203 --> 00:10:22,789 Because I run several. 232 00:10:22,831 --> 00:10:25,292 Have money and time on your hands? 233 00:10:25,334 --> 00:10:28,879 Start a shell corporation and use it... 234 00:10:28,920 --> 00:10:30,630 to invest in real estate. 235 00:10:31,840 --> 00:10:33,800 Blossom into a florist. 236 00:10:33,842 --> 00:10:35,344 - I'm here to pick up the orchid. 237 00:10:35,385 --> 00:10:38,680 - Great. - (ka-ching) 238 00:10:38,722 --> 00:10:43,518 Or even better, your corporation can put money in art. 239 00:10:43,560 --> 00:10:46,229 Oh, not in art, you dummy. 240 00:10:46,271 --> 00:10:47,689 Bid on it. 241 00:10:47,731 --> 00:10:50,025 Auctions are anonymous, so they don't care 242 00:10:50,067 --> 00:10:51,777 where the money came from. 243 00:10:51,818 --> 00:10:53,653 I bought this painting with my brand new 244 00:10:53,695 --> 00:10:57,532 legitimate art business that's not sketchy in any way. 245 00:10:57,574 --> 00:11:00,077 In a couple years, you can sell it again 246 00:11:00,118 --> 00:11:02,079 through the same auction house, 247 00:11:02,120 --> 00:11:07,167 and you can take that clean money to the bank. 248 00:11:07,209 --> 00:11:10,462 Know your business and keep the government out of it. 249 00:11:10,504 --> 00:11:13,757 - Hey, how did all this cash get here? 250 00:11:13,799 --> 00:11:15,884 - Selling flowers, of course. 251 00:11:15,926 --> 00:11:18,011 The only thing criminal here 252 00:11:18,053 --> 00:11:20,555 is the low cash-only prices. 253 00:11:20,597 --> 00:11:23,934 So come on over to Ben's Cash-Only Businesses. 254 00:11:23,975 --> 00:11:27,145 The only question we ask is why are you asking 255 00:11:27,187 --> 00:11:28,480 so many questions? 256 00:11:30,482 --> 00:11:34,444 (rhythmic bass and drum music) 257 00:11:39,825 --> 00:11:41,576 - [Kal] With some of these businesses, 258 00:11:41,618 --> 00:11:44,287 it could take years to clean a lot of cash. 259 00:11:44,329 --> 00:11:47,416 I've gotta get rid of it before the show ends. 260 00:11:47,457 --> 00:11:49,167 I'm in Miami to meet someone who knows 261 00:11:49,209 --> 00:11:52,421 how to clean a lot of cash quickly. 262 00:11:52,462 --> 00:11:54,673 - I was being considered for a judgeship. 263 00:11:54,714 --> 00:11:56,758 That's how secretive we were. 264 00:11:56,800 --> 00:11:58,677 Nobody knew that I was a trial lawyer during the day, 265 00:11:58,718 --> 00:12:02,347 and I'd put on my mask and I was a money launderer at night. 266 00:12:02,389 --> 00:12:05,183 - Back in the 80s, Humberto Aguilar 267 00:12:05,225 --> 00:12:07,811 lived a double life, defending criminals 268 00:12:07,853 --> 00:12:10,939 as an attorney by day, also becoming a criminal 269 00:12:10,981 --> 00:12:13,692 by laundering their money, also by day. 270 00:12:13,733 --> 00:12:16,236 Until he got caught and spent six years in prison. 271 00:12:20,282 --> 00:12:24,578 So now I must ask you a question 272 00:12:24,619 --> 00:12:25,996 about money laundering. 273 00:12:26,037 --> 00:12:27,372 How did you do it? 274 00:12:27,414 --> 00:12:29,040 - Well, back when I was doing it, 275 00:12:29,082 --> 00:12:32,377 most of the guys I worked for transported cocaine. 276 00:12:32,419 --> 00:12:35,130 Client came to me and said, look, I gotta problem. 277 00:12:35,172 --> 00:12:36,840 I go, you got a lot of problems. 278 00:12:36,882 --> 00:12:38,341 - As soon as you said that, I was like, 279 00:12:38,383 --> 00:12:40,051 Well, okay, this seems pretty normal so far. 280 00:12:40,093 --> 00:12:42,304 - And I said, okay, what's your problem? 281 00:12:42,345 --> 00:12:44,264 I gotta take you, and I go, okay, let's go. 282 00:12:44,306 --> 00:12:46,683 So we went to this warehouse, and it was a huge place, 283 00:12:46,725 --> 00:12:48,935 bigger than this, full of boxes. 284 00:12:48,977 --> 00:12:49,936 Okay, what's the problem? 285 00:12:49,978 --> 00:12:52,022 He says, open a box. 286 00:12:52,063 --> 00:12:53,482 What, what? Open a box! 287 00:12:53,523 --> 00:12:55,358 So I open a box and it's full of money. 288 00:12:55,400 --> 00:12:58,195 Okay, and that one, too, and that one? 289 00:12:58,236 --> 00:13:00,155 Yes, okay, we've got a big problem. 290 00:13:00,197 --> 00:13:02,532 - Yeah, it sounds like if you had a whole warehouse... 291 00:13:02,574 --> 00:13:03,992 - One warehouse? 292 00:13:04,034 --> 00:13:05,243 I worked for a lot of different people. 293 00:13:05,285 --> 00:13:07,120 - Oh, so this was... (laughs) 294 00:13:07,162 --> 00:13:08,997 This wasn't just one client one time. 295 00:13:09,039 --> 00:13:10,957 - No. 296 00:13:12,792 --> 00:13:15,045 - [Kal] In the 1980s, Americans had quite 297 00:13:15,086 --> 00:13:16,421 the appetite for cocaine. 298 00:13:18,590 --> 00:13:21,468 And Miami was the entry point for most of the supply. 299 00:13:25,055 --> 00:13:27,015 The town's business was booming, 300 00:13:27,057 --> 00:13:30,227 and dealers were swimming in billions of dollars 301 00:13:30,268 --> 00:13:32,020 of dirty cash. 302 00:13:33,104 --> 00:13:36,316 (car peeling out) 303 00:13:36,358 --> 00:13:38,652 - My clients would say, look, I need to use this money. 304 00:13:38,693 --> 00:13:40,070 'Cause how many cars can I buy? 305 00:13:40,111 --> 00:13:41,947 How many houses can I buy, cash? 306 00:13:41,988 --> 00:13:44,616 And I said, oh, oh, this is a challenge. 307 00:13:44,658 --> 00:13:47,494 I created a plan, and the plan was simply 308 00:13:47,536 --> 00:13:50,705 get the money out, get it overseas, 309 00:13:50,747 --> 00:13:53,291 and bring it back legally. 310 00:13:53,333 --> 00:13:55,710 - How did you physically get the money out of this country? 311 00:13:55,752 --> 00:13:58,171 - I would take these boats that went 312 00:13:58,213 --> 00:14:00,674 to pick up the cocaine, 313 00:14:00,715 --> 00:14:03,802 would go down to South America empty. 314 00:14:03,843 --> 00:14:06,388 And I said, wait, I'm gonna use 'em. 315 00:14:06,429 --> 00:14:08,098 So I would put the money in these boats 316 00:14:08,139 --> 00:14:11,017 to go down to South America and end up in Panama, 317 00:14:11,059 --> 00:14:13,562 and you have your people waiting at the port 318 00:14:13,603 --> 00:14:15,897 with guns to protect your cash. 319 00:14:15,939 --> 00:14:17,691 So you get the money in Panama, 320 00:14:17,732 --> 00:14:19,568 and you go to the bank, and you find the banker. 321 00:14:19,609 --> 00:14:22,487 And you start off slowly, build the relationship. 322 00:14:22,529 --> 00:14:24,906 You say, what kind of watch you wear? 323 00:14:24,948 --> 00:14:28,285 That's a Seico, no, man, no, not my banker. 324 00:14:28,326 --> 00:14:30,829 And you go and you give him your Rolex. 325 00:14:30,870 --> 00:14:32,747 Here's my Rolex, that's yours now. 326 00:14:32,789 --> 00:14:35,500 And he looks at it, whoa, 30 thousand bucks, right? 327 00:14:35,542 --> 00:14:38,962 Now, you own this guy. You own him. 328 00:14:39,004 --> 00:14:41,464 You say, okay, this is my money. I wanna deposit it. 329 00:14:41,506 --> 00:14:44,551 I'm gonna open this account for this corporation, always corporations. 330 00:14:44,593 --> 00:14:47,012 You're gonna start using shell companies. 331 00:14:47,053 --> 00:14:50,390 - [Kal] Shell companies, they're key to laundering 332 00:14:50,432 --> 00:14:51,975 big sums of cash. 333 00:14:52,017 --> 00:14:55,103 These corporate facades exist only on paper 334 00:14:55,145 --> 00:14:56,938 with no real business to speak of 335 00:14:56,980 --> 00:14:58,815 aside from holding on to money 336 00:14:58,857 --> 00:15:01,151 and moving assets around without detection. 337 00:15:01,192 --> 00:15:03,653 Think of money laundering as a cigar. 338 00:15:03,695 --> 00:15:05,989 Inside you have your money, the tobacco. 339 00:15:06,031 --> 00:15:08,033 Outside, you have your shell company, 340 00:15:08,074 --> 00:15:10,619 the wrapper that conceals the tobacco. 341 00:15:10,660 --> 00:15:12,495 The glue that holds it all together 342 00:15:12,537 --> 00:15:14,331 is your company's board of directors. 343 00:15:14,372 --> 00:15:16,958 These are people who appear to run your company, 344 00:15:17,000 --> 00:15:18,877 giving you total anonymity. 345 00:15:18,918 --> 00:15:21,338 Once the wrapper is sealed in a tidy package, 346 00:15:21,379 --> 00:15:23,548 it's hard to look at what's really inside. 347 00:15:25,216 --> 00:15:26,843 - And one of the things I would do is, 348 00:15:26,885 --> 00:15:28,762 when I went to Panama, there's a couple 349 00:15:28,803 --> 00:15:33,350 of whorehouses, I looked for a different way of doing it, 350 00:15:33,391 --> 00:15:35,226 no, it's whorehouses. 351 00:15:35,268 --> 00:15:38,813 But the whorehouses are good because they have IDs. 352 00:15:38,855 --> 00:15:40,607 - Who has IDs? - The girls. 353 00:15:42,359 --> 00:15:43,943 - All right, back up 354 00:15:43,985 --> 00:15:45,904 - and talk me through-- - We'll go back. 355 00:15:45,945 --> 00:15:48,740 So you form a company first. Who owns the company? 356 00:15:48,782 --> 00:15:52,577 Oh, shit, these two women own the company. 357 00:15:52,619 --> 00:15:54,704 I've got their IDs, here. 358 00:15:54,746 --> 00:15:58,124 You pay these whores two hundred bucks to use their IDs. 359 00:15:58,166 --> 00:15:59,834 They don't know what you're doing with it, 360 00:15:59,876 --> 00:16:01,378 they don't care, they got two hundred bucks, 361 00:16:01,419 --> 00:16:02,879 hey, I don't have to sleep with anybody 362 00:16:02,921 --> 00:16:04,422 for two hundred bucks, that's great. 363 00:16:04,464 --> 00:16:06,299 - So there was never a risk that they could go 364 00:16:06,341 --> 00:16:08,802 to the bank and say, that's my 10 million dollars? 365 00:16:08,843 --> 00:16:11,638 - There were always risks involved, 366 00:16:11,680 --> 00:16:13,431 but the money's out of there soon. 367 00:16:13,473 --> 00:16:16,267 In two, three weeks, I move the money. Where does it go? 368 00:16:16,309 --> 00:16:18,770 Switzerland, a wonderful place. 369 00:16:18,812 --> 00:16:21,690 And they send a car, and they pick you up, 370 00:16:21,731 --> 00:16:24,025 and you've got the money sitting there, and you're okay. 371 00:16:24,067 --> 00:16:26,236 - So they're just facilitating your money laundering. 372 00:16:26,277 --> 00:16:28,905 - No, no, they're investment-- 373 00:16:28,947 --> 00:16:31,074 - Sure, yeah, okay, they're facilitating their investment 374 00:16:31,116 --> 00:16:34,619 in their new clients, their new relationships. 375 00:16:34,661 --> 00:16:36,663 I worked in government. I know how these languages work. 376 00:16:36,705 --> 00:16:39,207 - It's wonderful, it is wonderful. 377 00:16:39,249 --> 00:16:41,167 - And then where would you move it? 378 00:16:41,209 --> 00:16:43,128 - Back here to invest it in Miami. 379 00:16:43,169 --> 00:16:45,797 They all wanted their money back to be able to use it. 380 00:16:45,839 --> 00:16:47,257 And that was my job. 381 00:16:47,298 --> 00:16:49,134 - It's legitimately coming from a legal bank 382 00:16:49,175 --> 00:16:51,261 - under a corporation name? - Yeah. 383 00:16:51,302 --> 00:16:54,639 At the time, I honestly didn't think it was illegal 384 00:16:54,681 --> 00:16:56,141 in my mind and heart. 385 00:16:56,182 --> 00:16:58,226 I knew it was, but hey, come on. 386 00:16:58,268 --> 00:16:59,477 - [Kal] But you feel like it's not hurting anybody. 387 00:16:59,519 --> 00:17:02,147 - It's not, look at Miami today. 388 00:17:02,188 --> 00:17:05,024 No really, you look at all these businesses 389 00:17:05,066 --> 00:17:06,276 that are grown up. 390 00:17:06,317 --> 00:17:07,944 They made Miami a grown-up city. 391 00:17:07,986 --> 00:17:09,779 And people ask me, well, what happened 392 00:17:09,821 --> 00:17:12,157 to all the money that was laundered in Miami? 393 00:17:12,198 --> 00:17:15,785 Get up, you go on I-95, you go over the overpass 394 00:17:15,827 --> 00:17:17,287 that overlooks downtown, and you look at all 395 00:17:17,328 --> 00:17:19,497 these beautiful buildings. 396 00:17:19,539 --> 00:17:21,040 You know what, that's the money. 397 00:17:21,082 --> 00:17:24,586 - So, I've got this bag of money. 398 00:17:24,627 --> 00:17:26,171 What do I do with it? 399 00:17:26,212 --> 00:17:27,464 - First, get it out of the country. 400 00:17:27,505 --> 00:17:32,969 Get it to Liechtenstein, Guernsey, Cyprus. 401 00:17:33,011 --> 00:17:35,764 It's probably one of the dirtiest places in the world. 402 00:17:35,805 --> 00:17:38,141 - [Kal] The island of Cyprus is well situated 403 00:17:38,183 --> 00:17:40,518 to be the premier money laundering destination 404 00:17:40,560 --> 00:17:41,978 for most of Europe and Asia. 405 00:17:44,981 --> 00:17:46,775 I don't have a drug boat like Humberto, 406 00:17:46,816 --> 00:17:49,569 and the lawyers at Amazon told me I couldn't wire money 407 00:17:49,611 --> 00:17:51,321 like most real launderers do, 408 00:17:51,362 --> 00:17:54,324 because it would be criminally boring to watch. 409 00:17:54,365 --> 00:17:57,827 So I'm taking my private plane. 410 00:17:57,869 --> 00:18:02,040 - Ladies and gentlemen, we'll be touching down in Cyprus shortly. 411 00:18:02,081 --> 00:18:05,251 Ladies and gentlemen, we've arrived in Cyprus. 412 00:18:05,293 --> 00:18:07,170 - [Kal] Cyprus has everything that an international 413 00:18:07,212 --> 00:18:10,256 traveler with large sums of money could possibly desire. 414 00:18:10,298 --> 00:18:12,634 - Hello. - Hello, Mr. Kal. 415 00:18:12,675 --> 00:18:14,052 Welcome, sir, can I take the bags? 416 00:18:14,093 --> 00:18:15,303 - No, thank you. - Sure? 417 00:18:15,345 --> 00:18:16,554 - No, I'm fine, thank you. 418 00:18:16,596 --> 00:18:19,224 Great weather, expansive beaches, 419 00:18:19,265 --> 00:18:22,977 Russian karaoke, and somehow less suspicious, 420 00:18:23,019 --> 00:18:25,396 a massive financial services industry. 421 00:18:28,107 --> 00:18:29,275 - [Kal] How are you? 422 00:18:29,317 --> 00:18:31,402 - I'm fine. Welcome to Cyprus, sir. 423 00:18:31,444 --> 00:18:33,530 - Thank you. I'm excited to be here. 424 00:18:33,571 --> 00:18:34,864 - Oh, thank you. 425 00:18:34,906 --> 00:18:36,241 - First time in Cyprus. 426 00:18:36,282 --> 00:18:37,534 - It's a lovely place. 427 00:18:37,575 --> 00:18:39,619 - It seems like it, it's warm. 428 00:18:39,661 --> 00:18:41,371 I've heard a lot of really interesting things about it. 429 00:18:41,412 --> 00:18:43,623 - What is the purpose of your trip? 430 00:18:45,166 --> 00:18:47,001 - Well, I, uh... - Tourist? 431 00:18:47,043 --> 00:18:48,419 - I guess, I'm a tourist. 432 00:18:48,461 --> 00:18:51,422 I also have some cash with me. 433 00:18:51,464 --> 00:18:52,507 - Cash. 434 00:18:52,549 --> 00:18:55,218 - And wanted to... 435 00:18:55,260 --> 00:18:57,136 - Cleaning or laundering? 436 00:18:57,178 --> 00:18:58,721 - We can just talk about that straight up? 437 00:18:58,763 --> 00:18:59,806 We can call it that, we don't have to... 438 00:18:59,848 --> 00:19:01,349 - Of course, of course. 439 00:19:01,391 --> 00:19:02,642 - Okay, well, yeah, I'm here to launder money 440 00:19:02,684 --> 00:19:04,018 and set up a shell company. 441 00:19:04,060 --> 00:19:07,564 - Of course. It's the paradise of money here. 442 00:19:07,605 --> 00:19:08,690 - Why is it the paradise of money? 443 00:19:08,731 --> 00:19:10,108 - First, because of the taxes. 444 00:19:10,149 --> 00:19:12,569 We have low tax in Cyprus. 445 00:19:12,610 --> 00:19:17,323 Otherwise, there is a lot of accounting companies. 446 00:19:17,365 --> 00:19:21,452 And we have a lot of Russians, actually, to launder money. 447 00:19:21,494 --> 00:19:23,204 - Okay, so you're saying a lot of Russians 448 00:19:23,246 --> 00:19:24,873 come here to launder their money. 449 00:19:24,914 --> 00:19:27,917 - Yeah. I can be the company's director if you want. 450 00:19:27,959 --> 00:19:29,419 - You can be the director of my shell company? 451 00:19:29,460 --> 00:19:32,463 - Of course. If you pay me good money. 452 00:19:32,505 --> 00:19:33,548 More than the taxi. 453 00:19:33,590 --> 00:19:34,841 - Yeah? 454 00:19:34,883 --> 00:19:36,467 - So you said that you have a lot of cash. 455 00:19:36,509 --> 00:19:38,887 - I do, so I have a lot of cash with me, and uh... 456 00:19:38,928 --> 00:19:40,471 - With you? You mean here now? 457 00:19:40,513 --> 00:19:42,432 - Yeah, here now. 458 00:19:42,473 --> 00:19:43,850 - How much? 459 00:19:43,892 --> 00:19:45,602 - Enough that I've brought other people 460 00:19:45,643 --> 00:19:47,270 with cameras in the cab with me. 461 00:19:47,312 --> 00:19:48,938 - Alright. 462 00:19:48,980 --> 00:19:51,232 - I'm a little-- I have to be honest, 463 00:19:51,274 --> 00:19:52,734 I'm a little surprised that we're able 464 00:19:52,775 --> 00:19:55,111 to talk so openly about money laundering 465 00:19:55,153 --> 00:19:56,529 and shell companies. 466 00:19:56,571 --> 00:19:58,489 Is that, uh, is that common, 467 00:19:58,531 --> 00:20:00,450 or is that just 'cause you're an interesting guy? 468 00:20:00,491 --> 00:20:02,827 - It's common, but it's just between us. 469 00:20:02,869 --> 00:20:05,955 - Okay. 470 00:20:05,997 --> 00:20:07,999 - Now let's get back to the money. 471 00:20:08,041 --> 00:20:09,792 You didn't say how much you bring. 472 00:20:09,834 --> 00:20:14,380 - Well, so how much, uh, how much would your rate be? 473 00:20:14,422 --> 00:20:15,840 - No less than seven. 474 00:20:15,882 --> 00:20:17,300 - No less than seven hundred euros? 475 00:20:17,342 --> 00:20:18,551 - Thousand. 476 00:20:18,593 --> 00:20:20,845 - Oh, seven thousand euros, okay! 477 00:20:20,887 --> 00:20:23,389 Hey, I'm trying to negotiate here, man. 478 00:20:25,266 --> 00:20:29,520 Cyprus's registrar of companies is an enormous warehouse 479 00:20:29,562 --> 00:20:32,148 storing all the island's corporate registrations. 480 00:20:32,190 --> 00:20:35,485 Here, there are paper records for hundreds 481 00:20:35,526 --> 00:20:38,363 of thousands of shell companies. 482 00:20:38,404 --> 00:20:41,282 The sheer volume and backlog of digitization 483 00:20:41,324 --> 00:20:43,743 makes any one of them about as easy to find 484 00:20:43,785 --> 00:20:45,119 as the Ark of the Covenant. 485 00:20:47,330 --> 00:20:50,458 - It's a good place to do business, actually, here, 486 00:20:50,500 --> 00:20:53,711 and if you keep an open mind, 487 00:20:53,753 --> 00:20:56,673 there's great potential in Limassol 488 00:20:56,714 --> 00:21:01,970 because of the many foreign companies, Russians, Germans. 489 00:21:02,011 --> 00:21:03,721 Actually, the largest... 490 00:21:03,763 --> 00:21:05,640 - Lately a lot of Israelis. 491 00:21:07,433 --> 00:21:08,977 - [Kal] Even if my shell company doesn't do 492 00:21:09,018 --> 00:21:11,187 any real business, I'll need to provide 493 00:21:11,229 --> 00:21:13,815 an address for my corporate records. 494 00:21:13,856 --> 00:21:16,693 Andreas Solea has the coolest mustache 495 00:21:16,734 --> 00:21:20,405 I've seen since Miami, so I will follow his advice. 496 00:21:20,446 --> 00:21:22,115 Because he and his daughter, Elisa, 497 00:21:22,156 --> 00:21:24,409 run an office space rental company, 498 00:21:24,450 --> 00:21:25,660 and business is booming. 499 00:21:28,830 --> 00:21:31,249 - You have some offices that you just have the desk. 500 00:21:31,290 --> 00:21:36,045 - Lot of empty offices. Rented. - Rented, empty offices rented. 501 00:21:36,087 --> 00:21:38,131 - Of course, rented, 'cause otherwise that wouldn't be good for you. 502 00:21:38,172 --> 00:21:42,760 - We, as a company, we don't actually care what kind of job you do, 503 00:21:42,802 --> 00:21:44,554 or why you need the office. 504 00:21:44,595 --> 00:21:46,055 - It's not our business. - We don't ask, actually. 505 00:21:46,097 --> 00:21:48,141 - We never ask what is your kind of business. 506 00:21:48,182 --> 00:21:50,768 It's your office. It's your private office. 507 00:21:50,810 --> 00:21:52,270 - You can do whatever you want with it. 508 00:21:52,311 --> 00:21:54,022 - You can do whatever you want there. 509 00:21:54,063 --> 00:21:56,190 Of course, in the contracts it's written 510 00:21:56,232 --> 00:21:59,318 not for illegal purposes, but who knows? 511 00:21:59,360 --> 00:22:02,613 - Do you suspect that some of your tenants 512 00:22:02,655 --> 00:22:04,449 might be money laundering? 513 00:22:04,490 --> 00:22:06,159 - Money laundering? 514 00:22:06,200 --> 00:22:09,328 - Anybody can do whatever they want. It's not our business. 515 00:22:09,370 --> 00:22:11,789 - That's been clear. - It's everywhere the same. 516 00:22:11,831 --> 00:22:15,668 From Cyprus to United States, to Russians 517 00:22:15,710 --> 00:22:18,171 to Germans, to everywhere. 518 00:22:18,212 --> 00:22:22,008 Those that they say, "Oh, they don't do it in Germany," 519 00:22:22,050 --> 00:22:24,927 either they are lying... 520 00:22:24,969 --> 00:22:29,807 or they want to protect sort of the image of their country. 521 00:22:29,849 --> 00:22:32,435 - Interesting. - There is everywhere money laundering. 522 00:22:32,477 --> 00:22:35,146 With the right lawyers and accountants, 523 00:22:35,188 --> 00:22:37,023 you can do a lot of things. 524 00:22:37,065 --> 00:22:38,691 So what is the problem? 525 00:22:38,733 --> 00:22:40,485 - [Elisa] Everybody makes money from it. 526 00:22:40,526 --> 00:22:43,071 - So you're saying, it's good for the economy. 527 00:22:43,112 --> 00:22:45,531 But is there ever a worry that the money 528 00:22:45,573 --> 00:22:48,493 is coming from things like terrorism or violence, 529 00:22:48,534 --> 00:22:50,661 and that that's what sort of propping up the economy? 530 00:22:52,622 --> 00:22:55,333 - Now it does. 531 00:22:55,374 --> 00:22:56,751 - Well, I didn't put that idea in your head. 532 00:22:56,793 --> 00:22:58,127 - Oh, you did, you did. - Really? 533 00:22:58,169 --> 00:23:01,464 - Yes. It never passed my mind, you know. 534 00:23:01,506 --> 00:23:04,425 - On the level we work and our contacts... 535 00:23:04,467 --> 00:23:08,513 How do you say it? If you don't mix with the chickens 536 00:23:08,554 --> 00:23:11,182 then you don't become a chicken. You know what I mean? 537 00:23:11,224 --> 00:23:14,560 - [Kal] It seems turning a blind eye to money laundering 538 00:23:14,602 --> 00:23:16,771 in Cyprus is so common that they have 539 00:23:16,813 --> 00:23:18,439 their own weird chicken metaphor. 540 00:23:20,650 --> 00:23:22,276 Am I alone in thinking that there's 541 00:23:22,318 --> 00:23:25,363 a whole lot of willful blindness happening here? 542 00:23:25,404 --> 00:23:26,656 I need to find someone who sees 543 00:23:26,697 --> 00:23:27,824 what's really going on. 544 00:23:36,207 --> 00:23:39,168 Not everyone on Cyprus is ignoring money laundering. 545 00:23:39,210 --> 00:23:41,295 Hey, guys. 546 00:23:41,337 --> 00:23:44,173 James Henry used to serve the corporate beast 547 00:23:44,215 --> 00:23:46,843 as chief economist at McKinsey & Co, 548 00:23:46,884 --> 00:23:48,386 but now he lances it towards 549 00:23:48,427 --> 00:23:51,305 by investigating financial crimes. 550 00:23:51,347 --> 00:23:52,890 He's part of a network of journalists 551 00:23:52,932 --> 00:23:55,309 working to uncover trails of illicit money 552 00:23:55,351 --> 00:23:58,437 that cross multiple international borders. 553 00:23:58,479 --> 00:24:00,815 Those trails often lead to Cyprus. 554 00:24:04,277 --> 00:24:05,778 - I'm working with journalists in the Netherlands, 555 00:24:05,820 --> 00:24:07,947 and the UK, and Cyprus. 556 00:24:07,989 --> 00:24:10,575 And it's incredible to see this new kind of 557 00:24:10,616 --> 00:24:13,369 collaboration going on. 558 00:24:13,411 --> 00:24:14,537 - All right. 559 00:24:14,579 --> 00:24:16,414 Oh, you fucker! 560 00:24:16,455 --> 00:24:19,876 (laughter and splashing) 561 00:24:22,628 --> 00:24:26,048 - Countries like Cyprus sell this kind of financial secrecy. 562 00:24:26,090 --> 00:24:27,842 You know, it's an easy business to set up, 563 00:24:27,884 --> 00:24:30,553 you offer secret companies and trusts. 564 00:24:30,595 --> 00:24:33,014 You have lawyers that are basically 565 00:24:33,055 --> 00:24:34,807 willing to work for anybody. 566 00:24:34,849 --> 00:24:36,767 The banks are willing to take their money. 567 00:24:36,809 --> 00:24:39,729 And this is a huge business, so it sounds great. 568 00:24:39,770 --> 00:24:41,772 But we're talking about betting the future 569 00:24:41,814 --> 00:24:43,858 of a country like Cyprus on a sector 570 00:24:43,900 --> 00:24:46,611 that's loaded down with systemic risk. 571 00:24:46,652 --> 00:24:48,779 And you also end up with some clients 572 00:24:48,821 --> 00:24:50,948 that you're not proud of. 573 00:24:50,990 --> 00:24:53,659 - [Kal] Have there been any negative consequences for this? 574 00:24:53,701 --> 00:24:57,580 - Yeah, so the financial system here grew very fast 575 00:24:57,622 --> 00:25:01,209 from 2004 until 2011. 576 00:25:01,250 --> 00:25:05,713 The banks became like 900% of national income. 577 00:25:05,755 --> 00:25:09,133 And by 2013, the whole economy was taken down. 578 00:25:09,175 --> 00:25:10,968 - Whoa. 579 00:25:11,010 --> 00:25:14,889 - And since the 2013 crisis, there's a whole set of 580 00:25:14,931 --> 00:25:17,433 changes in the laws that could make it 581 00:25:17,475 --> 00:25:22,563 much harder to launder money and to hide assets here. 582 00:25:22,605 --> 00:25:25,107 But there's still a big gray area. 583 00:25:25,149 --> 00:25:28,069 There's a lot of elasticity in the enforcement. 584 00:25:28,110 --> 00:25:29,987 The financial secrecy industry is still 585 00:25:30,029 --> 00:25:32,198 protecting money launderers. 586 00:25:32,240 --> 00:25:34,700 It's protecting tax dodgers, it's protecting kleptocrats 587 00:25:34,742 --> 00:25:36,535 that are basically Russian oligarchs 588 00:25:36,577 --> 00:25:39,914 who accumulated huge fortunes by basically looting Russia. 589 00:25:39,956 --> 00:25:41,582 - I assume things like this continue to exist 590 00:25:41,624 --> 00:25:43,960 because there's people who enable these things. 591 00:25:44,001 --> 00:25:46,754 - You can imagine a kind of Star Wars bar scene 592 00:25:46,796 --> 00:25:48,714 where you have all these various players 593 00:25:48,756 --> 00:25:51,133 gathered around the same kind of watering hole 594 00:25:51,175 --> 00:25:54,512 which is the financial secrecy provided by this industry. 595 00:25:56,222 --> 00:25:57,515 - [Kal] It sounds like this cantina has 596 00:25:57,556 --> 00:26:00,393 a pretty substantial cover charge. 597 00:26:00,434 --> 00:26:02,353 I hope this bag of cash can get me a seat at the bar. 598 00:26:02,395 --> 00:26:04,480 Okay, so you're the expert. 599 00:26:04,522 --> 00:26:07,858 So, how do I launder this bag of money that I brought? 600 00:26:07,900 --> 00:26:09,860 - So one of the objectives of money laundering 601 00:26:09,902 --> 00:26:12,530 is always to have a good story to make things 602 00:26:12,571 --> 00:26:15,449 appear as if they came from some legitimate source. 603 00:26:15,491 --> 00:26:18,119 And real estate is one of the easiest of those. 604 00:26:18,160 --> 00:26:20,079 First step would be to get a company 605 00:26:20,121 --> 00:26:24,458 in whose name you will own the real estate. 606 00:26:24,500 --> 00:26:26,961 In Cyprus, we have about two thousand lawyers, 607 00:26:27,003 --> 00:26:28,629 and they can set up a company 608 00:26:28,671 --> 00:26:31,299 that then becomes the owner of your condo 609 00:26:31,340 --> 00:26:33,884 or your property, and that way, 610 00:26:33,926 --> 00:26:35,803 no one will really understand that it's yours 611 00:26:35,845 --> 00:26:38,806 if someone's looking for your assets later on. 612 00:26:38,848 --> 00:26:41,267 You can pay cash for the real estate, 613 00:26:41,309 --> 00:26:44,645 and when you go to sell it, you have an explanation 614 00:26:44,687 --> 00:26:46,439 for where the money came from. 615 00:26:46,480 --> 00:26:47,815 You know, I didn't get it from drug dealing, 616 00:26:47,857 --> 00:26:49,734 I got it from real estate. 617 00:26:49,775 --> 00:26:52,111 - [Kal] Okay, so I have to find a lawyer. 618 00:26:52,153 --> 00:26:53,279 - Yeah. 619 00:26:59,410 --> 00:27:01,537 - [Kal] The multi-generational Yiangou Law Firm 620 00:27:01,579 --> 00:27:05,166 specializes in setting up companies for foreigners. 621 00:27:05,207 --> 00:27:07,126 They have a sterling reputation 622 00:27:07,168 --> 00:27:08,919 and know the new laws well, 623 00:27:08,961 --> 00:27:12,089 which may be why they're the only Cyprus law firm 624 00:27:12,131 --> 00:27:13,466 willing to let me bring in cameras 625 00:27:13,507 --> 00:27:16,135 to witness how they conduct business. 626 00:27:16,177 --> 00:27:17,428 Not only are they gracious enough 627 00:27:17,470 --> 00:27:19,013 to open their office for me, 628 00:27:19,055 --> 00:27:20,181 they've also opened their kitchen. 629 00:27:20,222 --> 00:27:23,476 (bright music) 630 00:27:23,517 --> 00:27:25,102 This is amazing. 631 00:27:25,144 --> 00:27:26,771 - This is a very... 632 00:27:26,812 --> 00:27:29,273 common, let's say, lunch that we have usually. 633 00:27:29,315 --> 00:27:31,192 - [Kal] This is the common lunch? 634 00:27:31,233 --> 00:27:33,569 You eat like this every day? If I ate like this every day, 635 00:27:33,611 --> 00:27:36,489 I would nap for a couple hours and then go back to work. 636 00:27:36,530 --> 00:27:40,242 - Well, stay a few weeks in Cyprus and you will adjust. 637 00:27:41,369 --> 00:27:44,663 (European string music) 638 00:27:48,459 --> 00:27:50,169 - What kind of law do you guys do for the most part? 639 00:27:50,211 --> 00:27:53,464 - Personally I've been dealing with corporate matters. 640 00:27:53,506 --> 00:27:55,758 Vangelis is an accountant auditor, 641 00:27:55,800 --> 00:27:57,802 and Natalie is an administrator. 642 00:27:57,843 --> 00:28:00,054 - Cyprus has no raw material. 643 00:28:00,096 --> 00:28:02,306 Has no industry. Has no agriculture. 644 00:28:02,348 --> 00:28:04,016 So that's why we developed 645 00:28:04,058 --> 00:28:06,727 the lawyers, the accountants, the bankers. 646 00:28:06,769 --> 00:28:10,147 And then they try to find business outside Cyprus. 647 00:28:11,273 --> 00:28:12,817 - [Kal] George and his family have agreed 648 00:28:12,858 --> 00:28:14,735 to walk me through the process 649 00:28:14,777 --> 00:28:16,695 of finally starting my own company. 650 00:28:16,737 --> 00:28:18,906 I'm anxious to see just how elastic 651 00:28:18,948 --> 00:28:20,449 the new regulations are. 652 00:28:20,491 --> 00:28:22,660 - So do you have any specific name 653 00:28:22,701 --> 00:28:24,620 in mind for your company? 654 00:28:24,662 --> 00:28:25,830 - Oh, that's a good questions. 655 00:28:25,871 --> 00:28:30,042 Um, The 69 Brothers. 656 00:28:30,084 --> 00:28:32,211 - The 69... very interesting name. 657 00:28:32,253 --> 00:28:33,629 - That's very specific. 658 00:28:33,671 --> 00:28:35,131 - You like that? - It's very specific. 659 00:28:35,172 --> 00:28:36,257 - He likes the 69 Brothers. 660 00:28:36,298 --> 00:28:37,425 - That's very specific. 661 00:28:38,926 --> 00:28:40,136 - It's very specific. 662 00:28:40,177 --> 00:28:42,471 - So basically now we're just going 663 00:28:42,513 --> 00:28:45,433 to search into the registrar record. 664 00:28:45,474 --> 00:28:48,269 - Okay, so she's Googling 69 Brothers... 665 00:28:48,310 --> 00:28:52,148 - She's searching whether a similar name exists. 666 00:28:52,189 --> 00:28:54,942 - Well, actually, there aren't any "69 Brothers" 667 00:28:54,984 --> 00:28:57,361 registered as a company so.. 668 00:28:57,403 --> 00:28:59,405 the name's clear. 669 00:28:59,447 --> 00:29:02,074 - [Natalie] You're ready to go. - That's a good sign. 670 00:29:02,116 --> 00:29:03,534 - but there's also the shelf companies, 671 00:29:03,576 --> 00:29:04,910 the available ones. 672 00:29:04,952 --> 00:29:07,079 And if you are okay 673 00:29:07,121 --> 00:29:10,958 with using our nominee officers, i.e. directors, 674 00:29:11,000 --> 00:29:14,837 shareholders, then we skip the whole registration part 675 00:29:14,879 --> 00:29:17,548 and you can buy an off-the-shelf company. 676 00:29:17,590 --> 00:29:19,133 - So I would be very curious to hear about that. 677 00:29:19,175 --> 00:29:21,260 - Okay, I have printed the list. 678 00:29:21,302 --> 00:29:26,682 - Here are the companies that we actually have now 679 00:29:26,724 --> 00:29:29,727 with a ready-made structure. 680 00:29:29,768 --> 00:29:32,229 People just use the structure because 681 00:29:32,271 --> 00:29:35,191 this information is not publicly available. 682 00:29:35,232 --> 00:29:37,985 So your name, it does not appear anywhere. 683 00:29:38,027 --> 00:29:41,739 This is very typical structure that they use in Cyprus. 684 00:29:41,780 --> 00:29:44,325 - Um, wow, all right, so if I pick one of these, 685 00:29:44,366 --> 00:29:48,579 then what are the costs and how quickly can it be set up? 686 00:29:48,621 --> 00:29:50,247 - So before we proceed with the cost, 687 00:29:50,289 --> 00:29:52,666 we need first to fill out a questionnaire. 688 00:29:52,708 --> 00:29:55,961 So you are going to establish a company in which area? 689 00:29:56,962 --> 00:29:59,256 - Well, I assume, uh... 690 00:29:59,298 --> 00:30:01,217 - "Assume" is not a good start, actually. 691 00:30:01,258 --> 00:30:02,801 - That's true, let me, okay... 692 00:30:05,387 --> 00:30:07,765 - So like, what are the more common reasons 693 00:30:07,806 --> 00:30:10,059 that people will set up a company? 694 00:30:10,100 --> 00:30:13,062 - Basically for trading activities. 695 00:30:13,103 --> 00:30:14,855 Or maybe a consulting company. 696 00:30:14,897 --> 00:30:16,440 - I think a consulting company was the... 697 00:30:16,482 --> 00:30:18,025 - Yeah, I mean, that could be a... 698 00:30:18,067 --> 00:30:20,653 - Would make sense. - Consulting. Consulting. 699 00:30:20,694 --> 00:30:24,323 - Now we need to identify if you're going to be 700 00:30:24,365 --> 00:30:26,492 in the category of politically exposed persons. 701 00:30:26,534 --> 00:30:30,329 - I worked in American politics for a few years. 702 00:30:30,371 --> 00:30:32,498 - (Hail to the Chief plays) - No big deal. 703 00:30:32,540 --> 00:30:34,333 Does that mean I'm politically exposed? 704 00:30:34,375 --> 00:30:36,669 - Yes, you can influence people. 705 00:30:36,710 --> 00:30:39,338 Or you can have influence into 706 00:30:39,380 --> 00:30:42,007 the general, let's say, market or business. 707 00:30:42,049 --> 00:30:45,177 So normally you should be in this category. 708 00:30:45,219 --> 00:30:49,932 - Okay. - And your personal, let's say, financial background? 709 00:30:49,974 --> 00:30:53,852 Can you give us a little bit where have you earned your money? 710 00:30:53,894 --> 00:30:56,480 From which activities specifically. 711 00:30:56,522 --> 00:30:58,148 - It fell from the sky. 712 00:31:04,780 --> 00:31:06,824 - So, Kal, I just wanted to let you know... 713 00:31:06,865 --> 00:31:09,618 it seems suspicious. 714 00:31:11,120 --> 00:31:13,455 We want to avoid accepting a client 715 00:31:13,497 --> 00:31:16,125 who is going to be involved in any money laundering. 716 00:31:16,166 --> 00:31:18,127 - Okay, so this is a little more complicated than I thought. 717 00:31:18,168 --> 00:31:20,838 - Many people believe that it's quite easy 718 00:31:20,879 --> 00:31:23,215 to incorporate a company in Cyprus, 719 00:31:23,257 --> 00:31:28,554 but things changed in 2012 to 2013, actually. 720 00:31:28,596 --> 00:31:30,180 When the financial crisis 721 00:31:30,222 --> 00:31:32,057 and the banking sector collapsed. 722 00:31:32,099 --> 00:31:34,518 Now we need to follow specific rules. 723 00:31:34,560 --> 00:31:37,688 Things now are more strict. 724 00:31:39,565 --> 00:31:41,108 - [Kal] Something feels off, 725 00:31:41,150 --> 00:31:42,735 and not because I just made a lawyer 726 00:31:42,776 --> 00:31:44,862 say 69 Brothers on television. 727 00:31:44,903 --> 00:31:47,573 This law firm says I can't even take the first steps 728 00:31:47,615 --> 00:31:49,033 to launder my million bucks, 729 00:31:49,074 --> 00:31:51,410 but everyone else says there are still 730 00:31:51,452 --> 00:31:54,288 huge rivers of dirty money flowing through Cyprus. 731 00:31:54,330 --> 00:31:56,081 I need to find out what happened during 732 00:31:56,123 --> 00:31:59,501 the crisis in 2013 that supposedly changed everything, 733 00:31:59,543 --> 00:32:01,003 and for that, I'll need someone 734 00:32:01,045 --> 00:32:03,589 who saw it all from the inside. 735 00:32:03,631 --> 00:32:06,133 Panicos Demetriades is the former governor 736 00:32:06,175 --> 00:32:10,012 of the Central Bank of Cyprus turned whistle blower. 737 00:32:10,054 --> 00:32:12,973 I'd love to meet up and find out what he knows, 738 00:32:13,015 --> 00:32:14,099 but he's no longer here. 739 00:32:20,147 --> 00:32:22,441 So it turns out that when you fight money laundering 740 00:32:22,483 --> 00:32:24,985 in one of the world's top laundering economies, 741 00:32:25,027 --> 00:32:26,820 you receive death threats, 742 00:32:26,862 --> 00:32:28,906 and have to move your family out of the country. 743 00:32:34,620 --> 00:32:37,247 This place is pretty incredible. 744 00:32:37,289 --> 00:32:40,459 - It's my gateway to Europe, basically. 745 00:32:40,501 --> 00:32:41,835 - The station, or the bar itself? 746 00:32:41,877 --> 00:32:45,381 - (laughs) The station. - Is this real? 747 00:32:45,422 --> 00:32:47,424 - If I press this, they will know-- - I've never tried it. 748 00:32:47,466 --> 00:32:50,260 - You've never tried it? - I've never tried it. No. Do you try it? 749 00:32:52,513 --> 00:32:53,597 - Oh, that was quick. 750 00:32:53,639 --> 00:32:54,848 - Wow. - How are you, sir? 751 00:32:54,890 --> 00:32:56,934 - That's amazing. - Cheers, by the way. 752 00:32:56,975 --> 00:32:58,769 - Cheers. - (clink) 753 00:32:58,811 --> 00:33:01,563 - Cyprus has had a reputation for being a place 754 00:33:01,605 --> 00:33:03,649 where people can bring a suitcase of money, 755 00:33:03,691 --> 00:33:05,859 nobody would ask where it was from. 756 00:33:05,901 --> 00:33:07,569 You can set up a company. 757 00:33:07,611 --> 00:33:10,906 Nobody would ask anything other than, 758 00:33:10,948 --> 00:33:14,284 here, give us a few bucks, and here's your board, 759 00:33:14,326 --> 00:33:15,619 here are your shareholders. 760 00:33:15,661 --> 00:33:17,579 - That used to be the case, I think. 761 00:33:17,621 --> 00:33:20,874 That used to be the case that people could do that. 762 00:33:20,916 --> 00:33:24,837 But it has tightened up quite a lot as a result of the crisis. 763 00:33:24,878 --> 00:33:27,756 Ordinary law firms, for example, in Cyprus 764 00:33:27,798 --> 00:33:31,593 wouldn't even dare to bend the law. 765 00:33:31,635 --> 00:33:33,595 - Now? Okay. - Now. 766 00:33:33,637 --> 00:33:36,223 But those practices is what, I feel, 767 00:33:36,265 --> 00:33:39,101 eventually led to the crisis of 2012-2013. 768 00:33:39,143 --> 00:33:40,769 - [Kal] Remember what happened to the U.S. 769 00:33:40,811 --> 00:33:44,732 Back in 2008 and 2009 when major banks failed 770 00:33:44,773 --> 00:33:46,567 and the government bailed them out? 771 00:33:46,608 --> 00:33:48,736 There was an Oscar-nominated movie about it. 772 00:33:48,777 --> 00:33:50,154 - [Announcer] The government will purchase 773 00:33:50,195 --> 00:33:52,865 125 billion dollars in U.S. bank stocks 774 00:33:52,906 --> 00:33:54,074 over the coming days. 775 00:33:54,116 --> 00:33:56,285 - It's an investment. 776 00:33:56,326 --> 00:33:58,662 - [Kal] Well, the same thing happened to Cyprus in 2013, 777 00:33:58,704 --> 00:34:01,623 except Cyprus was so flush with dirty foreign money 778 00:34:01,665 --> 00:34:04,001 that it's banking system was 10 times 779 00:34:04,042 --> 00:34:06,211 as large as the economy. 780 00:34:06,253 --> 00:34:07,838 There was no way the country could afford 781 00:34:07,880 --> 00:34:09,465 the cost of bailing the banks out, 782 00:34:09,506 --> 00:34:11,925 so there was something called a bail in. 783 00:34:11,967 --> 00:34:15,888 The banks seized 10% of their largest depositors' accounts. 784 00:34:15,929 --> 00:34:17,931 In exchange, those account holders 785 00:34:17,973 --> 00:34:20,142 became partial owners of the banks. 786 00:34:22,811 --> 00:34:25,314 The new shareholders are the depositors 787 00:34:25,355 --> 00:34:29,568 whose deposits are turned-- converted into equity. 788 00:34:29,610 --> 00:34:31,153 - Right. - The interesting thing is 789 00:34:31,195 --> 00:34:33,989 that it only affected deposits above 100,000. 790 00:34:34,031 --> 00:34:37,201 So only 4 percent of depositors were affected by the bail-in. 791 00:34:37,242 --> 00:34:38,869 - So then who were those four percent? 792 00:34:38,911 --> 00:34:40,996 - Russian and Ukrainian oligarchs. 793 00:34:41,038 --> 00:34:43,707 - Wow, okay. - It used to be the case 794 00:34:43,749 --> 00:34:45,459 that it was very hard to know how much 795 00:34:45,501 --> 00:34:47,586 Russian and Ukrainian money was in the system... 796 00:34:47,628 --> 00:34:49,421 - Okay. - because of banking secrecy. 797 00:34:49,463 --> 00:34:52,591 Through the bail-in we realized that 50% of the money 798 00:34:52,633 --> 00:34:54,927 that was bailed in belonged to Russians 799 00:34:54,968 --> 00:34:57,137 like Viktor Vekselberg who is 800 00:34:57,179 --> 00:34:58,972 allegedly very close to Mr. Putin. 801 00:34:59,014 --> 00:35:01,642 He's on the US sanctions list. 802 00:35:01,683 --> 00:35:04,812 - Okay, so that sounds problematic. - Yes. 803 00:35:04,853 --> 00:35:06,563 - (ding) - (liquid pouring) 804 00:35:06,605 --> 00:35:07,689 - Thank you very much. 805 00:35:08,941 --> 00:35:10,526 Did those four percent of people 806 00:35:10,567 --> 00:35:12,444 then have the controlling stake in these banks? 807 00:35:12,486 --> 00:35:15,405 - Yes, of course. I mean, the shareholders effectively decide 808 00:35:15,447 --> 00:35:16,698 who is going to sit on the board. 809 00:35:16,740 --> 00:35:18,742 - And those people then make, what, 810 00:35:18,784 --> 00:35:20,953 the policies of the bank, the decisions? 811 00:35:20,994 --> 00:35:24,039 - Absolutely. - Why do people wanna influence banks this way? 812 00:35:24,081 --> 00:35:27,084 - What can happen is that banks can be looted from within. 813 00:35:27,125 --> 00:35:28,752 If somebody controls the bank, 814 00:35:28,794 --> 00:35:30,587 they can loot the assets, 815 00:35:30,629 --> 00:35:33,006 and there's opportunities there for tax evasion. 816 00:35:33,048 --> 00:35:35,968 It's fertile ground, effectively, for corruption. 817 00:35:36,009 --> 00:35:38,345 (ding, ding) 818 00:35:38,387 --> 00:35:41,932 Eventually when the bank of Cyprus needed additional capital, 819 00:35:41,974 --> 00:35:44,560 the bank attracted Wilbur Ross 820 00:35:44,601 --> 00:35:46,562 to lead a group of investors... 821 00:35:46,603 --> 00:35:48,313 - I'm sorry, say that again. - Wilbur Ross. 822 00:35:48,355 --> 00:35:49,398 - Wilbur Ross, the U.S. Commerce Secretary? 823 00:35:49,439 --> 00:35:51,149 - Your current... absolutely. 824 00:35:51,191 --> 00:35:53,277 - Our commerce secretary Wilbur Ross? 825 00:35:53,318 --> 00:35:56,113 - Wilbur Ross, the current U .S. Commerce Secretary? - Absolutely. Absolutely. 826 00:35:56,154 --> 00:35:58,574 And he became a vice chair of the bank 827 00:35:58,615 --> 00:36:00,576 in 2014, I believe. 828 00:36:00,617 --> 00:36:02,578 Wilbur Ross was on the board until recently. 829 00:36:02,619 --> 00:36:05,664 When he became Commerce Secretary, he stepped down. 830 00:36:05,706 --> 00:36:07,624 Nevertheless, two major shareholders 831 00:36:07,666 --> 00:36:10,043 were one politically exposed American, 832 00:36:10,085 --> 00:36:12,254 and one very politically exposed Russian. 833 00:36:13,964 --> 00:36:15,465 - (ding, ding, ding) - I'm gonna need the bottle 834 00:36:15,507 --> 00:36:17,551 for what you just told me. 835 00:36:17,593 --> 00:36:20,220 Is there really that much more oversight now? 836 00:36:20,262 --> 00:36:23,891 - The rules are different for different people, right? 837 00:36:23,932 --> 00:36:25,475 So, some people can bend the rules. 838 00:36:25,517 --> 00:36:28,103 And for the benefit of the big and the powerful, 839 00:36:28,145 --> 00:36:29,771 and that's a danger for the whole world, 840 00:36:29,813 --> 00:36:32,900 not just for Cyprus, it's a danger for everywhere, I think. 841 00:36:32,941 --> 00:36:35,736 For Europe, for the United States. 842 00:36:35,777 --> 00:36:38,947 - [Kal] Across the globe, rules like those in Cyprus 843 00:36:38,989 --> 00:36:40,991 crack down on the schmucks like me 844 00:36:41,033 --> 00:36:43,327 trying to launder a million dollars, 845 00:36:43,368 --> 00:36:46,538 but the big guys, the ones with a few billion, 846 00:36:46,580 --> 00:36:51,710 well, it's easy to clean your money if you run the bank. 847 00:36:51,752 --> 00:36:53,962 There's more money going through the illegal 848 00:36:54,004 --> 00:36:57,049 shadow economy than ever, but that money is in 849 00:36:57,090 --> 00:37:00,802 the hands of a much smaller and richer group. 850 00:37:00,844 --> 00:37:02,679 (bell ringing) 851 00:37:02,721 --> 00:37:05,140 - Think of money laundering as cheating on your math exam. 852 00:37:05,182 --> 00:37:07,726 You get all the answers in some underhanded way, 853 00:37:07,768 --> 00:37:09,394 and then try to pass it off 854 00:37:09,436 --> 00:37:12,230 as your own legitimate hard work. 855 00:37:12,272 --> 00:37:14,066 Cheating used to be something anyone could do 856 00:37:14,107 --> 00:37:16,818 if they put their lazy math-averse mind to it, 857 00:37:16,860 --> 00:37:18,737 write formulas on your hand, 858 00:37:18,779 --> 00:37:20,948 hide answers in your hat, 859 00:37:20,989 --> 00:37:23,784 flirt with the nerdy kid while you copy off of him, 860 00:37:23,825 --> 00:37:25,786 but all over the world, schools caught on 861 00:37:25,827 --> 00:37:28,455 to these flagrant methods of cheating and cracked down. 862 00:37:28,497 --> 00:37:30,415 That's like the money laundering reforms 863 00:37:30,457 --> 00:37:32,918 put in place around the world over the last few decades. 864 00:37:36,338 --> 00:37:40,217 Holy smokes, that's a lot of reforms. 865 00:37:40,258 --> 00:37:42,052 Cheating, for low-level corrupt idiots 866 00:37:42,094 --> 00:37:44,137 like these guys, became harder. 867 00:37:44,179 --> 00:37:45,806 Now the people who can get away with cheating 868 00:37:45,847 --> 00:37:47,849 and money laundering are the ones with connections, 869 00:37:47,891 --> 00:37:51,019 wealth, and insight into the sophisticated loopholes. 870 00:37:51,061 --> 00:37:54,106 - What's up, dick bags, is this Griffin Hall? 871 00:37:54,147 --> 00:37:56,024 Of course, it is, my dad's Griffin. 872 00:37:57,484 --> 00:38:00,028 - So now, when it's time to take the exam... 873 00:38:00,070 --> 00:38:01,238 - Oh, is it test time? 874 00:38:01,279 --> 00:38:03,073 Yo, teach, get over here. 875 00:38:05,826 --> 00:38:08,453 You look good, you been doing crunches 876 00:38:08,495 --> 00:38:10,914 to get ready for my dad's pool party? 877 00:38:10,956 --> 00:38:14,334 - Yes. - Let's see those abs. 878 00:38:16,795 --> 00:38:18,839 - His connections and vast wealth incentivize 879 00:38:18,880 --> 00:38:22,509 me to look away while I maintain plausible deniability. 880 00:38:22,551 --> 00:38:24,428 If anyone drags me in front of an ethics board 881 00:38:24,469 --> 00:38:25,721 about helping kids cheat, 882 00:38:25,762 --> 00:38:27,556 I can say, of course not, 883 00:38:27,597 --> 00:38:29,641 I was simply showing the student my body. 884 00:38:34,312 --> 00:38:37,232 And that's what the billionaires and oligarchs are doing. 885 00:38:37,274 --> 00:38:39,359 Rich connected charmers like this guy 886 00:38:39,401 --> 00:38:41,528 cheat and then graduate into more connections 887 00:38:41,570 --> 00:38:42,988 that make them even richer. 888 00:38:43,030 --> 00:38:44,698 Ever wonder why the shadiest rich kids 889 00:38:44,740 --> 00:38:48,285 get ahead despite being irrationally confident morons? 890 00:38:48,326 --> 00:38:50,203 Here's a money laundering problem for you. 891 00:38:50,245 --> 00:38:52,205 Add laws that impact low-level offenders, 892 00:38:52,247 --> 00:38:54,291 subtract scrutiny for high-level offenders 893 00:38:54,332 --> 00:38:56,501 and those who own banks, 894 00:38:56,543 --> 00:38:58,462 then divide the assets amongst their friends. 895 00:38:58,503 --> 00:38:59,880 What are you left with? 896 00:38:59,921 --> 00:39:01,214 Pool party at Griffin's house. 897 00:39:03,216 --> 00:39:04,384 I hate myself. 898 00:39:07,220 --> 00:39:08,555 (screams) 899 00:39:14,770 --> 00:39:16,730 - [Kal] If money laundering is now a luxury 900 00:39:16,772 --> 00:39:18,315 reserved for the big fish, 901 00:39:18,356 --> 00:39:20,859 I need to consult a bonafide shark. 902 00:39:24,905 --> 00:39:27,949 Felix Sater has been involved in some shady businesses 903 00:39:27,991 --> 00:39:29,618 with questionable characters, 904 00:39:29,659 --> 00:39:31,745 but also some well-respected businesses 905 00:39:31,787 --> 00:39:33,538 with government connections. 906 00:39:33,580 --> 00:39:35,665 He committed fraud for the Russian mafia 907 00:39:35,707 --> 00:39:39,002 and helped foil plots to assassinate George W. Bush 908 00:39:39,044 --> 00:39:40,796 and Colin Powell. 909 00:39:40,837 --> 00:39:43,673 He also made a fortune laundering money. 910 00:39:43,715 --> 00:39:45,967 So maybe he knows where a minnow like me 911 00:39:46,009 --> 00:39:47,719 can clean a paltry million dollars. 912 00:39:49,221 --> 00:39:51,348 - You can head upstairs now. - Thank you. 913 00:39:53,266 --> 00:39:56,228 You're like the real-life most interesting man in the world. 914 00:39:56,269 --> 00:39:58,438 - I should probably put out a tequila or something. 915 00:39:58,480 --> 00:40:00,107 - Is tequila your drink of choice? 916 00:40:00,148 --> 00:40:01,817 - No, margaritas, but now I'm forced 917 00:40:01,858 --> 00:40:03,401 to drink them out of plastic cups. 918 00:40:03,443 --> 00:40:05,654 - (laughs) 919 00:40:05,695 --> 00:40:07,656 Earlier in Felix's career, he stabbed a guy 920 00:40:07,697 --> 00:40:09,866 with a margarita glass, and that was just 921 00:40:09,908 --> 00:40:12,202 the beginning of his adventures. 922 00:40:12,244 --> 00:40:15,497 - I went to Dubai to try to find out 923 00:40:15,539 --> 00:40:17,958 how Al Qaeda was laundering money through them. 924 00:40:17,999 --> 00:40:21,878 And that's where I got into the whole Bin-Laden hunting business. 925 00:40:21,920 --> 00:40:24,548 I'm testifying on Friday at Senate Intel 926 00:40:24,589 --> 00:40:26,424 in front of Senator Feinstein. 927 00:40:26,466 --> 00:40:28,385 The best place to hide your diamonds are in your scrotum. 928 00:40:28,426 --> 00:40:30,428 - In your like, you just tuck 'em underneath? 929 00:40:30,470 --> 00:40:32,389 - You tuck 'em right underneath your balls. 930 00:40:32,430 --> 00:40:33,974 - That's amazing. 931 00:40:34,015 --> 00:40:35,851 - I had a very successful career on Wall Street. 932 00:40:35,892 --> 00:40:39,396 That ended really badly over the margarita. 933 00:40:39,437 --> 00:40:42,149 The guy I got into a fight with 934 00:40:42,190 --> 00:40:44,192 wanted to drop the charges, but the district attorney wasn't having it, 935 00:40:44,234 --> 00:40:46,903 so um, I was convicted of assault. 936 00:40:46,945 --> 00:40:49,197 The lawyer needed a hundred thousand for the appeal. 937 00:40:49,239 --> 00:40:51,324 I had a kid coming. I had no money. 938 00:40:51,366 --> 00:40:53,869 That's how I got started on, what I call 939 00:40:53,910 --> 00:40:55,453 the darker side of Wall Street. 940 00:40:55,495 --> 00:40:57,372 I was making a lot of money illegally, 941 00:40:57,414 --> 00:40:59,708 and all that required money laundering. 942 00:40:59,749 --> 00:41:03,587 But at this point, my money laundering days are way done. 943 00:41:03,628 --> 00:41:05,213 For the last 20 years, I've been trying 944 00:41:05,255 --> 00:41:07,215 to pay back my debt for doing it. 945 00:41:07,257 --> 00:41:11,094 I've worked with every three-letter agency there is 946 00:41:11,136 --> 00:41:13,013 in this country, 947 00:41:13,054 --> 00:41:16,641 showing them every single step of the way how it's done. 948 00:41:16,683 --> 00:41:18,435 They've come to me, they've asked me, 949 00:41:18,476 --> 00:41:21,563 so I try to help them stop both money laundering, 950 00:41:21,605 --> 00:41:24,482 as well as theft of assets and things of that nature. 951 00:41:24,524 --> 00:41:26,818 - Are there things that we should be doing 952 00:41:26,860 --> 00:41:31,072 collectively as a country to prevent money laundering? 953 00:41:31,114 --> 00:41:33,491 - Yes, but the reality is we can try 954 00:41:33,533 --> 00:41:36,828 to stop money laundering, but you can never stop it 100%, 955 00:41:36,870 --> 00:41:39,247 because the type of controls that you would need 956 00:41:39,289 --> 00:41:41,458 to put on to stop money laundering 957 00:41:41,499 --> 00:41:44,502 will also choke the financial system 958 00:41:44,544 --> 00:41:46,630 to the point where it won't work. 959 00:41:46,671 --> 00:41:50,842 Free flow of money, trade, ease of us buying products 960 00:41:50,884 --> 00:41:53,970 from somewhere, the easier it is to conduct business, 961 00:41:54,012 --> 00:41:55,096 the easier it is to money launder. 962 00:41:55,138 --> 00:41:56,514 - Interesting. - So that's why 963 00:41:56,556 --> 00:41:58,391 money laundering will always exist. 964 00:41:58,433 --> 00:41:59,684 - So what are the tops of the list 965 00:41:59,726 --> 00:42:01,353 for money laundering right now? 966 00:42:01,394 --> 00:42:02,729 Where are the easiest places you can do it? 967 00:42:02,771 --> 00:42:04,439 - The funniest part is that the largest amount 968 00:42:04,481 --> 00:42:08,860 of laundered funds go in and out of the United States. 969 00:42:08,902 --> 00:42:11,947 - Oh, wow, okay. - So all these countries that hate America 970 00:42:11,988 --> 00:42:14,074 like to keep their money in America 971 00:42:14,115 --> 00:42:15,992 because it's very safe and nobody's gonna take it away 972 00:42:16,034 --> 00:42:17,827 from them unless they get caught doing something dirty. 973 00:42:17,869 --> 00:42:20,121 That's why they wanna buy cars here, 974 00:42:20,163 --> 00:42:23,792 apartments, houses, so we are number one 975 00:42:23,833 --> 00:42:25,835 for laundered money. 976 00:42:25,877 --> 00:42:27,379 - Damn. 977 00:42:27,420 --> 00:42:30,298 - And in the United States, the main conduit 978 00:42:30,340 --> 00:42:33,468 of money laundering is Delaware. 979 00:42:33,510 --> 00:42:36,721 - What makes Delaware a place where people launder money? 980 00:42:36,763 --> 00:42:41,393 - So Delaware has the most corporate friendly 981 00:42:41,434 --> 00:42:44,062 laws on the books, and that's why most of the 982 00:42:44,104 --> 00:42:47,607 publicly traded companies are Delaware listed companies. 983 00:42:47,649 --> 00:42:50,568 So for money laundering, it's a go-to state. 984 00:42:50,610 --> 00:42:52,737 I mean, I could literally dial the phone right now 985 00:42:52,779 --> 00:42:54,531 and within the next 30 seconds 986 00:42:54,572 --> 00:42:57,993 we will have a Delaware corp formed ready to go. 987 00:42:58,034 --> 00:42:59,995 - Whoa. - Yeah. 988 00:43:00,036 --> 00:43:01,746 - [Kal] Delaware, the first state 989 00:43:01,788 --> 00:43:04,082 to ratify the Constitution. 990 00:43:04,124 --> 00:43:06,293 Delaware is so business-minded that even 991 00:43:06,334 --> 00:43:08,461 its state nickname, The First State, 992 00:43:08,503 --> 00:43:11,172 brags about how quickly it processed paperwork. 993 00:43:11,214 --> 00:43:12,924 What better place to transform exotic 994 00:43:12,966 --> 00:43:16,011 drug-dealing, Ferrari driving money 995 00:43:16,052 --> 00:43:20,015 into unremarkable buttoned down Ford Fiesta money. 996 00:43:20,056 --> 00:43:24,561 Delaware is laundered money, the state. 997 00:43:24,602 --> 00:43:28,023 I really struggled to start a shell corporation in Cyprus, 998 00:43:28,064 --> 00:43:29,816 but in Delaware, it's a snap, 999 00:43:29,858 --> 00:43:33,028 and I don't even have to go to Delaware. 1000 00:43:33,069 --> 00:43:35,739 I just hop online, fill out a handful of questions, 1001 00:43:35,780 --> 00:43:37,449 and name my company. 1002 00:43:37,490 --> 00:43:39,826 Like Cyprus, the state of Delaware is small 1003 00:43:39,868 --> 00:43:41,870 and doesn't have a very diverse economy, 1004 00:43:41,911 --> 00:43:43,538 so its government decided to become 1005 00:43:43,580 --> 00:43:46,916 the easiest state in the country to set up a corporation, 1006 00:43:46,958 --> 00:43:48,960 and you don't even have to pay Delaware state taxes 1007 00:43:49,002 --> 00:43:50,587 if you don't live there, 1008 00:43:50,628 --> 00:43:52,505 which is perfect, because I've decided 1009 00:43:52,547 --> 00:43:54,716 on some other living arrangements. 1010 00:43:54,758 --> 00:43:57,886 But first, I'm gonna need a whole lot more money. 1011 00:43:59,179 --> 00:44:00,597 Oh, shit. 1012 00:44:00,638 --> 00:44:02,766 Then I'm headed back to Cyprus to buy enough 1013 00:44:02,807 --> 00:44:04,559 bank stock to become a shareholder. 1014 00:44:04,601 --> 00:44:06,269 After that, it's easy. 1015 00:44:06,311 --> 00:44:09,314 All I have to do is bribe the right government-- 1016 00:44:09,356 --> 00:44:11,358 (beep) 1017 00:44:11,399 --> 00:44:13,943 And I can take full advantage of the island's 1018 00:44:13,985 --> 00:44:15,779 luxury real estate market, 1019 00:44:15,820 --> 00:44:18,740 using my freshly cleaned cash to buy a swanky pad. 1020 00:44:20,784 --> 00:44:23,620 Whoa, what a beautiful view. 1021 00:44:23,661 --> 00:44:25,455 I'm here with what our lawyers have told us 1022 00:44:25,497 --> 00:44:27,248 to emphasize is a totally legit real estate agency 1023 00:44:27,290 --> 00:44:28,708 that would never knowingly sell a house 1024 00:44:28,750 --> 00:44:30,168 to a money launderer. 1025 00:44:30,210 --> 00:44:32,504 I think I'd like to buy this house. 1026 00:44:32,545 --> 00:44:35,590 Can we set this up through a company so that nobody can find me? 1027 00:44:35,632 --> 00:44:39,094 - Yes, yes. If you can sign here, please. 1028 00:44:39,135 --> 00:44:41,721 - [Kal] Now I just wait for someone to come along 1029 00:44:41,763 --> 00:44:43,390 to buy this house from me, 1030 00:44:43,431 --> 00:44:48,353 giving me clean cash to use however I please. 1031 00:44:48,395 --> 00:44:51,314 (electronic music) 1032 00:45:33,898 --> 00:45:36,234 - Hotchi Chachi, that's a lot of reforms. 1033 00:45:36,276 --> 00:45:40,113 86, 2018, do the math. 1034 00:45:40,155 --> 00:45:41,865 I can't. 1035 00:45:41,906 --> 00:45:43,700 It's 20, it's 30-- 1036 00:45:43,741 --> 00:45:45,618 impossible. 1037 00:45:46,619 --> 00:45:47,662 Do your test.