Why the Government Shutdown Is the Best News Ever for Money Launderers

Crime
A blog about murder, theft, and other wickedness.
Oct. 9 2013 12:06 PM

Why the Government Shutdown Is the Best News Ever for Money Launderers

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Cash money, and lots of it.

Photo by Chung Sung-Jun/Getty Images

Though I’ve found the ongoing government shutdown to be a huge drag—I was all set to pay my estimated quarterly taxes, but now there’s nobody at the IRS to receive my check—there are some out there who appreciate it, like grandstanding congressmen, and World War II veterans who enjoy seeing their pictures in the news. Also included in that list: criminals.

While the FBI and DEA are still open for business, there are other, smaller federal law enforcement and intelligence divisions that have been crippled by the shutdown. From now until the shutdown ends, I’m going to profile some of these groups: what they do, what they’re not doing now, and what their absence might mean in the short- and long-term.

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As anyone who watched Breaking Bad knows, illegal enterprises have a bear of a time dealing with the cash they generate. You can’t just flat-out spend the money, because that’ll raise questions from law enforcement. You can bury it in the desert or stack your cash in a storage unit, but if all you’re going to do with your dirty money is hide it, then what’s the point of earning dirty money in the first place? It’s thus important for criminal groups to disguise the source of their gains, and to make it seem like the money was honestly earned. This is called money laundering, and without it, criminal gangs and terrorist groups could not survive. That’s where the Financial Crimes Enforcement Network, or FinCEN, comes in.

FinCEN is a bureau of the Treasury Department that serves as a central repository for data on financial transactions. Every time you deposit, withdraw, or transfer $10,000 or more from your bank account, your bank documents the transaction and sends the record to FinCEN. The office also receives reports in cases of high-value financial fraud. All of this is logged and analyzed, and used to discern patterns that might indicate systematic criminal activity. As Chris Suellentrop wrote for Slate in 2001, all of this data is then used to aid “local, state, and federal law enforcement agencies with information and leads for ongoing criminal investigations.” The group also produces big-picture reports and liaises with financial intelligence bureaus worldwide.

This is an important service. Smaller, generalized law enforcement groups are rarely equipped to analyze this data on their own, or to connect isolated incidents with a potentially larger pattern. They rely on offices like FinCEN to offer the advice and intelligence necessary to help them build a case. If building a financial-fraud case is like playing Who Wants to Be a Millionaire?, then FinCEN is the ultimate phone-a-friend.

But, thanks to the shutdown, FinCEN is operating with a skeleton staff—out of 345 total employees, 295 have been “designated as non-excepted”—which means that law enforcement’s final answers are more likely to be wrong. Queries are going unanswered, patterns aren’t being discerned. Bank reports are piling up. And with information accumulating, FinCEN will certainly be backlogged with work when it does get back to full strength.

With FinCEN in abeyance, small-time grifters are more apt to get away with passing bad checks. But you can also bet that more serious criminal syndicates at home and abroad will take advantage of the reduced scrutiny and accelerate their efforts to make their dirty money look clean. In the new book Narcoland, about the rise of violent drug cartels in Mexico, economist Edgardo Buscaglia is quoted as saying that “El Chapo’s goal is to pay taxes.” [“El Chapo” is Joaquín Guzmán Loera, the most powerful drug lord in Mexico.] “When the criminal groups legalize their wealth… their success is complete,” Buscaglia says. FinCEN’s extended absence is going to make it more likely for crooks like El Chapo to succeed.

Crime is Slate’s crime blog. Like us on Facebook, and follow us on Twitter @slatecrime.

Justin Peters is a writer for Slate. He is working on a book about Aaron Swartz, copyright, and the rise of “free culture.” Email him at justintrevett@fastmail.fm.

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