The Criminals Behind The Driving Seat: How to Spot Them

Have you ever wondered, why there are lot of car dealership garages in Ghana and everywhere you pass in major cities in Ghana someone is selling a car? It is because there is no entry barrier and the industry is unregulated.

A friend who brought a vehicle from the USA to sell in Ghana was surprised when a potential buyer called him and offered to pay for the full cost of the vehicle in cash (which is the norm). I believe we can all relate with this practice and do not see anything wrong with it. Many will ask, “what is the big deal in this; after all the asking price for the vehicle is what the buyer is offering”. There is everything wrong with this transaction and one need to ask questions when there are suspicions.

All over the world, the automobile industry (especially the second hand dealership garages like this Japanese Auto Repair) has emerged one of the money washing avenues used by criminals. This type of money laundering chain is complicated and relies on trust. That is, a big ask in any criminal activity, particularly in the automobile business.

The automobile industry is vulnerable to criminal activities as the vehicles are used to transport illegal drugs and money by hiding them in the door compartments, seats, secretly designed compartments or any other space that can hide it.

Money laundering in the automobile industry in Ghana is gaining root as criminals are using so many means of washing their dirty money. One of the ways used by these criminals is vehicle trade-in. Vehicle trade-in is the process of exchanging ones vehicle for another vehicle and either by topping up with cash or getting refund of cash from the person. This practice is very common in some parts of the world such as USA, UK and Europe. Criminals have capitalized on this practice to wash their dirty money by taking their luxury vehicle (for example Maserati) to a dealership garage in exchange for less expensive car (for example Toyota Corolla) and asking the dealer pay him the difference in value of the two cars in cheque.

Another way of disguising the original source of the dirty money is using the dirty money to purchase vehicles and exporting these vehicles to another country. For example, a drug baron in USA who want to move the proceeds from USA to Ghana will purchase vehicles with the dirty money and export the vehicles to Ghana (with less restrictions on vehicle sales) to be resold for clean cash. Also, because less information is required from the buyer of the vehicle, criminals find the automobile industry attractive to launder their ill-gotten funds as they use the funds to acquire vehicles and live lavishly. In a typical scenario, a criminal will approach a vehicle dealer and offer to provide the cash to purchase the vehicle, typically at a price above the asking price so that the dealer can cash in, too. It is the practice in Ghana, to see potential customers carrying bag(s) full of money to purchase a vehicle without any questions being ask.

The practice of stealing and/ or snatching a vehicle and selling it in parts is one of the ways criminals are laundering their proceeds of crime in the automobile industry. Some even export these stolen vehicles to their associates.

Some criminals also use the automobile industry as a cover to advance the criminal activities. They invest the dirty money in their business as it is easy to start one and the industry is not or less regulated.

Mention can also be made cash refund as one of the ways criminals are using to wash their ill-gotten funds in the automobile industry. The criminal approaches a vehicle dealership to purchase or rent a vehicle. Days or weeks later returns the vehicle to the dealer or calls the dealer to cancel rental and ask for a refund citing one reason or the other. The dealer refunds the cash by issuing the criminal with a cheque, which is deposited into the financial system to be cleaned.

The use of a straw buyer is a popular method used by criminals in the automobile industry to launder money. A straw buyer is person who complete a transaction on behave of the real buyer. It is not necessarily illegal to use a straw buyer but the act becomes illegal when the transaction involves fraud or purchasing the vehicle for someone who is legally barred from making the purchase themselves. Example, person on the blacklist, sanctions list, wanted list etc.

Some of the red flags which players in the industry should take note off and ask more questions are:
⦁ Seemingly altered vehicle registration documents;
⦁ The types of cars being high-value, high-end luxury cars doesn’t correlate with the person’s lifestyle and background
⦁ Generic-looking export documents with suspicious inconsistencies;
⦁ Straw buyers struggling to explain anomalies in document;
⦁ Same straw buyers showing up for multiple transactions;
⦁ Buying a high valued vehicle with physical cash.
⦁ Buyer refusing to provide details about himself
⦁ A customer who refuses to accept physical cash as refund after buying the car with cash.

In order for the Automobile Industry to be less attractive to criminals, the Financial Intelligence Center (FIC) should come out with AML/CFT guidelines and regulations for all players in the industry. Also players in the industry should develop internal policies and procedures to fight the menace. The guidelines/ regulations/ policies should at least address the following issue: how to identify and report suspicious transactions, the reportable currency threshold, proper Know Your Customer (KYC) and Customer Due Diligence (CDD) principles among other provisions. Also the industry needs to be regulated and players closely monitored with periodic rendition of reports to the authorities (regulator).

Training and awareness creation on the ways and means of laundering money in the industry will go a long way to make the industry less attractive to criminals. Automobile companies, garages and dealers need to train their staff on how to identify red flags and thwart the activities of criminals.  All employees need to know the consequences of their actions and inactions when it comes to the activities of criminals in the industry. Media houses (both main stream and social media) should create the needed awareness to fight the menace of money laundering and terrorist financing. The cost of Anti – Money Laundering (AML) program for your automobile dealership is miniscule compared to what it could cost your dealership if one of your employees decides to “chew groundnut” with the criminals.  The publicity alone will destroy your business.

Another way of sanitizing the automobile industry of criminals washing their dirty money is by setting transaction threshold. That is to say, there should be a limit on how much physical cash can be used to purchase a vehicle. Any transaction with amount above that threshold should be channeled through the banking system. This will make the tracing of dirty money easy.

The introduction of Know Your Customer (KYC) principles in the automobile industry should be put in place. The identity, date of birth and source(s) of fund of any customer (buyer) should be known and verified. Customer Due Diligence (CDD) should also be carried out in order to determine the risk profile of the buyer. Enhanced Due Diligence (EDD) should be performed for any high risk buyer identified. Also by practicing good customers service, other information about buyer will be known and help in the due diligence process. The identity of any buyer should be run through a sanction list provided by the regulator, UN, OFAC, EU, HMT etc to avoid dealing with a criminal.

Dealers in the automobile industry should keep all transaction records and information about their customers and business for easy investigation and prosecution of the criminal. Without the necessary information, it will be difficult to fight criminals who use the industry to wash their dirty money. The transaction records and/ or documents should be kept for at least 5 years.

Even though these measures put in place to check the activities of criminal will not totally eliminate money laundering in the automobile industry, they will help make the industry less attractive to the criminals as industry players will now be aware of their methods and ways in washing their dirty money.

Would you mind doing me a favor? Share this article with someone so that the awareness of money laundering and terrorist financing could be spread to avoid being use as a conduit by criminals.

If you require further information on this article, please contact Richieson @richieson.gyeniboateng@gmail.com