UK RECEIVES $10 MILLION CONFISCATED DRUG MONEY

6 Dec 2004 12:45 PM

Ten million dollars confiscated from a Colombian drugs baron will be used to tackle crime in the UK, Home Office Minister Caroline Flint said today, following a successful international US/UK drugs enforcement operation.

The money (5.7 million) is the UK's half of a $20 million haul after a joint US/UK confiscation order stripped a Colombian drug trafficker who was at the heart of an international organised crime network investigated by the US Drug Enforcement Administration and the UK's National Crime Squad.

Code-named Operation Dian, the investigation also looked into the subsequent laundering of the proceeds via the Black Market Peso Exchange (BMPE) in 2002.

Home Office Minister Caroline Flint said:

"Organised crime is the scourge of our society. It affects each and every one of us, costing the UK at least 20 billion each year.

"I would like to congratulate the US Drug Enforcement Agency and the UK's National Crime Squad for their excellent work in seizing this substantial amount of money, which will be ploughed back into cracking even more crime gangs.

"The Serious Organised Crime and Police Bill, published last week, sets out a radical programme of reforms aimed at tackling those serious, organised criminals who devastate our communities through drugs, people smuggling and prostitution. This will include the setting up of a new agency, the Serious Organised Crime Agency, to tackle organised crime.

"On top of this, the Proceeds of Crime Act 2002 is already seeing criminals hit where it hurts - in their pockets - with a record 54.5 million seized last year."

Tony Placito head of the DEA in New York, said:

"This investigation is indicative of the longstanding and close co-operation between the US Drug Enforcement Administration and the UK National Crime Squad.

"While drug money is often referred to as "dirty money", this is a perfect opportunity to clarify just what that means. These $10 Million, represent the profits derived at the expense of tens of thousands of individual drug users. These drug users have caused substantial damage to our communities, their families and themselves. This same money will now go back into the community, to combat those who would hope to benefit financially from the misery or others.

"Through a successful partnership between the DEA and the NCS, we will persevere in dismantling international drug trafficking organizations, imprison their members and seize their assets thus reducing the harm they can inflict on our two nations."

Trevor Pearce, Director General of the National Crime Squad said:

"The $10 million presented to us today by our colleagues in the USA DEA is one of the largest amounts awarded to UK law enforcement. The National Crime Squad is very grateful to the DEA and we acknowledge that successes like this can only be built on the foundation of international partnerships.

"The money we have received today will enable the Government to reinvest in our continued attack on crime on all levels and those engaged in it.

"I hope this sends out a strong warning to those involved in this type of criminal activity; do not think that profit from your illicit crimes will be an investment for your future, the National Crime Squad is committed to tracking you down, dismantling your networks and recovering your proceeds. The message from us today is crime really does not pay."

Notes to Editors

1. Officers from the American Drug Enforcement Administration (DEA) handed over a special presentation cheque to the National Crime Squad (NCS) and Caroline Flint at the USA Embassy on Monday 6 December.

2. The cheque represented half of $20 million confiscated from a Colombian drugs trafficker following 'Operation Dian'. Details below.

3. The Home Office published the Serious Organised Crime and Police Bill on Wednesday 24 November. The Bill is available at
www.parliament.uk

4. A record 54.5 million of criminal assets were recovered in England and Wales in 2003/04, under the Proceeds of Crime Act (POCA 2002). This includes criminal confiscations, civil recovery, taxation and cash forfeiture.

5. This tops last year's record high of 47m and is more than double the 2000-01 total of 23.5m.

6. The NCS targets the top tier of criminality to secure maximum disruption to organised crime enterprises in the UK and abroad. Key areas are Class A drug trafficking, organised immigration crime and hi-tech crime.

7. NCS works in partnership with police forces and other agencies in the UK and abroad to reduce social harm in the UK.

8. Since 1998, NCS have seized drugs with a total street value of around 1billion, disrupted more than 1,500 criminal networks, arrested more than 5,000 offenders, and identified more than 139 million of convicted criminals' illegally gained assets for confiscation through the courts.

Details of Operation Dian

In late 2002, DEA agents contacted officers from the NCS, seeking assistance to try to trace funds from the drug trafficking operation that had been sent to the UK.

A joint investigation started with the National Crime Squad who carried out the UK investigation. Enquiries revealed managed investment accounts. Further enquiries revealed the account had been in existence for about 10 years and the accounts were owned by a Colombian Textile Company managed by a Colombian national Jose DOUER, together with his wife, son and daughter.

Examinations of the accounts revealed that the majority of the funds had been received by way of more than 250 wire transfers from around the world during 2001 and 2002.

In order to protect the funds while the DEA investigation continued, the Southern District of New York, on the 13 December 2002, issued a "warrant of seizure". Subsequently, upon the request of the US authorities a successful application was made to the High Court in London for the accounts.

The investigation was extensive with a number of Colombian nationals including Jose DOUER being indicted in the USA for offences relating to money laundering and utilising the BMPE or actively working as a broker.

While a number of these cases are still outstanding, proceedings in respect of Jose DOUER have concluded. DOUER made certain admissions in respect of some of the funds sent to accounts in London acknowledging that the BMPE had been used.
Part of the penalty imposed on Jose DOUER was a Forfeiture Order (equivalent to a Confiscation Order) in the sum of $20 million which has been paid.

Black Market Peso Exchange

The Black Market Peso Exchange is the term given to a method used to launder the proceeds of Colombian drugs sales in the United States of America.

In brief, the need to launder US dollors obtained from drug trafficking arises out of the massive amounts of cash generated by sales of South American drugs in the United States. US money laundering regulations prevent drug dealers simply depositing these funds at a bank and transferring them to Colombia so the funds are disguised to hide their source.

In Colombia, the original owners of the drugs (now sold in the United States) contact a third party, generally referred to as a 'Peso broker', who agrees to trade Colombian Pesos which he has control of, and which are located within

Colombia in exchange for the drug trafficking proceeds in the United States. The drug trafficker for example, may agree to provide US$ 1 million in the United States to the Peso broker in return for payment of US$ 800,000 worth of pesos in Columbia. The drug trafficker is then distanced from the laundering process; the broker, on the other hand, has US$ 1 million of drug trafficking proceeds with which he has to deal.

The Peso broker, generally, has a large number of contacts in the United States, which he will use to deposit funds into the US banking system and which form the drug proceeds 'purchased' from the drug trafficker. This is often done through multiple deposits of small sums into different bank accounts, which are later consolidated into larger amounts in the United States, or alternatively moved abroad. Colombians, who have Pesos to sell, whether from legitimate sources or not, and who want to buy US Dollars, then make arrangements with the Peso broker for the exchange of the accumulated US$'s for pesos.

To avoid Colombian currency transaction reporting requirements, the Peso broker will use others to transfer the funds to wherever they are required. The original drug trafficker receives 'laundered' Pesos. Colombians who wish to convert Pesos to US Dollars are able to do so without paying exchange tariffs, or reporting the large transactions. The Peso broker makes his profit from charging commission for the process.