What Can We Learn about Money Laundering from Ozark?
Popular fictional Netflix drama, Ozark depicts the dramatic shift in the career of Marty Byrde. From family friendly, but disengaged Financial Advisor to, at one point, being the Acting Head of the second largest drug cartel in Mexico. Marty and his family, initially positioned as financial crime ingenues, become increasingly steeped in the world of money laundering.
Netflix have proven themselves to be strong producers of original content and Ozark is no exception. What makes the show even more compelling is the assortment of standout performances, headed up by Jason Bateman playing the very understated and ever-resourceful Marty, the principal protagonist and money launderer. While initially reluctant to engage in laundering money, Marty becomes increasingly creative and devious as the series progresses.
Having escaped assassination by the Navarro family drug lords – and partly because of his quick thinking in coming up with a scheme to repay the stolen money – Marty uproots his family from Chicago to Lake of the Ozarks. Whilst this is not an incriminating act in itself, it is reflective of the unusual circumstances that foreshadow Marty’s subsequent money laundering activities.
In real life, would this type of unusual and spontaneous behaviour warrant a ‘red flag’ from UBO or PEPs and Sanctions monitoring? Perhaps, but certainly what happens next should, or at least we’d like to think so!
The ‘art’ of money laundering
The cartel earns millions of US dollars through the sale of heroin, delivering it in hard cash to Marty for him to launder. So, what does Marty do?
As you might expect, Marty quickly acquires a business with which to start laundering money. The business in question is the Blue Cat Lodge which presents itself as an ideal business for Marty due to the low purchase price, high operating costs, scope for capital investment and quick turnaround of cash exchanged between patron and business. There are few, if any, credit card transactions and no receipts to speak of, coupled with suppliers who are happy to be ‘creative’ with the accuracy of deliveries and prices.
To launder large sums of money, Marty gets to work on improvement investments. For instance, he pays for 25 air conditioners but only installs four. He pays for more hamburger meat than he could ever hope to sell, as well as more carpet than is required to refit the lodge.
What Marty is doing here is using the illegally gained cash to pay into the financial system to make its source undetectable, so it can then be withdrawn as untraceable ‘legal’ currency.
This is often the first step of money laundering and is known as the ‘placement’ phase.
By physically mixing the dirty cartel dollars in with the overall takings paid legitimately into the bank and, by artificially inflating the business’ revenues, Marty can heavily exaggerate the business’ outgoings.
So, the dirty money is effectively cleaned through a series of seemingly legitimate transactions purchasing goods and services. Critically, all the suppliers for these goods and services are controlled by the cartel, thereby allowing for a very efficient and highly collaborative money laundering operation.
Shell Companies and Ultimate Beneficial Ownership
Given the volume of cash that Marty must launder, he executes some more elaborate ways to get the job done.
Once the dirty money is in the banking system, its history needs to be covered so that the relevant financial authorities can’t identify its original, criminal source. This involves transferring it from a US dollar bank account to one or more shell companies. These shell companies have no employees or physical headquarters and exist solely to hold funds, often with anonymous or disguised ownership. Which, of course, is where oversight of Ultimate Beneficial Owners (UBOs) is needed.
Shell companies exist in countries outside the jurisdiction of the tax authority and the funds are then transferred back to a standard current account in another country, from which it can be withdrawn and treated as legitimate currency. Essentially, what Marty is doing here is exploiting the international banking system and jurisdictions that allow the forming of companies without requiring the names and address of the real owners, or UBOs.
The reality of a SaaS compliance solution to combat money laundering
As a viewer wishing to be entertained, Marty’s schemes appear credible, even somewhat admirable at times. However, Marty’s efforts would simply not be possible in the day and age we live in – thanks to the advancement of AML compliance software. Were the banks in Ozark using AML compliance software that’s even a fraction as powerful as NorthRow’s WorkStation, Marty would have been stopped in his tracks!
WorkStation is a SaaS solution that maximises the use of technology to deliver KYC, KYB and ID&V, through a powerful risk engine for routine daily compliance tasks. As an innovative compliance partner, NorthRow delivers reduced operational costs and supports businesses in remaining compliant.
Eliminating the proceeds of crime
The future of AML is to deploy an end-to-end, comprehensive platform that can be designed specifically to meet risk appetites and outcomes, with a set of bespoke rules that can be scaled as business needs change. NorthRow empowers businesses to make faster decisions and onboard customers immediately, whilst complying with ever-changing regulation.
It is because of drug cartels, like the one we see in Ozark, and criminals such as Pablo Escobar, that AML compliance regulations today are so rigorous. These policies are vital to stopping individuals benefitting from criminal activity. Drugs, terrorism, trafficking, slavery, illegal weapons sales, wildlife trade – these are just a few of the major atrocities criminals use to earn money illegally – money that will need to be laundered.
That’s why banks and other regulated industries need comprehensive AML compliance protocols in place to bring these horrific deeds to light and stop criminals from profiting from crime and suffering.
If you would like to learn about how NorthRow can support your business with its compliance, or you just want to share your views on Ozark, then get in touch!