Money Trail - Finding Footprints On The Money Trail

Finding Footprints On The Money Trail

When bribes or kickbacks are given in the form of physical cash, it needs to be transported and spent. Sometimes this leads to it being found. For example, a random check of luggage loaded aboard an aircraft revealed US$1.9 million in cash in the bag of one politician and it was suggested that it was an illegal campaign contribution for his presidential election. Many countries have laws in place to report when a large amount of cash is received or withdrawn from a bank. In the United States it is called the Money Laundering Control Act.

Sometimes the amounts of money that flow to government officials reaches into the billions of dollars. Footprints caused by movements of money of this size may seem hard to miss, however, there always seems to be a ready group willing to assist. Frequently the funds are transferred out of the country. Tracking them once in another country is more difficult, however, disguised as they may be, much of it appears to eventually come to light. One term coined for money like this is black money. An apparent contraction of black market and money.

The favored destination for many years has been Switzerland. Switzerland's banking laws, that favor protecting the privacy of the bank account holder, have attracted monies from around the world. Perhaps the toughest trail riders of all, the US Internal Revenue Service has been searching for footprints on this trail and money that escaped taxation.

Hiding footprints in this manner works as follows:

• a numbered account is opened hiding the person's name;
• monies are moved either by bank transfer, check or physically taken to one of several branches around the world;
• use of the money is maintained by taking out a loan against the deposited amount; and
• the bank becomes wealthy since it suffers no risk when lending the money back.

In 2009, an estimated 52,000 US citizens had numbered accounts. The IRS initially wanted all the names and data. On August 19, 2009, after much poking with a stick, the Swiss banks agreed to disclose information about approximately 4,450 American account holders suspected of evading taxes to the United States. However, like many trails, this one ended in a dead end when the Swiss later refused to comply with the agreement.

Unfortunately for trail riders, this may have made their task more difficult since the alert may have caused many to move accounts to other countries. For the United States, this is no small problem. According to a staff subcommittee meeting in 2008, tax haven banks cost American tax payers an estimated $100 billion dollars annually.

In some cases it is not the trail that is noticed, rather it is the net effect upon a government official's wealth. For example a rather candidate of modest means, who then earns a known salary in office, somehow manages to become very wealthy. Exactly what the official did, and how the official became wealthy isn't clear. The term for this is illicit enrichment. Laws vary among countries when this is found.