Some say it takes a thief to catch a thief. Humberto Aguilar helped drug cartels recycle their cash through bank accounts worldwide in the 1980s. Today the convicted money launderer lectures compliance professionals about money laundering methods old and new.
Humberto Aguilar, a chummy, 60-year old Cuban with a walrus moustache that gives him a Latin American flair, was in his late 20s when he got into the money laundering business.
Fresh out of law school in Florida, he started his career as a criminal defense attorney, which he enjoyed tremendously and which meant most of his clients were criminals. Most of the criminals were drug dealers.
One particular client approached him with “a problem.” He took Aguilar to a mini-warehouse and showed him five storage units filled with boxes. “Turns out, the boxes were full of money. We were looking at literally tons of money,” recalls Aguilar.
His client asked him: “What am I going to do with it?”
The question was not quite as puzzling as it first appeared because “how many houses or cars can you buy [with] cash?” Aguilar asks.
He did not have any major experience that qualified him as a money launderer. With a major in history from the University of Florida and a law degree, but no financial background to speak of, Aguilar possessed one quality that, paradoxically, proved both helpful and his undoing.
“I am what you call in Spanish ‘descarado,’” he says, a mixture of brazen, insolent and shameless. “I can do anything in the world,” he beams with a touch of sarcasm, his arms open wide.
Lacking any idea of how to transfer bulk cash, he had to make up the process. However, he could avail himself of a certain infrastructure, such as drug boats, thanks to his clientele. After the drugs arrived in the U.S., the cash was typically stored on the same boats, in hidden compartments, to be shipped abroad.
The problem was where to ship it and how to get it into the banking system?
Aguilar first traveled to Panama and made contact with bankers, claiming that as a lawyer he was representing clients in Miami who wanted to invest in Panama. He was welcomed with open arms.
The general principle was simple. “A banker will never turn money away. If you go to a banker and say, ‘I have got a million dollars,’ he will go home and think, ‘What can I do?’”
Of course, Aguilar did not show up with $1 million dollars. Instead, he opened bank accounts with deposits of $10,000 to $15,000 and let the bank officers know that he would be coming back regularly to make deposits.
Opening the bank accounts required identity documentation, company registration information and information about the owners of the companies. Aguilar showed up with all the correct paperwork for corporations in Miami and outside the United States, with true beneficiaries. The documents, paired with his professional appearance as a lawyer, ticked all the right boxes.
“Nothing wrong, right? That’s what the law says, right?”
Nevertheless, the volume of money deposited would, at some stage, raise red flags, which meant Aguilar needed to cultivate “friendly” bank relationships.
It’s just human nature,” Aguilar says.
“The philosophy in these countries is I am bribing you. You know it and I know it. Now, you don’t want to know what I do, you don’t want to know where my money is coming from. You don’t want to hear that, you want the benefit, but in the long run, if something happens, you can say ‘I did not know.’”
He bought expensive perfume for the secretaries and gifts for his banker friends, and he gave cash to client managers who handled his accounts. Aguilar didn’t give them a lot of money to start, but at some point he began to hand over envelopes with cash.
“I want to be your friend, your best friend. You are going to open the accounts for me. They are all going to be legit, I will have the paperwork.”
And he would take off his gold, diamond bezel Rolex and give it to his new friend.
“I would tell my client, you owe me a Rolex, because it worked. Human nature is such that after a while, you are not going to turn me in, maybe because you are making money or maybe because you really enjoy the false friendship. After a while, this banker was in my pocket. He is mine, I own him. My duty is to protect him.”
Aguilar believed that if he kept moving the money from bank to bank and country to country, he was less likely to get caught. The longer the trail, the more difficult it would be to follow. Ultimately most of the money went “through European banks to Switzerland and then out,” he says.
Aguilar used to keep the paperwork for each account at the bank itself.
“It would stay in a safety deposit box in the bank in Switzerland, Liechtenstein, Andorra, wherever it was, and it would stay there to prevent anybody from bringing that paperwork back in and getting caught.”
Aguilar says he had a few favorite banks, including a large European bank, and he raves without a hint of irony, “It is a great bank.” He then lists another familiar European bank, adding, “I love that one, too. They are all over the place. They never turned one dollar away.”
Nor did they alert law enforcement after he was arrested as a money launderer. Aguilar, who has been to 150 to 200 banks worldwide, says that when he was arrested, he made headlines not only in Miami, but also in The New York Times. “Not one banker has come forward and said, ‘Listen FBI, Mr. Aguilar has accounts with us, would you like to look at them?’ Nobody came forward.”
“The biggest crooks in the world are the Swiss bankers and the Andorrans,” he claims. “The Andorrans make no bones about it. You walk in with a lot of money, they will let you open a bank account, they let you have lunch, and they will expel you from the country and will keep your money.”
Money, money, money
Aguilar charged his “clients” for setting up the account and establishing the companies. For his services, he received 8 percent to 10 percent of the laundered money.
In return, “…the guy has got a great corporation, it operates legally, the Swiss account is legal, and he can get the money back in a loan or in investments. You can get the money back in a billion ways.”
Through his industriousness and word-of-mouth in the criminal underworld, his activities grew and made him very wealthy very fast.
Despite the stress and pressure that he was under, he got caught in the game and the new lifestyle was enjoyable, and even the criminals he hung out with could be good company. “It made my life a lot more fun having known these people.”
Later, the increasing violence in the drug trade and years of getting away with it made an impact. “And then you realize this is scary. That’s when I said I need to get out of this, this is insane. I have got kids now, I am leaving, and I went to New York.”
On one of his returns to Miami, someone wearing a hunting mask and carrying a submachine gun jumped out of the bushes in the driveway of his home.
“A Mac 10 is about this big,” he explains holding his hands in front of his chest as if holding a parcel. “But if you put a silencer on it, it’s this big.” His hands move more than shoulder width apart. “I was lucky to have my Berretta with me and the replacement Berretta in the car.”
A short while later, his house was shot up in a hail of machine gun fire.
Two years later, the FBI arrested Aguilar and offered him a deal if he gave up the money laundering business. He declined, posted bail and fled to Spain, taking his wife and children with him. Eventually the money ran out and he had to send his family back to the U.S.
“I lived in Spain for about three years until finally Interpol found out that I was there.” He was rearrested and spent 30 months in a Spanish prison before he was extradited to the U.S., where he served another prison sentence.
Aguilar often used bank reference letters, still in use today, to make an introduction from one bank to the other. These letters of good standing are typically required as a tool to fight money laundering and to verify the identity and address of beneficial account owners, but in Aguilar’s case only helped to open new bank accounts.
“What are you going to do if you get a letter from a real banker in Miami that says Mr. Aguilar is a reputable client, he has large sums of money deposited in our bank, he has three or four huge companies he works for, please be kind and open the doors for him and make it easy for him to do business. What are you going to do?”
Asked whether he considered this a weakness of the system, Aguilar says: “It’s a license to steal.”
Even enhanced due diligence, extra steps of information-gathering to prevent money laundering, which are required, for example, for clients with political ties, do not necessarily help, he argues.
“How do you do enhanced due diligence when you have a company that is giving you all the information? You are having everything in front of you. And you want to come to my country and see my business? Sure, and I take you over and I have a company, I have 200 trucks, you [see ]it’s legit and you open the account.”
At the time, he often used the actual identity documentation of the people engaged in the drug trade to open accounts. Today, compliance professionals check new customers against government lists and private service databases of known criminals, money launderers and terrorists.
“If you are on a list right now, it means you cannot do it, but somebody else can do it for you, a front man, and that is very common.” Even in the old days, he says, he could pay Panamanian prostitutes for the use of their identities when forming a company.
Yesterday and today
If he were laundering money today, Aguilar says, he would do some things differently. But he notes that money launderers have changed, too.
“The modern guys who are doing this today, they are real professionals. They are not fly-by-night like I was.
“These guys who are doing this today, they are Harvard lawyers, people who are bankers, people who really know how to do it. And they are not going to get caught because they do everything right.”
He also has no doubts that there is more money laundering today. Aguilar’s gentle nature only gets rattled a little when he hears self-congratulatory speeches at compliance conferences about how all the laws, regulations and controls that govern the banking system today somehow put compliance professionals a step ahead of the money launderers.
“Are you assuming that we are stupid? Are you assuming that [compared to] 20 years ago when I was moving money through here, through the Caribbean, without any problems, that in the last 20 years the new money launderers are dumber and slower, don’t have the magic touch anymore? Are you guys crazy? They are faster, they are smarter, they are better organized.”
Aguilar even believes that compliance conferences attract a certain number of people more interested in learning how to launder money than how to prevent it. In the same way, compliance professionals should be wary of banking customers particularly interested in regulations.
“You will be approached by money launderers who ask you about the regulations, etc. And you think this is a good prospective client. He follows the law. Bulls—. He wants you to allow him to get into your house.”
His advice is not to trust anybody and to ask a lot of questions: Why do you want open the account? Where is the money coming from? Why do you want an account in this country, with this bank?
Cayman and money laundering
Naturally, Aguilar also visited the Cayman Islands in his quest to launder money. On the recommendation of a colleague, he set up a couple of companies but did not like it when banks started to ask too many questions.
“I did a couple of things here and I said, no, I am not going to launder money here, just too many problems. About a year later they started investigations here, and I thought, man, I am glad I did not do it. It was getting hot back then because everybody was laundering their money here,” he claims.
Just as in Miami where a lot of the development was driven by laundered drug money, he believes it played a part in Cayman. In the 1970s, Grand Cayman was underdeveloped, he notes. “Do you think that money laundering had anything to do with this development [since]?”
Aguilar does not have any personal experience with Cayman in regard to money laundering today, but he claims what he is hearing is not good.
“A lot of the contacts I have are people who are doing time in prison, who just came out of prison and a lot of government officials. And these people tell me, this place, they are laundering money like crazy through there.
“That’s why it makes me laugh when people say there is no dirty money here, we are having the best possible regulations to prevent money laundering from coming through here, but by the time the money gets here it has already been laundered. I just want to stash it here, because I can make good interest here, tax-free, I can do a lot of things here. That’s what I used to do, move it in and move it out.”
Aguilar says he does not have any regrets. “I am not proud of what I did. [But] it would be hypocritical to say I am really truly sorry now. If I was really truly sorry, I would have never done it.”
It also never felt like he was laundering money.
“I was just a jerk moving money. I was a kid under 30 making a ton of money and having a blast. There is nothing like renting a plane and going to Paris for lunch,” he says with a shrug. “There should be a law, if you’re under 30, you cannot become a millionaire. You can’t give people too much money too fast because they’ll go crazy.”
Now, he says, he likes his role of advising banking professionals to be vigilant and not to be naïve about the effectiveness of their money laundering regulations. In many cases it will be the only chance they have to ever learn from someone who has actually done it, he says.
“I have been living simply for 14 years. I have no problem sleeping at night. Nobody comes after me. I don’t worry about this guy or that guy.”
Humberto Aguilar was a speaker at the Global Compliance Solutions Anti-Money Laundering, Compliance and Financial Crime Conference, Oct. 10-11 at the Grand Cayman Marriott Beach Resort.