Malaysia linked to world’s largest money laundering scheme, NYT reports

Asian currency notes are seen in this photo illustration in Singapore January 17, 2013. — Reuters picKUALA LUMPUR, May 29 ― Unlicensed money exchangers in Malaysia had aided the operators of a global currency exchange that ran a US$6 billion (RM18.33 billion) money-laundering operation online, a hub for criminals peddling in everything from stolen identities to child pornography, The New York Times (NYT) reported.

The currency exchange called Liberty Reserve is believed to be the world’s largest cyber money-laundering case and was based in the United States but operated well beyond the country’s borders as well as traditional international banking regulations, providing easy and anonymous cover increasingly sought by criminals to fund their activities, the widely-read daily reported, citing American law enforcement officers.

Liberty Reserve was responsible for laundering billions of dollars over the past seven years, conducting 55 million transactions that involved millions of customers around the world, including about 200,000 in the United States, according to US federal prosecutors who were reported to have announced the charges against the currency exchange in Manhattan yesterday.

According to NYT which cited the charges, Liberty Reserve’s system was designed to let people move sums large and small around the world just by setting up an email address, which did not require the user’s identity to even be validated.

Liberty Reserve also did not take or make cash payments directly but used “third-party ‘exchangers’” that “tended to be unlicensed money-transmitting businesses without significant government oversight or regulation, concentrated in Malaysia, Russia, Nigeria and Vietnam”.

Still citing from the charge sheet, the NYT reported that the “third-party exchangers” would take and make payments, and then credit or debit the Liberty Reserve account, allowing the latter to avoid collecting any banking information on its clients and not leave a “centralized financial paper trail.”

The people who accepted Liberty Reserve’s currency were “overwhelmingly criminal in nature,” according to the indictment as reported by the NYT.

“They included, for example: traffickers of stolen credit card data and personal identity information; peddlers of various types of online Ponzi and get-rich-quick schemes; computer hackers for hire; unregulated gambling enterprises; and underground drug-dealing Web sites,” the daily cited the charges as reading.

“As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes — the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers and traffickers,” Preet Bharara, the United States attorney in Manhattan was quoted saying at the news conference in Manhattan yesterday.

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