• A fraudulent investment

scheme in southern

California that robbed

hundreds of investors—

mostly Filipino immigrants—of more than

$25 million dollars. 

• An Iraqi man in

Washington who was

illegally transferring 

millions of dollars to his

native country in violation

of U.S. sanctions. 

• The financier for a major

narcotics smuggling

organization who sought

to launder several million

dollars in criminal

proceeds through real

estate investments. 

The three cases describedabove—all drawn from the case files of

U.S. Immigration and Customs

Enforcement (ICE)—illustrate just a few of

the ways in which criminals can exploit

U.S. financial systems to earn, move or

store their illicit funding.

But they also illustrate the importance of

strong partnerships between federal investigators and the private sector. Each of

these cases originated from information

provided to investigators through

“Suspicious Activity Reports” (SARs).

The benefits derived from Bank Secrecy Act

(BSA) reporting requirements go far

beyond the information contained within

the four corners of the documents themselves. While Currency Transaction Reports

(CTRs), Currency and Monetary

Instrument Reports (CMIRs), and other

BSA-required reporting documents are

extremely beneficial to law enforcement 

by creating a paper trail of potential 

criminal activity that allows the investigators to focus on specific transactions and

their relationship with ongoing criminal

activity, the mere fact that these reporting

requirements exist may prove to be the

most valuable anti-money laundering 

tool of all.

The existence of the BSA reporting requirements, and the implementation of stringent and effective anti-money laundering

programs built upon these requirements,

have forced criminals to resort to more

desperate schemes to earn, move and 

store their illicit funds.These schemes

require them to act outside of legitimate

channels, which makes their actions more

susceptible to detection. As these illicit

schemes are detected, “Red Flag” indicators

of the scheme can be developed and 

used to detect other subjects attempting

similar illegal acts which can be reported

through the use of SARs.

“Smurfing,” which is a by-product of the

CTR process, is an excellent example of a

scheme employed in an attempt to avoid

the reporting requirements. Since continued

Inside this Issue

Safeguarding America Through

Financial And Trade Investigations

www.ice.gov/cornerstone

Toll-Free Tip Line:

1-866-DHS-2-ICE

Cornerstone is U.S. Immigration and

Customs Enforcement’s (ICE)

comprehensive investigative initiative

for fighting financial crime, trade

fraud and intellectual property crime.

The Cornerstone Report is a

quarterly bulletin highlighting key

issues related to ICE financial and

trade investigations.

Spotlighting ICE’s SAR Review Teams . . . . . . . 2

SAR Referrals Provide Valuable

Information To Law Enforcement In

Their Fight Against Financial Crime . . . . . . . . . 3

SAR Review Sparks ICE Financial 

Investigation in Detroit . . . . . . . . . . . . . . . . . . . 3

ICE Cracks Illegal Money 

Transfer Schemes In Virginia . . . . . . . . . . . . . . 4

ICE Partners With IAFCI. . . . . . . . . . . . . . . . . . . 5

SCAM ALERT: Internet Fraudsters Prey 

On Families Of Iraq Soldiers. . . . . . . . . . . . . . . 5

SAR Referral Identifies Alien

Smuggling Ring . . . . . . . . . . . . . . . . . . . . . . . . . 5

Cornerstone Calendar . . . . . . . . . . . . . . . . . . . . 6

Volume II: No. 2 • August 2005

Suspicious Activity Reports: A Critical

Tool For Financial Investigations 

Suspicious Activity Reports (SARs) and guidance on their

use are found online at www.fincen.gov.
I

CE’s Washington,

DC/Northern

Virginia Field Office is

actively targeting money launderers, illegal

money service businesses (MSBs) and

other financial fraudsters in the region.The

Office of the Special Agent-in-Charge,

Washington, DC’s SAR review team and

others like it around the country are comprised of special agents, intelligence analysts and state and local task force officers

with special training in conducting complex financial criminal investigations.

Marcy M. Forman, Director of ICE Office

of Investigations, has made financial investigations a priority at every ICE SAC office

in the United States. Staff judiciously

examine financial documents, bank records

and other financial reports in their pursuit

to find the financial crimes investigator’s

equivalent of the “smoking gun”—structured cash deposits, illegal wire transfers to

foreign countries, or other indicators of

illegal financial activity.

SARs are a vital component in the fight to

combat serious financial crimes; many SAC

offices created SAR review teams to sort

through the multitude of reports that are

filed from banks and other financial institutions nationwide. SARs provide potentially significant data that may identify potentially serious violators of the Bank Secrecy

Act (BSA) and related crimes.

The SAR itself is not direct evidence of a

crime—it is a report of suspicious activity

that MAY be indicative of criminal activity.

ICE agents utilize the information contained in the SAR to evaluate whether or

not the activity reported rises to a level that

warrants further investigation.The BSA,

which created the SAR reporting requirement, places strict limitations on the manner in which SARs can be used.The disclosure of the existence of a SAR to unauthorized individuals (including the subject of

the SAR) is strictly prohibited. Despite

these limitations, the SAR is and will continue to be a valuable tool in combating

money laundering, terrorist financing, and

other serious financial crimes.

The following cases were identified and

successfully investigated through the

efforts of ICE SAR reviews:

• SAR information led to an ICE investigation of a California man who defrauded

a bank of hundreds of thousands of dollars by obtaining stolen checks and

depositing them into his own account

under a fictitious name.This investigation showed that the man was attempting to further defraud the bank of 

well over $1 million before he was

arrested.The defendant was ordered to

make restitution to the bank as part of

his sentence.

•Based upon SAR information, an Atlantaarea business was targeted for investigation by ICE agents for failing to register

with the Financial Crimes Enforcement

Network (FinCEN) as a money service

business (MSB). Investigation showed

that the owner of this business deposited

in excess of $1 million into a bank

account, which was subsequently wired

abroad to several financial institutions. As

a result, agents seized over $100,000 in

currency and property from the violator.

•A bank employee was discovered to be

involved in structuring and other Bank

Secrecy Act violations based upon SAR

information filed by a National Capitol

Region financial institution. In addition,

the funds used as part of the scheme

were discovered to have been smuggled

from Central America into the United

States to avoid currency reporting

requirements.The defendant pled guilty

to structuring cash deposits and was

ordered by the judge to forfeit the currency involved in the scheme. $

Page 2 of 6

Volume II: No. 2

August 2005

Suspicious Activity Reports, continued

this scheme was first introduced, it has

become easily detected and provides clear

evidence of ongoing criminal activity.

Therefore, while many CTRs that CMIRs

are filed on legitimate financial transactions and may provide limited information

or assistance to law enforcement, the paper

trail they create causes criminal organizations to resort to desperate—and therefore

identifiable and vulnerable—means to

move their illicit proceeds, as they attempt

to avoid reporting requirements.

Since 2001, more businesses and industries

have been required to fill out these 

valuable reports to ensure that increasingly

sophisticated money launderers, terrorists

and other criminal organizations 

don’t attempt to exploit vulnerabilities 

in our nation’s financial systems.These 

businesses include casinos, money 

services businesses, and securities and

futures industries.

ICE’s “Cornerstone” initiative for financial

and trade investigations is committed 

to working with industry to ensure the

integrity of the nation’s banking and 

financial systems. And your feedback—

through the scrupulous filing of SARs 

in response to legitimately suspicious

activity or by sharing information with 

ICE investigators in other forums—is 

making a difference.

For more information on “red flag” indicators

that might signal the need for an SAR, visit

us online at www.ice.gov/cornerstone. 

In addition, the Financial Crimes

Enforcement Network, or FinCEN, publishes

regular “SAR Activity Reviews” detailing

trends and offering tips to industry. Check

out the latest edition online at

http://www.fincen.gov/sarreviewissue8.pdf. 

$

Spotlighting ICE’s SAR Review Teams
USA PATRIOT Act

enhancements to 

Title 18 USC 1960

contribute to conviction of four for operating illegal money remitting business.

The globalization of financial transactions has reframed the fight against

financial crime into an international

endeavor that requires engagement and

commitment by all the countries and

financial sectors throughout the world. An

increase in bulk cash smuggling across

borders as well as the laundering of criminal proceeds throughout various countries

outside of the country where the crime

was perpetrated has forced law enforcement to adapt to criminals ever-changing

methods. Criminals continue to adapt their

methods of moving their proceeds in

response to the successful application of

U.S. anti-money laundering laws that were

first enacted in 1986—both criminal and

civil.The adaptation by criminals to law

enforcement and regulatory action presents

a constant challenge. Each new challenge

creates new hurdles to overcome in investigations in order to successfully identify

and dismantle the means by which criminals sustain their illegal activity. ICE recognizes this challenge and appreciates the

financial industry’s invaluable partnership

in combating money laundering and other

financial crimes through the filing of suspicious activity reports (SARs) and currency transaction reports (CTRs) that are

shared with law enforcement.

Recently, as a result of numerous SARs filed

by vigilant bank employees, ICE and the

Internal Revenue Service Criminal

Investigations Division (IRS-CI) in Newark,

NJ initiated an investigation into a money

remittance business that culminated in the

successful prosecution of 5 subjects associated with the business.The SARs alerted law

enforcement to unusual patterns of deposits

with immediate wire transfers to countries

outside of the United States—these patterns,

as identified in the SARs, were indicative of

possible money laundering and structuring.

The investigation revealed that the money

service business (MSB), although licensed,

did not allow public access and therefore

was not a legitimate MSB.The MSB utilized

four couriers to transport large sums of bulk

cash to the business; the MSB then deposited the cash into their bank accounts and

wired the money to the Middle East. ICE

and IRS-CI’s investigation disclosed that the

business made over $100 million in cash

deposits within 30 months.The owner of

the business was charged with violations of

the Bank Secrecy Act including, Failure to

file Currency Transaction Reports (CTRs)

and Structuring transactions to Evade

Reporting Requirements in addition to

Conspiracy and Aiding and Abetting.

This case highlights not only the value and

utility of SARs but the vulnerability of the

MSB industry—an industry that often provides a legitimate and valuable service to

the immigrant population—but an industry which is often exploited by criminals

in furtherance of their criminal scheme. A

critical note to this case is how it demonstrates the importance of law enforcement

and private sector partnerships in protecting the homeland with the bank employees serving as “first responders” through

the filing the SARs. $

Every day ICE special agents, intelligencespecialists and contract employees

review and analyze Suspicious Activity

Reports (SARs).The goal—to identify

criminal organizations through their behavior patterns.

Bank Secrecy Act (BSA) reporting requirements and effective anti-money laundering

programs have caused criminal organizations to resort to acts of desperation in

their attempt to earn, move and store their

illicit funds.

Recently an analyst assigned to ICE’s Detroit

Special Agent-in-Charge office was searching SARs for “red flag” indicators of criminal activity associated with countries of

interest.The astute analyst identified a SAR

filed by a financial institution referencing a

suspicious financial transaction related to a

country of interest in the Middle East.

The subject associated with the SAR was further researched and identified through law

enforcement databases.The ensuing investigation entailed hundreds of investigative

hours and countless grand jury subpoenas,

interviews, surveillance and search warrants.

During surveillance, agents observed 

clandestine money drops being made 

in remote parking lots and the exchange 

of bags of currency at businesses and

behind dumpsters.

Ultimately, ICE agents identified an organization operating a hawala and sending millions of dollars to foreign nations in violations of numerous U.S. laws and sanctions.

This case demonstrates the effective use 

of SARs by ICE to identify criminal violations that could have otherwise gone 

undetected and affected the integrity 

of the U.S. financial system and the 

security of the United States. $

SAR Review Sparks ICE Financial Investigation In Detroit

• Wire transfers to countries of concern

immediately following large deposits.

• Structured cash deposits.

• Customers refusal to show identification.

3Red Flag Indicators Page 3 of 6

Volume II: No. 2

August 2005

SAR Referrals Provide Valuable Information To Law

Enforcement In Their Fight Against Financial Crime
On May 23, ICE

announced the latest results in an ongoing nationwide campaign to identify and shut down unlicensed

money transmittal businesses— including

underground “hawala” businesses.

Since late 2001—when the USA PATRIOT

Act was enacted—ICE has made 140

arrests, secured 138 indictments, and seized

more than $25.5 million in illicit proceeds

by targeting these illicit financial operations.These investigative efforts continue to

ensure that this potential avenue for criminal and terrorist financing is closed off.

“Hawalas” are a form of money transmitting

business, common in many Middle Eastern

and African countries, through which funds

can be transferred between parties based on

ties of kinship and individual trust.These

arrangements could be exploited by terrorist

groups or other criminal organizations to

transfer large sums of money across international borders undetected.

“ICE targets these illegal operations

because we know that terrorists and

other criminal organizations can use

these underground businesses to move

illicit funds anywhere in the world

with no questions asked.”

—ICE Assistant Secretary Michael Garcia

“Over the past two years, ICE has shut

down a number of unlicensed money

transmittal businesses that were responsible

for the transfer of millions of dollars to

Afghanistan, Pakistan and Iran,” said

Assistant Secretary Michael Garcia of ICE.

“ICE targets these illegal operations because

we know that terrorists and other criminal

organizations can use these underground

businesses to move illicit funds anywhere

in the world with no questions asked.”

Money services businesses (MSBs) provide

a valuable service to individuals both in the

U.S. and abroad. However, individuals who

choose to operate in violation of federal

and state laws pose a significant vulnerability and place legitimate MSBs at a competitive disadvantage.

The Patriot Act enhanced the ability of

federal law enforcement agencies to

combat illegal money transfers and

underground hawalas.

Two separate cases in which ICE arrested

individuals in Virginia illustrate the success

of this campaign.

In the first case, Louay Habbal, a naturalized U.S. citizen originally from Syria,

was arrested for operating an unlicensed

money transmittal business from his 

home in Vienna,Va. He was arrested at

Dulles International Airport as he returned

Visit us on the Web at

www.ice.gov/cornerstone

Learn more about money laundering, trade

fraud, intellectual property crime and other

financial crimes.

Find out how you and your industry can

participate in the Cornerstone partnership.

Learn how to spot common “red flag”

indicators of criminal financial activity.

File an online complaint about copyright

infringement, counterfeiting and other

intellectual property violations.

Access more resources related to ICE 

financial and trade investigations.

Want To Find Out More 

About ICE And 

Cornerstone

?

▲▲

▲▲

▲▲

▲▲

▲▲

• Frequent wire transfer activity, especially

involving a new account.

• Frequent deposits into and/or withdrawals from

accounts that were opened in different areas of

the country.

• Frequent deposits of 3rd party checks and

money orders.

3Red Flag Indicators

to the United States on a flight from

Damascus, Syria.

According to the indictment, Habbal

allegedly transferred a total of more than

$23 million to countries in the Middle East

and North Africa between November 2001

and July 2004 through his business, Mena

Exchange. ICE agents seized more than

$100,000 from the company’s bank

accounts and other assets.

In a separate case in Virginia, ICE arrested

Rahim A. Bariek, a naturalized U.S. citizen

originally from Afghanistan, after an investigation revealed that Bariek had been involved

in the illegal transfer of $4.9 million to

recipients in various Middle Eastern nations,

including Afghanistan, Iran and Pakistan.

On May 20, Bariek pleaded guilty in federal court to charges of operating an unlicensed money transmittal business. He

faces a maximum sentence of five years in

prison when he is sentenced in July.

In an unusual twist to the case, Bariek had

earlier testified before a subcommittee of the

U.S. Senate Banking Committee on “hawala”

money transfer businesses and underground

terrorist financing mechanisms.

“I pay taxes on my hawala business and I

comply with the law,” Bariek testified in

November 2001. “It is upsetting to us that

there are hawala used for illegal activity.

They give all hawala a bad name.”

In similar investigations, illegal money

transmittal businesses and hawalas have

been shut down in California, New York,

Illinois, Ohio, Michigan, Washington D.C,

and other locations around the country. $

Page 4 of 6

Volume II: No. 2

August 2005

ICE Campaign Targets Illegal Money 

Transmittal Businesses
I

CE’s Cornerstone Unit

is expanding its reach

by forming strategic

working relationships

with partner organizations. Most recently,

Cornerstone has partnered with the

International Association of Financial Crimes

Investigators (IAFCI) to identify trends in

financial crime in the United States and

around the world.

The IAFCI is a non-profit international

organization of representatives from the

financial and trade industries and from

local, state and federal law enforcement

agencies.The organization’s goal is to foster

an environment in which information about

financial fraud, fraud investigation and fraud

prevention methods can be collected and

exchanged—a goal consistent with ICE’s

Cornerstone mission.

ICE has partnered with the IAFCI to share

important information about recently identified trends in financial

criminal activity occurring

throughout the world. Last

year, Marcy M. Forman,

Director of ICE’s Office of

Investigations, spoke at the

IAFCI’s International Training Conference in

Chicago, Illinois.This year, ICE became a

member of the IAFCI’s Executive Advisory

Board with Cornerstone Section Chief Joe

Gallion serving as ICE’s principal representative to the board.

The IAFCI will hold its 37th Annual Training

Conference in Orlando, Fla., from Aug.

29–Sept. 2.The agenda contains numerous

topics dealing with financial crimes. Office

of Investigations, Financial and Trade

Investigations Division Unit Chiefs Brock

Nicholson and James Dinkins, and Section

Chief Joe Gallion will speak at the conference.To learn more, visit IAFCI online at

www.iafci.org. $

I

n earlier issues, we’ve reported on

ICE’s efforts to investigate telemarketing fraud. A recent e-mail scam

illustrates the lengths to which these

criminals will go to defraud the

American people.

In February, ICE issued a warning to

the public about a pair of Iraq-related

e-mail scams making their way

around the Internet—one directed at

the relatives of fallen U.S. soldiers in

Iraq and another in which the sender

claims to be an ICE agent tracking

Saddam Hussein’s assets in Iraq.

The first scheme is directed at the

families of U.S. troops killed in Iraq.

The sender of the e-mail claims to be

a volunteer working with U.S. forces

who is writing on behalf of another

fallen soldier who was a friend of the

family’s son or daughter, and seeks the

family’s assistance in recovering

money that the deceased friend had

kept for them.The sender promises to

provide more details when the family

responds, and even adds a link to the

ICE Web site to make the solicitation

appear authentic.

In a separate e-mail scam, the sender

claims to be an ICE official in Iraq

who is investigating funds that Saddam

Hussein’s sons stole from the Iraqi

Central Bank.The sender provides ICE’s

Web site address (which includes

information about ICE investigators

who actually were in Iraq) to establish

credibility and asks the recipient to

confirm his or her e-mail address.

The perpetrators of these scams have

taken pains to make their stories

compelling and to make their pitches

look like the real thing, but the fact 

is that the solicitations are not associated with ICE personnel or activities

in any way. $

SCAM ALERT: 

Internet Fraudsters

Prey On Families Of

U.S. Soldiers In Iraq

I

n June 2005, ICE agents in New York and

Nevada arrested three individuals on money

laundering and alien smuggling charges.

These arrests were part of a nine-count

indictment against numerous individuals—

some of who remain fugitives at this time.

Through leads developed from a Suspicious

Activity Report (SAR), ICE agents identified

and arrested the perpetrators of a large scale

money laundering and alien smuggling ring.

This case demonstrated that SARs not only

assist law enforcement in the identification

of currency violators, but perpetrators of

other serious crimes. ICE agents in multiple

jurisdictions were able to link several ongoing investigations in order to uncover the

current scheme.The alien smuggling organization used “coyotes”—or guides—to illegally bring South American citizens into the

United States by way of Mexico.

The smuggling organization in this case capitalized on the unrestricted visitor policies

that exist between many South American

nations and Mexico. Although these policies

allow for less restrictive travel and trade

between theese nations, they create

exploitable vulnerabilities by allowing

prospective “clients” easier access to our

borders. Clients often pay the criminal

organization thousands of dollars for successful entry into the United States, and even

more for “door to door” delivery within the

United States. Some organizations even offer

financing options.

In addition to the criminal activity described

above, this investigation uncovered a number of schemes the targets used to move 

and store their illicit proceeds, including:

bulk cash smuggling, utilization of the 

Black Market Peso Exchange (which is

responsible for laundering billions of 

dollars in illicit funds annually) and money

laundering involving the purchase of real

estate to store their funds. $

SAR Referral Identifies Alien Smuggling Ring

Page 5 of 6

Volume II: No. 2

August 2005

ICE Partners With IAFCI
Recent and upcoming

events include 

the following:

•May 23–26, 2005—National Program

Manager Nick Annan and Section Chief

Joe Gallion spoke at a National

Association of Securities Dealers (NASD)

conference in Chicago, IL.

•June 12, 2005—National Program

Manager Nick Annan spoke at the 29th

Annual International Precious Metals

Conference, Orlando, FL.

•June 15, 2005—Deputy Assistant

Secretary John P. Clark spoke at 

the New York High-Intensity Financial

Crimes Area (HIFCA) Symposium,

New York City.

•June 16, 2005—Director of

Investigations Marcy M. Forman spoke at

the Federal Financial Institutions

Examination Council (FFIEC)

Supervisory Update and Emerging

Issues, Arlington,VA.

•June 16, 2005—ICE Unit Cheif Jim

Dinkins spoke at an American Express

Anti-Money Laundering Conference,

New York City.

•June 23, 2005— National Program

Manager Tonya Fox spoke at a National

Parcel Carrier Industry meeting,

Arlington,VA, regarding internet pharmaceutical shipping.

•August 10, 2005—Director of

Investigations Marcy M. Forman will

speak at the Canadian Imperial Bank of

Commerce World Markets Conference,

New York City.

• September 6, 2005—Director of

Investigations Marcy M. Forman will

speak at the 23rd International

Symposium on Economic Crime,

Cambridge, England.

• September 13, 2005—Managers from

the Financial and Trade Investigations

Division will speak at the annual Global

Gaming Exposition (G2E) concerning

money laundering issues in the gaming

industry in Las Vegas, NV.

• September 28, 2005—Director of

Investigations Marcy M. Forman 

will speak at the Institute for

International Research (IIR) AntiMoney Laundering Audit and

Compliance Forum, New York City. $

In an average year, ICE agents:

• Arrest over 25,000

individuals

• Seize over $100 million

in currency and

monetary instruments

• Open over 61,000

investigations

• Seize over 600,000 lbs.

of illicit drugs

• Seize $83 million in

counterfeit and other

prohibited merchandise

?

U.S. Immigration and Customs Enforcement (ICE) is the largest investigative arm of the Department of Homeland Security (DHS).

ICE’s mission is to secure the homeland by enforcing immigration and

customs laws and by protecting U.S. commercial aviation and federal

facilities. Cornerstone, ICE’s comprehensive enforcement initiative

focusing on financial and trade fraud investigations, is a key component of that mission.

In addition to financial and money laundering investigations, Cornerstone targets 

commercial fraud, smuggling and trafficking, export and trade violations and intellectual

property crimes. ICE’s global reach allows the agency to investigate these crimes around

the world.

The Secretary of Homeland Security has determined that the publication of this newsletter

is necessary in the transaction of business required by law of U.S. Immigration and

Customs Enforcement (ICE).

The Official Newsletter of Cornerstone Invitation For Cornerstone

Report Article Submissions

The Cornerstone Report covers a

broad range of topics related to

financial investigations and potential

vulnerabilities in the financial and

trade sectors.

We strive to present clear thinking 

by knowledgeable observers that 

can be read with ease and pleasure

by both professionals and a general

audience, and we’re happy to review

unsolicited submissions for potential

publication in the newsletter.

If you would like to submit an article

for publication or simply find out

more about how you can participate

in the Cornerstone initiative, drop 

us an e-mail at tripwire@dhs.gov.

Did

You 

Know

Cornerstone Web Site Awarded

ICE’s Cornerstone Web site has received the

following awards for excellence:

March, 2005 July, 2005

American Association Masscops

of Webmasters Site of 

Gold Award Excellence Award

Page 6 of 6

Volume II: No. 2

August 2005

Cornerstone Calendar