ICE Expands Financial Investigations to

Combat Growing Money Laundering Threats

I

CE’s innovative efforts and 

growing commitment to combat

money laundering threats were

highlighted at a Washington, D.C.

ceremony January 11 where

Assistant Secretary Julie Myers

participated in the unveiling of the

first national Money Laundering

Threat Assessment.

Since ICE was created in 2003, the

number of arrests resulting from

ICE financial investigations has

increased from 1,224 in FY03 to

1,567 in FY05. The number of

indictments has increased from 865

to 932, and the number of convictions has increased from 703 to

823. In total, ICE financial investigations have resulted in the seizure of

more than $477 million over the

past three fiscal years.

The increases stem, in part, from the

expansion of ICE’s financial authorities to address human smuggling

and other immigration violations.

ICE agents routinely include financial

components to most types of criminal investigations, including narcotics smuggling and trafficking,

alien smuggling and human trafficking, weapons smuggling, export

enforcement, commercial trade

fraud, intellectual property rights

(IPR) enforcement, cyber crimes,

immigration document and benefit

fraud and human rights violations.

Prior to the creation of ICE, there

was no systemic U.S. effort to target

the financial infrastructure of human

smuggling and trafficking organizations. Today, ICE is combining its

financial and immigration authorities in a coordinated campaign

against these groups.The amount of

assets seized by ICE in these cases has

jumped from almost nothing in

FY03 to $34 million in FY05 and

$22 million during the first three

quarters of FY06.

ICE has achieved success in its antimoney laundering efforts by using

an approach that focuses on the

underlying financial systems most

vulnerable to exploitation.These 

systems are all identified in Money

Laundering Threat Assessment.

Continued on page 2

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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.

Newark ICE Agents Seize 

$5.7 Million, Luxury Vehicles 

in Massive Benefits Fraud Case . . . . 3

Congressional Testimony from 

Kevin Delli-Colli Regarding 

“CTR Utility” . . . . . . . . . . . . . . . . . . . . 4

ICE Dismantles Major Narco-Money

Laundering Group in Puerto Rico . . . 5

Man Pleads Guilty to 

Operating Unlicensed Money

Transmitting Business . . . . . . . . . . . 6

Volume III: No. 1 • September 2006

ICE played a key role in the first national Money Laundering Threat Assesment.
ICE Fights Growing Threats

Continued from page 1

The following are

examples of how ICE

is addressing some

of these threats.

Money Services Businesses

For decades, money service businesses (including money transmitters

and hawalas) have proven vulnerable

to criminal exploitation.The USA

PATRIOT Act of 2001 enhanced 

ICE’s ability to combat the international movement of illicit funds

through these businesses by amending federal statutes making it a crime

to operate an unlicensed money

service business under 18 USC

1960, prohibition of unlicensed

money transmitting businesses.

Since the enactment of USA 

PATRIOT Act, ICE agents have used

this statute to aggressively target

unlicensed money transmittal businesses and underground hawalas

nationwide because of the substantial vulnerabilities they pose.These

investigative efforts have resulted in

142 criminal indictments and the

arrest of more than 155 persons, as

well as the seizure of more than

$25 million in illicit profits.

Trade-Based Money Laundering

Trade-based money laundering

involves several schemes that enable

dirty cash to be separated from the

crime early in the money laundering process.The most common

trade-based scheme in the Western

Hemisphere is the Black Market

Peso Exchange (BMPE), in which

Colombian drug traffickers swap

illicit dollars in the United States for

clean pesos in Colombia.

ICE has created a Trade Transparency

Unit (TTU) that employs sophisticated computer systems to analyze

trade data and financial information

to detect anomalies in international

commerce that may be indicative of

money laundering.

ICE helped create the first foreign

TTU in Colombia late last year,

under the auspices of Plan

Colombia. Under this initiative, ICE

detailed agents and provided more

than 200 computers to Colombian

authorities to help them develop a

database for the exchange and analysis of trade data. On March 13,

Assistant Secretary Myers announced

that ICE was teaming up with the

governments of Argentina, Brazil,

and Paraguay to create new TTUs to

combat trade-based money laundering and other financial crimes in

their nations and in the shared triborder area in South America.

Bulk Cash Smuggling

The threat posed by bulk cash smuggling at home and abroad is growing

increasingly acute. DHS, through 

ICE and U.S. Customs and Border

Protection (CBP), plays a leading 

role in combating this threat.

In recent years, ICE and CBP have

launched comprehensive, intelligence-driven operations targeting

organizations involved in smuggling

bulk currency. From FY03 through

FY05, ICE agents have arrested more

than 260 individuals and, together

with CBP officials, have seized more

than $100 million in bulk cash

smuggling cases.

ICE has also been providing bulk

cash smuggling training to U.S. and

foreign law enforcement officers. In

recent years, CBP and ICE have been

sharing intelligence and providing

training to Mexican law enforcement officials to combat the smuggling of currency from Mexico to

other nations.This special training

and intelligence-sharing operation

has helped Mexican authorities

seize more than $40 million in

smuggled currency over the last two

years. ICE is also working with CBP

and the State Department to train

authorities in the Middle East, Asia

and Africa.

Industry Outreach and Partnerships

An effective partnership with the

private sector is critical to ICE’s

efforts in combating financial

crimes.Through its Cornerstone

initiative, ICE is conducting aggressive anti-money laundering training

and outreach with representatives

from the private sector. ICE agents

have delivered more than 2,800

training presentations at home 

and abroad, attended by nearly

50,000 representatives from the

private sector, law enforcement 

and judicial officials. $

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September 2006

•Frequent deposits or third party checks, or

receipt of domestic and/or international wire

transfers that are immediately used to fund bank

drafts of wire transfers to business that have not

logical association with the account holder’s

stated business purpose, i.e., jewelry store

account wiring money to auto parts exporter.

Red Flag Indicator

•Frequent international wire transfers from bank

accounts that appear inconsistent with stated

business. 

•Large (value or volume) of bank drafts, often

issued to the same individual that are routinely

cashed at foreign financial institutions located in

countries of concern. 

Red Flag Indicators
Acitizen of India

living in New

Jersey is in federal

custody and ICE agents have seized

$5,724,592 in a massive immigration benefit fraud investigation.

Narendra Mandalapa has been

charged with fraud and misuse 

of visas, violations of 18 USC,

Section 1546.The charges were

filed in U.S. District Court in

Newark. Mandalapa is in the custody of the U.S. Marshals Service.

The investigation is a product 

of a joint anti-fraud initiative

undertaken by ICE’s Office of

Investigations, U.S. Citizenship 

and Immigration Services (USCIS)

and the Department of Labor’s

Office of the Inspector General.

The investigation began when a

special fraud detection unit of

USCIS uncovered a pattern of 

fraud in petitions for immigration

benefits submitted by Mandalapa

through one of his companies.

USCIS referred the information to

the ICE Benefits Fraud Unit for

analysis. ICE’s subsequent criminal 

investigation resulted in the 

arrest and seizures.

During the investigation, ICE agents

discovered that Mandalapa filed

nearly 1,000 possibly fraudulent

labor-based petitions on behalf of

Indian and Pakistani nationals seeking to enter or remain in the

United States.The petitions were for

skilled computer workers. Both

USCIS and ICE continue to investigate those aliens who received

fraudulent immigration benefits.

Investigators are also working to

determine the number of persons

who fraudulently entered the country and may have received fraudulent labor benefits.

ICE investigators found that two

shell companies in New Jersey

owned by Mandalapa were created

solely for the purpose of filing

fraudulent labor-based petitions 

for foreign workers. During the

investigation, agents armed with

search warrants seized computers

and documents from the corporate

address of Cybersoftec, Inc. Agents

believe that at least $2.1 million

came from fees paid by individuals,

often in the form of international

wire transfers or personal checks,

seeking fraudulent benefits. Since

the accounts were used to hide

those illegal profits, ICE, through

judicial order, seized all money 

in the accounts.The assets seized

come from four bank accounts 

in Edison, N.J., and two brokerage

accounts in New York City. Also

included in the seizures were 

a Mercedes SUV and a Lexus 

sedan with a combined value 

of $100,000. $

•Numerous incoming wire transfers or personal

checks deposited into business accounts with no

apparent legitimate purpose.

•Sudden, unexplained change in banking habits

or activity.

Red Flag Indicators

A Lexus sedan (above) and a Mercedes SUV, with a combined value of $100,000, were

among the seizures in this investigation made by ICE agents.

Newark ICE Agents Seize $5.7 Million, 

Luxury Vehicles in Massive Benefits Fraud Case stoneReport

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September 2006
On April 4,

Kevin 

Delli-Colli,

deputy assistant director of the 

ICE Office of Investigations,

Financial and Trade Investigations

Division, testified before the U.S.

Senate Committee on Banking,

Housing and Urban Affairs in

Washington, D.C. Delli-Colli

discussed how ICE is applying 

its financial investigative authorities,

as well as its unified immigration

and customs authorities to identify,

dismantle and disrupt criminal

enterprises that threaten our

nation’s borders and homeland

security. He noted that among 

the Department of Homeland

Security law enforcement agencies,

ICE has the most expansive investigative authorities and the largest

number of investigators.

A portion of Delli-Colli’s testimony

focused on ICE’s use of one powerful tool in financial investigations:

Bank Secrecy Act data. A portion of

his testimony follows:

Law enforcement uses the entire array 

of Bank Secrecy Act documents in a

variety of ways. ICE has a long history

of collecting, analyzing and utilizing

Bank Secrecy Act data in criminal 

investigations. ICE’s use of currency

transaction report (CTR) data is a 

valuable analytic tool for detecting 

illegal activity, developing leads and 

furthering investigations. 

The so-called “placement” of funds into

the financial system is the most vulnerable stage of the money laundering process

for criminal organizations. Generally,

individuals and businesses conducting

legitimate transactions have

no reason to structure

deposits or withdrawals to

avoid the current $10,000

threshold for the filing of a

CTR. The CTR requirement

leads criminals to deliberately structure deposits into

the banking system in order

to avoid the reporting

requirement in the hopes of

avoiding suspicion and

detection. Because criminals

must structure their illicit

proceeds, they are forced to

make multiple financial

transactions to place the

illicit proceeds into financial institutions. This forces

the criminal organization to

expend additional time and

effort, and it provides law enforcement

with indicators used to 

detect illegal activity. 

In an effort to circumvent the CTR

requirement, international criminal

organizations have employed numerous

“peripheral employees” to “smurf” their

illicit proceeds into financial institutions.

U.S. law enforcement has learned to

exploit the inherent weaknesses created

by this process, as it provides law

enforcement with a greater number 

of targets for interdiction efforts, 

undercover opportunities, and confidential source development. 

In the course of our investigations, 

CTRs are used to establish links between

persons and businesses, to identify 

co-conspirators, potential witnesses, 

and to reveal patterns of illegal activity.

CTR information has been utilized to

meet the probable cause requirement

necessary to obtain search and/or arrest

warrants. CTRs link individuals and

businesses to financial institutions 

and provide this information so the

investigator can utilize the information

for subpoenas. CTRs can also provide

critical information relating to asset

identification. Most importantly, 

as mentioned above, the CTR requirement causes violators to deliberately

structure deposits into the banking 

system, which is a significant red-flag

indicator of criminal activity. To 

illustrate how important CTRs are 

to ICE investigations, ICE special 

agents queried CTR records over

454,000 times just in FY05. ICE 

has many examples of investigations 

that were initiated, enhanced or 

perfected because of access to the Bank

Secrecy Act repertoire of documents.”

A complete copy of Delli-Colli’s 

testimony is available at:

www.ice.gov/pi/news/testimonies/

index.htm $

Congressional Testimony from Kevin Delli-Colli

Regarding “CTR Utility” stoneReport

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Suspicious Activity Reports (SARs) and guidance on their

use are found online at www.fincen.gov.
ICE Dismantles Major Narco-Money Laundering

Group in Puerto Rico

An ICE investigation based 

in San Juan,

Puerto Rico has resulted in the

arrest of eight persons involved 

in a complex drug money 

laundering scheme that covered 

the United States, Europe, the

Caribbean and South and 

Central America.

The eight individuals arrested are

charged with money laundering

(18 USC 1956) for their alleged

membership in several money

laundering and drug trafficking

organizations operating out of

Puerto Rico.The 11-count indictment alleges that the individuals 

are responsible for laundering at

least $17 million through the 

Black Market Peso Exchange 

(BMPE) scheme.

The BMPE is a decades-old money

laundering infrastructure and is

believed to handle billions worth 

of illicit dollars annually. It is

among the primary means by

which Colombian drug cartels 

convert their U.S.-based drug dollars into “clean” pesos they can 

use in Colombia.

The arrests occurred in cities in

Puerto Rico and in New York.

To date, ICE has forfeited 14 

domestic and international bank

accounts and seized more than 

$1.3 million connected to this

organization. Numerous additional

bank accounts are being pursued

for civil forfeiture. $

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Bundles of cash seized in Puerto Rico.

•Payments to vendor made via unrelated 

third parties.

•False Reporting (commodity misclassification,

commodity over-valuation or under-valuation).

•Double-invoicing.

•Carousel Transactions (the repeated 

importation and exportation of the same 

high-value commodity).

•Commodities being traded do not match the

businesses involved.

•Unusual shipping routes or 

transshipment points.

•Packaging inconsistent with commodity 

or shipping method.

Red Flag Indicator

• ICE agents have

made nearly 

3,000 outreach

presentations 

to more than 

57,000 individuals

worldwide. 

• In Fiscal Year 2005,

ICE agents seized

$1.3 billion in illicit

cash and assets.

Did

You

Know?
Man Pleads Guilty to Operating Unlicensed 

Money Transmitting Business

A Hamtramck,

Mich., man

pleaded guilty 

in U.S. District Court in Detroit 

on January 10 to operating an 

unlicensed money transmitting

business (18 USC 1960).

Mohummed Islam Uddin, 39, a

naturalized U.S. citizen from

Bangladesh, operated Ibrahim

Money Exchange, which was

responsible for transmitting about

$3 million to Bangladesh with 

little or no documentation about

the senders or recipients of the

money transfers.

ICE executed a search warrant 

and apprehended Uddin at 

his residence in March 2003.

Evidence seized indicated that

Uddin was preparing to depart 

the U.S. for Bangladesh. Additional

documentary evidence revealed 

a pattern of unusual banking

activity by using seven bank

accounts in support of a money

transmitting business.

Uddin operated a trade-based

scheme to facilitate his illegal

money transmitting business 

in which telephone calling cards

were purchased on behalf of 

a pre-paid phone card merchant 

in Bangladesh.The merchant 

served as Uddin’s distribution 

agent for Ibrahim Money Exchange.

Uddin would purchase the cards

with U.S. currency from a legitimate

and unwitting U.S. communications

corporation on behalf of the

Bangladeshi merchant.The 

merchant would generate sales 

in local currency (takas) from 

the sale of the phone cards.

The ICE investigation uncovered

that once the merchant received 

the takas, he would then distribute

the funds to the ultimate recipients

in Bangladesh on behalf of Ibrahim

Money Exchange. Uddin avoided

paying the fees to convert U.S.

dollars to takas, and was also able 

to avoid conducting suspicious

international wire transfers. $

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September 2006

The Official Newsletter of Cornerstone

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 the DHS has determined that the publication of this

newsletter is necessary in the transaction of business required by law 

of ICE.

stoneReport

TheCorner

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 

cornerstone@dhs.gov.

•Frequent transactions or purchase of negotiable

instruments under $10,000 in order to avoid

filing a Currency Transaction Report (CTR).

•Splitting large currency deposits among several

bank accounts.

•Reluctance or refusal of depositor to provide

indentifying information to bank employees.

•Purchase of any monetary instrument with large

amounts of currency by a non-customer.

•Wire transfers by charitable organizations to

companies located in countries known to be

bank or tax havens.

•Transfer of funds to a commercial account with

no logical relationship or connection to the

sender of the funds.

Red Flag Indicator