It’s common to scene in a number of movies for the ransom money/illegal arms payment to be made by wire transfer. There might be an accompanying animation showing the money somehow instantly being sent through thousands of additional wire transfers to other accounts the bad guys control and “it’s gone”.
This is bullshit, right? Let’s suppose the bad guys hold a bunch of people hostage, and they get the authorities to pay 1 billion dollars (pinky in mouth) in ransom money. That goes to, I dunno, some bank in the Grand Caymans.
Bad guys let the hostages go and escape apprehension.
Can’t the rightful authorities just get some kind of international warrant and go to the bank the money was sent to? Sure, the bad guys transferred it, but they can just get the records of where those transfers went. And then continue following the trail until they find the money, whether there were 5 transfers or 5000. Once they find the money, freeze the accounts.
The bad guys could have an army of “cashers” and use the billion dollars to fund some accounts linked to ATM cards, but they’d never be able to withdraw a whole billion dollars before the authorities found some way to freeze all the accounts.
that works only if its in the us … other wise you have to get international warrants if that’s even possible and all that would prove was the money went through there and it ended up with someplace that didn’t cooperate with us authorities hence the cayman islands Vanuatu ect if they were fast enough
if t goes through Russia china or red asia you wont find it until it moved somewhere else …
Nothing tangible is transferred, it’s just an electronic book entry. If you assume the cooperation of the financial authorities and banks involved, I don’t see what would prevent everyone just agreeing that the chain of book entries associated with the series of transfers are simply void.
Even if there’s an uncooperative bank located in a hostile nation involved somewhere in the chain of transfers, I can’t see how that makes any difference. Let’s say these are N Korean terrorists, and the nominal destination is a bank in N Korea. All that really means is that there is a book entry crediting the N Korean bank’s USD account at a proper bank somewhere in a (presumably cooperative) jurisdiction.
Even if there were no international cooperation, if the money originates from the US, and the US financial authorities unilaterally deem the wire transfer out of the US void, what recourse does a non-US receiving bank have to restore an electronic book entry? Invade? I mean, ok, under some circumstances unilateral action like this would have implications for the credibility and stability of the international financial system, sure. But if it was made under terrorist duress, it seems to me that it’s obviously a fraudulent transfer, and if another nation disputed that you’d simply tell them to go fuck themselves.
The comments by Nightshadea were accurate maybe 10 or 15 years ago, but nowadays this kind of thing would be impossible, governments have really cracked down on this hard.
Banks worldwide are now very closely scrutinized by governments for legal compliance especially as it pertains to international movement of funds by tax evaders or organized crime (money laundering, drugs, terrorism etc.) You might be able to send a few thousand, but when you get into “millions” (pinky in mouth), let alone “one billion dollars” there are many many laws & regulations that must be complied with first. For example proving the funds were legally generated, taxes have been paid, the transfer complies with the laws of the courtly they’re leaving as well as the country they’re going to etc)
The company my wife works for (in the finance dept) does a lot of international transactions and they have lists of banks world-wide they are not allowed to accept money from or transfer money to. They flag it internally, but the large international bank they deal with also doubles checks. As part of their annual audit they are required to show their compliance with these banking laws (i.e.: “We’ve done no transactions with internationally red-flagged banks”.) Both her company and their bank are liable to be fined if they don’t comply.
She showed me a list recently that was generated by Interpol and based on the input of various governments around the world. Countries also have their own lists.
Sure, but when you say there’s a big difference in compliance standards between now and a couple of decades ago, you’re talking about routine transactions.
That’s not the scenario the OP is describing. It was never possible to make a large sum of money (paid under duress) vanish quickly and irrevocably by a series of wire transfers in the way portrayed in movies. You have to take a step back and realize that if it’s just a series of electronic book entries, and nothing tangible (like a pile of gold) was paid out, then if the financial authorities and banks concerned deem retrospectively that it didn’t happen, then it just didn’t happen.
The only question is, if money left the US and a chain through multiple countries is involved, and government authorities disagree, then how is that resolved? It would have to be through the courts, it’s not as though a foreign government could attempt to seize US assets and expect a good outcome. What are the chances that (say) a Russian bank would prevail in attempting to enforce a payment that US government authorities have deemed void? Remember that we’re talking about a terrorist ransom that was clearly paid under extreme duress here. I think the chance of enforcing payment is zero.
For the specific transfer to be worthless, those specific bits of electronic currency would need to be distinguishable from every other bit of currency which exists as electronic information in the same bank holding the final-destination accounts. Since there is no way for merchants to identify the specific bits being paid to them with a Visa card from Back Of Nowhere Bank from every other bit being paid with a Visa card from Back Of Nowhere Bank, the original issuing bank saying “that money ain’t real!” doesn’t do jackshit. You’d have to get the whole Back Of Nowhere Bank invalidated. Good luck with that.
That door seems to have been closed but another one opened; Today, ransomers would use Bitcoin, Ethereum, Monero or other cryptocurrencies although I don’t think they’re equally anonymous.
Erm, I’m not quite sure where to begin with this. Suffice to say your bank account is not (yet) a bucket holding anonymous “bits of electronic currency”.
A bank account is a series of specific debit and credit entries, adding to your current balance. Suppose you hold Donald Trump’s toupee hostage and demand a wire transfer of 10 million dollars. A wire transfer simply means there is a credit entry to your account and a matching debit entry in Donald’s account. (The transfer may pass through a settlement system that nets payments for each bank, but that doesn’t mean that the accounting record of the specific credit and debit entries is lost.)
When the FBI hostage rescue team recovers the toupee, if you haven’t managed to extract anything tangible from the account (a suitcase full of banknotes), then - with the appropriate legal authority - the credit and debit entries can simply be reversed to void the transfer.
Bitcoin obviously doesn’t work this way, but that’s a completely different conversation.
While international Anti-Money Laundering provisions have changed the landscape for this kind of thing and made it far more difficult, it is by no means impossible.
Take for instance the fraud last year against a Bangladeshi bank, who lost $81M (Could easily have been far more) the money has been lost after being washed through a Phillipino casino.
I’ve seen one estimate from PWC that the global money laundering market is in excess of $2Trillion per annum. So clearly the authorities efforts are a long way from strangling the activity.
There are transfers that are guaranteed by the participating banks. Just as a “bank cheque” is a cheque drawn on a bank, not on your account, and a “bank note” is a note drawn on (the federal reserve bank, or some similar bank), a wire transfer was something that could be reversed, but not nullified. If the money was gone, it was gone.
The modern telegraphic transfer is still irrevocable in some countries: money sent to a Western Union branch and withdrawn in cash is gone. For larger sums, a SWIFT transfer is relevant: SWIFT terminals are kept in locked rooms with limited access because the bank can quickly and irrevocably loose all it’s money if that security is breached. Traditionally SWIFT terminals were only held by banks who understood that, but with the expansion of the system there have been recent examples of major losses.
To prevent this kind of criminal activity banks are required to have processes on top. The underlying processes do not permit cancellation.
@Greedysmurf - You’re absolutely correct, money laundering does happen quite often and is hard to stop, however I was thinking more of the scenario the OP describes in which someone using an accredited international bank and tries to transfer millions or billions to another bank and then to multiple banks in a chain of transactions.
First, transferring that amount alone would send red flags requiring automatic compliance checks (for both the sender and receiver banks and their respective clients) and secondly if the final institution in the chain was not accredited as compliant, the final transfer could not happen.
A kidnapper could follow the compliance rules and set up a company / business or individual who had a proper history with the bank, but that is very very hard these days.
One simply does not walk into Credit Suisse and say “I’d like to open an account.” and have $1 Billion transferred in and then withdrawn the next day.
Which is why the Bangladesh hackers used the SWIFT inter-bank transfer mechanism, and successfully got millions of dollars to disappear, by exploiting lax banking processes, greed (what bank operator wouldn’t like to have a new customer who is going to move large sums overnight to currency exchanges and back through different currency accounts, and ensure that the first transaction is expedited on the promise of many future such transactions), and also using clever timing (local holidays) to interfere with recovery efforts.
How does banking work, nationally and internationally?
So, is the balance (in US$ I presume) in each bank an entry in the US central bank? Or is it a matter that each bank keeps track of what they “own” in virtual cash, and ensure they stay solvent?
If the former, then reversing a transaction is easy. The federal government says it didn’t happen, and bank A keeps its $81M and bank B has to adjust to the fact that it thought it got $81M and it didn’t, so sorry, it’s up to them to correct any subsequent transactions to customers.
If it’s just a matter of every bank keeping a “running total” of what it should have, making required reports to the feds, etc. - Then reversing a transaction is a breakdown of the trust relationship that keeps the economy going. This is what happened in 2008 - I pay my VISA bill through A, and A should transfer the money to B who then pass it on to the credit card agency. If B doesn’t believe my bank has the actual assets to pay, then they refuse to believe B can pay, they will not just happily forward my payment to the CC; they will ask A “show me the money!” Similarly if A can say “that $81M? I was just kidding, I did not really transfer it…” - chaos will ensue, no matter what the legal basis for the reversal.
(I don’t think banks work this way, because it would be too easy for a bank to make up money and go heavily “overdrawn”, especially foreign banks. Someone must be watching them. )
I am certainly no banking expert and I don’t understand the system at all. I suspect that is by design-the details aren’t discussed among outsiders precisely to maintain a bit of security.
However, it seems to me that the OP is postulating a straw man. If the ransom goes in one lump sum to an account where it is unusual, then on to another account where it is unusual, etc. then yes it can be tracked and in principle reversed. So that isn’t how a successful transfer would work. In reality, the successful criminal/hostile government (N.Korea is considered a likely villain in the Bangladesh SWIFT attack) will move the money into a series of accounts where similar transactions happen all the time. Say, a large casino that processes large cash transactions. Then a couple of trading companies-I am thinking currency traders-who routinely handle large transactions. You would quickly build a sufficiently convoluted trail that no one would cooperate in reversing it because any one of them might be the one left holding the bag.
So I think the OP is correct-his simple minded method would be reversible. So it wouldn’t (successfully) happen. But it has been shown that such transfers, done with planning and an understanding of the whole world, do work.
Unless you think american financial entities hold no overseas liquid assets, a foreign concerned sovereign in a case of your idea of the Americans taking an illegal non procedural annulation of a transaction can seize some counter balancing american assets transiting, if the usa authorities undertook unilateral non legal recourse actions. Reversal of transactions is possible, but it follows procedure to ensure the overall trust in the system. US authorities do not just get to act like cowboys because America… and they do not as they know better of course
the answer in any case is seen in the recent Bangladesh incident described in detail in this wiki leak where the transfers exploited specific windows of differing national holidays and some specific windows of poor enforcement. Even then they did not succeed with the entire transfered amounts.
the crediting by international transfer to accounts in a bank is not instantaneous (or it is not suppsoed to be under normal circumstances to manage for errors etc), as the history of the 2016 incident illustrates.
