Publications

The Anti-Money Laundering Regime for the Futures Industry

March 21, 2007
The Review of Securities & Commodities Regulation

Commodities firms have been exploited by money launderers as far back as the mid-80s, when the infamous "Pizza Connection" case revealed that millions of dollars that were the proceeds of the heroin trade were being laundered through U.S. commodities accounts. Various elements of organized crime used pizza parlors throughout the country to distribute heroin smuggled into the United States and to launder the cash proceeds. Cash from the trade was transported out of the U.S. by private jet to Bermuda or transferred through investment houses and banks in New York City, to Italy and Switzerland by couriers. The heroin network laundered over $25 million between October 1980 and September 1982, nearly $13 million of which was deposited into commodity futures accounts. While the brokerage houses that received the deposits were not accused of any crime, the case was just one of many signs that money launderers had become more sophisticated in exploiting the U.S. financial system, and regulators and law enforcement took note. The PATRIOT Act was targeted at the growing trend of money launderers and terrorist financiers to broaden placement of illicit funds beyond banks to other financial institutions, including securities broker-dealers and commodities firms.