The Bank Within The Bank
The bank within the bank is a method used by the launderer who has both the connection and finance to institute all of its aspects which compose the complex process. It is a rather concrete method, and has been done by many in the past. This is more complex, and can best be explained with an example.
Let’s assume that I find a huge monetary market in making guaranteed loans to a developing countries. I also have employment at a bank, which is necessary in establishing your bank within a bank. Now, I have to find a company that wants me to make a loan to the developing country so that the people in the country can buy some of their product (assume wheat).
The United States is often very happy to find funding going to developing countries (such as the situation currently with Iraqi) and someone like the CCC (Commodity Credit Corporation) will guarantee these loans. This means that there will be some rate, say 89 cents to the dollar, if the country which is borrowing the money, defaults on the loan. Now, I can make a huge credit-line to the country that is CCC-backed, even if it isn’t approved by the head office. But, this obviously causes issues because if no approval for such a loan is given, there can be huge internal financial crises. Hence, the loan has to be made to never have been extended on the books. There just has to be a constant flow to keep the records off the books by yourself, the person who is extending the loan. By calling them agricultural loans we have gotten the CCC backed guarantee. As of now, it is not clear what this has to do with laundering money.
Mainly, the loan proceeds can be laundered exactly like money. The goods that the loans are bought with can be traded to buy weapons, drugs, or other high profit investments. This seems rudimentary, and easy to get caught doing. However, this is not the case if one goes about it using current electronic techniques, by basically increasing the amount of banks used. A whole network of banks to launder money in such a way that the banks concerned wouldn’t even know what was going on. By having a network established, everything will be concealed.