Seminar 4
Financial operation of money
laundering
The problem of credit cards and electronic
banking
Judge . PhD
Amjad AL-juhani
The banking and Financial business continues to evolve, both in
terms of the worldwide electronic connection among banks, as well as
the increasing sophistication of banking methods. This is likely to
facilitate a number of matters, among which is money laundering
operations via the international electronic networks. In addition,
globalization facilitates the movement of goods and transpiration of
passengers, resulting in cash amounts which cross the borders,
including money emanating from crime. Although crimes, especially
organized ones, that yield money to be laundered, are less frequent in
the Jordan, due to strict laws and severe punishment’s imposed on
smuggling, distribution and taking of drugs, in addition to the
difficulties faced by criminals to enter the country due to entry visa
requirements, the Central Bank, however, feels that it should extend a
helping hand, within the legal constraints of the Jordan laws, to the
international regulatory authorities that are in charge of combating
money laundering.
The Problem
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The use of credit cards as an alternative for dealing with
paper money raised several problems, especially what
concerns money laundering . It is not possible to track or
detect the trace of financial dealing using these cards,
which makes the prevalent principle in bank dealings
“Know Your Customer” a difficultly applied principle .
In addition to the fact that dealing with these cards
takes place directly between two people, and does not
require an intervention by the financial institution. Also,
these dealings take place smoothly and rapidly, since
they guaranty an immediate transfer of the money from
and into any place in the world, and the principal is
anonymous and without barriers or legal restrictions .

Credit cards have lately become vastly used in
money laundering operations, due to the rapid
development that occurs to facilitate payment
and transfers, such as using the phone and the
internet electronically in banking procedures,
which enable the money launderers to use the
credit card in transferring large sums of money
without fear of having their identity revealed,
especially that this card is easily carried across
the country’s borders, and used internationally,
and it is difficult to detect the source of the
money through it .

One of the most famous of
these
cards
is
The
Commemorative Card due to
its ability to have million of
dollars saved on its own CD,
and
the
possibility
of
electronically
transferring
these monies to another card
bia the phone especially
prepared for this purpose, and
without the intervention of any
bank, i.e. away from any
control or supervision which
paves the way for money
laundering in an accurate
manner, and in a neat process
that is not easily detected or
tracked .
In Terms of the Law

Article Two of the Jordanian Bill on Anti-money
laundering operations defined money as
being:”Every in-kind object or right, whether
physical or moral, movable or immovable,
tangible or intangible, existing in the Kingdom of
outside it, as well as any document or deed
regardless of its form or nature, that ascertains
the ownership of the in-kind object to a person
or attributes the right to him”. Based on this
definition, we see that the Credit Card is covered
by the definition of money under this Bill .

Article Three of the same Bill stipulates the
following :
“Money laundering is considered …
1- Exchanging any illegitimate money or
transferring it, or investing it for the purpose of
concealing its source, or place, or movement or
ownership .
2- Concealing or camouflaging the nature of
any illegitimate money, source, place,
movement or ownership or giving any
misleading information on the matter” .
The Guidelines of the new Anti-Money
Laundering Jordanian Law, and the
Instructions
for
Combating
Money
Laundering issued by the Jordanian Central
Bank for the year 2006, a special item about
electronic
money
laundering
ways.
However, they did not explicitly nor
specifically stipulate the money laundering
ways via credit cards and ways to combat
them .

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The UN Convention for combating the illicit drugs trading
has included references to a group of concepts, terms
and ways relevant to money laundering operations .
Paragraph (R) of Article One hereof stipulates :
“Collected monies mean any monies directly or indirectly
obtained from committing one of the crimes stipulated in
paragraph (A) of article three”.Also, paragraph (T) of
Article One specified what is meant by “monies” as
being:”monies regardless of their kind, whether physical
or non-physical, movable or immovable, tangible or
intangible, and the legal documents and deeds that
prove the ownership of the monies or any right relevant
thereto” .
According to this specification, the credit card is
considered part of these monies .
Ways of Money Laundering
Through Credit Cards

First Way : Using the card in ATM
machines

The client often applies for
subsequent orders to the issuing
bank, to have it issue for him credit
cards for local and international use,
and for his employees,assistants
and members of his family, and for
any other individuals that deal with
him with the collateral of the cash
or in kind deposits of the
company.These cards are used in
the field of money laundering
operations,
whereby
incoming
financial transfers are carried out
electronically , and before they
settle, they are withdrawn also
electronically then collected, and the
client transfers them in large sums
abroad .
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The client cashes the sums through the
card from the ATM machine using his pin
number, then the branch from where it
was cashed or through its systems
requests the transfer of the money to it
from the branch issuing the card. The
latter automatically transfers and deducts
the value from its client’s account who
would have thus evaded the restrictions
imposed on these transfers .
And since the ATM cards enable their
holders to withdraw funds locally and
internationally – throughout 53 countries
in the world – this facilitates for the
money launderers the task of smuggling
the suspicious funds .
The
American
authorities
have
discovered through the reports that the
monies deposited in some of the
American banks are withdrawn via ATM
machines in some drugs producing
countries, and that these processes are

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Second Way : Money
Payment Systems .
Laundering
via
the
This process takes place on three stages :
Stage One : Depositing or Replacing .
Where the suspicious funds are deposited in a bank
whether local or foreign, and credit cards are obtained
with a ceiling equaling the deposited balance .
Stage Two : Fraud and Camouflage
These cards are used later on in purchasing physical
assets such as precious minerals and expensive art
paintings . The purchasing process is usually direct or via
others by handing him the credit card, or via the internet
while resorting to using the protection and coding
systems to guaranty the confidentiality of the operations
that take place through it .
Stage Three : Incorporating and Declaring
Where the physical assets are sold in cash or against a
check or a financial remittance drawn on another bank .
Third

Way : via the internet.
The varied and developed use of that net provides several
electronic banking activities such as hypothetical banks or internet
banks that are not in reality banks of an ordinary kind, but a
mediator for conducting some financial and selling operations .
This way allows the money launderers to transfer or remit huge
sums of monies rapidly and safely, since the dealers are
anonymous. They are also not subject to laws nor control
instructions, and they take place across international frontiers
without control nor the possibility of tracking them . These
transfers via the internet can be completed using the credit card,
since the money launderers can in this way transfer their balances
several times a day in more than a bank in the world.
Money Laundering via Forged Credit
Cards
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General Glimpse on Cards Forgery
Forgery is considered in general a criminal way that was
established since a long time and that is limited to a very
limited number of people that have the necessary skills and
efficiency to copy or extract original valuable documents .
In our era, and with the technological development, the
criminal does not only have the ability, but has also all the
tools to produce copies with good specifications. Forgery
has developed into a very organized trade of a wide scope,
which revenues are estimated for billions of dollars for the
criminal organizations .
(Continuation)
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First : The Falsified Card

First way :

To falsify or
re-carve the embossed details
on the card or re-type the
information on the magnetic
tape on the back of the card .
The Second Way : TO
retype the details of
the new account on
the magnetic tape .
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ٍSecond : The forged cards made by the criminals.
The criminal needs to effect the forgery the information about the account,
the thrown selling slips or the merchant’s copy thereof, or the typing of
the information from the card or from the selling slip .However, with the
use of anti-forgery measures on the magnetic tape, the use of information
on the face of the card has become of less value currently, and it is
restricted to the possibility of using the card in a fraudulent way .
Nowadays, the valuable information of the account are obtained through a
more complicated way called “reproduction” . Reproduction requires the
typing of the magnetic tape and storing it on the computer, and then
typing the information in embossed letters on a forged, missing or stolen
card . This way, the original information are obtained including the
security information, and this is how the original magnetic tape is
reproduced . In spite of that, the information relevant to the account must
be typed on the forged card , stolen or missing original card .
Forms of Forged Cards

The used V letter is
not the V security
letter
The identification number printed above or under
the four digits of the account number is not
present .
ٍEven though the spectrogram looks like a bird flying, but it
is not the picture of the dove that Visa uses, it is flat and not
of the same color, and does not give the three dimensional
movement that appear in the original spectrogram .
Typing around the visa logo is not the accurate typing
required according to the visa measures . The thin line
around the logo which needs a magnifying glass to read it
should show the first four numbers of the account number,
in addition to other security information .
Notice that the signature plate in both cards is not in its
right place, and this led to the appearance of a white line on
the lower part of the plate on one of the two cards and to
the right of the other card .
On the signature plate, the word visa
was placed in the wrong place. It should
be inclined with a 45 degrees angle, and
should be repeated in colors . Notice
that on one of the signature plates, the
word visa was typed once in a horizontal
manner .
Notice that the word “bank” that
appears on the card of the Hang Sing
Bank Ltd. is wrongly written as follows
“back” .
The picture of the spectroscopic dove was replaced
by the picture of a full face, and there is no
spectrogram at all . The thieves apparently try to
give an impression that this is an original card, and
exert pressure on the merchant to accept it, as if it
was presented by the legitimate holder of the card.
The Bank’s identification number is different from the
first four digits of the account number that are printed
in embossed letters.
Even though the spectrogram seems to be the picture of
a bird flying, but not like the dove that Visa uses. It is
flat and was printed on a metal or golden chip to
represent a spectrogram. The criminals have used on
some cards reflecting metal chips on mosaic drawings in
an attempt to imitate the spectrogram .

The account number apparent on the invoice is different from the
account number that is printed on the card, which indicates that
the magnetic tape does not belong to this card .

This spectrogram shows the face and head of
the Statute of Liberty on the forged card, in
spite of the fact that the visa logo is a flying
dove .
ٍAll these cards are forged and not issued by
any company .
The most famous examples on money laundering
operations using credit cards

1- What happened in the US where the money
launderers managed to install ATMs machines ,
through which they could to detect and know
the pin numbers of the clients using them, then
they forged the cards and used them in the
withdrawal and deposit operations, through real
machines. Thus, large amounts of money were
laundered in this manner until they were
discovered .

2- One of the drug dealers was discovered doing money
laundering of his funds by opening accounts for cards in
several banks, and depositing financial sums on
installments until the remittances appear ordinary later on.
Then, he travels to another country in which one of his
partners that owns a jewelry shop uses it as a façade for
misleading and fraudulent purposes. He pays him using the
cards for purchasing jewelry with high prices . These are
fictitious operations until his partner could collect these
sums from the banks that issued the cards, so that they can
be used later on for purchasing narcotics or paid against
drugs that were actually delivered .

3- In Britain, the British police managed in July
1995 to capture the largest gang specialized in
forging credit cards since the history of Britain.
The police has found (80) thousand forged cards ,
and managed to arrest members of the gang that
intended to withdraw one hundred million
Sterling Pounds via this card from the account of
actual clients of British Banks, as revealed by the
investigations, and to remit these funds to other
banks outside Britain to be able to give them a
legitimate capacity and return these funds to the
country another time in a different and legitimate
way .

4- Some illegitimate organizations use
credit cards in illicit trade across the
internet, and launder monies obtained
from dealing in drugs, human organs,
international prostitution and children
selling, by depositing funds withdrawn in
illegal ways in bank accounts, then they
remit them among several branches until
the connection with the illegal issuer is
severed, and they use them after for
settling payments and can withdraw from
them using the card .
Recommendations for combating money
laundering via credit cards
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Jordan considers it extremely important to ensure that
monies earned through illegal activities abroad are not
run through the financial system in the country for the
benefit of those criminals, irrespective of where the
crime was committed.
For stopping Possible Money Laundering via Electronic
Banking Services :
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The bank/financial institution, which provides to its customers
electronic transfer systems, should connect a programme on such
systems to flag/ highlight all unusual transactions, so as to enable the
concerned financial institution to report such transactions.
When an account receives numerous small fund transfers
electronically, and then the account holder carries out large transfers in
the same way to another country.
Customers who make regular and large payments using different
means, including electronic payments, that cannot be clearly identified
as bonafide transactions, or receive regular and large payments from
countries which are identified by the Central Bank as large drug
markets.
- Transfers from abroad, which are received in the name of a customer
of the bank of any financial institution electronically, and then are
transferred abroad in the same way without passing through an account
(i.e, they are not deposited then withdrawn from the account), are not
allowed. That is, these should appear in the account statement.
Thanks