The Yemen Civil War, Russian Oil and Corruption Within the US Government

This story may sound like something from a bad Hollywood blockbuster, involving corrupt lobbyists and international schemes, but it is real and happened just a few years ago. The men at the centre of this debacle are Barry Bennet and Douglas Watts. Between them, they possess decades of lobbying experience and have connections to numerous politicians and governmental organizations. Watts is a former Presidential consultant and the founder of his own PR company. Bennet oversees two lobbying firms in Washington D.C., Avenue Strategies and Avenue Strategies Global. Additionally, he was a key advisor to Donald Trump during his presidential campaigns. These two men played a crucial role in a plot to undermine a US alliance with other nations. When lobbyists and advisors take on work for foreign nations, they are required to register under FARA, the Foreign Agents Registration Act. This organization, established in the 1930s, aims to increase transparency in political decision-making, making it more difficult for foreign nations to influence US policy. However, Bennet and Watts did not make such disclosures.

Lobbyists cannot make a difference without a politician to influence, and in this case, it was Kansas Governor Jeff Coyler. With our American actors established, a key player is currently missing in this story: What foreign government is paying our Foreign Agent Lobbyists? It was Qatar, specifically the money came from the Qatari Embassy in the United States.

The corruption issue began in 2017 when Yemen was in crisis. The country was embroiled in a brutal civil war between the Yemeni government and the Houthi Movement. The Houthis are an anti-West terror organization seeking to sever Yemen's ties with the USA, Israel, and any other nation aligned with the West. The group was galvanized by US activities in the Middle East, specifically its invasion of Iraq in 2003. Since the 1990s, the Houthi Movement has been active in perpetrating attacks in Yemen. In the 2010s, these attacks escalated to the point where the Houthis had occupied a large section of Yemen.

While Western nations opposed the Houthis, in the Islamic realm, opinions were divided. Conservative nations like Iran and Syria, which had similar feelings toward the West and Israel, supported the Houthis. On the other hand, nations with allegiances to the West, such as the United Arab Emirates and Saudi Arabia, stood in staunch opposition to the Houthis. This divide turned the Yemen Civil War into a proxy war among Muslim states, with each side receiving financial support from sympathetic nations. Saudi Arabia led efforts to ensure the Yemeni national Government remained supported and internationally recognized. Qatar was one such nation in this council. However, relations between Qatar and Saudi Arabia were far from perfect, as they were political rivals. They had backed differing sides in the Second Libyan Civil War in 2014, and the Syrian Civil War, and had other disputes, including Qatari-owned media company Al Jazeera's criticism of Saudi Arabia. Al-Jazeera would be a useful asset for the Qatari Government, especially concerning the Houthi Movement. Qatar used its media resources to shift the perception of the Houthis from a terror group to that of a freedom fighter organization. Such portrayals, coupled with continued financial assistance by Qatar, angered Saudi Arabia and other council members. In June 2017, Saudi Arabia and all other council members cut diplomatic ties with Qatar, including restricting their air and sea space to Qatari vehicles.

Saudi Arabian media organizations began accusing Qatar of funding terror organizations and openly criticizing the United States. Such negative attention by its allies in the Middle East made the US focus on Qatar. Fearing repercussions for its expulsion from the anti-Houthi coalition, Qatar decided to pay US lobbyists to help them from within.

Between 2017 and 2018, Qatar paid Avenue Strategies, owned by Bennet, $3 million, along with plans to improve relations between the US and Qatar. Subsequent payments of $250,000 were also made to Bennet's companies by the Qataris. Funds from the initial payments were used by Bennet and Watts to establish an organization known as 'Yemen CrisisWatch.' The sole purpose of this organization was to undermine Saudi Arabia and the UAE by strengthening ties with the US. Around this time, then-Lieutenant Governor Colyer was briefing fellow congressmen on the security crisis in Yemen, displaying the logos and graphics of Yemen CrisisWatch. Colyer, preparing to run for the Governorship of Kansas in 2018 and accepting donations, received $4000 from Bennet's Avenue Strategies on December 18th, 2017, toward his campaign fund. The use of such logos in his presentation implies that he was in contact with Bennet and Watts long before those donations were made. It was clear that Yemen CrisisWatch's main purpose was to reach out to as many influential individuals as possible. Californian Televangelist Robert Schuller was also contacted by the organization, writing two op-ed pieces echoing the group's message.

He wrote:

"I was recently asked to become ambassador to Yemen CrisisWatch, a new organisation that seeks to raise awareness about the country. I agreed without hesitation. As a follower of Jesus, I have preached throughout my career- on television, on radio, and at churches- that we must help others who languish in fear and hopelessness".

This Has Happened Before

This would not be the only time Avenue Strategies, led by Bennet, would be linked to not registering as a foreign agent. This story had occurred before, but the men involved had managed to avoid prosecution. In 2017, Corey Lewandowski, another founder of Avenue Strategies and Trump's former campaign manager, lobbied for an American branch of a Venezuelan oil company called Citgo. Citgo paid Avenue Strategies $25,000 a month to establish connections with Trump's closest confidants and to dissuade Congress from imposing economic sanctions on Venezuela. At that time, Venezuela, a Russian ally, was in a fierce diplomatic dispute with the US. Additionally, Venezuela faced intense media scrutiny for its role in state-backed drug and human trafficking. Rumours circulated that Russia was in talks to purchase Citgo from its parent company in Venezuela. Citgo was desperate to cleanse its reputation among US government officials, and Avenue Strategies aimed to accomplish this. Once again, these connections weren't formally disclosed to the relevant authorities. Barry Bennet was also involved in this scandal when he stated that paperwork about the Citgo deal would be submitted on Wednesday, February 22nd.

When these documents weren't submitted, eyebrows were raised. Meanwhile, Trump promised to eliminate the influence of special interest groups in D.C., but his closest advisors were illegally lobbying. The situation brought nothing but embarrassment to Trump, Bennet, and Lewandowski. Soon, formal complaints were made to the Department of Justice by watchdog groups. Further investigation found that Bennet and Lewandowski used their Citgo lobbying money to establish another organization called Washington East West Political Strategies. Through this new organization, documents were discovered showing that they offered clients meetings with President Donald Trump and Vice President Mike Pence. These documents are believed to have been used when reaching out to potential clients in Eastern Europe. The situation worsened when it was found that Citgo had donated $500,000 to Donald Trump's inaugural committee, despite never making a political donation before. Bennet denied all these claims, stating that, although Avenue Strategies had stakes in Washington East West Political Strategies, they were not aware of these documents. He blamed the third owner of Washington East West, an Azerbaijani oil tycoon and businessman, who Bennet says created and distributed the documents without his knowledge. When pressed about Washington East West and these business dealings, Bennet announced that the company would be dissolved. The only issue was that other Avenue Strategy-affiliated lobbying companies operated in other areas such as the Middle East. Bennet did not comment on whether these would be shut down.

Concerning the business dealings with Citgo, further investigations found that the Russian government-owned oil company Rosneft was on the brink of taking over Citgo, causing concern among many Congress members. Citgo had three refineries in the US, as well as three major pipelines. Rosneft had given a loan to Citgo's parent company, the Venezuelan government-owned oil company PDVSA. As collateral, PDVSA had offered 49.9% of their company stock. Venezuela was experiencing one of its worst economic crises, and experts predicted they would not be able to pay it back in time. A bipartisan group of Senators wrote a letter to Trump's Secretary of the Treasury, Steve Mnuchin, expressing their fears about a Russian government-owned company having so much power over the US's energy production. The controversy reached a fevered pitch, and everyone was looking at Avenue Strategies, whose initial lack of paperwork filing had uncovered Citgo's potential buyout by Russia and the extremely close links between foreign agents and the President.

Bennet had previously stated that he would not lobby against US interests; clearly, he did not mean that. He stated that if Rosneft acquired Citgo, then Avenue Strategies would resign from the contract. He also doubled down, stating that Citgo was based in Texas and was an American company, despite being technically owned by a foreign government. Bennet shirked responsibility by stating that Avenue Strategies was subcontracted by VantageKnight, a Democrat-linked lobbying company. Documents revealed that VantageKnight had contracted Avenue Strategies for another lobbying job. In addition, VantageKnight was paid $270,000 to lobby for Citgo for the first three months of 2017, focusing on voiding possible sanctions and restrictions on US energy policy. So after all of this, where did it leave Bennet, Lewandowski, and Avenue Strategies? Well, the smoke kicked up by this whole controversy seemingly allowed them to avoid any punishment. Trump's presidency was already marred by talks of Russian collusion, and this foreign agent issue didn't help, but Avenue Strategies saw no major setback or punishment for their role in lobbying for other countries. In fact, Lewandowski received a major promotion to the advisory board of the Pentagon.

They got caught

The tactic of using lobbying money to establish a new organization to work through is clearly a favourite of Avenue Strategies. Yemen CrisisWatch and East West Washington Political Strategies are just two such organizations. This time, Avenue Strategies wasn't able to escape punishment for being undisclosed foreign agents. Soon after Yemen CrisisWatch began to ramp up its operations, the Department of Justice began to investigate. Promptly, the Yemen CrisisWatch Twitter and website were deleted. Bennet and Watts were brought in for deposition by the Department of Justice and FBI. Both men entered Deferred Prosecution Agreements. For Bennet, he consented to two charges of falsifying, concealing, and covering up material facts from the FARA Unit. In addition, he was charged with making false statements and material omissions in FARA filings. For this, Bennet will face a fine of $100,000. Watts consented to three counts of acting as an agent of a foreign principal without registering under FARA and making false statements to the FBI. He would be fined $25,000. The punishments for these men are measly. They openly accepted hundreds of thousands of dollars, sometimes millions, just to be fined nothing close to that. This will do nothing to discourage or prevent this in the future. The Department of Justice had failed once to punish these same men for doing this, and then when they did, they gave them punishments so weak that it likely wouldn't change anything.

Below is the Department of Justice's description of events. They kept the countries and companies involved anonymous. In this version, I will replace the pseudonyms with the actual names of the actors involved.

In 2017, Bennett signed a contract for Avenue Strategies to perform lobbying services for the embassy of Qatar. As part of his lobbying strategy on behalf of Qatar and for and in the interest of Qatar, Bennett covertly operated Yemen CrisisWatch, a Limited Liability Company (LLC) founded by Watts at Bennett’s direction. As directed by Bennett and managed by Watts, Yemen CrisisWatch ran a public relations campaign designed to cast one of Qatar’s rivals, Saudi Arabia, in a negative light for its conduct, and thereby to improve Qatar’s standing with the U.S. government relative to this rival.

 Qatar paid Bennett’s Avenue Strategies $2.1 million between September 2017 and December 2017 for lobbying services, and approximately 27% of those funds (i.e., approximately $773,000) financed the operations of Yemen CrisisWatch. In return, Yemen CrisisWatch conducted a social media campaign (the Yemen CrisisWatch Twitter), published opinion articles in major newspapers (The Televangelist Op-Ed), produced a documentary that was distributed through a national television network, sent direct mailings to American citizens, and lobbied Congress (Through Governor Colyer) and former President Trump.

Yemen CrisisWatch took credit for directing 3,000 phone calls to members of the U.S. House of Representatives encouraging them to discontinue U.S. involvement in a coalition of  Qatar’s rivals. The House eventually voted overwhelmingly to “deauthorize” U.S. involvement with the coalition.

            Neither Watts nor Yemen CrisisWatch was registered under FARA.

What is Operation Prosperity Guardian? (The Red Sea Crisis & US strikes in Yemen)

In the sphere of counterterrorism, it has already been a monumental year in 2024. A coalition of forces, led by the US, has launched several attacks on Houthi positions in Yemen. The ongoing operation, called Operation Prosperity Guardian, is a military response to the unfolding Red Sea Crisis. In this article, the goals and aims of the operation will be examined, as well as the crisis that prompted the coalition to form.

The Red Sea Crisis

The Red Sea and Suez Canal are arguably the most important shipping routes in the world. Recent events have forced global trade to use the Suez Canal over other routes, especially for trade between Asia, Europe, and the US. The Suez Canal is faster than circumnavigating the continent of Africa around the Cape of Good Hope, which adds an extra two weeks to sea voyages. Recent droughts in Panama have hindered the capabilities of the Panama Canal, forcing traders to use the Suez Canal. However, the Suez Canal is in a geopolitical hotbed of unrest, notably Yemen, a country whose coast sits on the Red Sea.

Yemen has been facing unrest from the Houthi Movement since the 1980s. The Houthis formed out of staunch opposition to Saudi Arabia's influence over Yemen and were galvanized by the US Invasion of Iraq in the early 1990s. The group is staunchly against western powers and their Asian allies interfering in Middle Eastern matters. The Houthi Movement comprises nearly 20,000 fighters who have been carrying out attacks across Yemen, gaining control of a western section of the country.

The Houthis divide Muslim nations, with some, like Iran and Qatar, financially backing the group in its efforts to overthrow the Yemeni Government. On the other hand, countries like Saudi Arabia and the UAE have been supporting the national Yemeni Government in their fight against the movement. The Houthis have been more proactive in their attacks since the conflict between Israel and Palestine broke out, targeting container ships in the Red Sea. Their most notable attack was on a cargo ship named the Galaxy Leader, which was seized and taken back to a Houthi-controlled port in Yemen, disrupting global trade significantly.

The economic impact of the Crisis has already been seen, with businesses turning to aircraft for shipping due to fears of cargo being jeopardized in the Suez Canal. Some fear that if the crisis goes unanswered, shipping companies may increase their fees, leading to higher prices for goods worldwide. However, leading financial experts believe that a major escalation in Houthi attacks would be required to seriously harm shipping companies to the point where it affects the prices of everyday items.

Operation Prosperity Guardian

UK Typhoon Jets launching strikes against the Houthis

Fearing further escalation, the US formed a coalition of nations to curb Houthi attacks in the Red Sea. On December 18th, the US announced Operation Prosperity Guardian, consisting of the US, UK, Norway, Greece, Sri Lanka, Singapore, Australia, Denmark, The Netherlands, and Bahrain, which will be the host nation for the military operation. There are a number of other aiding nations, though they have chosen not to be named as members of the US Coalition.

In the days after it was signed, on the 31st, the US began to carry out military activity in the Red Sea, with helicopters firing upon small boats attempting to capture a container ship. Ten militants were killed, and Operation Prosperity Guardian had officially begun. Soon, coalition nations began to send naval fleets to the Red Sea to begin their protection efforts. The UK's HMS Richmond and HMS Lancaster are traveling to the Suez as this article is being written. The US has already deployed the aircraft carrier the Dwight D. Eisenhower to the Suez, along with three destroyer-class ships, the USS Gravely, USS Laboon, and USS Mason. On January 9th, US and British navy and aircraft shot down 21 drones and missiles launched at them by the Houthis in Yemen, marking the largest attempted attack by the Houthis in the region. UK officials said that further escalation from the Houthis will only prompt more western nations to join the coalition.

In the Middle East, Prosperity Guardian has been met with mixed results. Many from Yemen are thankful for the protection as it is not only safeguarding global trade routes but also stemming the growth of the Houthi Movement. Officials in Yemen feared that if the Houthis gained significant control over the Red Sea, it would only further their efforts against them. However, Saudi Arabia has not been as happy about the operation's success. They have been attempting to normalize relations with Iran, and it is believed a peace deal might be reached on the condition that Saudi Arabia recognizes the Houthi Movement as a legitimate one. Such recognition could allow the Houthis to be acknowledged on the same level as the Yemeni National Government. Saudi Arabia has been fighting the Houthis since the group's inception and leads a coalition of Middle Eastern nations against the group. These negotiations with Iran could put this Operation in jeopardy. With widespread official recognition, plans to attack the Houthis could become increasingly complicated and fraught with international pressure to stop. Attacks by the Houthis have been condemned by the nations and organizations that support them.

What does this mean for the future of Yemen?

In the realm of counter-terrorism, the future of Yemen hangs in the balance. Several factors will contribute to the success and failure of Operation Prosperity Guardian. The Saudi negotiations with Iran will have a major contributing factor to whether the strike against the Houthis will be condemned by US allies in the Middle East. Furthermore, there are already rumours that US officials are displeased with the UK's immediate, and possibly unplanned, counter-attacks against Houthi forces. The situation has already unfolded rapidly in the past month, so it is likely that more developments in this story will occur in the coming weeks.

To read more about the Yemeni Civil War and its impacts around the world, check out another article here - which looks at how Qatar used US lobbyists to infiltrate Donald Trump's cabinets.

A Year in Counter Terrorism: The Counter-Offensive Against Al-Shabaab in Somalia

2023 has been a monumental year in the fight against terrorism in Somalia. For nearly two decades, the Somali Government has been fighting the terror group Al-Shabaab. This year, a second phase of a joint counter-offensive against the group was carried out. African Union, US, Somali, and other African nation troops came together to strike back against Al-Shabaab. This year has seen two phases of the counter-offensive, the first dealing with Al-Shabaab in the central regions of the country and the second seeing allied militaries push into the heartlands of Al-Shabaab-controlled territory.

Phase One

Map of Clashes with Al-Shabaab from August 2022 [The Start of Phase One]

Phase One of this counter-offensive began in August of 2022. This opening phase consisted of consolidating military power in northern regions and pushing Al-Shabaab out of the country's central regions. In these opening months, the Somali Government began to rally the support of local clans and militias active in the fight against Al-Shabaab. Previously, these clans and local forces were left out of military activity. The failings of the Somali Government in the past had radically changed their views on these local forces. It was apparent that without these local clans' support, successfully defeating Al-Shabaab would not have been possible. The Government also found key targets in Central Somalia to focus their attacks on. In particular, numerous Al-Shabaab strongholds in central Somalia were the main targets of this first phase.

As the nation entered 2023, the dimensions of the first phase had transformed radically. Political tensions within Somalia had ruptured ties to some of the local clans. An incident involving tax collection issues with some of these local clans caused them to no longer cooperate with Somalia's Government. This hampered this first phase enormously, as Al-Shabaab sought to negotiate with these local clans, to stop their resistance against them. The negotiations between the local fighters and Al-Shabaab occurred in the key areas of Hirshabelle and Galmudug. The lack of local clan support in these key areas, caused Somalia to turn to their international allies to aid them in continuing the counter-offensive.

These key allies would be instrumental in continuing, and eventually, ending this first phase successfully. Several neighbouring African nations have their own forces fighting Al-Shabaab, independent of the African Union. Many of these neighbouring countries have forces pledged to the African Union as well. African Union troops were instrumental in carrying out raids on towns in these central regions. The US would also be instrumental in aiding the Somali Government. Particularly, the Air Force would prove incredibly useful in eliminating key members of Al-Shabaab. Somalia's own military and security forces were also key in eliminating Al-Shabaab from these central regions and protecting northern areas from retaliatory attacks.

From March to April of 2023, the final push of the first phase would eliminate Al-Shabaab's dominating presence in these central regions. The victories in this period would not be decisive, and continued action in the area to prevent Al-Shabaab from re-embedding themselves in these areas would continue until August. As a consequence of this victory in the Hirshabelle State, Al-Shabaab operatives would move over the border into Kenya and continue conducting activity there. Other operatives, moved further south to the Lower Shabelle Regions. These areas have long been under the occupation of Al-Shabaab. The second phase, which officially began in August of 2023, planned on targeting the last remnants of Al-Shabaab in these southern areas. These areas are critical to Al-Shabaab's operations and would be vehemently protected by them. As a result, the violence and severity of the attacks doubled as Somalia entered its second stage of the counter-offensive.

Phase Two

Map of Clashes with Al-Shabaab from March to April [The Start of Phase Two]

Somalia targeted the areas of Lower Shabelle and Galgaduud where it had a strong presence of local fighters, sympathetic to the Government's cause. Al-Shabaab also had members from the same local clan, which they had negotiated with months prior. The clan in question, the Hawiye Clan is the largest in Somalia and was experiencing its own turmoil. A political disagreement split the group, and sub-clans who desired the protection of Sharia Law sided with Al-Shabaab. Those who remained in the clan pledged their allegiances to the Somali government. On August 25th, this second phase would begin with the Somali military capturing the occupied town of Ceel Buur, the last remaining Al-Shabaab stronghold in the Galmudug region. Just as quickly as they had occupied the town, they evacuated it, fearing a strong terrorist retaliation. The town was immediately recaptured by terrorist forces. Giving Al-Shabaab such a tactical advantage allowed them to recapture key areas that were taken in the first phase of the counter-offensive. A large portion of the forces on both sides were made up of local clans and militias.

The losses in Galmudug and the reliance on clans caused a political outcry from many in Somalia. The Government had recently requested more support from their African allies and the additional support was coming slowly. They argued that local clans were the only way they could keep fighting Al-Shabaab. As for the US, they were still assisting in the counter-offensive but had now shifted their focus from ground assaults to targeting key members of the terrorist organization's financial hierarchy. Politicians were now actively speaking out against the territorial losses and poor planning of the campaign, including the county's President Ahmed Mohamed Islam. Many blamed the leader of Somalia's military for the tactical blunders made in the counter-offensive. As the second phase faltered, more political discourse continued and military action halted. Politicians began to claim that local clans were not invested in the fight against Al-Shabaab and shouldn't be part of the counter-offensive at all. During September, political in-fighting by the state government in Galmudug would see little progress being made on the offensive front. In fact, the political infighting allowed Al-Shabaab to refortify and retake multiple key locations.

As the year comes to a close, fighting remains focused around Ceel Buur and Ceel Dheer, locations that were once under the Somalian Government's control but were vacated after the military retreat. With Al-Shabaab able to strengthen their position it remains a point of contentious fighting. The most successful Somali advances were made in the Middle Juba Region. As the year comes to a close, it seems the second phase has not been as successful as the first. With military activities coming to a halt and fighting becoming deadlocked, the Somali government is at an impasse. Al-Shabaab is struggling, not with fighting but with in-fighting between leadership. The US' plan to eliminate high-ranking members of the group has been incredibly successful with financial chiefs and group leaders being killed by airstrikes. Ambitious terror operatives are now fighting for control of these positions within the group.

Map of Al-Shabaab Internal Clashes

In October, in-fighting between Al-Shbaab peaked, especially in the hotly contested region of Middle Juba. There have been four reported fights attributed to Al-Shabaab in that month alone. Before 2023, there has only ever been one reported. Diriye is the current leader of the Al-Shabaab organisation, which he assumed in 2014 after his predecessor was killed by a US airstrike. His leadership was surprising to many as it was expected that prominent member Mahad Warsame would take control of the group. Warsame was given the role of Deputy. In 2022 Diriye fell into bad health and was expected to die. Upon his death, Warsame would assume control of the group. Diriye's health issues weren't as bad as first thought and he survived. His survival seemingly tore apart the group with Warsame and Diriye clashing over multiple issues. The crackdown on the group's financial wing also wounded the group significantly. It was expected that Al-Shabaab would bring in tens of millions of dollars every year, but with the seizure of over 200 bank accounts, funds for the group were restricted. Warsame's multiple attempts to undermine Diriye's power resulted in fighters loyal to the group's leader clashing with his men. In response to this repeated undermining of his leadership, Dirye announced that he would pass leadership to another prominent member of the group, not Warsame.

Map of Clashes with Al-Shabaab from August to September [During Phase Two]

Summary

The counter-offensive against Al-Shabaab has reached its peak and its valleys this year. From a coordinated counter-insurgency initiative to a failing military offensive plagued by political infighting. Despite this, the African Union hopes to exit the country by 2024, leaving the country secure enough for Somalia's military to handle. Though the counter-offensive lost momentum in September and October, the deteriorating state of Al-Shabaab's leadership and infrastructure offers a unique opportunity for them to capitalize on. It will be interesting to see if politicians and clan disputes can be put aside to tackle the common enemy or if political differences will continue to hinder the offensive. With Al-Shbaab's leadership fractured and the group turning on itself, it is the ideal time for the military to act.

Tags: Somalia counter-terrorism, Al-Shabaab updates, Horn of Africa conflict, African Union intervention, Terrorism in Somalia, Military offensive 2023, Al-Shabaab leadership, Political infighting in Somalia, African military cooperation, Terrorist group dynamics, Security situation in Somalia, Anti-terrorism efforts, Al-Shabaab insurgency, International military support, Somali government strategy, Military successes and setbacks, Al-Shabaab financial crackdown, Political discourse in Somalia, Counter-insurgency developments, Somalia security updates 2023

Follow The Money: Then & Now. How the World of Money Laundering has Changed.

Laundering money is the backbone of any criminal enterprise. It takes the ill-gotten gains from criminals and turns them into clean usable money. Making criminal funds look normal to the Government and tax authorities. In this article, we are going to look at money laundering at the peak of narcoterrorism and what money laundering looks like now, with the growing use of cryptocurrency. 

Robert Musella

As an example of a more complex money laundering operation, we will examine the most famous case of it, that being Robert Musella's operations with the Medellin cartel. Robert Musella was a businessman in the United States who was involved in an air charter business, a chain of jewellery stores, a brokerage firm, and an investment firm. Musella then spent two years slowly infiltrating the ranks of the Medellin Cartel. The first person he would meet from the cartel was a man named Gonzalo Mura, a low-level launderer for the cartel. The vast wealth of the cartel meant that low-level launderers still dealt with tens of thousands of dollars. Through an associate, Mura was directed toward Musella with the promise of easy money laundering businesses. Mura himself owned a small import-export business, which could only feasibly launder around $50,000. This may sound like a lot, but in reality, this was petty cash for the cartel. Musella allowed them to increase laundering operations to the millions.

With the connection to the cartel being made, Musella was now part of the 'Black Money Market.' The network is set up by various criminal enterprises to send and clean their cash around the world. Launderers would be given money by their superiors and then would have to find businesses or people who needed that cash. Then, once this cash was run through businesses, it could then be sent back to their superiors as clean money that could be pulled from an ATM without raising the eyebrows of any tax authorities or law enforcement body. This is a very simple and dumbed-down explanation of such a process, but fundamentally, this is what Musella had to do for the cartels. Before he could think of where to launder the money, he would have to collect it.

All 'dirty' cartel money comes in the form of physical cash. That dirty money is usually in larger denominations, normally in stacks of 50 or 100 dollar bills. Carrying around these amounts of physical money already raises suspicion. So imagine the difficulty of moving thousands of dollars in $50 stacks. Moving them around would be nearly impossible. This is where we find another crucial actor in the money laundering chain: the money movers. The movers' main job is collecting and moving money. They smuggle cash, not narcotics. In fact, cartels are very specific about keeping money movers and drug smugglers separate, as not to draw too much attention if they are caught. Being caught moving massive amounts of cash by authorities is a red flag. Being caught smuggling massive amounts of drugs by authorities is a red flag. Being caught doing both at the same time is the biggest red flag there can be. For Musella, movers would smuggle the money into New York, usually one or two million at a time. Gonzalo Mura would then tell Musella the location of the money and how much was being transported. Then, his own runners would go collect the money for him from a cartel contact who protected the transported money. Usually, they were hidden inside suitcases or cardboard boxes. Musella's runners would then collect the money and bring it to him. Sometimes, instead of recruiting money movers, they would use smurfs. These smurfs would meet a cartel money contact and be given thousands of dollars. They would then be given orders to change those thousands of dollars into MoneyGram, traveler's checks, and cashier checks. They would do this in precise amounts, not flat thousands, to make it look like they were paying for something. For example, a smurf could obtain a traveler's check of $745.45. They would never go over $3,000, as this would flag up in the system. There would be tens of smurfs working at a time, to quickly change the 'dirty' cartel money into these different checks. These checks could then be sent in the mail to Musella, streamlining the money-moving process. It may seem overly complicated with so many people involved in a process that could be so simple. But that is the point. Important cartel operatives would never deliver the money themselves, to avoid getting caught. Movers and runners would usually be the lowest of the low of the cartel's pecking order. They were expendable and held no value within the criminal pecking order. If they were caught, they could give no information to the authorities. The whole process is intended to create separation between cartel members and launderers.

With the money obtained, he had to find a way to inject businesses with this dirty money. He needed businesses that were cash-intensive and used physical money. The fundamentals of laundering money are integration. You merge the cartel money into the clean money of the business. Then on paper, it looks like normal business profit. Import-export businesses were perfect for this kind of process. These businesses wanted physical money they could use and send around the world. Normally, these packages of money would be purchased through a country's central banking system, though this was documented and expensive. (Central Banks usually charge an additional 25% of the money's value) Money launderers could undercut central banks and offer shipments for much less (Around 10%). For Musella, his two main currencies were American Dollars and Colombian Pesos. His dealings with various importers and exporters around the world would all be layered and then deposited into cartel-controlled bank accounts in Panama. So what's layering? Layering is a process of muddying the paper trail. If Musella took the money from the import-export deals and just sent it into the bank accounts in Panama, the authorities could easily track down where the money came from. Layering is the process of moving the money around so much that following it would become nearly impossible, like a magician using misdirection in a trick but on a global scale in the international banking system.

Musella would take the money from the import/export earnings and send it to Corporations he had established all over the world. These are known as Off-Shore Corporations. It would then be put into a Certificate of Deposit in a bank in Luxembourg under the name of one of these off-shore corporations. They would then use this money as collateral for a loan in another part of the world. That loan would then be given to another off-shore corporation, for Musella one of his off-shore corporations was in Gibraltar. This Gibraltar corporation would then send the funds to a Panama bank account, and then those funds could be transferred to any bank across the world. As many of the leading members of the Medellin Cartel were in Colombia, funds from the Panama bank accounts were sent there. Once again, this was done to create ultimate separation from launderer to cartel. Actually tracking the money was an incredibly difficult task. To trace the money, first authorities would have to get information from the banks in Panama (something that will be explained at length later), and then the corporation in Gibraltar would have to be investigated. Then the banks who issued the loan would have to be investigated and the one in Luxembourg. Due to bank secrecy laws around the world, investigating financial institutions is an incredibly long and tedious process. So, layering like this really hampers the authorities' efforts to track down the source of criminal money.

Once all of this had been done, the money was clean. The money wasn't ill-gotten gains from drug trafficking but instead profit from legitimate business transactions.

So, why Panama? Well, Panama, in the 1980s, was a safe haven for money laundering due to their loose bank laws. For example, in most countries, foreign businesses would need a business license to start up a business banking account; this is not the case in Panama. Even foreign businesses overseas could set up a bank account in Panama without proof of proper documentation. This lack of documentation also created a layer of anonymity that allowed criminals and launderers to operate without fear of identification from authorities. Business owners and financial officers in said companies don't even need to register with Panama's Public Registry. Panama is also a tax haven with low taxes, allowing for money moved there to not be hit with huge fees. In fact, the only tax needed to be paid on business accounts in Panama is a $300-a-year franchise tax. The other major upside of Panama's banking system is that there are no audits or need to file tax returns. Once the money from Musella's import/export business dealings was deposited into those Panama accounts, cartel bosses would have their clean, laundered money that they could do with as they pleased. The biggest reason the cartels laundered in Panama was the fact that they had a close relationship with the country's leader, Manuel Noriega. All cartel accounts would be protected by him personally. The cartel was untouchable in Panama.

These accounts didn't just belong to the bosses of the cartels; running a massive criminal enterprise was costly, and equipment was needed for smuggling operations. One example Musella himself has spoken about is that most of the money he laundered initially went to the cartel's plane broker. His main role in the cartel was to purchase planes for drug smuggling operations. Once Musella had made the deposit, the plane broker could then purchase light aircraft for further drug smuggling operations. Some of this money is even smuggled back down to Colombia to be used as bribes for the Government, Judicial, and law enforcement officials, who turn a blind eye to the cartel's activities.

These basic methods of money laundering worked for Musella as he worked with the cartel's lower levels. Musella quickly climbed the ranks and began doing business with some of the highest-ranking members of the cartel. His laundering ramped up. He was receiving shipments of $1 million in the morning and $2 million in the afternoon. The cartel higher-ups wanted money laundered and sent to Europe so they could set up an emergency fund. So, if they ever had to flee South America, they had wealth waiting for them in Europe. Musella went to the Bank of Credit and Commerce International (BCCI), a commercial, normal bank that thousands of average people used every day. Musella went there to further bolster his accounts in Panama. He was a credible client with millions of dollars in the bank and in assets. Once they had verified he was trustworthy and could be a lucrative client. They let him in on the biggest secret in global banking. They told him how they laundered money for criminal organizations across the world. All of Musella's layering, corporate accounts, and his own finances would be overseen by the BCCI, which also helped establish him in Panama. The man in charge of all of Musella's business dealings was an esteemed banker, Amjad Awan. Awan ran business accounts for Noriega and other world leaders. His dealings in the 'Black Money Market' had now extended to Musella and the Medellin Cartel. It wasn't just one man; most of the BCCI's senior management was involved in laundering criminal money. This opened up Musella to a new laundering support group. Tens of middlemen who assisted in the laundering of cartel capital. From lawyers in Switzerland who helped set up the shell and off-shore corporations, to bankers who sent the money to Panama, to Financial Servicemen in Panama, whose sole job it was to form corporations to layer laundered money. Musella's operation became massive and international. They provided nominee directors for Musella's corporations, who hid the true ownership of a corporation and hid financial records. Why would the BCCI do it if it was a normal reputable bank? Because they earned from the process and would turn a blind eye to lawlessness if it meant they got to have another lucrative account. Musella alone was bringing in millions to the BCCI, with their other criminal clients, they were likely making billions of dollars.

How do we know all of this? Robert Musella wasn't a real person. He was a fictitious identity created by the US Customs Service. Musella was an undercover Customs agent. Robert Musella's work for the Medellin Cartel led to the arrests of 85 people, all crucial in the laundering of the cartel's money. Musella didn't just uncover a cartel laundering operation but the role of conventional banks in the entire operation. His work led to BCCI closing down, almost overnight due to their sleazy business practices. Musella's work decades ago did have an effect on drug trafficking. Today, however, it is estimated that drug trafficking creates over $400 billion a year globally.

Modern Problems & Modern Solutions

Across the world, countries have been passing anti-money laundering laws to stop criminal and terror organizations from operating with ease. With money becoming more and more digital, newer legislation is needed to get ahead of modern money laundering. Surprisingly, the United States lags behind Europe when it comes to monitoring financial crime. In 2020, the US House of Representatives passed the biggest anti-money laundering legislation. $740 million from the defence budget would be used to fight money launderers in the United States. The lack of transparency in the United States was highlighted that year when two Russian oligarchs used shell corporations to avoid international sanctions imposed after the invasion of Ukraine. The legislation passed is the first step in the right direction. The US lacks the regulations that are commonplace in the EU and UK. The US remains on the EU's blacklist of countries that lack proper financial regulation. EU Member states have to abide by organization-wide anti-money laundering laws that require each country to have its own central regulating authority. In the UK, there is a beneficial ownership register that creates full transparency when it comes to company ownership.

Even though legislation and regulatory bodies are in place, the constantly evolving economic world poses new laundering threats. Chiefly, cryptocurrency and NFTs. These new, unregulated, anonymous online currencies already make it difficult for authorities to track payments. Private coins use third-party services to increase their anonymity, hiding things like wallets, amounts, and sources of the coins. The most common, and easy, way to launder through cryptocurrency is by the use of a Crypto-Mixer service. As we saw Musella worked diligently, shifting and moving money to muddy the paper trail. Crypto-mixers make this process extremely easy. Not only are the coins anonymous to begin with, but Crypto-Mixing services will take coins from multiple different wallets and then send them into one account. Then, from this one account, all of the funds will be mixed and swapped around, then sent to different addresses. The process essentially makes finding the original source of funds impossible. These Crypto-Mixing services basically launder 'dirty' cryptocurrency, usually for a 10% fee.

Much like cryptocurrency, NFTs are something that has exploded onto the scene and have become highly controversial for a number of reasons. One reason that is the concern of many anti-money laundering authorities is that NFTs are ideal for laundering dirty money. The art and antiquities world is already a prime place for money laundering but NFTs take that and offer new anonymity. They are virtual antiquities bought with cryptocurrency. The process is called Wash Trading, where different, normally anonymous, bitcoin wallets sell their NFTs to one another, gradually raising the price each time. These false speculation and sales inflate the perceived value of the NFT. This is no new thing in the crypto world; numerous cryptocurrency exchanges have been caught wash trading, sending money to various accounts to make it look like they are doing more business than they actually are. Let's look at an example of wash-trading in the NFT world and how these fake transactions can skyrocket the perceived value of an NFT.

Crypto Punk 9998 is your typical run-of-the-mill NFT. It looks pretty low energy and doesn't look like it should cost a lot, right? Well, this NFT cost, at one point, over $500 million. This ridiculous valuation is because of wash-trading. The transaction that caused everyone's attention to focus on this NFT was when a transaction occurred between two wallets. One paid 124,457 ETH for Punk 998, around $535 Million. Someone paying half a billion dollars for this NFT was suspicious, to say the least. When experts looked into the transaction, they found that the buyer took out multiple loans to obtain 124,457 Ethereum. Then after the transaction, the seller sent the Ethereum straight back to the buyer who repaid their loans. The whole transaction was a farce, just done to raise the value of Punk 9998. Crypto Punks themselves revealed that the wallets were both owned by the same person. The transaction was just one guy inflating the value of his own NFTs. After all of this wash trading, Punk 9998 was then listed for 250,000 Ethereum, nearly $1 Billion. Much like BCCI, Crypto Exchanges are often seen fostering this behavior. As long as they are receiving more business and more activity, then they often turn a blind eye to wash trading, something which has been illegal in the US since the 1930s.

There is still a long way to go when it comes to properly fighting money laundering. With the world of crypto and banking the way it is, change will be slow. The undercover operative who played Robert Musella has an ingenious way of tackling money laundering. He sees banking as two sides. Sales and compliance. The sales teams just try to bring on accounts, without doing the due diligence to see if the accounts are criminal. Then compliance has to do the legwork to verify if they are legitimate or not. For sales, their main goal is boosting bank activity and increasing the cash flow. This is the same for the Crypto Exchanges. The sales teams ignore compliance to increase business. Musella believes that sales and compliance should be one entity, not separate. Checks and due diligence should be administered to potential clients before they start working with a bank. Then, a bank representative should have to sign a sworn statement that such checks were carried out properly. In the eyes of Musella, this would stop much of the laundering going on around the world. For now, Governments need to continue fighting this activity that aids criminal behaviors. Without financing, terrorists and narco-terrorists would cease to operate effectively.