YES IT’s TRUE. I AM A FINCEN NETWORK PARTNER. I DO NOT WORK WITH ANY NON LICENSED PROFESSIONALS WITHIN BANKING SPACE. However Shadow Banking Does Shape World Politics.
SHADOW BANKING
The Question We Need To Ask Is? What is Shadow Banking and how is it used for Criminal Activity? In this post I will touch on several Shadow Banking topics within illicit activity. From Loan Sharking, Money Laundering, Insurance Fraud, and even Iran’s use of Oil and Gas and Gold to evade Fiat Monetary Systems and Launder Money to fund Terrorist Proxies. This is a long topic. However this is only a brief post on this interesting white collar topic.
According to Google’s Gemeni;
Shadow Banks aren’t specific named institutions but rather a diverse group of non-bank financial firms performing bank-like functions, including investment banks (Goldman Sachs, Morgan Stanley), money market funds, hedge funds, private equity, finance companies, mortgage lenders (Quicken Loans), and newer players like crypto lenders, all operating with less regulation, posing systemic risk but also providing crucial credit.
Key Examples & Categories:
- Investment Banks: Goldman Sachs, Morgan Stanley.
- Asset Managers: BlackRock (sometimes called the world’s largest shadow bank).
- Funds: Money Market Funds, Hedge Funds, Private Equity Funds.
- Lenders: Mortgage lenders (Quicken Loans), payday lenders, peer-to-peer lenders (LendingClub).
- Structured Finance: Asset-Backed Commercial Paper (ABCP) Conduits, Structured Investment Vehicles (SIVs).
- Insurance Companies: Reinsurance firms.
- Other Entities: Government-Sponsored Enterprises (GSEs), Securities Lenders, crypto firms.
Why They’re Called “Shadow Banks”:
- They provide credit and liquidity like traditional banks but aren’t subject to the same strict oversight (like capital requirements).
- This lack of regulation can amplify risks, as seen in the 2008 financial crisis with entities like Lehman Brothers and AIG.
In essence, any firm that acts like a bank (taking risks, lending money) but isn’t a regulated commercial bank falls under the shadow banking umbrella, with a constantly evolving landscape. I hope this makes perfect since.
Criminal Organizations that act like Shadow Banks are todays topic of interest.
How can Shadow Banks Be Used For Criminal Activity?
Look Everyone; There is nothing wrong with Investment Firms or Entrepreneurs using Investment Funds to fuel a business or companies growth trajectory. But when Criminals who are not licensed begin using shadowy means to hurt others, avoid TAXES, and use fraud and other crimes to produce and Hide Assets illegally? Thats a problem.
Criminal Financial Activity
When it comes down to criminal activities and Shadow Banking? Criminal Activity can be best described using a short list! We find a lot of Loan Sharking, money laundering, Extortion, and transferring funds to different countries to hide assets and avoid TAXES.
Loan Sharking & Money Lending
Criminals historically have used their own Money FUNDS to make loans on the street. The Italian Mafia and other Criminal Organizations pool capital together from legitimate and ill legitimate means to have their soldiers or associates lend money out on the streets to desperate small business owners, and sometimes businesses that are in trouble financially and are willing to pay extremely high exorbitant interest rates for access to short term loans. And no surprise when the Business owner or Proprietor fails to pay the money back? The Mafia uses force and takes possession of the business or begins hurting a person until the money is paid back in full. Or a third option is Insurance Fraud. It’s a cruel and dirty way of doing business. It’s very nasty.
The Art of using illegal Profits to Produce New Legitimate Profits!
It’s highly likely you have heard of and seen the SOPRANO’s TV Series on HBO, as matter of fact one of the Guys Mr. Steve Schrippa follows me on X Twitter. His character was Bobbie Baccala the Husband of Tony Sopranos Sister Janice. And its absolutely comical to watch the Series on repeat. Its a classic Americana TV Show. But make no mistake that is a life I would never want for myself or my family. Because the damage of it all to relationships and the crime. It’s really undesirable.
Usually we have historically seen the older Sicilians, and Italian Mafiosi in the 1970’s use their illicit profits to open Pizza Shops in Manhattan, Brooklyn, and beyond. Then we see the Mafia open Construction Companies for Cement, Waste Management Companies and more service companies. Like “Sammy the Bull Gravano” did in the 1980’s. And let’s not forget Colombo Family CAPO Michael Franzese Gasoline Tax Operation that made him and the New York Italian Mafia family members Billions. They used illegal street profits to generate new profits on the Income Statement using cash businesses as financial structuring vehicles. It’s a quasi way of structuring for money laundering. But it works. And that’s why they do it.
Making money is the American Way, But let’s keep it lawful and keep our communities safe. This post is all about how Financial Crimes Enforcement Network uses it’s legitimate Businessman to enforce Federal and State Laws. There are guys out here Hunting Criminals and other Legitimate Banking and High Finance Professionals that are always looking for Criminals in the shadows. Who may be defrauding or committing white collar crimes in the Financial Space.
It’s not wise to run into Investment Professionals like myself who have worked inside Military Special Operations, CIA, DIA, and Financial Crimes Networks, and the FBI. Hunting Criminals is something many of us have done for fun. While making sure Transactions, and Investments are made with Integrity. The integrity of the Capital Markets and private markets are the beating heart of what makes the United States so Dominant and Powerful globally.
Money Laundering
The Definition of Money Laundering according to Financial Crimes Network (FINCEN); Money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them.
The principle in Money Laundering is simple. Use Illicit money to make or blend illicit money into legitimate profits. This is the principle inside what we know today as Money Laundering.
Many International Money Laundering Activities have been traditionally used to Launder Dirty Narcotics Money from Cash and cycle this dirty traceable cash into the Banking System for legitimate uses. In the end with Forensic Accountants and more Forensic Tool and Investment Advisors Representatives trained in spotting structuring and questionable deposits and other other red flag activity? It’s extremely difficult to evade the Authorities, and the layers of Trained Financial Professionals to abscond from Investigations exposing illicit cash flow that may be questionable Banking deposits. It just does not pay to commit White Collar Crime.
Institutional Level Insurance Fraud
While recently reading PwC’s article about Insurance Fraud within the Insurance Space it’s clear that if your thinking about a street criminal filing false Insurance Claims as a form of fruad? We are just not on the same page. The Fraud I am focusing on is Institutional International Fruad by Eastern European, and even Latin American organized Crime networks. It’s big business for a Shipping Containers full of Cars, Boats, and American Exports that have been stolen to be shipped out and be fixed and sold onto local markets.
According to PwC’s website; (Insurance offerings are an attractive target for financial crime through fraud, sanctions, bribery, corruption and other avenues. Despite this, insurers have relatively immature risk control frameworks compared to their banking sector counterparts.
In the US alone, industry organisations such as the Coalition Against Insurance Fraud have estimated that insurance fraud costs Insurance Financial Institutions $350.6 bn annually. It’s a risk that imposes significant costs on insurance companies and results in higher premiums for policyholders.)
If you really want to learn about the Insurance space? Pay attention to our Berkshire Hathaway Friend; Ajit Jain. Ajit built Berkshire Hathaway’s Insurance Arm with the incredible late Mr. Michael Goldberg. Ajit is an Indian-American executive who is the Vice Chairman of Insurance Operations for Berkshire Hathaway. Insider speak from my Berkshire Charlie Munger friends have shared Ajit speaks to Warren more than Charlie did in his later years. They are very close over there Berkshire.
It is said by the Insurance Authorities that roughly Ten percent of all Insurance Claims are fraudulent. Those are big numbers. However if we do the math and if returns are averaged out within the Insurance Firm Assets and Investments? Your likely to see why Insurance is so profitable as a Business model. IF your 100million dollar Insurance Fund has a 12 percent return that year and your cost of doing business is Seven Percent of 7million in Claims? You get the picture it is very profitable in the small margins of roughly 2 to 3 percent profit on Millions to large numbers.
Its great to exercise my knowledge as trained Investment Professional on my blog. The numbers don’t lie. Insurance Fraud is big business in the United States and International Criminal underworld. But the numbers do cover the Fruad happening in the Institutional space. “The Business Fundamentals are fundamentals as Warren and Ajit say!”
Money Laundering Activity | Iran Shadow Banking
The Example I am about to give is a real example of A Iran Shadow Bankers using Shadow Banking. This is a real example of a Foreign Country Iran the United States has caught laundering money from illicit oil and gas activities to fund the country’s terrorist proxies and terrorist networks across the globe.
Iran, Tehran Caught Funneling Nine Billion For Terrorist Proxy Activity
According to the FINCEN Advisory; Tehran relies on shadow banking networks of Iran-based exchange houses and foreign companies to evade sanctions, sell oil and other commodities abroad, launder money, sustain its regional terrorist proxies, and fund its military and weapons programs. Iranian shadow banking networks are connected across continents—most prominently through the United Arab Emirates (UAE), Hong Kong, and Singapore—by a diverse array of Iranian front companies. This includes oil companies, shell companies, shipping companies, investment companies, and technology procurement companies, which transact billions of dollars with each other and with unrelated companies, who may be witting or unwitting counterparties.
It’s no secret Iran has traditionally allied itself with Russia, and even it’s Islamic Mullah leaders have led crowds on Friday Prayer to scream “Allah Akbar, Death to America. The Great Satan.” However Iran is a Oil and Gas country and it’s export is difficult to export due to the International cooperation to sanction Tehran’s support of Proxy Terrorist Activities. We have seen agin and again Iran export Oil and Gas to other nations it does business with. And when Tehran takes it’s profits from the Oil exports it uses these profits to evade capital markets detection and grow the Money on the many European Stock Exchanges using middle men who act like Irans Personal Investment Professionals. Ultimately this is how they evade sanctions by the United States Foreign Policy. Gold is often used to circumnavigate fiat monetary policies in United States Aligned Capital Markets.
Criminal Shadow Banking Activities Extend Globally
If your a reader like myself? I would recommend a good book by decorated career CIA Case officer Bob Baer who was investigated by his own Government for turning down a plot to overthrow Saddam Hussein in the early nineties. During his travels Bob goes into details about the affluent oil & gas Money Men he frequently met with as a CIA Case officer within the Middle East. During one of his meetings he describes how these Financiers Influence their shadowy networks to make policy and investments work for thier interests. They use Oil and Gas money to influence Governments, Funding Infrastructure, Regional politics, and influence Commercial Transactions. And lot of what we know is detailed in his books related to Investments made into infrastructure and security forces and of course the business of Middle East politics.
Monitoring Politics and Government Policy’s is a huge part of what CIA case officers do overseas. Shadow Bankers often Influence Economies and Make Investments for Rebel or Friendly Government Alliances on the ground within hostile countries and territories. It’s a fascinating look into how Oil and Gas does business over seas and how money guys are the negotiation point men that keeps politics moving and keep private businesses afloat with capital. If you want to read about normal American guy who went from Berkley California to the Traveling the Middle East? Bob Baer’s book will not disappoint. I say this with true affection for Bob and Dayna Baer, this is a fantastic read.
Did you catch my post on the “Three Financial Statements”
I do hope you found true value in todays brief post on Shadow Banking. Its primarily written to explore criminal angles in the Shadow Banking space. I do not have a need or want to have any experience within the Criminal Shadow Banking Space. This purely for education and should be read with a curiousity in mind. It’s a topic I will write about extensively in the coming years. Because the Advisery’s from the The United States Financial Crimes Network from the United States Treasury are truly that interesting. Thank you. Until next time?
Jameson Sharp
