2016 Safety, Security and International Affairs

Richard May

Employed underutilized authorities to expose drug cartels, transnational criminal organizations and others who launder money in the U.S. through high-end real estate, fashion and electronics transactions.

In recent years, drug cartels, terrorist organizations, transnational organized criminals and others seeking to hide their illegal assets have laundered money in the U.S. through secretive purchases of luxury real estate and transactions with fashion and electronics businesses.

U.S. authorities have identified and disrupted many of these activities through the work of Richard May, director of the Office of Special Measures in the Department of the Treasury’s Financial Crimes Enforcement Network.

“Richard is a role model for finding innovative ways to solve big, tough problems,” said Greg Lisa of FinCEN’s Enforcement Division.

FinCEN is the Treasury agency that collects and analyzes information about financial transactions, helping law enforcement combat domestic and international crimes such as money laundering and terrorist financing.

May has employed investigation authorities called Geographic Targeting Orders to aggressively fight those seeking a safe place to hide money generated from their illegal activities. The process allows FinCEN to impose strict reporting and recordkeeping requirements on businesses in specific localities. 

Under May’s direction, FinCEN recently issued a geographic order requiring U.S. title insurance companies to identify the individuals behind shell companies that pay cash for high value residential real estate in New York City, if the purchase price is for $3 million or more. The order also covers cash real estate deals in Florida’s Miami-Dade County of $1 million or more. In Miami-Dade, for example, cash transactions accounted for 53 percent of all home sales in 2015—double the national average.

The aim of these orders is to root out “corrupt foreign officials or transnational criminals” who may be “using premium U.S. real estate to secretly invest millions in dirty money,” said FinCEN Director Jennifer Shasky Calvery. “With each iteration of a geographic targeting order, Richard takes on a bigger problem in a more unique way and with greater impact.”

In Los Angeles, for instance, FinCEN targeted more than 2,000 large and small businesses that are considered to be part of the fashion district, such as garment and textile enterprises, perfume, beauty supply and shoe stores, as well as transportation companies and travel agencies. The Los Angeles order requires these businesses to report transactions involving transactions of at least $3,000 or more in cash or monetary instruments.

Investigations have revealed that tens of millions of dollars of drug money goes toward purchasing these types of goods that businesses then ship to countries such as Mexico. When the goods are sold, the money—in the form of local currency—returns “laundered” to the drug trafficking organizations.

May instituted the same type of reporting requirements on electronics businesses in Miami. Authorities said electronics equipment is purchased in Miami with cash from illegal drug sales and then the products are sent to South America where they are sold for local currencies. Most nonfinancial businesses, including exporters, now are required to report cash transactions over $3,000 to shed greater light on this potential illicit activity.

In April 2016, this FinCEN reporting requirement helped lead to the arrest of 22 individuals involved in a complex money-laundering scheme that had ties to the Mexican Sinaloa drug cartel and centered on 11 Miami businesses.

FinCEN’s Lisa said May’s work not only provides data that alerts law enforcement to possible illegal activities and can result in investigations and prosecutions, but “it deters illegal conduct in high-problem areas” because people know the government is watching. Lisa said the results of May’s efforts “are notable,” but added that details of some ongoing inquiries cannot be disclosed.

In addition to the geographic orders, May has been involved in employing a provision of the USA Patriot Act to target foreign banks that serve as a conduit for illegal finance. Under this law, FinCEN has designated some foreign financial institutions as “primary money laundering concerns” and imposed regulations, including precluding banks from having access to the U.S. financial system. These efforts serve to protect the U.S. financial system from illicit use and combat money laundering.

Besides designing and implementing these money laundering detection procedures, May communicates directly with outside partners—including law enforcement agencies, banks, insurance and real estate companies, and other businesses—to explain the rationale for the requirements and bring people on board.

“He has reached out to industry to help them understand precisely what’s required and why it’s important,” said Jamal El-Hindi, FinCEN’s deputy director. “His passion and his commitment to getting it right brings them into the process.”

Stephanie Brooker, who until recently was the associate director of FinCEN’s Enforcement Division, said May has been “targeting some of the most complex criminal activity the U.S. is facing,” and has had a big effect on the financial system and U.S. foreign policy objectives.

“Rich is one of those government servants who is completely consumed by his dedication to the mission, and he will do whatever it takes to get the job done,” Brooker said.

May, a former Army officer who served in Iraq and Afghanistan, said he likes tackling big problems. “I want success to feel like I accomplished something, and for me that means doing something for the good of the government,” he said. “I like being a government guy.”