1. Cash and Carry Melvin Soudijn Senior researcher Dutch National Police
Peter Reuter
University of Maryland
Lisbon,

2. The Cocaine Smuggler’s Problem: Too Much Cash
Bulk drug sales are all in cash
Many small or medium bills
Traffickers sell in large lots
200 kilo shipment typical
Generated ca. € 5 million
For Colombian smuggler money is in the wrong place in the wrong form

3. Solution
Hire someone to smuggle your cash back home

4. Colombia The Netherlands Wholesale cocaine trader Money broker
Coordinator
Employees
Suppliers
(500 notes)
Cocaine buyers
Couriers
Colombia
The Netherlands

5. Our study Research question:
What is cost of moving the currency?
Financial records of 6 Dutch police investigations
Defendants involved in transporting cash from NL to Colombia, Venezuela etc.
All used similar methods
Convert to € 500 notes
Create concealed compartments in luggage
Recruit (South-American) emigres for courier work
We estimate 914 courier shipments moving 277 million euros

6. Case example 1 FIU Netherlands report
Bank employee converts euro bills
Financial notes on money smuggling
Three week period:
€ 7,8 million received
€ 4 million smuggled
€ 2,6 million confiscated
51 transports identified (€ 425,000 on average)

8. Case example 2 Colombian woman changes € 500 notes
Financial records of 7.5 months
€ 19.5 million received
€ 15 million smuggled
No confiscation
64 couriers identified (€ 300,000 on average)
Estimate of amount of money changed
€ 95 million in € 200 and € 500 notes over 4.5 years

9. Exchange at small tobacco shop9

10. Case example 3 Failed robbery 20 months financial records
€ 234 million received
€ 208 million smuggled
€ 7 million confiscated
Dozens of couriers identified (€ 200,000 on average)

11. Costs in % Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Exchanging 3%
3 - 3,5%
2,5%
2,5 – 3,5%
3 – 3,5%
Couriers fee
3,4%
0,9% 2%
4,75%
Tickets
0,53%
0,44%
0,81%
0,52%
0,6%
0,5%
Transport
0,03%
0,19%
Pickup airport 1%
General costs
0,23%
0,37%
0,14%
0,25%
Luggage
0,05%
Total known costs
7,12%
4,37%
6,37% 6%
8,15%
6,5%
Fee coordinator
1-3%
Fee broker
2-5%
Insurance
5-7% ???

12. Conclusion Smuggling cash generally costs over 10%
Highest price is 17%
Confirmation: depends on factor time and relations

13. The Puzzle: why such an inefficient method?
Our earliest case was from 2003
Still in use today
Latest incident april 2017
Alternative methods?
Regular banking (0.1%)
Hawala (3-7%)
Bitcoins (5-9%)
Trade based money laundering (%?)
Hurdles
Depositing (or buying goods with) millions in cash will trigger SARs
Hawala network not strong in South-American region
Bitcoin’s public ledger draws attention to changing millions
Trade from Europe to S-A too thin

14. Other puzzles
Money not laundered in Europe but moved to other destinations
Why euros outside Europe?
Where do all the € 500 bills go?
Impact of non-production of € 500 note?
Is the size of the South-American economy underestimated?
Are cocaine smugglers not very competent?
Or at least incapable of reaching beyond their own networks?