Business Owner Indicted for Failing to Establish an Effective Anti-Money Laundering Program
ATLANTA – A federal grand jury has indicted Daniel Barrs for willfully failing to follow anti-money laundering requirements under the Bank Secrecy Act as well as conspiracy to commit money laundering for his role in operating a money transmitting business that processed hundreds of millions of dollars’ worth of financial transactions for entities located around the world.
“Our country requires financial institutions to guard against money laundering, terrorist financing, and financial fraud,” said U. S. Attorney John Horn. “Individuals in the financial services industry who willfully avoid complying with the Bank Secrecy Act are not only engaging in highly risky behavior that facilitates dangerous activities, they also risk criminal prosecution.”
“This indictment is a culmination of many months of intense investigative efforts and document review and the matter now moves into federal court. The federal Bank Secrecy Act is in place for very good reason and the FBI will continue to provide investigative resources toward its enforcement,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office.
“This joint effort continues to demonstrate our efforts to ensure that the financial services industry will not be used to launder money and will be operated in a fair and honest manner to promote the public interest,” stated Veronica Hyman-Pillot Special Agent in Charge, IRS Criminal Investigation. “Among the goals of this effort are: protecting the integrity and stability of the international financial system, cutting off the resources available to criminals, and making it more difficult for those engaged in crime to profit from their criminal activities.”
According to U.S. Attorney Horn, the indictment, and other information presented in court: Barrs ran a money transmitting business located in the Atlanta area named “Global Transaction Services” (GTS) along with several interrelated entities that transmitted hundreds of millions of dollars’ worth of wires on behalf of customers located around the world, many of whom Barrs knew were not able to obtain access to U.S. banking on their own and were sending or receiving wires from countries that posed money laundering concerns. GTS was marketed as a company that could minimize the costs associated with transactions from entities located in one country and customers in other countries. The Bank Secrecy Act requires money transmitters like GTS to guard against money laundering and illegal activity by developing, implementing, and maintaining an effective anti-money laundering program. Money transmitters that identify certain types of suspicious financial transactions are also typically required to file a “Suspicious Activity Report” (SAR) with the U.S. Department of Treasury, Financial Crimes Enforcement Network.
The indictment alleges that Barrs took steps that ensured that GTS did not have an effective anti-money laundering program even though he knew it was critical that the company maintained one. Barrs hired individuals with no experience with the BSA - such as his teenage grandson - to be the compliance officers, failed to train GTS employees to comply with the BSA, and ignored warnings from independent examiners that GTS’s compliance program was inefficient. He also took various steps to help GTS obtain bank accounts even though domestic financial institutions repeatedly closed GTS accounts.
At one point, Barrs became a controlling owner over a community bank based in Braselton, Georgia, so that GTS could process millions of dollars’ worth of international wires, even though federal regulators opposed his efforts. At one other point, Barrs created a shell consulting company so that GTS could obtain a bank account under false pretenses.
As a result of Barrs’ willful failure to develop, implement, and maintain an effective anti-money laundering program, GTS failed to have sufficient procedures in place to guard against money laundering. Notably, from 2009 through the end of December 2014, GTS failed to file a single SAR.
The indictment lists various examples of the types of transactions that GTS processed while Barrs ran the company, none of which resulted in the timely filing of a SAR. For example, GTS transmitted wires totaling over $700,000 for two entities even though publicly available press releases from the U.S. Department of Justice and Federal Bureau of Investigation stated that the entities had been charged with running a large-scale offshore asset protection, securities fraud, and money laundering scheme. GTS transmitted wires totaling over $900,000 for another entity even though a publicly available press release from the U.S. Department of Justice stated that an individual under indictment for operating a Ponzi scheme had used the entity to commit the offense.
In another example, GTS transmitted wires totaling over $1.5 million for a Cyprus-based company that had a limited public profile, with no website or business listings, and that was listed on various publicly available websites as being associated with potential fraudulent credit card charges.
In yet another example, GTS transmitted wires totaling over $2 million on behalf of a Belize-based company that was publicly listed in various websites as being associated with illegal spamming activity and internet fraud.
A substantial portion of GTS’ business also came from processing transactions related to the Iraqi dinar. The indictment alleges that Barrs knew that regulators had concerns regarding the sale of the Iraqi dinar and whether it was part of a scam. GTS facilitated the transfer of hundreds of thousands of dollars between an Iraqi dinar exchanger and an individual in Japan who was purchased dinar in bulk for sale to his/her own customer base in Japan. The Japan reseller submitted dozens of wires that listed the remittance reference as “purpose to buy antique books.” At one point, the Chief Operating Officer of the Iraqi dinar exchanger forwarded a “Confirmation/Statement of Remittance” to GTS that indicated that the Japan reseller was transmitting money “to buy antique books.” However, GTS failed to file a SAR on any of these transactions.
Daniel Barrs, 67, of the United Kingdom, was charged with one count of willful failure to maintain an effective anti-money laundering program and one count of money laundering conspiracy.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the Internal Revenue Service Criminal Investigation and Federal Bureau of Investigation.
Assistant United States Attorney Thomas J. Krepp is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.