U.S. accuses Costa Rica – based Liberty Reserve of operating one of largest money laundering operations in history

May 28^th, 2013 (InsideCostaRica.com) In what many are calling one of the largest money-laundering busts of all time, U.S. prosecutors have indicted the operators of the Costa Rica – based digital currency exchange Liberty Reserve with helping criminals to launder more than $6 billion in illicit funds linked to everything from child pornography to online pharmacies.

An indictment, unsealed by U.S. authorities yesterday, said that Liberty Reserve had more than a million users worldwide, including some 200,000 in the United States.

In the indictment, U.S. authorities said, “Liberty Reserve has emerged as one of the principal means by which cyber-criminals around the world distribute, store and launder the proceeds of their illegal activity.”

On Friday, Costa Rican authorities working in coordination with Spanish and U.S. authorities arrested five people, including company founder Arthur Budovsky.  Authorities also seized bank accounts and Internet domain names associated with the company.  Criminal charges have been filed against seven individuals in total.

The United States Department of Justice reportedly seized $25 million in funds from at least 45 bank accounts.

Helping the DOJ pursue the case were the U.S. Secret Service, the Internal Revenue Service, the Department of Homeland Security’s U.S. Immigration and Customs Enforcement (ICE) and the Department of the Treasury, as well as 17 law enforcement agencies from other countries.

“Liberty Reserve has emerged as one of the principal means by which cyber-criminals around the world distribute, store and launder the proceeds of their illegal activity,” authorities from the United States said.

Liberty Reserve S.A. incorporated itself in Costa Rica in 2006.  Since that time, the company processed more than 55 million transactions and transferred more than $6 billion in illegal funds, according to U.S. authorities.

Liberty Reserve had become a financial hub for a wide range of illegal activities, including credit card theft, identity fraud, investment fraud, computer hacking, child pornography and narcotics trafficking, according to the United States Department of Justice.

Liberty Reserve is “as far as we can tell wholly criminal,” the a senior U.S. law enforcement official said.

In 2011, Liberty Reserve ran into trouble with Costa Rican authorities, which cited concerns that it didn’t have tight enough money-laundering controls.

Liberty Reserve then went underground and continued to operate in Costa Rica using a “stripped-down staff working out of an office space held in the name of shell companies,” according to U.S. authorities.

Two suspects related to the case, identified by the last names of Abdelghani and Hidalgo Jimenez are currently at large in Costa Rica.

Related Stories:

Costa Rica – based digital currency, “Liberty Reserve” shut down by authorities