Last week, the law enforcement agencies across the globe executed a historic two-day takedown of hundreds of alleged criminals who used securely encrypted communication devices to further their criminal enterprises.  The operation, dubbed “Operation Trojan Shield,” involved over 9,000 law enforcement officers deployed worldwide to search more than 700 locations, which resulted in more than 800 arrests.  Their secret weapon? The encrypted communication devices used by these criminal organizations were manufactured and distributed by a company called ANOM, which just happens to be owned and operated by the Federal Bureau of Investigation (“FBI”).

To date, government press releases throughout the world have focused on the arrests and the seizures of contraband:  more than eight tons of cocaine; 22 tons of marijuana; two tons of methamphetamine/amphetamine; six tons of precursor chemicals; 250 firearms; and more than $48 million in various worldwide currencies and cryptocurrencies.  However, law enforcement agencies also have been clear that, of course, spin-off investigations are in the works.  As we discuss, money laundering already is a focus, and presumably numerous money laundering charges will be forthcoming over the years as a result of this operation, including as to any third parties or professionals knowingly involved in helping to move the massive amount of illicit proceeds.

The FBI’s Honey Pot

An unsealed search warrant affidavit in the U.S. regarding a Google e-mail account details the background of the investigation. After the FBI dismantled Phantom, a Canada-based encrypted device company, in 2018, a confidential informant provided the FBI with the “next generation” encrypted communications product, named ANOM, and offered to distribute ANOM devices to an existing network of distributors. The FBI opened Operation Trojan Shield, “which centered on exploiting Anom by inserting it into criminal networks and working with international partners, including the Australian Federal Police (“AFP”), to monitor the communications.” The FBI, AFP and the confidential informant built a master key that attached to each message, enabling law enforcement to decrypt and store messages as they were transmitted.

According to VICE, ANOM’s Reddit account promoted the product as follows:  “Introducing Anom—a Ultra-Secure Mobile-Cell-Phone Messaging App for Android. Your Confidentiality, Assured. Software hardened against targeted surveillance and intrusion—Anom Secure. Keep Secrets Safe!”  ANOM looked like a cell phone but had one function only – by using the single working application, disguised as a calculator, one could send (supposedly) encrypted messages.  All other applications, including GPS and location tracking apps, had been removed from the device.  Apparently, its users were so confident about the security offered by ANOM that many sent messages explicitly discussing narcotics deals and other crimes, with no effort to use code or otherwise disguise the subject of the messages and the details of the illicit conduct.

At first, the confidential informant controlled distribution of ANOM devices in consultation with the FBI, distributing the devices to former Phantom distributers with connections to criminal organizations. The FBI obtained a court order to conduct a “beta test” on approximately 50 devices in use in Australia.  After the success of the test, ANOM grew slowly in Australia. Eventually demand grew for the devices outside of Australia, with several hundred users by October 2019.  After European investigators announced an investigation into EncroChat in July 2020, leading to its dismantlement, demand for ANOM devices from criminal groups increased.

Eventually, ANOM was widely promoted, via word of mouth, by criminal syndicates, resulting in more than 12,000 devices and services being sold to more than 300 criminal syndicates operating in more than 100 countries.  Since October 2019, the FBI, in conjunction with law enforcement agencies who agreed to store the messages in two other countries, has reviewed, translated and catalogued over 27 million messages. The messages related to narcotics concealment methods and shipments, money laundering, drug deals, and even violent threats. Several high-level public corruption cases have also been initiated based on ANOM messages.  Law enforcement officials in in Sweden, the Netherlands, Australia, New Zealand were particularly involved in the investigation, including many other countries.  Reportedly, the  top  five  countries  where  ANOM devices were  used  were  Germany,  the Netherlands, Spain, Australia, and Serbia.

This sting operation was extremely clever and executed – with some lucky breaks – with great success.  The sheer logistics and degree of inter-government cooperation are impressive, as is the fact that this operation ran for years in numerous countries and secrecy was maintained throughout.

A Money Laundering Bonanza

As noted, the emphasis by law enforcement to date has been placed on the arrests and the tracking and seizure of contraband.  However, the single indictment unsealed in the U.S. to date references, not surprisingly, money laundering as a predicate offense for a RICO charge.  Specifically, on June 8, 2021, a federal grand jury indictment resulting from the sting operation was unsealed in San Diego.  The indictment charges 17 foreign nationals with distributing thousands of encrypted communication devices to criminal syndicates, advertising the devices as “designed by criminals for criminals.” The sales were also targeted to individuals they knew participated in illegal activities. The indictment further provides that ANOM members “engaged in acts involving drug trafficking, money laundering, and obstruction of justice.”  Additionally, as basis for the RICO charge, purposes of the enterprise are listed as “launder[ing] the proceeds of such drug trafficking conduct,” “obstruct[ing] investigations of drug trafficking and money laundering investigations,” “preserv[ing] and protect[ing] the ANOM ENTERPRISE’s profits and client base through acts of money laundering,” avoiding detection “by, among other things, laundering its illegal proceeds.”

It is inevitable that this massive operation will lead to future money laundering charges across the world.  As publicly announced by Europol, “countless spinoff operations will be carried out in the weeks to come.” Surely, money laundering indictments will follow, presumably to include any professionals knowingly involved in transferring the enormous amount of illicit proceeds involved in the many underlying crimes.  Further, the nature of the evidence obtained by law enforcement – millions of explicitly incriminating texts – and the enormous amount of arrests indicates that global law enforcement will have hundreds if not thousands of potential cooperators motivated to point fingers at others, including lawyers, bankers, and anyone involved in moving the illicit funds. Stay tuned for developments on related investigations and indictments.

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