Amazon ordered to stop sending traffic to alleged money-laundering hub

A New York district court has issued an injunction to Amazon Web Services ordering it to "cease providing to Liberty Reserve any services that support the operation of the forfeitable property, including but not limited to cease to direct web traffic to the forfeitable property".

The injunction was issued after the US Department of Justice (DoJ) seized control of a number of web addresses, including libertyreserve.com, after receiving a warrant from the New York court enabling it to do so. Amazon owns and controls the IP addresses assigned to libertyreserve.com and other domain names seized by the DoJ and the company "routes traffic to the server[s] that host the Liberty Reserve website", according to the court papers published by the DoJ.

DoJ took action to seize control of the Liberty Reserve domain names as well as the domain names allegedly associated with 'exchangers' that users of Liberty Reserve used to send money from their Liberty Reserve accounts. The action was part of its case into alleged criminal activity conducted by Liberty Reserve and some of its staff.

Liberty Reserve is a digital exchange that facilitates payments and the transfer of money between accounts across the globe. DoJ has alleged that the service is one that is "preferred by cybercriminals around the world for distributing, storing and laundering the proceeds of their criminal activity".

Seven individuals who either currently work for Liberty Reserve or used to do so have been charged with conspiring to commit money laundering and conspiring to operate an unlicensed money transmitting business in New York.

The men allegedly "deliberately attracted and maintained a customer base of criminals by making financial activity on Liberty Reserve anonymous and untraceable", according to court papers published by DoJ.

"Liberty Reserve has become a financial hub of the cyber-crime world, facilitating a broad range of online criminal activity, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking," it said.

It is estimated that 55 million separate financial transactions were processed by Liberty Reserve from 2006 until May this year, and that more than $6 billion of "criminal proceeds" has been laundered on the exchange during this period, according to the court's indictment papers.

It is alleged that Liberty Reserve was established in Costa Rica as an unlicensed money transmitting business and that the company did not require account holders to verify their identity. It allegedly enabled users to conceal their account numbers when transferring funds from their accounts upon payment of a fee to Liberty Reserve and further required users to transfer funds owed cover account charges via third parties. These third party exchangers were largely based in jurisdictions such as Malaysia, Russia, Nigeria and Vietnam and operated "without significant governmental oversight or regulation", it is alleged.

Some of the men charged by the New York court are accused of creating a system "designed to feign compliance with anti-money laundering procedures" in a bid to fool Costa Rican regulators into awarding Liberty Reserve a license to legally operate as a money transmitting business. The company also allegedly falsely informed the Costa Rican authority that it had been bought by a foreign company and would not be operating in the country, but continued to do so "underground".

If found guilty, Liberty Reserve and the six men will be forced to hand over at least $6 billion to US authorities and surrender funds deposited in 45 accounts based around the world.

Manhattan US attorney Preet Bharara said: "As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes – the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers, and traffickers. The global enforcement action we announce today is an important step towards reining in the ‘Wild West’ of illicit Internet banking. As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth."