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Hello friends, I was at a lunch recently with a buddy, and he commented on this blog. He shared that there was an additional way to launder parts that I had not cited. The purpose of this update is to insert that method. For those of you who may have read this article in the past, I've posted the updated information in paragraph #5 below.

First, this is not an article about Martinizing or French Cleaning of parts.

I found a definition for Money Laundering as follows: "Popular term used to describe the process whereby criminals conceal illicitly acquired funds by converting them into seemingly legitimate income." And so it is for those who would try to launder aircraft parts. Persons who engage this sort of activity are those with stolen parts, parts with missing trace, or parts whose existing trace is not acceptable to their customers. I'm not a Lawyer or Law Enforcement Official, so I won't comment on the legal terms of what to call such persons. Suffice it to say that when a deliberate attempt is being made to conceal a material fact as described below, that's part laundering. What are the common methods used to launder parts?

1) Unfortunately, either wittingly or unwittingly, Repair Stations find themselves used to launder parts. Lets say you have a part with trace problems, or a stolen part. You ask that the repair station buy the part from you, overhaul it, and then sell it back to you. You now claim to perspective buyers that you have trace to a Part 145 Repair Station, and you have an 8130-3 to boot. Most end users, when buying parts from the aftermarket accept trace to Part 145 Repair Stations. There is a growing trend among some airlines now to require trace beyond the Repair Station for just this reason.

Here's Royboy's counsel:

• If you're a Repair Station Auditor for an airline or third party, ask the repair station's salesperson to randomly give you a list of parts sold. Then ask to go to the records section and ask to see all the trace files for the randomly chosen sales orders. Better yet, if they have sold your operation any parts, ask to see a sampling of the trace for those parts.
• Earlier I described a growing policy of some airlines to require trace beyond the repair station. First, carefully consider revising your policy. For example, if you're a large airline (with a corresponding large amount of receiving inspections), you're going to double the amount of trace paperwork your inspectors have to review before accepting such parts, thereby lengthening the time for receipt. Do you want to do that for every purchase with trace to a repair station? I suggest that if you're considering such a policy that you limit it to first time, unknown repair stations. Exclude 145's associated with manufacturers, airlines, or 145's you've had long, successful relationships with. I may offend some small or new repair stations by this suggestion, but the ethical ones will have no problem producing the docs, and hey, it's my blog so I'll say what I want. There.
• One final note on repair stations: For your supplier to state that he/she has trace to a 145, the repair station must exercise their repair station number. Make sure that this appears on the paperwork. Pay particular attention to assure that the part they are selling is reflective of their Certificate, Op-Spec, and capabilities list. For example, if they are an Avionics repair station, are they trying to sell a tire? Hmm,. it has happened. Some repair stations have associated parts distribution operations, but again, be careful about how they are both representing themselves as well as the trace of the part. Most of these are legitimate, but be careful.

2) Beware the "bottomless" cert. This refers to certs for non-serialized parts. For example, you have a legitimate manufacturer's cert for a quantity of 100 bolts, but you have 10,000 bolts of the same part number with trace problems. What's to stop you from using the cert for the 100 to continue selling parts from the 10,000 in 100 lots? I've heard some people describe this practice as "loaves and fishes", a reference to the Biblical story

Here's Royboy's counsel:

• If you're an auditor, perform a random sampling of trace documents as is normal. Write down the part numbers of certs for non serialized parts for a sampling. Ask the company you're auditing to show you in its system how many parts have been sold of this part number. For quantities that exceed the amount on the cert you've sampled, ask to see the remaining trace paperwork. Of course there should be a perfect balance between parts sold and the quantities on all the trace certs, with the exception of parts still in stock, unsold.
• Also, randomly check your own trace files with an emphasis on trace docs for the same unserialized part number from the same supplier. Are the trace docs different, do the numbers add up, and the lot numbers differ as applicable?

3) Data Plates: This is obviously a reference to serialized parts with data plates. For example, you have a stolen part. You either fabricate a new data plate with a different serial number, or you have a data plate stolen from a part in service.

Here's Royboy's counsel:

• For your high dollar rotables, consider writing or vibro-peening the serial number of the assembly on the inside of the unit, on the cover or chassis for example. The repair shop will then routinely check for the agreement of the data plate with the serial number on the inside. This sort of thing can get pretty sophisticated with the use of invisible inks for instance. When you see a disagreement of the two, it will be your first indicator of possible nefarious activity.
• In the near future expect to see a publicly available, free website for stolen parts. The point being that if you have evidence of a stolen part with a police report, it can be listed on the website. In this way, Law Enforcement Agencies can see if there is evidence of theft-rings operating in certain areas, if certain parts are being targeted, etc. Of course, if the parts fall into a responsible party's hands, they'll now have a point of contact to return the parts. I've been working on the SUPs Steering Committee to make this happen, and we expect to have it rolled out in 2004. ILS has a service for its subscribers to list such parts

4) Forgery: This is the most hideous form of parts laundering, and for the person with deep knowledge of paperwork requirements, it would not be too difficult with the right Art Software on the their desktop computers to recreate and lift signatures, logos, forms, etc. Has there ever been a perfect forgery? Not really, but look for the small things.

Here's Royboy's counsel:

• Look closely at the Logo. Companies are very jealous of their logos, and are understandably careful of how they are posted, positioned, etc. In a well publicized SUPs case, a counterfeit Pratt & Whitney part was nearly identical in most aspects, but the Eagle in the logo was pointed the wrong way!
• Are the fonts used in the documents consistent? Does the serial number or part number field font look different, as if someone has obliterated those fields and added new info?
• Does the trace docs look like they've been repeatedly copied or faxed?
• Some companies ask their suppliers for a copy of the signature roster of those authorized to return parts to service. When doing routine audits, randomly check for the signatures on the docs you been provided against the signatures on the roster. Do they match?

5) The unwitting accomplice. Here's the scenario: You have an expensive part in your inventory that does not have trace, and lets say it's an INU, or Inertial Navigation Unit. One of your customers is a well recognized airline, whom you routinely ship parts to. One day you're preparing such a routine shipment, and you slip the INU unit into the box. The INU was not ordered by the airline, nor is it on your packing list. The airline receiving inspection quickly determines that a part was received that was not ordered, and subsequently needs to be returned to the supplier (you). Now you have a packing list from the airline to your firm itemizing the INU P/N and Serial Number, and with their logo and address. Traceability for this part now does not seem to pose such difficulty. Speak of dastardly acts!

Fortunately, our industry is overwhelmingly composed of honest, ethical firms. Nonetheless it is the intention of this article to raise the awareness level of purchasers and receiving inspector so as to intercept this activity.

Here's Royboy's final counsel:

• FAA AC 20-62, and the FAA's SUPs video advises us to "know your supplier." Just who is this person/firm you're buying the part from? Note especially that this type of review should extend to anyone in the trace trail for the buy in question, not just the person you're directly buying from. THIS COUNSEL IS THE BEST, FRONT LINE ADVISE TO ANYONE CONCERNED ABOUT PARTS LAUNDERING.

By the way, just what is Martinizing and French cleaning? I don't care really; the lowest priced, closest cleaner is going to get my business. Keep your creases sharp.

3/21/07

Roy Resto - VP Technical Operations, FAA-DAR
Phone: 414 875-2191   Fax: 414 875-0200
royboy@mbtrepair.com

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