Kenneth Rijock

Kenneth Rijock

Tuesday, May 3, 2016

NEW INCORPORATIONS DECLINE IN PANAMA


Statistics released in the Republic of Panama show that there has been a decline in the number of new incorporations, ever since the Panama Papers offshore scandal broke in global media. Though Panama's civic boosters have tried to put a spin on this news, by claiming that it is actually due to declining economic factors in Latin America, clearly the effect of the disclosures has been felt. News articles, some clearly planted to improperly suggest that the government is rushing to cooperate with foreign jurisdictions, do not have a true basis in fact, but indicate a serious effort at damage control by the present leadership.

The annual fees government collects on active and existing corporations are estimated to be as high as $90m, and any diminution in new company formation, which offsets the losses represented by defunct corporations, will have a major effect on the national budget of Panama, which has suffered greatly from the effects of massive corruption by the former Martinelli government. The Varela administration has a cash crisis on its hands, but an extradition order directed at its ex-president, available since December, has still not been issued, confirming that reform efforts have been ineffective in Panama City.

Reports that a number of Panama's banks have declined to accept new corporations as bank clients indicate that the Panama Papers scandal is having an effect, but whether this will become a widespread practice is not known. There have been no moves, in the National Assembly, to revoke the existing Bearer Share laws, which effectively obstruct transparency in both Beneficial Ownership, and Source of Funds. Unless there is true reform, of corporation law, Panama will remain opaque.

Monday, May 2, 2016

IF THE EU GIVES IN TO TURKEY'S REQUEST FOR VISA-FREE ENTRY, EXPECT HAMAS AS WELL


Turkey appears to be linking its demands that the European Union allow visa-free travel for its nationals, to its adoption of the reciprocal agreement that requires Turkey to accept the return of illegal migrants. On Wednesday, the EU Executive reportedly will propose enacting the removal of visa restrictions on Turks entering the Schengen Zone, notwithstanding that the reforms specified appear to not have been completed.

Here's the problem those good people in Brussels have failed to consider: Turkey is now the field headquarters for Hamas, a sanctioned terrorist organization, and it launches its terrorist operations from there, whether in the West Bank, or elsewhere in the world. You can expect, given the fact that Turkey provides material support to Hamas, that Hamas operatives will be given Turkish passports.  

If any of these agents try to open an account in your EU bank:

(1)  Let us hope that the compliance officer will assign a Turkish-speaking new accounts clerk to help with account opening, for that individual will be able to spot a non-native Turkish speaker in a heartbeat, and decline the business. The last thing you want in your bank is someone moving money for a specially designated global terrorist organization.

(2) Did the prospective client forget to alter his place of birth ? If so, you may find that this 'Turk" was born in Israel, or the Palestinian Territories; That's another tip-off.

(3) Is the new client avoiding Turkish altogether, and speaking Arabic ? There's another red flag.

While I am not suggesting that you profile all new Turkish clients , look for those with the above issues, as well as newly-issued passports. You do not want to bank Hamas agents.






WILL FINCEN EVER GET A CAREER DIRECTOR ?

                                                                 

The list of Directors, and senior staff, that have left their positions at the Financial Crimes Enforcement Network (FinCEN) prematurely, if placed end to end, would go around the room. James Sloan; Stephanie Brooker; William J. Fox; William D Langford, Jr.; Robert W. Werner, and now Jennifer Shasky Calvery, all leaving for the private sector. It is getting to the point where I am starting to feel neglected, because I have not had a turn at the helm.

Whatever happened to career public service leaders, the ones who would stay on for two decades, gaining valuable experience, and yes, wisdom, to aid them in the discharge of their duties ?  Unfortunately, the lure of middle six-figure positions in the banking world has been far too enticing for our best public servants at FinCEN, as major financial institutions, particularly those with bruises, believe that a former regulator can assist them, far better than their in-house counsel, in dealing with the uncertain future. I cannot blame them, but they take the best of the best away with them.

Can we please appoint a qualified individual, who will actually stay on indefinitely as Director ? Can we get a career-minded person, who will serve as steady hand, and guide FinCEN through what may be rough waters in the years to come ? Please, search committee, find a worthy choice, and one with years of prior government service, who will stay on the job, be effective, and raise the bar on banking best AML/CFT Best Practices. 

ALERT FOR HEZBOLLAH "PRINCELINGS" WITH ACCOUNTS IN YOUR BANK



After the Vietnam War ended, many American veterans were incensed when they learned a number of hard truths, which were not disclosed to the public*. One of these was the fact that no son of a US Senator or Congressman, in office at the time, ever served in the American military in Vietnam, between 1959 and 1975. Their fathers saw to it that they, like the young George Bush, were kept out of the combat zone, while individuals with no political power were less fortunate.

History has a habit of repeating itself; reports from Lebanon have confirmed that senior Hezbollah military commanders have been sending their sons to Europe, to evade their conscription into units sent to fight in the Syrian civil war, in which Hezbollah is sustaining major casualties in the field. This has been the case since 2015, when Hezbollah's demands for replacements for Syria duty, expanded.

One individual entered France, via one of the former Soviet republics. Inasmuch as they are favored sons, who can rely upon financial support from their fathers, who draw significant salaries, you can expect that they open, and maintain, bank accounts in EU countries, like the Chinese "princelings," who are often sent to the West, ostensibly for their education.

These Hezbollah youth, whose funding most likely comes from clever third-country transfers, pose a threat to Western European banks, for they may be called upon, by Hezbollah, to engage in terrorist financing, money laundering, or a number of other criminal activities, in material support of a designated terrorist organization. You do not want them as bank customers.

Identifying them may be difficult;
 (1) Your compliance department should look for places of birth, as listed on their passports, in those towns and villages in the Hezbollah-dominated south of Lebanon.
(2) They will most likely not hold full-time jobs, and will not be matriculated university students.
(3) Like the Chinese princelings, they may appear to be affluent, but without any visible means of support.

Remember, the EU has sanctioned Hezbollah's military ; you do not need to bank their adult children.
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* Inasmuch as April 30 was the anniversary of the end of the Vietnam War, readers who are too young to have personally experienced it firsthand should be aware that, afterwards, it was disclosed that the size of the infantry of the North Vietnamese Army, who opposed US and allied forces in-country, was three times the estimates given by the Central Intelligence Agency; this was considered a major intelligence failure.

Sunday, May 1, 2016

PANAMANIAN FRAUDSTER GARY LUNDGREN MAKES DEATH THREATS TO JOURNALISTS COVERING HIS CASES



Gary Lundgren (after facelift)


Apparently, the disgraced Alaskan fraudster, Gary James Lundgren, is unhappy that we, and others, have been reporting on his lifetime FINRA ban from the US securities industry, the $75m suit against him, filed by Donald Trump in Europe, his bearer share scams, his money laundering, and his extensive sexual predator history, both in the US and in Panama. The publication of his criminal conduct has caused him to have repeated temper tantrums, both at his office, where he is protected by two burly bodyguards, and at other businesses, where he has vented his anger upon defenseless female employees, tenants  who rent from him, and various other unlucky Panamanians who happen to be in his path.

Gary before facelift
He has more recently been closely linked to the Canadian stock fraudster, Ryan Bateman, the mastermind behind the $450m  Cayman Islands trading theft, and who currently resides in Panama. The scandal, whose participants are known as the Cayman Gang of Four, include former Dundee Bank Senior Vice President Sharon Lexa Lamb, former Dundee Bank President Derek Buntain, a Canadian national, and B & C Capital Managing Director, Fernando Moto Mendes, a Portuguese national residing in the Cayman Islands.

Bateman, Lamb, Buntain
 Lundgren has recently made a number of death threats, against everyone who has published articles about his fraudulent activities. He has even threatened their spouses with death, in writing, including some who live outside the Republic of Panama.

The question is: who will arrest Lundgren first ? He is rumored to have a sealed arrest warrant pending against him in the United States, through it is not known if it is for money laundering, Federal securities offenses,  tax evasion, or sexual battery. For that reason, Lundgren has consciously avoided entering the US for several years. Whether he will now disappear into Colombia, to evade justice, just as he once did when he fled America for Panama, is not known, but his departure has been rumored for weeks.  

Saturday, April 30, 2016

A MONEY LAUNDERER WHO IS AN ILLEGAL ALIEN ! GIVE ME A BREAK

   
Valencia Ortega
In this week's news is the guilty plea, to major money laundering charges, of a Mexican national named  Edgar Manuel Valencia Ortega, a laundry man for the kingpin Joaquín "El Chapo" [Shorty] Guzmán in Chicago. Here is why the case bothers me: Valencia Ortega, who was a major player in Shorty's pipeline, which shipped drug profits from the Continental United States to Mexico, is a illegal (undocumented) alien.

How on earth could an illegal alien operate a major money laundering network in the United States ? The reason is because the US Immigration enforcement program is broken; there's absolutely no excuse for this law enforcement malpractice. Moreover, if this is one case we have seen, expect that there are many, many others. That's all we need, Latin American money launderers, who are undocumented aliens, moving narco-profits inside the United States. Customs and Border Protection (CBP) should be ashamed of itself.

One wonders how many times Valencia Ortega came into, and left, the US, while supervising the movement of millions of dollars in criminal proceeds.

NOTE TO FINCEN; REQUIRE DUE DILIGENCE ON ALL SHAREHOLDERS, NOT JUST THOSE WITH 25%




The pending proposed shell company regulations, designed to require US banks to obtain the identities of all shareholders of twenty-five per cent or more of corporations holding accounts, are flawed, and requires modification, to be effective. You have to give the practicing money launderings working in America due credit for both imagination, and diligence, for they stay up night and weekends, just to beat the banks.

A decade ago, before I was the Financial Crime Consultant for World-Check, I was a compliance officer at a large investment firm, specializing in enhanced due diligence investigations. Our rule was simple: all ten per cent or larger shareholder of a client corporation were to be the subject of at least a due diligence check. The customer service/sales staff told their prospective clients to reduce the share ownership anyone who was dodgy to 9%, to evade that requirement. When I found out about it, I had the floor reduced to 5%. When it comes to commissions and bonuses, your sales staff will find a creative way around your fixed rules.

If you are a money launderer, and you have a client that will not pass muster, you can give him only a token number of shares, and have the controlling shares held in another name, and endorsed in blank, to be filled in only when needed. As you can see, the FinCEN rule will be ineffective.

To properly evaluate risk levels of a corporate account holder:

(1) Check ALL shareholders, not just those who are prominent.
(2) Physically examine the stock certificates, to ascertain whether any are endorsed in blank, and make photocopies.
(3) Require that the corporation's attorney sign an Opinion of Counsel, attesting to his own due diligence, and identifying all beneficial owners by name and address, and warranting that he will notify the bank, via registered mail, should there be any change in ownership. Lawyers who are partners at major US law firms will not jeopardize their law licenses. If there is no opinion rendered, decline the account. If their lawyer does not trust them, you do not either.