Kenneth Rijock

Kenneth Rijock

Tuesday, February 21, 2017

WILL NEW VENEZUELAN INVESTMENT IN DOMINICA REALLY BE LAUNDERED IRANIAN MONEY ?

The PM and Venezuela's president
                                                   
The love affair, that Dominica's Prime Minister, the beleaguered Roosevelt Skerrit, is having with the Bolivarian Republic of Venezuela, will not end well for the Commonwealth of Dominica. Given that the latest estimates now, for the first time, place Venezuela below Haiti, as the poorest country in the Western Hemisphere, and that US Dollars have become rare as hen's teeth, unless they are criminal profits, or Iranian capital, one must expect that all of the promised "investment funding" sent to Dominica from Venezuela will neither be clean, nor free of strings.

Remember, scores of Venezuelan nationals, from senior military officers, to the Vice President himself, are on the OFAC sanctions list, known in Latin America as the Clinton List, because it was created during the administration of Bill Clinton. This means that Dominican businessmen who accept funding from Venezuela may later learn that the source of the funds transferred to them may be tainted, land them on the OFAC sanctions list, or cause them to be banned from entering the US as visitors.

The money may also be laundered narco-profits, which could land unwitting Dominican recipients in a 200-person Federal indictment, filed somewhere in the US, as co-conspirators in some vast cocaine smuggling enterprise. Not a happy outcome, to be sure.

Iranian capital, though cleverly disguised as Venezuelan, might just place Dominica front and center in a future American-Iranian conflict, economic rather than military, as the US seeks to reduce the influence of its global adversaries in the Caribbean Basin. While Gunboat Diplomacy is a vestige from America's past, there are far more subtle ways for the United States to keep foreign influence out of the Western Hemisphere. The Monroe Doctrine is far from dead; Ask Grenada and the Republic of Panama.

If Dominica accepts suspect investment from Venezuela, the risk of future OFAC sanctions problems, even potential exposure to US criminal charges, serves to further increase Country Risk. We trust that cooler heads will prevail, and Venezuelan, or Iranian, dollars will not find their way into Dominica. Remember, Iran is regarded as a State Sponsor of Terrorism, and no matter how much greed the Skerrit government possesses, how can it take money from a radical islamic dictatorship, which treats its people, especially minorities, worse than Nazi Germany ?

Monday, February 20, 2017

TO MINIMIZE RISK, BANKS MUST IMPOSE KYCC UPON THEIR CORRESPONDENTS, OR SHED THEM


The risk-based compliance programs that North American banks have implemented, to suppress money laundering and terrorist financing, can only succeed if they extend effective risk reduction to their correspondent banks. This means Know your Customer's Customer, or KYCC, is not longer an option, if banks are to retain their correspondents.

Correspondent often have compliance shortcomings for various reasons, including but not limited to:
(1)  The constantly increasing cost of new AML/CFT technology
(2)  Budgetary constraints that make it impossible to engage sufficient fully trained & experienced compliance staff, and a functional financial intelligence unit
(3) A lack of sufficient recurrent in-country compliance training.
(4)  Developing nations' local economies, which operate at a level that fails to sustain sustain successful profit margins for an excessive number of local and regional banks
(5)  Strong competition from local branches or affiliates of international banks

there are also many other contributing factors. Banking best practices, at the level practiced by North American banks, is thus the rare exception, rather than the rule. The problems are often more severe in countries in the developing world.

The sole acceptable solution is to require that your correspondents enable you to have full & complete access to their clients' information, that they close accounts for customers who your inquiry finds present an unacceptable level of risk, or are on sanctions, and that legitimate customers who subsequently engage in conduct that is not acceptable, are also asked to leave the bank.

This is not all bad news for the correspondent banks, because by working with their onshore banks, they insure that their prized relationship will not be terminated, for risk-related reasons. To understand the reverse of the problem, that experienced by your correspondents, read my recent article, How Caribbean Banks can keep their Correspondents by utilizing KYCC Technology  .

 With KYCC, both the onshore bank, and the overseas correspondent, can retain their valued relationship.
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For further information, or for questions about this article: miamicompliance@gmail.com




CARIBBEAN CRUISE LINES CONCERNED ABOUT DIPLOMATIC PASSPORT SCANDAL, MAY GIVE DOMINICA A WIDE BERTH


Many of the world's major cruise lines have their headquarters here in Miami, especially those for whom travel to the Caribbean represent a major portion of their business operations. I am monitoring all Internet traffic to blog articles dealing with the diplomatic passport crisis in Dominica, and I am seeing, for the first time, visits to those stories, from cruise lines serving the East Caribbean. I have never seen specific attention paid to any of my articles about the Caribbean, by this industry, and this indicates a new focus on Dominica's current situation.

If you understand that cruise lines, like most large corporation, follow risk-based guidelines, and have been known to delete travel destinations, without prior notice, when weather, crime, political unrest, or any other number of negative events, raise risk levels, this is cause for concern, as cruise visits bring much-needed tourist dollars, follow-up visits by tourists who are intrigued by what they see, and provide a shot in the arm to local economies.

Pictures of individuals setting fires, and causing vandalism to downtown stores did appear in some global media, which certainly hurt tourism, and the most disturbing aspect of that violence is the allegation that the persons causing the damage were employed by the Prime Minister's Labour Party, to precipitate a crisis, requiring police intervention. That allegation was was received from two different sources, and it later appeared in the media. I expect such tactics in a Latin American dictatorship, not in an East Caribbean democracy. In any even, we  will soon see if Dominica is deemed too unsettled for cruise line tourists.

Behind the vandalism ??

ACCUSED COLOMBIAN MONEY LAUNDERER DENIED BAIL FOR SECOND TIME




Nidal Waked Hatum,  a Colombian "businessman" who allegedly led a multi-million dollar enterprise in Panama, that engaged in laundering criminal profits for Colombian & Mexican drug traffickers, has been denied bond for the second time, in a Miami Federal courtroom. He was extradited from Colombia in January, and many of his companies placed on the OFAC list.

A US Magistrate Judge originally denied him bond, and his attorney took the issue to the District Judge who will try his case. At the hearing it was revealed that Waked has a Spanish passport, A Panamanian passport, and is a resident of Canada. The judge, noting that he has no ties to the US, and that his wife was refused entry, ruled that he was a wealthy flight risk, who should be subject to pretrial detention, until his case is heard.

We wonder, given that Waked's money laundering activities were well known, how he, at the time of his arrest, held a Spanish passport, and residence in Canada. This economic citizenship problems, where dodgy individuals pay a lot of money to obtain a passport in another country. continue to confront  law enforcement, when the target's multiple access to passports is exposed at his arrest, seem to be increasing, but no international movement to ban them is on the horizon.

IS JUDGE WITH ONE OF THE CRIMINAL CASES AGAINST MOSSACK AND FONSECA SEEKING TO DELAY JUSTICE ?

CSJ Magistrate Judge Harry Diaz

According to published reports, there may be as many as four separate money laundering cases now filed against Panama City office practitioners, Jurgen Mossack and Ramón Fonseca Mora. Both lawyers, accused for running a massive tax evasion, corruption laundering, and money laundering operation, in the Brazilian scandal known as the "car wash" case, have been detained, to prevent them from fleeing the jurisdiction, or further engaging in criminal activities.

Now, at the Supreme Court of Justice, Magistrate Judge Harry Diaz González de Mendoza, has lodged a formal objection to the consolidation of the pending cases, to another magistrate. Diaz has beena ssigned one of the Mossack cases. His motives are unclear, since judicial economy is to be observed whereafter possible in complex litigation. Diaz was closely linked to the fugitive former president of Panama, Ricardo Martinelli, and also visited the offices of a Waked-controlled company, when it was about to be sanctioned by OFAC, and he may have designs on delaying the prosecution of the Mossack partners, to deny the swift imposition of justice, on the orders of corrupt Panamanian officials, present of former.

Unfortunately, there are not real procedures in place to discipline Supreme Court judges, so his sins and transgressions have been roundly ignored by the court, but Martinelli's undue influence could be the reason for Diaz' efforts to keep one of the Mossack and Fonseca cases. 

IS MALTA'S LOSS OF CORRESPONDENT ACCOUNTS IN THE US DUE TO PANAMA PAPERS ?




Last year, when the Panama Papers information was publicly disclosed, two senior members of the Government of Malta were shown to be using the law firm of Mossack and Fonseca, to conduct suspicious offshore financial business. Malta's reputation as a corruption-free jurisdiction was tarnished as the direct and proximate result, but the injury is believed to have much more severe than mere reputation damage.

Since the  release of the Panama Papers, Maltese media have reported that a number of local banks have lost their correspondent relationships with US financial institutions. The situation became so serious that the country's prime minister traveled to New York, in what many observers believe was a mission to seek to restore those corespondent accounts, and assure the global banking community that the two instances of possible corruption were an aberrant event, and that Malta can be trusted.

Damage control, regarding the roles of the government official named, appears to be ineffective, due in part to a lack of action against those officials, and Malta will now have to move in a direction to assure American bankers that its client base has no surprises, and that corruption is non-existent.  That can only happen through total transparency, regarding bank customers, and again we remind our readers that KYCC, Know your Customer's Customer, appears to be the only solution that major onshore banks will accept. We hope that Malta's bankers will respond to the challenge, and offer our advice and assistance, as we do for all of our readers with a compliance problem.
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Sunday, February 19, 2017

CANADIAN CASE SHOWS THE LENGTHS TO WHICH THE MOSSACK FIRM WENT TO FOR CLIENTS


A classic tax fraud case, the object of which was to evade taxes, by making it appear that the profits of a Canadian company, generated abroad, had been sent to Canada, when it was an elaborate fiction, demonstrates that there was nothing that the law firm of Mossack and Fonseca would engage in, when it came to facilitating client criminal activity.

Tax treaties, between certain countries in South America, and Canada, provide that companies do not pay taxes upon their income, if taxes on those sums was being paid in Canada. A corrupt "tax consultant." created dummy contracts and false invoices, and even bogus records of wire transfers, ostensibly to Canada, but in truth and in fact, the money was wired to Mossack Fonseca, who followed client instructions, and sent the funds to Swiss accounts.

The only question I have is, why did it take the Government of Panama so long to finally arrest the Mossack partners ?