Kenneth Rijock

Kenneth Rijock

Tuesday, May 22, 2018

LOOK WHO ALSO USED THE OFFICE OF OFFSHORE ZUMA BANK IN DOMINICA



Due to the large amount of interest in yesterday's article on Dominica's Zuma Bank, we are making additional information available, in our efforts to determine the bank's lines of business, customer base, and goals.
Vladimir Antonov

 The bank's office, 42 (Unit 2) Kennedy Avenue, in Roseau, the capital of Dominica, was formerly the office of Banco Transatlantico, the failed Dominica offshore bank owned and operated by Vladimir Antonov, the London-based Russian banker. Antonov later fled to avoid extradition to Lithuania, where he faced charges of fraud and money laundering for asset-stripping ($1.4bn) at Snoras Bank, which was nationalized. together with its Latvian subsidiary, to save both from total collapse due to his criminal acts. Antonov's Dominica attorney was Alick C Lawrence.


 Antonov is currently known to be living in St. Petersburg, Russia. Banco Transatlantico Ltd., which also maintained offices in the Republic of Panama, collapsed shortly after Antonov was arrested in the United Kingdom. It was the subject of compulsory liquidation in Dominica's High Court of Justice.  In April, 2018, Antonov was arrested in Moscow, and charged with embezzlement at Sovetsky Bank, which was placed under government financial supervision.



The other former tenants at that office were two offshore banks, ASA Bank and Trust.and FGC Bank and Trust, both of whose licenses were revoked in 2016. Both banks were owned by Alex Nain Saab MorĂ¡n, a Colombian national with close ties to the Maduro government in Venezuela, and whose name shows up as a holder of a diplomatic passport from Antigua & Barbuda.


The Zuma Bank Mastercard we pictured in our last article about Zuma comes back to a Venezuelan bank, most likely one that has branches in Panama. The credit card firm that is processing the cards is believed to be located in Panama, and the website has the earmarks of Panamanian webmasters. Our  investigation into Zuma continues.




Monday, May 21, 2018

MYSTERIOUS ARRIVAL OF PRIVATE BANKER IN DOMINICA IS NOTICED



Last night, Gabriel Sanz Gonzalez, the CEO of the low-profile offshore private financial institution, Zuma Bank, incorporated in the Commonwealth of Dominica, arrived in-country, on board the Venezuelan business jet YV-2961, which is a Learjet Type 55. The aircraft reportedly came in directly from the British Virgin Islands, the corporate formation jurisdiction of choice for anyone who wants to obtain a corporation with beneficial ownership information that is be totally and permanently opaque.


Sanz' biz jet at Douglas-Charles (ex-Melville Hall) Airport
Sr. Sanz came to Roseau to see Claudius Lestrade, the director of Dominica's Financial Services Unit, which is part of the Ministry of Finance. We are not aware of the subject of his visit. Since its Dominica incorporation in 2012 according to Zuma (though the FSU states it was in 2015), there has been no significant information in the media, detailing Zuma Bank's operations or clientele.

 Zuma Bank has no footprint in the global financial industry, though it holds itself out to be a private bank. Many of the Internet websites are in the Russian language, and it is therefore assumed that the bank's marketing is directed towards wealthy Russian nationals. What is in Zuma Bank's book of business and who are its clients ?




The arrival of Sanz is not the only recent arrrival of private aircraft that has puzzled Dominicans; on another recent evening, Melville Hall Airport staff were dismissed at the end of the day's aviation operations, notwithstanding information about a late arrival. One member of the airport staff, having seen all the runway and airport lighting extinguished for the night, was driving by the field later that evening when he saw, to his amazement, that all the lights were back on, meaning that a significant arrival was in progress.

What's with all this frenzied activity involving Venezuela of late ?  We note that the so-called Bolivarian Republic is now funding hurricane reconstruction, specifically single-family home construction, but given Venezuela's failing economy, is there another reason for this totally  unexpected financing ?  Remember also that the US has recently sanctioned Venezuelan officials, which might expose local contractors and vendors in Dominica to OFAC violations.



Finally, is Zuma Bank owned by Venezuelan or Russian interests, and who are its clients ? We cannot say, but our inquiry into the bank's operations shall continue.


FFIEC UPDATES ITS MANUAL ON CUSTOMER DUE DILIGENCE AND BENEFICIAL OWNERSHIP



The Federal Financial Institutions Examination Council (FFIEC) has updated its manual on Customer Due Diligence and Beneficial Ownership Requirementss for Legal Entity Customers.  Readers who wish to review the complete text of these sections may access them at the bottom of this Press Release here.

Sunday, May 20, 2018

SHOULD THE UNITED NATIONS EXPEL DOMINICA FOR THE DIPLOMATIC PASSPORTS IT SELLS TO CRIMINALS ?




If you live in the Caribbean, you know that the Commonwealth of Dominica has been stripped of its voting rights in the United Nations General Assembly, for failure to pay dues for a period of two years. Considering that the country's government is taking in millions each year, from its Citizenship by Investment, or economic passport, program, it makes you wonder into whose pockets all that money is going.

More importantly, the United Nations should eject Dominica from its membership, not for that reason, but for one much more serious; its outlaw diplomatic passport program, which freely sells passports that do not comply with international law, to career criminals, international sanctions evaders, corrupt government officials, organized crime members, and just about any other type of lowlife who would benefit from a tool that facilitates crime or terrorism. Do you have two or three million dolars in criminal proceeds on hand ? Then you can become an instant diplomat.

The officials in power in Dominica have sold, for US Dollars, passports that violate the Vienna Convention on Diplomatic Relations, to which all UN members, as signatories, are bound. They really do not give a damn about international law, believing that national sovereignty protects their criminal enterprise. In the meanwhile, over five hundred Dominica diplomatic passports have been issued by a government that is engaged in racketeering for profit.

The most effective remedy available to solve this problem is for the UN to remove Dominica from membership and to declare all diplomatic passports issued by it null and void. The United States, Canada and the UK are considering how to impose sanctions, but it is also up to the United Nations to act; Throw the bums out.

WHEN CARIBBEAN BANKS REJECT KYCC, THEY REAP THE CONSEQUENCES OF DE-RISKING


The complaints about what is called "de-risking" continue to roll in, especially from the financial institutions in the Caribbean. Those banks bitterly relate tales of abrupt cancellation of long-term correspondent relationships with American financial institutions, and their often desperate quest to find alternatives, only to learn that the increased costs will probably have to be passed along to the class of client who can least afford it, expats sending remittances, and the recipients of those payments, which they do not want.

It is not a conundrum; the affected banks all have access to programs that create the Know Your Customers' Customers, or KYCC, that American banks now demand. if I am a compliance officer in a New York bank, I want to have immediate acccess to the Caribbean bank's customers, his transactions, personal information, account history, and lines of business. Basically  it isall those things that are part of his client story, so that I may reduce my risk of being involved in his US transactions.

Compliance officers know, or should know, that KYCC programs can be installed that give the USA bank a window into the Caribbean banks' customers, their recoreds, and their transactions, on a real-time basis. Unfortunately, due to cost concerns, fears about losing clients to local competitors, and pressure from clients to maintain confidentiality, most Caribbean banks fail to engage in KYCC programs, and their eventual loss of correspondent relationships, due to increasingly intrusive regulatory actions against US banks and bankers, is only a matter of time.

My advice to compliance officers at Caribbean financial institutions, adopt a program that affords onshore US banks KYCC access to your clients' information, before you get the final notice of impending closure of your prized correspondent accounts in New York. Loss of access to the US banking structure, even temporarily, can result in massive client flight, and eventual insolvency. Pay attention, and solve this problem, before your bank becomes a fatality of de-risking.

RAISE COUNTRY RISK ON LEBANON




The perfect storm for armed conflict in Lebanon, due to Hezbollah's new monopoly on political power, in the wake of recent elections there, and other factors, could result in a total disruption of the Beirut banking industry, the country's remaining significant asset.

The additional reasons for concern:

(1) The Trump Administration has just sanctioned the senior Hezbollah leadership, and America's total support of Israel has angered that specially designated global terrorist organization. Bellicose statements from the newly-sanctioned Nasrallah, against the US Embassy opening in Jerusalem, as well as Isreal, has increased.

(2) With the winding down of the anti-ISIS war in Syria, Hezbollah has combat-experienced fighters available to it, and they hold strategic positions close to the northern Israeli border.

(3) Israel's military has increased its readiness in its north, especially in the Golan Heights region. Hezbollah feels its is invincible, due to its Iranian missile inventory.

(4) A leading Israeli politician has bluntly warned that, should Hezbollah initiate hostilities, has country will formally declare war on Lebanon, and not limit its response to the area under Hezbollah control, south of the Litani River. If the missiles fall on Israeli population centers, count on a massive aerial response, and since Israel can maintain air superiority, Beirut could end up looking like Berlin in 1945.
If the Beirut banking center is attacked, even if alternate security arrangement have been carriec out in advance, Middle East money will think twice before continuing to patronize the city's banks, and massive capital flight is a distinct possibility.

This is probably a good time to reduce your risks regarding Lebanon, whether it be financial exposure, outstanding receivables, or pending matters. for war is not just possible, it is fast becoming probable.

Saturday, May 19, 2018

THE FOLLY OF THE EAST CARIBBEAN CBI STATES: ALLOWING APPLICANTS TO MAKE PAYMENT IN US DOLLARS


Use of US Dollars can confer extraterritorial jurisdiction of US Courts
The issues that compliance officers at North American banks, and US & Canadian immigration officers, have with holders of Citizenship by Investment (CBI) passports have been reported in the financial press of late, but there is a more serious problem that the five East Cabibbesn CBI states are facing: the threat of criminal prosecution, by the US Department of Justice, for violations of money laundering laws by government leaders, notwithstanding that they operate these probems outside the Unted States.

The problems the EC states have is that US money laundering laws confer what is known as extraterritorial jurisdiction upon foreign nationals, and this is occurring because the Caribbean attorneys who created CBI legislation committed what some legal experts regard as a fatal error: they adopted provisions in their CBI laws that allowed CBI program managers to accept US Dollars (USD$) as payment for their economic citizenships. That has has been judged to be a major error.

Why is this now actually considered legal malpractice ? Any attorney drafting legislation in his country should be aware of the possbility that the laws he is creating might increase specific risks in other jurisdictions, and carefully weigh the potential consequences with his client before recommending that they be enacted into law.

In this case, most attorneys in the Caribbean are aware of the Money Laundering Control Act of 1986 (18 USC §§1956-1957), which imposes a maximum penalty of twenty years for violations, plus a mega-fine. The lawyers drafting CBI legislation ibn the East Caribbean failed to research that statute in depth, for if they had they would have learned that it has extraterritorial jurisdiction.

This means that a foreign national could be charged if the US Dollars they accept, for any purpose, are the proceeds of what are referred to Specified Unlawful Activities, and any portion of the transaction has a connection (nexus) with the United States, such as being deposited in a US bank, or transiting the American financial system. The MLCA, which was strengthened by the USA PATRIOT Act of 2001, will reach out and touch foreign nationals (e.g Reza Zarrab), for acts that they committed totally outside the USA.

Therefore, any dodgy applicant, using criminal proceeds for his cash to purchase that CBI passport, which is later deposited in a dollar account, and ends up passing into, or through, a US financial institution, has implicated not only himself, but the CBI program, and the country's leadership, as well, under US law.

We doubt that the Caribbean attorneys tasked with drafting their local CBI laws even bothered to look at the possible negative consequences of accepting US currency. They probably used the pioneering St Kitts & Nevis CBI program as a template. Unfortunately, that program became law back in 1984, two years before money laundering became a federal crime. Why didn't someone realize that using US Dollars might have consequences ?

Should the CBI program directors, and their attorneys, have chosen the Pound Sterling, instead of the US Dollar ?  Probably so, given the extraterritoriality issue, as well as the fact that the USA has very broad conspiracy laws, unlike the UK, which adds to the undesireability of accepting US Dollars, unless you are completely sure of the Source of Funds, and of your applicant's bona fides.

We understand that the leaders of a number of the East Caribbean CBI states are feeling anxious of late; are they feeling a cold chill, perhaps coming from the possibility that the US Department of Justice might be investigating them ?