Kenneth Rijock

Kenneth Rijock

Wednesday, June 20, 2018

SHOULD CBI PROGRAMS HAVE ANNUAL LIMITS ON APPLICATIONS ?



We note that the Government of St. Kitts has reported that it has taken in 1200 applicants for its low-cost $150,000 Hurricane Relief CIU (CBI) Program. At the same time,  the Government of Cyprus has announced that it is limiting the total number of CBI passports issued annually this year to 700, and it will take up to six months to conduct enhanced due diligence upon the applicants. Does Cyprus know something the authorities in St Kitts don't ? Absolutely.

The short answer is that individuals conducting due diligence on CBI applicants (which should be enhanced due diligence, not merely due diligence-level compliance) must have sufficient time to thoroughly examine each applicant, wait for inquiries made abroad to return, and if necessary perform follow-up on the results. If they are under pressure to complete files, due to a large backlog of pending cases, true enhanced due diligence, which cannot be rushed, may suffer, and unsuitable applicants will be approved, only to subsequently get arrested, with their CBI passports in hand.

CBI jurisdictions must accept only quality applicants, which they cannot do if they are into quantity, for the sole reason of maximizing cash flow. Given St Kitts' past history of abject failures in its CIU program, unless it wants to see further compliance failures, with the attendant negative publicity it would do well to put a ceiling on passport issuance, and at the same time truly raise its level of inquiry to enhanced due diligence, which history tells us it does not conduct upon its applicants.  

Tuesday, June 19, 2018

ST. KITTS SENDS IT BEST TO CANADA, TO CONVINCE IT TO OPEN ITS DOORS TO CBI PURCHASERS


St. Kitts & Nevis recently sent an official contingent to the capital of Canada, in a full court diplomatic press, intent on convincing senior leaders to again allow visa-free entry of its passport holders to Canada. The Kittitian diplomats who met with government officials, which included its Minister of Foreign Affairs, and the SKN High Comissioner to Canada, have long been seeking to abolish the Canadian visa requirement, without success, and sought to use family ties, and trade and investment connections, to pursuade Canada's officials to bend to their will. It appears that they failed.

The personal meetings, which included House of Commons leaders,  and Canada's Minister of Immigration, Refugees and Citizenship, had a serious business goal. St. Kitts' Citizenship by Investment, or CBI, program, allows its passport holders visa-free admission to all Commonwealth of Nations jurisdictions, unless otherwise restricted, which Canada does. Of all the visa-free countries CBI passport holders wish to have access to, Canada is at the top of the list. Unless Canada revokes it visa requirement, the SKN CBI passport is not as valuable as those of competing East Caribbean States with CBI programs. This means fewer lucrative CBI sales, hence the personal visit to Ottawa.

Unfortunately, since the St; Kitts CBI program has still not upgraded its CBI applicant vetting procedures, to the level of Enhanced Due Diligence, both Canada and the United States will contiue to regard the holders of SKN passports as high-risk, punishing legitimate native-born Kittitians, as they troll for dodgy CBI passport holders. Someone should tell that to the SKN Minister of Foreign Affairs.

Monday, June 18, 2018

ARE THERE MORE INDICTMENTS IN THE PILATUS BANK $115m IRAN SANCTIONS EVASIONS CASE ?


Ali Sadr Hashemi Nejad
A number of curious filings thus week in the Ali Sadr Hashemi Nejad case, in US District Court in New York, raises a number of questions. Look at these docket entries and see if you can make heads or tails out of it:

(1) the last six documents in the case were all filed under seal. Why so many sealed filings so early on in the case ? These could be sealed indictments of additional defendants who are outside the United States, and not in custody. They could be also sealed due to national security reasons involving Iran.

(2) The court has rescheduled the Status Conference for mid-July, a delay of thirty days, "in the Interests of Justice," a phrase which is often used to grant additional time to cooperating defendants, so that their cooperation can further be exploited.

It is important to remember that he is charged with funneling more than $115m, paid under a Venezuelan construction contract, through the US financial system, for the benefit of Iranian individuals and entities. It is a major sanctions evasions case, and Nejad certainly has first-hand information about the pipelines through which Iran has, for years, moved billions of dollars through the US financial system, details of corruption at the highest levels, in Malta, where he effortlessly obtained a banking license, notwithstanding his and his family's background in sanctioned entities.

The other question is whether the Substantial Assistance being rendered by the kingpin of Iran sanctions evaders, Reza Zarrab, was instrumental in obtaining the indictment against Nejad. Do these cases intersect, and if so, who is next to be charged ?

HSBC : DON'T ASK, DON'T TELL ABOUT FINANCIAL CRIME ?



I recently published, as exhibits to my article on the widespread use by Asian organized crime syndicates, counterfeit and altered HSBC bank documents, used to commit massive bank fraud in the region, especially in South Korea. The criminal element uses the bogus document to falsely claim assets, which to uses as references to take out loans, which are, of course, never repaid. The HSBC documents, of which there are hundreds, are reportedly being used in the Republic of Korea, Taiwan, Hong Kong, and in the Peoples' Republic, to borrow money.

While I noticed that a number of HSBC bankers have accessed my article, there has not been one official inquiry, or requested  information. don't they want to know how I acquired al those bogus HSBC documents, including account statements, HSBC officer passports, negotiable paper, and other financial instruments ? Don't they want to know who the individual members of the Asian organized crime syndicates are ?



Perhaps they simply charge off the losses, and ignore the criminals fleecing the bank, in an effort to avoid the negative publicity, which can drive away customers who fear becoming victims. Whatever the reason, they are failing to interdict financial crime, which only makes it grow stronger.  



 

NOTE TO CARIBBEAN BANKS WORRIED ABOUT INCREASED DE-RISKING: STOP COMPLAINING AND INSTITUTE KYCC



I have been reading a number of articles of late, in the Caribbean media, bitterly complaining abut rampant de-risking at North American banks, and making all sorts of arguments for continued access to US & Canadian financial structures, through correspondent accounts. Whle some of the arguments certainly have merit, the de-risking situation in North America, where compliance officers at international banks are under increased pressure, and even fear the imposition of personal liability, for perceived ineffectiveness in their AML/CFT compliance programs, is only going to get worse.

North American banks will only retain their correspondent acounts at Caribbean banks if they are afforded a window into the local accounts of the offshore banks, which means Know your Customers' Customer, or KYCC. This means having softeare installed in each Caribbean bank, that will allow the bank in New York or Toronto to examine their correspondent bank's local accounts in depth, with the same access as the local bank has. It is as simple as that.

There's no great mystery about how this is accomplished; the Csribbean bank, and its Northern correspondent both download commercially-available software. There's even one created locally*, by IT techs in the Cayman Islands, for that express purpose. The problem is, in the Caribbean, with rare exceptions, no banks are willing to do it,  notwithstanding that the cost to the banks are minimal.

Why the hesitation ? I am afraid the most likely excuses are also the reasons that the North American banks want to close those correspondent accounts in the first place. The Caribbean banks say that they do not want to expose the privacy of their customers. In plain English, they do not want these types of customers/clients exposed:

(1) Accounts of corrupt government officials,and their political allies. An examination of such accounts could show deposits far in excess of an official's known salary and minimal assets.

(2) Accounts of dodgy tax evaders, drug traffickers, or individuals engaged in illegal activities.

(3) Accounts of individuals from sanctioned countries, deposited without any verification of Source of Funds, and who may be internediaries, or terrorist financiers.

(4) Accounts that hold income from Citizenship by Investment (CBI) applicants. Knowing how many deposits, and their country of origin, could provide clues to foreign law ernforcement aencies as to the volume of CBI passports issued, and what countries they ase coming from.

Unfortunately, unless true KYCC capability is granted to the onshore banks, you can expect increased de-risking, forcing the losing banks to funnel US Dollars through third parties, at increased cost, and with additional delays for clients. If KYCC does not come to the Caribbean, you can count on an eventual deterioration in local economies, and the reinforcement of the perception that bank secrecy exists there only to keep illicit clients out of the sunlight. The banks must choose KYCC to survive.
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*Readers who are not familiar with the software I am describing may email me for details. As this is a non-commercial blog, we do not promote specific goods and services.miamicompliance@gmail.com

Sunday, June 17, 2018

WITH MARTINELLI'S EXTRADITION, DONALD TRUMP'S DARK DEEDS IN PANAMA MAY NEVER SURFACE

Donald Trump, Andrey Bogdanov, Ivan Kazan, Phil Shloesenberg

  There has been zero coverage, by any media, of the curious fact that both former Panamanian president Ricardo Martinelli's District Court extradition case, as well as his subsequent Eleventh Circuit appeal, were effectively sealed, and remain unavailable to the public and press. Nobody has questioned why the courts have denied access to the pleadings in the files; indeed, we have not even seen any ruling or order that has closed these files to inspection. Why was the appeal also restricted, which is an extremely rare occurrence ?

While national security is a valid reason to restrict Federal Court files, there has never been a whisper out there that this is the reason. To the contrary, reliable sources abroad, as we have previously reported, confirm that it is common knowledge in the Republic of Panama that Donald Trump, and one of his sons, engaged in conduct in Panama City that would be extremely embarrassing if disclosed in the media. There appears to be a news blackout in place.

Longtime Panama watchers know that one of the charges that Martinelli has been exrtradited for include widespread illegal video and audio surveillance of powerful people, caught in private and intimate moments. Martinelli used tapes and videos to blackmail his victims, and the word is that two Trumps are allegedly on the tapes. Is that really why the Martinelli court files were restricted ?

Given the wide-ranging Russian election influence investigation conducted by the Office of Special Counsel, and the Russians involved in both sales, as well as purchasers, of the Trump Ocean Club in Panana City, we wonder whether its investigators have read those files.

AFTER EIGHT MONTHS, STILL NO SENTENCING DATE FOR REZA ZARRAB



Back in October, 2017 the principal defendant in the Federal Iran oil-for-gold sanctions evasion case, Reza Zarrab, waived the filing of an Indictment in his case, and a Superseding Information was filed against him. This is an indication to the Court that the defendant is rendering Substantial Assistance to US law enforcement; in truth and in fact, he did testify against his former Turkish banker, Mehmet Atilla.

Eight months later, Zarrab has not only not been sentenced, his sentencing date has not even been set. His cooperation, which could include Grand Jury testimony against others in his sanctions evasion organization, making incriminating documents available, and placing recorded telephone calls to targets, must be extraordinary. Does he have so much critical evidence, or is the US Attorney waiting for the next trial, where he will again testify, before setting his sentencing date, so that he can get sufficient credit for his cooperation ? I believe this is so.
 

 Several of his associates, including Babak Zanjani and Alireza Monfared, both of whom are in Iranian custody, and who assisted him in selling sanctioned Iranian oil and laundering the proceeds of this criminal conduct, may already have sealed indictments on file against them, An examination of the court docket of late shows only that numerous sealed pleadings have filed.

How many individuals have been indicted already, but inasmuch as they are not yet in Federal custody, are unaware that they are defendants in America's largest Iran sanctions case ?