Kenneth Rijock

Kenneth Rijock

Thursday, June 21, 2018

A FOUR MONTH SENTENCE FOR LAUNDERING $100m ? GET OUTTA TOWN !



A father and son team, who laundered one hundred million dollars, coming to them from Venezuela, into and through the United States, were sentenced in US District Court in New York to only eight and four months' imprisonment, in a case which will definitely not serve as a deterrent to others tempted to engage in criminal activity. The defendants, Luis Diaz jr., and Luis Javier Diaz, who will also be subject to two years of Superviased Release, face substantial forfeiture proceedings, but no more prison time, although the US Probation Office suggested a five year sentence, and the US Sentencing Guidelines computation was 13 years or more.

The defendants used their Miami-based company, Miami Equipment & Export VO., to transfer funds from Venezuela, for a fee, as an unlicensed money transmitter, using fake invoices, which recited that they were for "consulting services," and deducting fees for those illicit services. Much of the wired funds went to a British Virgin Islands corporation controlled by their Venezuelan clients.

How can sentences of only a few months operate as a deterrent to others ? What is a fair sentence for money laundering large amounts of money ? We cannot point to a specific sentence that is sufficient to act as a deterrent to others, to promote respect for the law, and to establish accountability, but what we see here is definitely insufficient. Indeed, it might just be regarded as such a small slap on the wrist, as to encourage others to become money launderers.


WILL NORTH KOREA DROP ITS FINANCIAL NUCLEAR WEAPON, THE SERIES 2006 SUPERNOTE ?



The most lethal weapon that the DPRK has is not nuclear, it is financial. It is the Series 2006 Supernote, the latest counterfeit USD$100 bill, printed in North Koreas, on plates crafted by the North's organized crime syndicate in the ROK, and sitting, well-guarded, in seven secure warehouses in the south, awaiting orders for global distribution. Will Kim Jong Un make that call in 2018 ?

Only a few of these bogus notes have surfaced in recent years:
(1) A number were passed In North China in 2016.
(2) One was identified in Seoul, South Korea, in late 2017.
(3) Advertized for bulk sale in 2018, in Singapore.
(4) A large quantity was reportedly stolen by a defecting DPRK Colonel in China in early 2018.



Will Trump anger Kim to the point that he opens up all those pallets of Supernotes ? We cannot say, but  considering that the United States is in denial over their existence in quantity, as well as the relationship between the dominent South Korean organized crime syndicate and the DPRK, expect that it will later be written off as just another intelligence failure, when the Supernotes fly.









 

Wednesday, June 20, 2018

NEW LEAK OF MOSSACK AND FONSECA DOCUMENTS SHOWS THE LAW FIRM DID NOT KNOW WHO THEIR CLIENTS WERE

A new leak of internal documents at the now-closed law firm of Mossack and Fonseca has revealed that, in the aftermath of the chaos created by the release of the "Panama Papers,"the firm desperately sought to identify the beneficial owners behind the thousands of shell corporations it formed in several offshore tax havens.

The International Consortium of Investigative Journalists (ICIJ), which exposed the original Panama Papers, reports that the law firm tried to make up for years of neglect, in attempting to conduct the due diligence it had deliberately neglected when it formed all those dodgy shell companies. The ICIJ has acquired correspondence from the firm in the period after the release of the Panama Papers, until the firm closed.

Readers who wish to follow Panama Papers 2.0, should access the ICIJ website at   www.icij.org/

DOMINICA SEEKS TO PASS OVERBROAD ANTI-TERRORISM LAW TO SUPPRESS POLITICAL OPPOSITION




The House of Assembly,  Dominica's Parliament, is set to consider on June 25 an Anti-Terrorism Law that will effectively eliminate all politial dissent or opposition to the administration presently in power, by improperly classifying all types of opposition, including peaceful protest, as a terrorist act. The overly broad definition, as contained in the proposed law, will prevent Dominicans from exercising their Constitutional right to dissent and protest, against a corrupt, incompetent government.

Unilke anti-terrorism laws in other countries, the proposed Act does not contain any provision excluding acceptable forms of peaceful protest asnd dissent from the definition of a terrorist act.The impact of this legislation, if it becomes law, is to allow the govenment to charge dissenters and protesters, even if peaceful, as terrorists, and impose a prison sentence upon them, of up to twenty-five years. Dissent is being criminalized, under the guise of fighting terrorism.

The net effect of this new law will be to eliminate the Opposition, in all forms, and to turn Dominica permanently into a one-party state, as all dissent will be classified as a criminal terrorist act, and suppressed.  



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 ?
 

Saturday, June 16, 2018

LAWYER HIRED BY ST KITTS FOR $3m TO KICK BACK MONEY TO PRIME MINISTER


Just when you thought that the corruption in St Kitts & Nevis couldn't get any worse, with the Peter Virdee scandal, it gets worse. The obviously politically motivated suit* against Opposition leader Denzil Douglas, seeking to have him removed from his seat in the National Assembly has itself a dark aspect which, when it becomes widely known, will result in the public conclusion that the Prime Minister is unfit to hold office.

According to reliable government sources, The Prime Minister has engaged Anthony Ross QC, to bring the suit, and has promised him a $3m fee to bring the action. The problem is that the PM is expecting a substantial kickback, which is not only unethical, according to the Law Society of Upper Canada, where Ross holds his law license, but could constitute a criminal act in Canada. Nonlawyers cannot receive referral fees from attorneys admitted to practice in Ontario.

We invite the public, whose taxes pay attorneys fees on outside counsel retained on behalf of the Government of St Kitts, to track and trace all payments to Ross that have already been made, and which will be made in the future, and to determine if your PM recorded a deposit from Canada during that time period.



With this obscene level of systemic corruption, it is easy to understand why both the United States and Canada want to look carefully at anyone holding a St. Kitts passport, before issuing them a visa to visit their country.
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* Political case against Opposition Leader in St. Kitts could be Dismissed this Week

APPEALS COURT IN GREECE REFUSES TO EXTRADITE WHISTLEBLOWER TO MALTA IN PILATUS BANK CORRUPTION CASE

Maria Efimova
An appellate court in Greece has affirmed a lower court decision declining a request from Malta to extradite the Russian whistleblower Maria Efimova, the former bank employee who helped the assassinated journalist Daphne Caruana Galizia expose financial crime and Iran senctions evasion at now-shuttered Pilatus Bank. The Maltese government's petition for extradition was held by the lower Greek court to be vague and irregular, and found that she would neither get a fair trial in Malta, nor be protected while in custody.

The arrest warrant from Malta, which alleged that Efimova provided false evidence, false accusations, and theft, allegedly was politically motivated, and have no factual basis. Powerful politicians in Malta, some of whom have been exposed in the Panana Papers, and thereafter scalded by the media for reputed corruption, are believed to be behind the government's action.

The court system in Malta, whicb is regarded by many observers as corrupt, with two recent court cases involving judges accused of bribery, may have been a factor in the Greek court's ruling as were allegations of governmental corruption in Malta, irrespective of the law. The corruption, when paired with a citizenship by investment (CBI) program where effectiveness of the due diligence investigations of applicants has been questioned, has increased Country Risk for Malta among compliance officers in the EU, for valid reasons. Investigations by the EU, into both the CBI programs, and money laundering allegations, are pending.


POLITICAL CASE AGAINST OPPOSITION LEADER IN ST KITTS COULD BE DISMISSED THIS WEEK



Denzil Douglas, Timothy Harris
A civil suit, brought by a constituant against the leader of the Opposition in St. Kitts & Nevis, for having a diplomatic passport from Dominica, appears to be legally flawed, and could be dismissed as early as next week, as the two island nation continues to be roiled by a bribery and corruption scandal involving its prime minister, Timothy Harris.

At a recent hearing, several issues were raised by the Court, including whether there was legal standing, whether the plaintiff's expert witness on Dominica law was actually qualified to render an opinion,  whether the case should be decided based upon the Constitution, rather than the National Elections Act. The Court implied that the matter appeared to be ripe for dismissal, and an additional hearing on a pending motion to dismiss has been set for the coming week, on June 18th.

Most experts say the case is purely political, and brought by the PM to divert attention from his dire position, due to multiple scandals, the object being to attempt to drive the leader of the Opposition, Denzil Douglas from his seat in the National Assembly. Tony Ross, A Kittitian lawyer from Canada, who is counsel for the plaintiff, and is said to be commanding a huge fee at government expense, is, according to a Kittitian whistleblower, kicking back a portion of his fee to Timothy Harris .

According to local sources, several Cabinet members have called for Harris' resignation, as the financial records of receipts from the Citizenship by Investment (CBI) program are not being released for inspection, and there are issues of sexual misconduct in what is a very conservative nation. Their dismay is compounded by the Peter Virdee scandal, which has generated extensive negative press throughout the Caribbean. So far, Harris has refused to resign; Whether he will be forced from office by the people of St. Kitts is not known.


Friday, June 15, 2018

MARTINELLI CONFINED TO PANAMA'S EL RENACER PRISON PENDING TRIAL



For those who predicted that the former president of Panama, Ricardo Martinelli, would never be extradited to face prosecution for the $13m embezzlement and massive illegal surveillance charges, here he is behind bars, where he will remain until trial.  

ANGUILLA COMPANIES ARE BEING USED IN SYRIA SANCTIONS VIOLATIONS

Flag of the Governor of Anguilla
  Readers who have read my autobiography, The Laundry Man (Penguin/Random House UK) know that the British Overseas Territory of Anguilla was a hotbed of money laundering in the 1980s, until reforms in the next decade more or less removed it as a jurisdiction favored as a destination for illicit wealth. Most of the overt money laundering has moved to independent East Caribbean States, where corrupt politicians have allowed it to flourish, in exchange for bribes and kickbacks. Financial crime had disappeared from Anguilla, or so I thought.

So why, in a white paper recently released on Dubai money laundering into real estate investments, do we see that several Anguilla corporations* have been employed to violate international sanctions on Syria ? The companies were employed to own several commercial vessels that smuggled oil ftom Russia, the Ukraine and Croatia, into Syria.

Anguilla companies named are:
(1) Metal Shipping Ltd.
(2)  Maestro Shipping Ltd.
(3) Splinter Shipping Ltd.
(4)  Milano Shipping Ltd.

The Anguilla companies appear below marked with a yellow border.


While there is little the Crown can do when Commonwealth states, which are independent sovereign nations, violate international (UN & US) sanctions, the Governor or the Foreign Office can certainly step in here in Anguilla, and reign in the lawyers who are forming these companies and sending them off to Syrian clients. The question is, will they do so ?
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* We see in the illustration above that St Kitts is also a jurisdiction where companies violating Syria sanctions were employed. Before St Christopher & Nevis became independent, it was linked to Anguilla, so I suspect the attorneys or corporate formation specialists who performed the legal services are the same.


Thursday, June 14, 2018

CENTER FOR ADVANCE DEFENSE STUDIES REPORT EXPOSES MASSIVE MONEY LAUNDERING INTO DUBAI REAL ESTATE



The Washington-based Center for Advanced Defense Studies, using leaked real estate data from Dubai, UAE, has published a major white paper, documenting the extensive ownership of pricey Dubai real estate, by criminal elements, including sanctioned individuals and entities. It is well documented and is recommended reading for anyone who wants to lift the veil on Dubai, and reveal exactly who is buying those million dollar properties. There are extensive charts & pictographs.



Readers who wish to review the complete text of the thirty page C4ADS document, which is in pdf format, may access it  here.

THE USE OF SOCIAL MEDIA RESOURCES IN EFFECTIVE ENHANCED DUE DILIGENCE INVESTIGATIONS


 While we have previously written several articles on this blog, detailing how important the utility of social media resources in routine inquiries made by bank compiance officers, prior to account opening, as well as its usefulness in successful law enforcement investigations, social media searches have also become an integral part of all Enhanced Due Diligence procedures. The widespread use of Internet reputation management companies, and the artful placement of so-called "fake news" articles in the media, has eliminated the ability to rely upon much that is posted to the world wide web, even if it sems to come from authoritative sources.

Social media searches are valuable source of negative information that your target may have worked very hard to keep from the Internet, but which artful and focused inquiries on social media will reveal. For example, a photograph documenting the presence of what you thought was a successful businessman-client at birthdays, holiday observances, charitable events, or simple gatherings, will often show close links to his more disreputable (i.e. organized crime) associations. Individuals may reveal interesting aspects of their lives when they as off-duty, or they think they are participating in private moments.

Another example is information ,which can often be gleaned only from social media sites, about your target's close friends' relationship with criminal elements. Is he the covert intermediary between your target and individuals who will disqualify him from any serious consideration for a directorship, large commercial loan, or investment in a joint venture ?  Often you can find evidence of such a relationship hiding in plain sight in a social media source.

When conducting an effective Enhanced Due Diligence investigation, Social media resources have become as important as your reliance upon facial recognition software, and of Second Generation, cloud-based information. Do not neglect to make it a mandatory element of all your EDD inquiries, lest you miss an important discovery which could affect your recommendations about the target's suitability, or lack thereof.

Wednesday, June 13, 2018

HOUSE REPUBLICANS REMOVE BENEFICIAL OWNERSHIP DISCLOSURE FROM PENDING LEGISLATION


 Long before 9/11, I was actively supporting significant anti-money laundering legislation pending before the US Congress, and actually testified three times, before committees of Congress, in 1999 and 2000. Unfortunately, powerful bank lobbying forces opposed to the additional expenses that effective AML compliance programs must cost, defeated all nine of those bills, and they never became law. It might be important to note that convicted fraudster R Allen Stanford was one of the major supporters of those lobby efforts.

On December 29, 2000, I wrote a letter to the New York Times, Stop Money Laundering. pointing out how none of the critical bills were passed, and the fact checker at the Times verified that my statements were sadly true and correct. Readers who wish to read that letter can access it here.

Now Republicans in the House of Representatives are at it again, obviously putting their campaign contributors ahead of the war on money laundering. The provision, placed in the Counter-Terrorism and Illicit Finance Act, which mandates complete disclosure of beneficial ownership of corporation, was cleverly deleted from the final draft, which can be viewed here.  The vote on the bill, with the beneficial ownership requirement removed, is due for a vote tomorrow (June 14th). No wonder many experts believe we are losing the war on money laundering.

NEW FINCEN ADVISORY ON CORRUPT PEPS IS REQUIRED READING

 I recommend that you review the latest Advisory of the Financial Crime Enforcement Network (FinCEN-2018-A003), entitled Advisory on Human Rights Abuses enabled by Corrupt Senior Foreign Political Figures and their Financial Facilitators. The fifteen page white paper includes case studies, Red Flags to watch for, and contains extensive and helpful footnotes for further research.

Readers who wish to review the complete text of the Advisory can access it here. Go to the webpage, then click on the blue hyperlink to access the pdf file.


WHY DID ST KITTS CBI PASSPORT HOLDER HAVE FOUR PASSPORTS ?

Ali Sadr Hashemi Nejad

His name is Ali Sadr Hashemi Nejad, an Iranian national currently in Federal custody in New York,and charged with multiple violations of US sanctions on Iran, by concealing the role of Iran in US Dollar payments through the American banking system. The charges are:
(1) Money Laundering.
(2) Conspiracy to defraud the United States.
(3) Conspiracy to violate IEEPA*.
(4) Bank Fraud.
(5) Conspiracy to Commit Bank Fraud.
(6) Conspiracy to Commit Money Laundeing.

The senior executive, and owner, of Malta-based and incorporated Pilatus Bank, Nejad faces a maximum of 125 years in Federal Prison for his crimes. So why is he the subject of a CBI passport article ?

It appears that Mr. Nejad acquired four (4) CBI passports from St Kitts & Nevis, according to reliable reports. The fact that the CBI passport agency in SKN issued him so many identity documents speaks volumes about the ineffectiveness of the CBI program's operation.

(A) His attorney, on spin control, has attempted to diffuse the situation by claiming that two of the passports had all their visa pages filled in, and one, not completely full, contained some sort of "authorization" (Visa ??) for the United Kingdom, This is a flagrant lie, as St Kitts passports holders, as nationals of a Commonwealth state, enjoy visa-feee access to the UK.

(B) This nonsence about two passports being completely full is another falsehood. Anyone can have extra pages appended to an existing passport, and many jurisdictions do not even stamp your passport any more.

(C) Our Iranian sources have stated that these passports contain different  names, and/or diferent dates and places of birth. Money launderers, which Mr. Nejad is alleged to be in the indictment, frequently alter the spellings of their names, and birthdate information, slightly, to defeat government computer searches at Customs.

(D) Is one these passports a diplomatic passport ? That might explain why Nejad has more than one. Of course, he's no diplomat, not accredited or posted anywhere, a violation of UN treaty laws.

The case is a classic illustration of the shortcomings of the current St Kitts CBI program; that program must be the subject of a major upgrade, if it is to survive, and prosper. Otherwise, CBI passport holders may find themselves detained an international customs kiosks, interviewed at length, and even detained, all because St Kitts has failed to raise its program to an acceptable level.  
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Nejad is alleged to have placed obscenely high processing charges upon Iran, in some cases as high as forty per cent (40%) on transactions.  

Tuesday, June 12, 2018

PANIC DUE TO THE FAILURE OF PETROCARIBE COULD LEAD TO INCREASED FLOW OF DIRTY MONEY INTO THE CARIBBEAN



Veneuela's oil industry* has declined to the point where even exports to the country's wholly-owned US oil company, Citgo Petroleum Corporation, have ceased, forcing that firm to itself buy oil on international markets. Accordingly, Petrocaribe, Venezuela's preferential sales program to the states of the Caribbean, is unable to ship to the recipients of that program. That fact is haunting the region's governments this week.

The response of the East Caribbean states has been discomfort, at times even bordering upon panic, for they will now be forced to buy fuel on the world market, which will not only be pricey, but will be required to pay for it, rathen than the generous deferred terms that Petrocaribe offered. Many of those countries do not have sufficient liquidity in their treasuries to meet the higher 2018 prices in today's marketplace.

Countries of Petrocaribe

Add to the mix the depressed post-hurricane tourism estimates, and the decline in foreign investment due to perceived storm damage, and you have a perfect storm of desperate financial need, which increases the risk that dirty money from abroad may find willing recipients, most likely in more than one country.


Compliance officers at international banks should be aware of the names of the countries that were Petrocaribe recipients, and take that into account in the future, for risk assessment purposes:

Antigua & Barbuda
Bahamas
Belize
Cuba
Dominica
Dominican Republic
Grenada
Guyana
Haiti
Jamaica
Nicaragua
St Lucia
St Vincent & the Grenadines
Surinam
St Kitts & Nevis


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* To complicate hemispheric oil issues further, Iran, with Venezuelan assistance, illegally sold massive amounts of oil in Latin America, notwithstanding United Nations and United States sanctions. It is not known whether any oil vended through Petrocaribe was of Iranian origin. Iranian sources insist that there are still billions of dollars still due, owing and unpaid from those sales.







WILL MOSSACK AND FONSECA CHEAT JUSTICE ?




The recent commencement of criminal investigations, against a number of minor employees at the defunct Panama city law firm of Mossack & Fonseca may signal a change in focus, from the name partners, to low-level participants in the international money laundering and tax evasion program exposed in the Panama Papers.

The timeline shows that the clock has been ticking on the abysmally slow progress of the case:

(1) Panama Papers released to global media; April 2016.
(2) Mossack & Fonseca partners arrested; February, 2017.
(3) Partners bond out of jail; April, 2017.
(4) Law firm closes down; April, 2018.

Given that sufficient evidence to convict the partners many times over has been in the public domain for more than two years, the fact that investigations are continuing is suspicious at best. Will Jurgen Mossack and Ramón Fonseca, the founding partners of the law firm, ever go to trial ? It is beginning to appear more and more unlikely to experienced Panama watchers, who are familiar with the corrupt status of the country's court system, where illegal gratuities often change hands, and influential lawyers can delay justice indefinitely through bribes and favors.

While the Panama Papers have focused the financial world's attention on the sordid and opaque offshore corporate formation industry, and caused global awareness, the M & F partners may never see the inside of a Panamanian prison.

Monday, June 11, 2018

US SECRETARY OF STATE WARNED FORMER ST KITTS PM ABOUT CBI PROGRAM DEFICIENCIES

PM Harris, ex-PM Douglas
 In a meeting last month, the current Prime Minister of St Kitts & Nevis disclosed some critical historical information about official correspondence on file in his office, regarding the United States' conclusions about the previous SKN government's lack of effectiveness, in properly administering the due diligence portion of its CBI program. 

The Prime Minister, Timothy Harris, stated that there were several letters from officials in the United States, critical of the deficiencies of the St Kitts CBI program. One specific letter, from then-Secretary of State John Kerry, to then-Prime Minister Denzil Douglas, flat out told Douglas to cease and desist issuing any additional CBI passports, due to the manner in which the program was being operated.

Obviously, Douglas never complied with Secretary Kerry's request; subseqently his US visa was revoked by Kerry, and it has never been reinstated, notwithstanding repeated requests.

A reform element in St Kitts is seeking to elevate its existing CBI program, which is still poorly regarded by the United States, which has never rescinded the 2014 FinCEN Advisory, through an upgrade to Enhanced Due Diligence investigation of all applicants. Employing EDD could also ease the relationship with Canada, which also imposed visa requirements on SKN nationals, reportedly based upon the flaws in the CBI program vetting procedure.






PANAMA'S FUGITIVE PRESIDENT TO BE EXTRADITED TODAY FROM MIAMI


Martinelli coming home
Sources in the Republic of Panama have advised that the country's fugitive former president, Ricardo Martinelli, said to have been the most corrupt leader the country has even known, is being extradited from the United States, arriving in Panama City sometime later today. He faces charges of embezzlement, and of conducting an illegal surveillance program upon prominent Panamanians.

Martinelli has been held in Federal custody, in a facility in Miami, while his appeal of an adverse ruling regarding his extradition was pending, but he recently abandoned that appeal, allowing the Secretary of State to order his extradition.

Sunday, June 10, 2018

DARK FORCES SEEK TO INFLUENCE CBI SALES IN THE EAST CARIBBEAN STATES THROUGH NEWS MANAGEMENT


The exposure of a "sponsored news story" about the purported arrest in China, of a senior officer of a prominent CBI real estate developer, as a total fabrication, once more confirms that there are powerful, albeit hidden, forces in the East Caribbean, devoted to the pursuit of a hidden financial agenda .That agenda is to divert potential affluent foreign investors from certain CBI programs, and toward others where the hidden forces have a large financial stake in increased sales.

What happened recently in the news has been traced back to a  dodgy businessman, formerly from one of the East Caribbean states but now living in the United States, who allegedly sought to place "fake news" in several Caribbean media. One online website published the information, without confirming the story, leading others to blindly follow, assuming, incorrectly and negligently, that it was true and correct; Big mistake.

This is but one example of how news management forces in the Caribbean seek to mold public opinion against one or more CBI jurisdictions, while cleverly leaving out the ones it can most benefit from, so that CBI applicants are being steered and directed to the "clean" alternatives championed by certain parties.

How are CBI applicants subtly pushed in one direction, meaning one jurisdiction, over others ? Let us cite some obivous ploys:

(1) financially supporting what appear to be objective online news services, when in truth and in fact, they are heavily weighted with pro-articles, concerning one jursidiction, and negative news about their competition.


(2) Placing what are referred to as Opinion pieces, or Commentary, of content slanted against certain CBI jurisdictions, on news sites.

(3) The placement of "sponsored" content, often paying well for the privilege. Warning: that content may not be labeled as such. These are often puff pieces, extolling the virtues of one country; This may occur on strictly local media sites,where advertising revenues can influence the content,  as well regional, commercial news and information services.



(4) The use of surveys,  forums, and non-profit industry groups that are little more than shills, and other so-called objective yardticks, showing one CBI jurisdiction as head and shoulders above another. All negative information, concerning the one which is being the subject of the advocacy, is suppressed or glossed over.

So, who is doing all this, spending a lot of money to fill any search engine results with one entry after another, faithfully pushing an agenda designed solely to hawk one jurisdiction as the best choice ? We cannot say, as the evidence is not sufficient to prove who is behind it, in as court of law. Our best guess:

(A) An international CBI consultancy, who wishes to direct market shares from CBI jurisdictions where it does not have a favorable position, to one where it enjoys a major share of profits, in its commission structure, or

(B) Certain financially flush senior government officials, at a specific state where they themselves have a lucrative, although probably covert, means of "profit sharing," and who simply want much more of the same.

Frankly, it could even be a joint venture between (A) and (B); whoever it is, the news management efforts have made any accurate assessment of the truth of information on Caribbean news websites problematic at best, and to be avoided for any compliance enhanced due diligence, as well as risk management purposes. Consider the "news" from these resources to be either deliberately disinformation, or sugar-coated, either of which renders them unsatisfactory as news sources.




NEW HAMAS-HEZBOLLAH COOPERATION RAISES RISK OF A THIRD LEBANON WAR



Information confirming that there is a new program of tactical cooperation between Hezbollah and Hamas, which could easily result in a Third Lebanon War with Israel. The reported arrangement, which provides that Palestinian terrorists affiliated with Hamas will train with Hezbollah, as well as learn rocket and missile technology, in Hezbollah-controlled territory in South Lebanon, is extremely disturbing.

This tactical assistance will result in groups of radical Palestinian fighters being based near the frontier with Israel, and give Hamas the opportunity to open a new front against Israel, without exposing itself directly to IDF retaliation. I doubt whether Hamas' beleaguered leadership will be able resist an opportunity to tweak Israel from what they view as a safe haven. Trouble is, any Hamas attacks against Northern Israel will more or less automatically reault in retaliation, which could easily further escalate into a theater-wide conflict with Hezbollah. 


Israel's senior government figures have long warned that any future conflict involving Hamas-controlled Lebanon will result in the immediate destruction of Lebanese infrastructure, and since Israel has air superiority, I fear that downtown Beirut, including Lebanon's precious banking center, will be on the top of the list.

Given Israel's recent attacks on Iranian military installations in Syria, you can expect any Palestinian fscilities in South Lebanon to get more of the same treatment, if there are even small attacks across the border, so a Third Lebanon War may well be inevitable; if you asssume so, then any pending transactions with Lebanese banks, importers or traders, or any exension of credit or investment would be out of the question. Will 2018 be the year that Lebanon is forced back into war ? We canot say, but we will be watching.

Saturday, June 9, 2018

US STATE DEPARTMENT ORDERS RICARDO MARTINELLI EXTRADITED TO PANAMA



The President of the Republic of Panama, Juan Carlos Varela, has advised that his office has received a letter from the US State Department confirming that the agency has approved the extradition of the fugitive former Panamanian president, Ricardo Martinelli. Martinelli recently advised that he has dismissed his pending appeal of a Federal judge's order mandating extradition. He is presently in custody, in a Federal pretrial detention facility.

News media from Panama has indicated that government sources believe Martinelli will be swiftly extradited within the next few days. He faces charges of embezzlement of millions of dollars from government accounts, and operating an electronic surveilance program that illegally spied upon an extimated 150 Panamanians. Under existing extradition laws, he can only be tried for those two cases, although he also has approximately twenty other criminal cases pending against him.

Friday, June 8, 2018

PASSPORT SALES AND MONEY LAUNDERING CONTINUE IN DOMINICA, AMIDST A PUBLIC HEALTH NIGHTMARE




While corrupt politicans in Dominica are raking in cash, hand over fist, the rest of country's impoverished population is literally dying, in a public health crisis that is the worst in the Western Hemisphere, and it has nothing to do with either the last hurricane, or the previous tropical storm. If you are living in Dominica, you have an excellent chance of an early death from cancer, as the present government blissfully ignores the individuals who elected them into office.

On June 3, 2018, The Journal of the American Medical Association Oncology published the results of its global cancer study, under the auspices of the University of Washington. The study, which covers 195 countries, found that Dominica has the third-highest death by cancer rate in the world, specifically 203.1 per 100,000 of population. Only Mongolia and Zimbabwe have higher rates.

Dominica leads in prostate cancer deaths, with 54.9 deaths per 100,000 of population. The global average is 6.1 . It also leads in Multiple Myeloma, which is cancer of the plasma cells, with 5.9 deaths per 100,000 , where the global average is but 1.5.



These findings cannot be atrtributed to Hurriane Maria, as they are statistics from the year 2016. They are indicative of neglect of domestic health services over a prolonged period of time, while Dominica's cash flow, from its lucrative CBI passport sales program, was diverted from supporting public health needs, and much of which cannot be accounted for.

In April of 2018, the Dominica Nursing Association placed blame squarely upon the government for nurses leaving the profession in droves, because of poor pay and working conditions. Even though there is severe chronic unemployment in Dominica, in May the government announced that twenty Cuban nationals would be imported, to address the nursing shortage, according to Dominica news Online.

Some observers have compared rthe Commonwealth of Dominica to the Republic of Haiti, where corrupt kleptocrats skim off all the country's wealth, leaving their countrymen destitute and unemployed, and living in a failed state, but these statistics actually show that a resident of Dominica will most likely pass away before a citizen of Haiti. That sad fact is totally ignored by Dominica's corrupt officials, who can visit the best doctors that Swiotzerland has to offer, while they visit their fat Swiss bank accounts.

















 

READ FCA FINAL NOTICE ON CANARA BANK UK BRANCH DETAILING AML FAILURES



While many compliace officers have already read the media reports about the civil fine and penalty imposed upon the UK branch of India's Canara Bank, for rampant AML shortcomings, you will only understand the situation, where the FCA detailed the failures, by reading the 44-page report. From the placement of compliance officers from India who did not fully understand UK compliance, to the utter failure to control PEPs, the bank's management failed to reform its program, even after the regulator pointed them out, years earlier.

More damaging than the equivalent of a million dollar fine (in Sterling) is the FCA ban on the bank accepting any new customers for an extended period of time.

You can review the complete text of the Final Notice here.

Thursday, June 7, 2018

CONSTITUTIONAL CHALLENGE BY BVI WILL FURTHER DAMAGE ITS BRAND AS AN OFFSHORE COMPANY PROVIDER

 
 The news this week is that the British Virgin Islands, reeling from the impact of its upcoming obligation of total corporate transparency, due to an Act of Parliament becoming effective in 2020, has engaged a prominent expert in constitutional law, to contest the legitimacy of the new law in court. Whether there are legal grounds to make such an argument, in defying the UK Government, in what many will surely consider a purely dilatory action, without merit, will not endear the BVI to the compliance officers at financial institutions in North America, and may indeed render BVI companies, which are the bulk of the local govetnment's source of income, completely unacceptable to hold assets abroad.

While many European financial institutions may continue to accept clients' active BVI companies,  compliance offices in the US & Canada, already smarting over their inability to conclusively identify the beneficial owners of such corporations, may just blacklist them altogether, due to the fact that there is total resistance to transparency. Let us also not forget that FinCEN, which could publish an Alert, warning US banks away from BVI companies, as account holders, sellers of assets, trustees, guarantors, and in all other categories where foreign corporations could be employed in transactional matters, because potential money laundering or financial crime threats of beneficial owners could be shielded from view.

If the British Virgin Islands want to retain the pedigree and legitimacy of the Crown, so that it can hawk the lucrative sale of BVI companies to Chinese tax evaders, corrupt PEPs, and other scoundrels, it needs to agree to transparency, and post a public corporate register forthwith. If not, then we must recognize that its true goal is to perpetuate opacity in corporate ownership. and redline BVI companies as high-risk, for all compliance purposes.

Wednesday, June 6, 2018

CORRUPT DOMINICA OFFICIALS TRY TO CONCEAL THEIR DODGY CBI CLIENTS' TRUE NATIONALITY FROM COMPLIANCE OFFICERS



When a compliance officer examines a passport presented by an individual seeking to initiate a relationship with his bank, should the prospective customer's country be one of those engaged in the sale of economic citizenships, through a Citizenship by Investment program, also known as CBI or CIP, he knows to immediatelty examine the place of birth of the passport holder. Should the birthplace be outside the country where he claims citizenship, compliance knows to initiate enhanced due diligence, for absent the remote possibilitty that the holder is a naturalized citizen, the odds are that he is holding a CBI passport, which substantially increases the level of risk in accepting the individual as a customer.

Now, however, we have learned that corrupt officials in the Commonwealth of Dominica are selling not only CBI passports, but birth certificates that falsely attest that the holder was actually born in Dominica. This tactic means that compliance officers can no longer be assured that they are dealing with a genuine Dominica national, making the birthplace inquiry moot. CBI passport purchasers are also getting drivers' licenses, and other secondary identification, to back up their spurious birth certificate and passport; Do not accept this fraud.

As the result, we must, regretfully, advise that, hereafter ALL individuals who present passports from the Commonwealth of Dominica must be subject to enhanced due diligence procedures, prior to account opening, with no exceptions. If this proves to be too costly, or too time-consuming, you are advised to blacklist all nationals from that country, and decline to open new accounts for any Dominica national, as the risk is simply too great that you will be banking a career criminal, corrupt foreign government official or PEP, or terrorist financier. 

Tuesday, June 5, 2018

ANTIGUA TO HOLD ANTI-CORRUPTION MARCH FOR JUSTICE THURSDAY

Asot Michael


The residents of Antigua will make a non-partisan United March for Justice on Thursday, to peacefully protest their government's continuing failure to investigate several major corruption scandels that have shaken the country to its core. Two of those involve the disgraced MP Asot Michael, who was cashiered as Minister of Investments after evidence of his partcipation in soliciting million dollars bribes from foreign investors surfaced, and who is also the principal suspect in the disappearance of two hundred Antigua passports, in another scandel.

Michael has refused to surrender his seat in Parliament, notwithstanding a groundswell of public anger at his gross avarice. The third issue involves charges of conspiracy to sell Antigua passports, and charges are pending against the fired Assistant Superintendent of Police, and others named and unknown.

The Government's apologist, the Prime Minister's Chief of Staff Lionel Hurst, has openly and disrespectfully discouraged Antiguans from attending, rudely calling the march pointless, as well as irrelevant, due to the poor showing of the Opposition parties in the recent national elections. However, the memories of widespread election fraud, through the illegal purchase of votes, and the resulting anger of the people of Antigua after they learned about it, and who assert that the election was fixed, due to rampant corruption, should insure a large turnout at the march.

Additionally, a number of real estate projects, where the foreign investors were never adequately vetted, and who later turned out to be the criminal element, has also infuriated Antiguans, who have called for fundamental reform of the due diligence process.

Participants are being asked to wear white, to demonstrate that they are not turning out on behalf of, or to garner votes for, any political party, and some are calling the event the "White March." There are calls for the march to begin at 3:00 PM. Calls by other government officials to avoid the march are being ignored.


A RUSSIAN IN DOMINICA GOVERNMENT ! SAY IT AIN'T SO, FRANCINE


His name is Omar Murtuzaliev; he is the Vice President of the Russian Wrestling Federation and a close personal friend of Vladimir Putin. The press has described him as one of the Russian Oligarchs, businessmen who rapidly accumulated wealth in the years after the dissolution of the Soviet Union, when privatization of vast government assets was allegedly sold for peanuts, making many billionaires overnight.

What does this have to do with Dominica, you ask ? Murtuzaliev was the Trade Attache for the Commonwealth of Dominica, based at the High Commission in London,  between 2012 and 2014 when Francine Baron, the present Minister of Foreign Affairs, was the High Commissioner. He even listed his nationality and residence as Dominica, though he is known to reside in the Principality of Monaco. Why does a Russian national, who lives elsewhere, become Trade Attache for Dominica in London, and how can he discharge his "trade attache'"duties ?  How much trade did he actually facilitate during his term as attache, anyway ?

It seems his son, Timur Murtuzaliev, who is a British national, resides in the UK. Omar's Dominican passport gives him visa-free entry to Great Britain. Both Timur and Omar are directors of the Tiko Foundation, a tax-exempt charity, listed as delinquent in its financial filings, and formerly known as the Red Lodge Trust, formed the same year that Francine Baron was appointed High Commissioner in London, 2012. Connect the dots, please. If the UK Government makes it difficult for Russians to get visas, try a Dominica passport, my Russian friends; it is the Nature Island, and a Commonwealth member.

Since Minister Baron departed London for Roseau, her Second Secretary at the High Commission, Janet Charles, has been designated Acting High Commissioner, while curiously still retaining her portfolio as Second Secretary, and not being promoted to Commissioner. the London rumor mill has Minister Baron still giving all the orders at the High Commission.

A final note; it was Minister Baron who signed the bilateral Dominica-Russia agreement at Sochi. How much influence does Russia have in Dominica Government ?