Kenneth Rijock

Kenneth Rijock

Wednesday, November 14, 2018


Canada's House of Commons Standing Committee on Finance has issued a major white paper, making thirty-two recommendations for modifying Canada's AML laws. The subjects covered are:

(1) Beneficial Ownership
(2) Politically Exposed Persons
(3) Expanding PEP and Beneficial Ownership Requirements
(4) White Label ATM Services and Armored Cars
(5) Real Estate Sector
(6) Structuring
(7) Luxury Goods Sector
(8) Casino Sector
(9) Crypto-currency
(10) Suspicious Activity Reporting
(11) Information Sharing

The report, entitled Confronting Money Laundering and Terrorist Financing: Moving Canada Forward can be accessed here.


Hassan Nasrallah and Jawad Nasrallah.
 Jawad Nasrallah, the son of Secretary-General Hassan Nasrallah, has been named as a Specially Designated Global Terrorist (SDGT), as a foreign national who has committed acts of terrorism that threaten national security and foreign policy. He was sanctioned by the Department of State, pursuant to Executive Order 13224.

The younger Nasrallah has been responsible for a number of failed terrorist actions in the West Bank.

Tuesday, November 13, 2018


The news that the Indian fugitive Mehul Choksi has filed a lawsuit in Antigua, where he is a CBI citizen, against the Minister of Foreign Affairs, and the Prime Minister, has, thanks to the Internet, circled the globe. Legitimate citizens of the East Caribbean states where CBI programs exist are now openly worrying about the potential of large numbers of CBI and diplomatic passport purchasers demanding their money back, due to the abrupt, and probably illegal, cancellation of their citizenship rights by local officials.

These same corrupt ministers and prime ministers, who have accepted large cash bribes, in addition to the normal CBI fees intended as contributions to the national treasury, must fear public exposure of their misdeeds, as well as the possibility that attorneys for the claimants might seize government assets, to recover for their clients, with possible Foreign Corrupt Practices Act or UK Bribery Act violations as added consequences.

An additional issue, which must keep the East Caribbean ministers up at night, is the distinct possibility that a court of competent jurisdiction might hold that the cancellation of a passport is a criminal act, outside the scope of authority of the official who executes that act, or that it subjects him to personal liability. What about the real estate in North America or Europe purchased by the corrupt Caribbean minister ? It would them be subject to levy, seizure and forfeiture by the minister's judgment creditors.

Will the CBI and diplomatic passport sales world implode ?  We cannot say, but we will be watching.



 Serbia has failed to fully implement FATF's most recent recommendations on the prevention of money laundering, and the financing of terrorism.  The shortcomings include:

(1) The work of law firms is not properly supervised.
(2) Government agencies do not have complete and updated information on company ownership.
(3) A lack of monitoring of the financial transactions of Politically Exposed Persons (PEPs).
(4) Inadequate control of wire transfers.

Please keep these facts in mind when reviewing any transactions that affect Serbian banks, corporations, nationals, or companies.


Mohamad Noureddine, a Lebanese businessman and money launderer who moves criminal proceeds for Hezbollah, goes on trial on drug trafficking and money laundering charges in Paris this week, charged with operating a sophisticated cocaine and heroin trafficking ring that used its profits to purchase weapons for Hezbollah's Syrian operations. Noureddine, who is a principal money launderer for Hezbollah's so-called "Business Affairs" component, was perviously sanctioned by the US Treasury, together with several of his front companies; He was arrested in France in 2016.

European media, who are referring to the case as the "Lebanese Connection," are stating that a conviction of Noureddine will blacken Hezbollah's reputation as a strict, pious organization back in Lebanon. Nureddine denies that the Source of Funds he was moving were narcotics profits, and further denies that the money's ultimate destination was Hezbollah. Another suspected Hezbollah narcotics trafficker, affiliated with Noureddine, was also sanctioned by OFAC in 2016. His name is Hamdi Zaher El Dine.

The trial is scheduled to commence today, and run until November 28.

Monday, November 12, 2018


Mehul Choksi, India's Most Wanted Man

It was bound to happen, sooner or later, according to attorneys and experts who claim the Citizenship by Investment (CBI) programs administered by five East Caribbean states are fatally flawed. The grantor jurisdictions, after receiving large payments for citizenship, many in the millions of dollars, have summarily revoked those rights of nationality and citizenship, which is inconsistent with Western concept that such rights are permanent, and obligate the grantor to protect the recipient.

Antigua PM Gaston Browne

A CBI passport holder, in this case the billionaire Indian fugitive Mehul Choksi, has brought a civil suit against Charles Fernandez, the Minister of Foreign Affairs, and Prime Minister Gaston Browne, who holds the portfolio of the Citizenship by Investment Unit (CIU). These two individuals are responsible for the awarding of Antiguan citizenship via the CBI program, and for entering orders of extradition.

(Image courtesy India Today)

While the details of the new lawsuit have not yet been made public, attorneys for Choksi have obtained an expedited hearing on the matter; it has been set for November 14, 2018, before a High Court Judge. The Deputy Solicitor General has notified the Prime Minister, according to the memorandum appearing above. Is Choksi demanding that Antigua refuse to extradite him to face criminal charges in India ? Is he seeking damages ? We cannot say at this point, but given that the hearing is in two days, we may soon learn more about Choksi's claim. He fears that Antigua will allow his extradition to India, and may revoke his citizenship and Antigua passport(s).

 Citizenship is permanent and irrevocable, unless the individual engages in treason, or takes up arms with an enemy country. If a court of competent jurisdiction in the Caribbean holds that a CBI passport holder's rights cannot be terminated, then the whole CBI house of cards may come tumbling down, and applicants, fearing the temporary nature of CBI, will stop coming. Without CBI money to pump up their treasuries, the East Caribbean states might run out of money to pay the salaries of their government officials and staff.

We will be closely monitoring all developments in this case, as they occur, and report them back to our readers on this blog. 


 The Financial Action Task Force (FASF) has issued a white paper entitled Guidance for a Risk-Based Approach for the Life Insurance industry. Given the risks, threats and vulnerabilities of life insurance products to both money laundering and terrorist financing, we welcome the publication of this 64-page Guidance. It details the issues in a financial sector that has historically failed to acquire sufficient AML technology to combat ongoing problems, where remote clients can access their products, often without sufficient Customer Identification Procedures, since the local agents, commission-driven, are part of the problem.

Far too many insurance companies and their local agents fail to maintain effective AML//CFT programs, resulting in the placement and laundering of illicit capital. This is mainly due to their inability to detect suspicious transactions, and to act as gatekeepers.

The insurance industry, including the smallest component, the field agents/sales staff, must maintain effective compliance programs, at the level of banking best practices, if it is ever to block enterprising and clever money launderers and terrorist financiers, who seek to hide their illicit assets within their investment products, and in the process, launder them in an industry that has been traditionally ignored by law enforcement investigators.

Readers who wish to review the Guidance may access the complete text here.

Sunday, November 11, 2018


 The Government of Turkey, obviously unhappy that the Iranian oil-for-gold sanctions evader Reza Zarrab is cooperating with US law enforcement, has issued a warrant for his arrest on obvious political charges. Zarrab, accused of illegally renovating three historic Turkish mansions, faces a three year sentence, as does his wife. Given that new Turkish regulations provide for an amnesty for violators, the case clearly has political overtones.

Zarrab, born in Iran, but living in Turkey, where he orchestrated the oil for gold scenario, held passports from several countries, and was seeking additional passports; his partners in the embezzlement of billions of dollars of Iranian oil profits were known to hold CBI and diplomatic passports, which they employed in the covert sale of Iranian oil.

 Zarrab has been released from US custody, which is not a normal event in a major case where the defendant has pled guilty, and is reportedly openly assisting the United States on a number of criminal matters. He faces seventy years in Federal Prison for assisting Iran in evading international sanctions on oil sales. The most important aspect of Zarrab's substantial assistance may be his cooperation with the Office of the Special Master, which is investigating Russian interference in the American Presidential Election campaign, but no information has leaked out on precisely what evidence he has given to Robert Muller's investigators, especially whether his evidence and testimony concerns Russians or the members of the Trump Election Campaign staff.  



If you are a distributor of narcotics in North America, and you need to repatriate the profits of your employer abroad, the technique known as cuckoo* smurfing is often the method employed to transfer those funds, outside normal financial channels. It occurs when one party has money here, and need it overseas, leaving no record of international transfers, and he is matched up with the second party, who has dirty money abroad, but wishes to have it inside the US or Canada, so that he can launder and/or invest it. The technique came under scrutiny recently in a prominent Australian investigation which is diagrammed in the illustration that appears above.

There are several different permutations and combinations of this technique, but they all involve someone overseas smurfing dirty cash into legitimate banks accounts, giving the first (onshore) party instant access to his assets overseas, without alerting regulators and law enforcement to large transactions.

Some commentators classify this method as a variety of Hawala, while others contend that it is refinement on the Black Market Peso exchange, modified to fit any currency.

* It is so named because the cuckoo deposits its eggs into the nests of another breed of bird, for it to to hatch, not knowing that one of the eggs is a cuckoo egg.


This blog regularly attaches original documents to our stories for a purpose; always look at the source of the information, to get a precise interpretation of the facts. Not that I am unhappy with the compliance press, but to be honest, they are typically journalists who have never been compliance officers, and as such do not have the perspective necessary to explain what the impact is of a specific story to compliance. That is why they need to look at the actual material yourself, to fully appreciate what it means to them.

if you have never been a compliance officer, facing deadlines, pressure to perform from clients and management, delays in obtaining necessary information from abroad, you do not understand the particular need for specific solutions, in real-time, that compliance staff have. They need attention to detail, not general statements. Hence the need for all the material.

We make it a point to either append the document to the article, or to create a hyperlink to the article, rather than to excessively quote from the text, as many journalists are prone to do, because one does not want to omit something that others might find not only important, but critical to the understanding of the messenger. Therefore, we direct you to the original material whenever it is available to us.


Compliance officers often differ regarding what is, and more importantly, what is not, a shell company for the purposes of anti-money laundering compliance. The Central Bank of Cyprus recently issued a Circular on the subject of shell companies and entities, sometimes known in Europe as letterbox companies. Issued on November 2, 2018, the Circular is directed to money laundering compliance officers.

The Circular deserves your attention, not just for the finite nature of the definition of the term, but for the enumeration of "circumstances [that] could indicate economic activity,"specific facts which take a company outside the textbook definition of "no established economic activity in its country of incorporation/registration."

The Circular may be accessed here.


If I am a corrupt Politically Exposed Person (PEP), known narcotics trafficker, or convicted money launderer and fraudster, and I want a clean passport, to move some dirty money, modern technology has made my task quite simple. I bribe a government official in my home country, purchase official identification under the name of an alias, which passes muster on any commercial-off-the-shelf database of high-risk individuals, and take it to another jurisdiction where money also talks.

I am now in one of the three East Caribbean CBI states where a large payment to the appropriate senior government official gets me a new passport, based solely upon the totally false, yet authentic, government-issued identification I presented to the CBI unit. Alternatively, I travel to one of the European CBI jurisdictions, and though it costs me more money in bribes and kickbacks, obtain the same result with my bogus documents. I may even go to a country where I can deal direct with the authorities, and score a passport that says I was born there and have always been a citizen. What's wrong with this picture ?

Modern technology and greed have combined to create a perfect storm of risk for compliance officers seeking to positively identify new clients in a potentially dangerous AML/CFT situation. The old database due diligence searches no longer guarantee that you have absolutely identified your target. Due diligence has become obsolete and ineffective, in a regulatory environment where compliance officers have become personally liable, even on the criminal level, and their future in the financial industry could be permanently terminated, should they fail in the identification role.

Since technology (paired with corruption) has created the problem compliance officers face, we must look past pure data to identify customers, to the solution that images offer. Only through the use of facial recognition software systems, which can scan social media, social networking sites, arrest records, visa photos, newsreel and CCTV footage, and many other pictorial resources, can we uncover the true identity of your clever criminal passport holder. Then, we employ enhanced due diligence, to verify our findings using data sources, albeit in a secondary role.

The days when a compliance officer can punch in a new customer's name, taken from his passport, into a commercial database, and know he has identified the client, are long gone. While databases still have their place in compliance, they are now in a secondary role. Images have replaced data as reliable sources of identification verification; To do anything less constitutes malpractice, and the threat pf personal liability and accountability for compliance failures.

Saturday, November 10, 2018


Just when you think you have seen it all, regarding propaganda extolling the virtues of Malta's Citizenship by Investment (CBI) program, someone really goes off the deep end. An information professional, from a company whose parent assists Malta with its CBI program, asserts that its due diligence investigations of applicants are on a high level. He also states publicly that the Individual Investor Program provides a high standard of due diligence, and that it should be a model for the programs of East Caribbean CBI states.

Nothing could be further from the objective truth. Both the European Union and Transparency International have very recently come down hard on Malta's CBI program. Many Maltese CBI passport holders have been arrested on a variety of serious white-collar crimes, on several continents. Our recent article about the Russian with a Malta CBI passport who appears to have been an intelligence agent engaged in espionage in Finland, is but one of many such stories.

Painting a rosy picture of the benefits of a CBI passport, while ignoring and evading the negative aspects of holding an economic passport, does a disservice to all prospective applicants. It also is a clear and present danger to banks within the Schengen Zone, considering that visa-free access to the EU is the most advertised benefit that Malta offers. Compliance officers working at EU banks should carefully examine all Maltese passports, to identify CBI clients, verify their legal names through image confirmation, using facial recognition software, and commence enhanced due diligence on all of them, prior to accepting them as bank clients. 

Malta's ineffective due diligence for its CBI program has angered the European Union, which will be taking action against it. Perhaps those professionals who are continuing to tout Malta CBI, notwithstanding its due diligence failures, will cease making their bogus recommendations.


The South Africa Reserve Bank, the country's central bank, has imposed administrative sanctions upon HSBC Bank Plc Johannesburg Branch, for noncompliance with AML/CFT laws and regulations. The bank was directed to take certain remedial actions, and to pay a financial penalty of R15m (USD$1m), of which one half was suspended for a period of three years, during which time HSBC must comply with certain conditions not specified in the Order.

Readers who wish to review the document may access the complete text here. The issuing entity is the Prudential Authority, which is part of the SARB.


The Second Circuit Court of Appeals has affirmed the District Court's order denying convicted Ponzi schemer Francisco Illarramendi post-conviction release. Illarramendi, who turned a $5m loss in his  hedge fund into a $370m Ponzi scheme, is seeking release during his motion to set vacate his thirteen year sentence. His Ponzi scheme, which seriously damaged the Venezuelan PDVSA pension fund, alleged that his hedge fund was worth two hundred seventy five million dollars, when in truth and in fact the document attesting to that fact was a forgery, and worthless.

The District Court, where Illarramendi was convicted, was the subject of his post-conviction motion to be granted Supervised Release (which replaced Parole in the Federal justice system) while his claims were pending. He previously lost his direct appeal. His allegations:

(1)The appellant alleged that he received Ineffective Assistance of Counsel at trial. We have covered this case in earlier articles, and noted that he changed his attorneys multiple times, and was, at best, a difficult and manipulative client. Remember, his pretrial bail was revoked when it was discovered that he had improperly spent a $630,000 state tax refund, without informing the Court.

(2) He alleged that, since the United States seized his assets, he was therefore prevented from retaining the attorneys of his choice.

The District Court denied his motion, stating that it had no power to grant Supervised Release to a convicted Federal defendant. thereafter, Illarramendi appealed.

The Second Circuit Court of Appeals, which treated his request for Supervised Release as a request for release on Bail, affirmed the District Court decision, in a well reasoned 8-page opinion. He pled guilty in 2011, and is presently scheduled to be released on May 22, 2024.

Friday, November 9, 2018


If you, as a compliance officer, are not instituting Enhanced Due Diligence upon all new affluent Venezuelan clients, to ascertain their Source of Funds, you are woefully  negligent, for many Venezuelan nationals are fleeing their country (over three million at last count), and some are financing their new lives with the proceeds of official corruption. Have you, as gatekeeper, insured that they will not be allowed to launder their dirty money through your bank ?

The City of Doral, which is a municipality in Miami-Dade County, and where many Venezuelan expats live and work, has enacted a new ordinance that requires applicants for a city occupational license to file an affidavit detailing Source of funds, as well as all interested third parties. If a municipality is seeking this information, so that it can bar Venezuelan nationals with illicit funds, you should take this into account when assessing risk, and instituting policies and procedures.

Thursday, November 8, 2018


Readers who are monitoring the developing situation in Malta, or who have a special interest in whether Malta's Financial Intelligence Analysis Unit is taking additional measures to comply with the Fourth Anti-Money Laundering Directive should review the Opinion.

Europea Union Opinion, addressed to the FIAU of Malta, on the action necessary to comply with Union Law


Burning Iranian tanker

Brian Hook, the US Special Representative for Iran and Senior Policy Advisor to the Secretary of State, has warned all countries not to allow Iran's sanctions-busting oil tankers to enter their territorial waters, or to dock at any of their port facilities. This is due to the fact that the world's insurance companies will be canceling all their coverage on Iranian oil tankers, given the reinstated US sanctions, and Iran's domestic insurers are not capable of covering that level of risk.

This means that the Iranian tankers are self-insured. Should there be a massive oil spill, vessel collision, sinking of vessel that blocks canals or waterways, fire or explosion, or other catastrophic event, the country where the oil spills or ship collisions occur will be strictly liable for the damages, not to mention the likely imposition of civil fines and penalties for the sanctions violation.
Also Iranian

The fact that Iran's tankers disable their transponders, foiling any tracking efforts, and take circuitous and indirect routes to their destinations increases the risk of an accident, collision or spill. Those nations who lie along the principal shipping lanes of the world, where Iran's tankers must pass through, especially canals, choke points, channels or straits, are in danger, and should govern themselves accordingly, especially when it comes to refueling, resupply or offering harbor facilities to Iranian oil tankers.

During the prior oil sanctions period, Iranian sanctions evasion agents stationed full oil tankers in the harbor at Labuan, Malaysia's offshore financial center & tax haven, while the opaque sales were conducted in the banks located within the financial center. Which tax havens will now double as sales closing sites, and the bunkering of loaded oil tankers ? Those jurisdictions can expect to feel the full weight of the United States Government this time, given the public position of the Trump administration.

Another Iranian



 Every year, the Office of Foreign Assets Control (OFAC) files its Annual Terrorist Assets report, detailing how much has been seized from each designated or sanctioned terrorist organization. The 26th Report is also useful if you are looking for statutory references on regulations regarding State Sponsors of Terrorism, or just general anti-terrorist references.

Readers who wish to review the complete text of the Report may access it here.

Wednesday, November 7, 2018


On June 8, the Prime Minister of Malaysia announced that the Malaysian financier, known in the West as Jho Low, was wanted in the billion dollar 1MDB scandal. Only then did Jho, who had been a St Kitts CBI passport holder since 2011, and had never been to St Kitts, have his SKN passport cancelled. He was known to ber stealing billions for years. What's wrong with this picture ? Let's look at the facts.

(1) Jho had, for years, led a high-profile, very public social life, on the global stage, with one wretched excess after another, including the purchase of a $250m super yacht, a $33m apartment in New York, and a $335,000 Ferrari which was a gift for Kim Kardashian. This lifestyle was inconsistent with his known income and assets, but no action was taken against his SKN CBI passport; this indicates that there is zero follow-up due diligence in St Kitts on its CBI passport holders.

(2) In October 2016, Singapore obtained an INTERPOL Red Notice for Jho; again no action was taken against him in St Kitts. This indicates that SKN due diligence and at passport issuance, St Kitts does not periodically check its CBI passport holders for criminal charges.

(3) Jho's courting of Hollywood's most beautiful female stars, including expensive gifts such as diamonds worth $8m, as well as pursuing the friendship of male stars (Jho sent one a Picasso), put his face on the social pages and websites of all the major media in the West. This confirms that once St Kitts issues a CBI passport, the file is essentially closed, unless scandal comes knocking hard on its doors.

Obviously, the CIP Unit in St Kitts is simply not monitoring its customers; does that mean its initial due diligence was also fatally flawed ?



The Magistrate's Court in the Commonwealth of Dominica, obviously acting on the orders of the Prime Minister and his Cabinet, have notified Opposition leaders that the charges pending against them, of Willfully Obstructing the Police in the Discharge of their Duties, which were set for hearing on March 28, 2019 have been moved up to November 22, 2018.

Opposition leaders, who were holding a peaceful protest on February 7, 2017, face imprisonment on purely political charges. The Opposition:

(1)  Seeks major reform of the flawed and corrupt election process, where the Skerrit government pays bribes to voters, provides them free airline travel from abroad at voting time, and awards voters temporary employment at voting time.

(2) Has demanded that the illegal cash sale of diplomatic passports to foreign nationals be terminated, and any and all funds illegally connected be disgorged to the government treasury.

(3) Wants reform of the Citizenship by Investment (CBI) program, and the assignment of all CBI receipts towards government projects.

Will the Opposition leadership be imprisoned, and if so, will that act result in the isolation of the Commonwealth of Dominica in the East Caribbean Community, and also by the US & UK ?

 It is believed that the intent of the Skerrit government is to see that all the major Opposition leaders are in custody when he calls the next National Election on December 18, 2018.



 A review of publicly available information concerning the approximately 4000 Malta Citizenship by Investment (CBI) passports issued in 2015 and 2016 indicates that the vast majority of the applicants are either from the Middle East, or from Russia. Is this sufficient grounds to classify all Maltese CBI passports as high risk, for compliance purposes ?

Let's examine the issues:

(1)Transliterating the names of Russian and Arab applicants from the Arabic and the Cyrillic alphabets into the Latin Alphabet and English language is not an exact science, and there are multiple alternative spellings that are acceptable. This means that the correct name of an applicant could be, accidentally or intentionally, translated into a clean alias not recognizable by high-risk databases as the original bad actor. One expert estimates that there are no less than 32 acceptable Western spellings of Arabic names, as the alphabets do not have all the same letters.

(2) Is the Middle East applicant OFAC sanctioned under his or her true name ? Are they Iranian nationals using an Arab alias to escape detection ?

(3) Both the Middle East and Russia have systemic official corruption, meaning that anyone with cash can easily obtain a legitimate, official proof of identity that features a well-crafted, and totally clean, alias.

The billionaire's, grown daughter, and current girlfriend

(4) The Malta CBI program appears to not look very closely at the backgrounds of its applicants. Anna and Elena Rybolovlev, the grown daughter and former wife of the recently-arrested Russian billionaire (arrested in the Principality of Monaco on corruption charges) Dmitry Rybolovlev obtained Malta CBI passports in 2017, notwithstanding that Dmitry spent a year in a Russian prison on murder charges, which were only dismissed when a third-party magically appeared to take the blame.

Dmitry Rybolovlev

Candidly, I do not trust any of the Malta CBI passports, and only the names of the successful applicants are released, not their photographs. Without those images, we are unable to verify their identities to the exclusion of a reasonable doubt. Therefore, it is necessary to classify all Malta passports you see as high-risk, unless you can prove that the holder was born there, and is thus not a CBI passport owner.

Tuesday, November 6, 2018


 With much fanfare, and the assistance of a number of international CBI consultancies, the Republic of Moldova announced this year that it had created its own Citizenship by Investment (CBI) program. Moldova has a close relationship with the European Union, and its citizens have visa-free access to the 26 Schengen countries of the EU, which makes its CBI passports attractive, on its face.

However, there are other issues:

(1) Moldova has a long and sordid history; it is the regular destination for Russian organized crime money laundering operations.. Its courts, government and law enforcement agencies are stained by corruption, and frankly, not trustworthy, if you are a wealthy foreign national that contemplates acquiring a passport and making an major investment. It has a reputation regarding its jurists, who are known to  totally ignore the Rule of Law.

(2) Given the low level of esteem that the world's law enforcement and intelligence agencies hold Moldova, presenting a Muldovan passport when entering the European Union might very well result in a criminal investigation being opened against you. This alone should be sufficient to deter applicants for Moldova's CBI passports. Nobody wants to have a bulls-eye painted on their back.

(3) Do not listen to the prattle espoused by CBI sales consultants; the country is too rural and too poor to be a viable candidate for EU membership at this time. An additional negative issue is the existence of a breakaway state, Transdnistria, which is legally Moldovan territory, but a nation unrecognized by the world at large. Unless and until this spinoff returns to Moldovan control, EU membership seems to be remote.

 All this baggage means that displaying a passport from Moldova, upon arrival at customs and immigration abroad, could be regarded as too dangerous.While it is up to the attorneys for individual CBI applicants to decide whether the potential risks outweigh the passport benefits, and to advise their clients where they should make application, an objective conclusion should be to avoid this CBI jurisdiction, due to its high risk status, at this time. 


Even though it was completed in 2017, the Ministry of Finance of Malta has kept the National Risk Assessment under tight wraps, for it finds the country to be a high-risk jurisdiction for money laundering. A number of Maltese media sources have been able to gain access, and the conclusions are extremely disturbing.

While we do not know all the details, this is what we have learned thus far:

(1)  Malta is at high risk for money laundering, and at medium-high risk for terrorist financing.
(2)  The money laundering high risk involves the threat of foreign criminal proceeds arriving in the country.
(3) Drug trafficking, fraud, corruption and bribery were labeled medium-high risk in Malta.
(4) Banks, lawyers, trustees, corporate service providers, and offshore gaming were found to be at the highest level of risk for money laundering.
(5) Terrorists could take advantage of the country's geographic proximity to other EU states, to move terrorist operations into Malta.
(6) There are systemic weaknesses in cash control and cash movement into the airport and seaport.

When and if the complete National Risk Assessment is made public, we shall reprint it here into its entirety, or publish a hyperlink, as a service to our readers


 Be advised that President Recep Erdogan, the leader of Turkey has publicly announced that his country will not be observing the newly reinstated economic sanctions imposed by the United States against the Islamic Republic of Iran. Erdogan stated that the sanctions smacked of "imperialism," and would upset the global economy.

Turkey, which purchases natural gas from Iran, for heating homes, is receiving a limited exemption from the US for that purpose, but not on all the other goods and products of American origin. While the UAE was the principal Iran sanctions evasion destination for illegal transshipment of goods during the prior sanctions period, Turkey, which is a nominal US ally and NATO partner, could replace it this time around.

This means that compliance officers at US banks whose client regularly engage in exports to Turkey may want to monitor their customers' activities after today, paying special attention to changes in established export patterns. For example:

(1) Has the client's sales volume of exports to Turkey now greatly increased ?
(2) Are there any transactions that are inconsistent with the client's prior business model ?
(3) Are there transactions that are commercially unprofitable ?
(4) Is your client now shipping to new clients not known before today ?
(5) Are any of the goods dual-purpose, meaning could they be used in Iran's illegal WMD or ballistic missile programs ?

President Recep Erdogan of Turkey

Make sure you initiate Enhanced Due Diligence on any new client customer companies in Turkey. Are the officers or directors Iranian nationals ? Are any of the recipient companies newly formed ? Alert your front line compliance staff to be watchful for any suspicious activities, and consult with your legal counsel should you believe a bank customer may be engaging in exports that could constitute sanctions evasion.

I suggest that you require your bank clients to supply your compliance officers with copies of passports of the officers at the Turkish companies, to insure that you do not get the latest version of Reza Zarrab, Alireza Monfared or Babak Zanjani, the Iran sanctions evasion specialists that ran Iran's billion dollar oil-for-gold sanctions evasion program. Zarrab had Turkish, Iranian and even European passports. Take the passports your bank customers send you, and run them through a good facial recognition system, to make sure their "buyers" are not intelligence agents, like Zarrab, or officers in the Kuds branch of the IRGC, the Revolutionary Guard of Iran.

Monday, November 5, 2018


Nigeria plans to extradite Diezani Alison-Madueke, the former Oil Minister of Nigeria, to face justice for her theft of billions of dollars of her country's oil revenue. This action was disclosed this week by a member of the Economic and Financial Crimes Commission of Nigeria. She is presently living in the United Kingdom, where she is under investigation for money laundering.

Alison-Madueke is perhaps the most egregious example of blind greed, on the part of any Nigerian government official, in modern history. It is a testament to the systemic corruption that has infected the country, and destroyed its image in the international community.

In the Western Hemisphere, she is notorious for the fact that she bought a Dominica Diplomatic passport, for cash,which was hand delivered to her in London by the country's Prime Minister, Roosevelt Skerrit, after being arranged by Baroness Patricia Scotland. The circumstances surrounding that cash transaction, when it became public knowledge, fueled outrage among Dominica's voters, who openly accused PM Skerrit of pocketing the payment. In Dominica, there are no records that any payments made in connection with the sale of diplomatic passports were ever deposited in the country's treasury.

When Alison-Madueke was detained by British law enforcement, she produced her Dominica diplomatic passport, claiming diplomatic immunity, notwithstanding that she had no appointment to represent Dominica in the UK. Her claims were dismissed, for being legally insufficient.

Diplomatic passports continue to be a major problem when they are sold by corrupt government officials to the world's criminals, who then attempted to cheat justice by interposing their passports, to evade the rule of law. They use the passports to commit crimes, especially money laundering, and the United Nations, many of whose members have officials profiting form the illicit sales of passports, ignores the problem. It refuses to enforce the Vienna Convention on Diplomacy, and corruption reigns as the result.


If you have a question about a specific Iranian financial institution, corporation, or individual, you can access the complete list here.



The European Central Bank has cancelled the license of Pilatus Bank, according to the Malta Financial Services Authority, which recommended this action in June, which is a pointed reminder of the inability of the ECB to act decisively and promptly in cases of money laundering and bank fraud. Compliance officers were wondering about the delay, and Country Risk for Malta was directly affected.

The inaction of Maltese regulators, who failed to respond until the bank's Iranian Chariman, Alisadr Hesheminejad, was charged in the United States with money laundering and other crimes, has exposed systemic weaknesses in Malta, whose Schengen status permitted free movement of its CBI passport holders, in the eyes of the rest of the European Union. Malta's reputation has taken a major hit in the global financial community, and the EU is looking to increase AML laws as the direct result of Maltese failures.

Additionally, the fact that the bank's chairman, an Iranian national, had four St Kitts CBI passports, obtained through an international CBI consultancy who reportedly assisted in his acquisition of a banking license, focused global attention upon the high-risk nature of Citizenship by Investment passport holders, and the perception that due diligence upon CBI applicants is fatally flawed, and conducted by companies with a built-in conflict of interest.


If you are a wealthy white-collar criminal and you want to be able to transit international customs kiosks without being searched, when you arrive at a third-world nation, purchasing a diplomatic passport from those jurisdictions where cash money talks is the way to do, if you take the very long list of "diplomats" who have bought their counterfeit diplomatic status abroad.

The problem is, United Nations Vienna Treaty regulations require that you actually be a working diplomat, assigned to a specific task at a specific consulate or embassy, and that you be approved by the host country where you will be working. These so-called "Ambassador-at-Large appointments are easily seen as bogus by both law enforcement, and the courts, when diplomatic immunity is pled.

So what does an enterprising jurisdiction like the Commonwealth of Dominica, where there are more than 550 diplomatic passports issued, in small country with few diplomatic posts, do ? You appoint your  "Ambassador Extraordinary and Plenipotentiary to the Permanent Delegation of  Country X to UNESCO.

The United Nations Educational, Scientific and Cultural Organization, which has its headquarters in Paris, provides the ideal cover for bogus diplomats; their "duties" are so limited as to be non-existent, and if the country providing diplomats to UNESCO, as Dominica does, increases the number of individuals posted there to a dozen*, nobody actually has to do anything, save the secretary. The World Heritage Site applications appear to be the only business Dominica has with UNESCO, ever.

The Paris location provides a perfect excuse to travel to France multiple times a year, without arousing suspicion, and Swiss banks are just a short train (or limousine) ride away. Is it a coincidence that the brother of one of Dominica's UNESCO diplomats is the Consul for Dominica in Switzerland, and he just happens to be not only the former director of a very private Swiss bank, but is currently the owner of a "strategic wealth management company" in Dominica.

Bottom line; if you are a career criminal seeking to buy your way into the privileged world of diplomacy, you best make sure there's some BS assignment attached to it, if you want to snow customs officers who want to open your suitcase containing stolen bearer bonds. Seriously, compliance officers who are presented with a diplomatic passport as proof of identity should immediately look beyond the four corners of the document, to determine whether you are truly seeing a bona fide diplomat, or a wannabee who just happens to be a professional money launderer.
* I will not be naming Dominica's UNESCO "diplomats," for I am sure that the names on their passports are not their true legal names. We would need to deploy our facial recognition software system to accurately ascertain their real names, as some of them may have police records, be known as fraudsters, or otherwise be identified as having aliases.