Kenneth Rijock

Kenneth Rijock

Thursday, January 17, 2019

IN AFTERMATH OF CLOSURE OF RUSSIAN DISINFORMATION, DO NOT ACCEPT NEWS ARTICLES POSTED ON SOCIAL MEDIA AS FACT


If you are paying attention to developments on social media, you know that social media sites, including Facebook, have been shutting down clients that turn out to be Russian disinformation organizations. Not only are these bogus sites spewing false "news" about the United States, but about European countries as well, especially those who have upcoming elections that Russia is seeking to manipulate.

As a practical matter, when conducting enhanced due diligence on new customers, it is wise to disregard the facts contained in ALL articles that appear on social media, whether the entire article, or just a hyperlink. The disinformation campaigns are just too well made for you to differentiate between verified fact, and misinformation. A wise move would be to ignore all references to news articles posted on social media, lest you use misleading information to make a decision about onboarding a new client, and later find out it was a costly mistake.

Wednesday, January 16, 2019

SENATE VOTES TO ALLOW REMOVAL OF SANCTIONS AGAINST DERIPASKA COMPANIES



The Republicans in the US Senate who support the Treasury Department's move to remove OFAC sanctions from Russian corporations controlled by OFAC-sanctioned Russian tycoon Oleg Deripaska succeeded today in voting against a motion to lift those sanctions. The motion required 60 votes in the Senate, and the movants fell short in reaching that number.

Democrats in the Senate, as well as eleven Republicans, dissatisfied with Treasury Secretary Mnuchin's assurances that reducing Deripaska's holdings to 45% would cause him to lose control, voted to lift the sanctions, but the affirmative vote on the motion were insufficient to move the motion to a floor vote. 


TURKEY SEEKS INTERPOL RED CARD FOR AMERICAN BASKETBALL STAR, CALLS HIM 'TERRORIST"



If you were looking for a reason to raise Country Risk on Turkey, which is lurching towards complete abandonment of the Rule of Law, here it is. The Government of the Republic of Turkey has charged that NBA professional basketball star Enes Kanter, who plays for the New York Knicks,  is a "terrorist." Kanter who is a vocal opponent of the Erdogan government, declined to travel with his team to play in London, stating that Turkish agents might kill or kidnap him.

Kanter's father Mehmet, a former university professor, has been arrested, and expelled from public service, and faces an upcoming trial, for his critical comments regarding Erdogan. Turkey is requesting that INTERPOL. the international association of chiefs of police, issue a Red Card, or arrest notice, for Enes Kanter. More than 50,000 Turks were arrested by the regime after the 2016 unsuccessful coup d'etat attempt, many without any evidence of their involvement.

We trust that the National Basketball Association will insure the safety of its player, especially given that a conspiracy to kidnap a major Opposition figure living in Pennsylvania, Fethullah Gulen, became known during the investigation conducted by the Office of Special Counsel.

Tuesday, January 15, 2019

US SENATE VOTES TO TAKE UP RESOLUTION TO BLOCK LIFTING OF SANCTIONS ON DERIPASKA COMPANIES


The United States Senate today voted to advance a resolution which would block the US Treasury Department from lifting sanctions on three Russian corporations connected to sanctioned Russian businessman Oleg Deripaska. By a 57 to 42 vote, the Senators have moved the matter forward; a 3/5 majority, or 60 votes, will be required to move the resolution to a final floor vote. Eleven Republicans, who generally vote lockstep with President Trump, voted in favor of advancing the resolution.

Reducing Deripaska's ownership to less than 45% will certainly not change his influence upon Russhal, notwithstanding Secretary Mnuchin's claims that a minority share will magically and immediately change control of the company. Many believe this is just one more concession made to Russia on the orders of President Trump, and that Treasury's claims are totally without any basis in fact, and bogus.

Given Deripaska's known connection with Russian efforts to influence the 2016 Presidential Election, Treasury's proposed lifting of sanctions, which reportedly comes as the result of Deripaska's efforts, is seen as pandering to special interests, and not in the best interests of the United States.




REVIEW WHITE PAPER ON CHINA FOR COUNTRY RISK ASSESSMENT




Readers who are charged with conducting Country Risk assessments in the Asian region should review the Defense Intelligence Agency (DIA) White Paper, entitled China Military Power. It contains a detailed analysis of China's military history, current capabilities, and long-range goals. Compliance officers may access the complete text of the 140-page document here.                         
 


AMERICANS SUE HEZBOLLAH IN FEDERAL COURT IN NEW YORK



If you were wondering why the Americans injured in Hezbollah rocket and missile attacks recently sued only Bank Saderat Iran and Bank Saderat PLC, and not Hezbollah, the primary bad actor, they had a reason: a separate action was brought when the suit against Bank Saderat was filed. The Complaint is based upon alleged actions of Hezbollah that consititute "International Acts of Terrorism," pursuant to 18 USC §2231.

The prayer for relief requests:
(1) Compensatory Damages in the amount of $50m.
(2) Punitive Damages.
(3) the costs of the action, plus attorneys' fees.

CONGRESS WILL SEEK TO BLOCK REMOVAL OF OFAC SANCTIONS AGAINST RUSSIAN COMPANIES TODAY

Movement, in both houses of the US Congress, is expected today, to block any action by Treasury to remove OFAC sanctions that exist against companies controlled by Russian investigation figure, and OFAC SDN, Oleg Deripaska. The Trump Administration, by asserting that Deripaska's majority corporate holdings will be reduced to a minority interest, is arguing that control will effectively change. Unfortunately, Deripaska's management team, which he personally selected, will remain in place, and he still will be the largest, and therefore most influential, shareholder.

I personally cannot buy Treasury's attempt at sleight-of-hand, to make it appear that control has shifted from Deripaska, and feel this feeble attempt to justify what is obviously a political act, is an insult to the intelligence of anyone in the compliance industry. Let us hope that saner heads prevail here, and Deripaska's companies' sanctions are not lifted.

Monday, January 14, 2019

CHINA IMPOSES DEATH SENTENCE ON CANADIAN, IN AN EFFORT TO DERAIL EXTRADITION OF FUGITIVE CHINESE NATIONAL FROM CANADA TO US

If you are a businessman living in North America, and you are considering travel to the Peoples' Republic of China, for any reason, pay strict attention to this article. The Government of China has imposed the death sentence upon a Canadian national, Robert Schellenberg, on narcotics charges. The trouble is that Schellenberg was sentenced to 15 years for the offense years ago, and he was arbitrarily re-sentenced immediately after Canada detained Meng Wangzhou, a Huawei Technologies executive and Chinese national who is wanted in the United States for Iran sanctions evasion crimes.  We have previously reported on the Huawei case, and readers are referred to that story for more details.

China has, essentially, made Schellenberg, and several other recently detained Canadian nationals, hostages, to insure that Meng is never extradited to the United States. This constitutes extortion, and the Government of Canada has publicly stated that it will not release Meng, under any circumstances, because of the extradition proceeding now pending. We commend Canada for standing up for the Rule of Law, and against the demands of an authoritarian regime.

China has also formally demanded that Meng's case be dismissed, and that Canada allow her to leave the country, and has made what amount to threats of dire consequences if this does not occur. it does no appear that Canada will cave in and release her. If you are contemplating travel to China, whether you be an American or a Canadian, there are travel warnings in place for this reason. It is best that you do not become just another hostage imprisoned in China, as a pawn in an international game of chicken. Kindly travel elsewhere in 2019.

Sunday, January 13, 2019

WATCH FOR UNUSUAL TRANSACTIONS FROM ST. VINCENT IF VENEZUELA-GUYANA DISPUTE HEATS UP

Coat of Arms, St. Vincent and the Grenadines

Most compliance officers at international banks located in North America and the EU don't consider St. Vincent & the Grenadines (SVG) to be a high-risk jurisdiction for money laundering or terrorist financing purposes, but the country does now deserve a closer look, for two reasons:

(1) Convicted former Trump Presidential Campaign chief, Paul Manafort, and his deputy, Rick Gates, used two shell companies, both incorporated in St. Vincent, to move money in their dodgy (read: illegal) funds transfers.

(2) St. Vincent's close relationship with the current regime in Venezuela has allegedly resulted in the use of the country's offshore banks, by both the Maduro and Chavez families, and their "Bolivarian Elite" associates, to move the proceeds of crime out of the region, and into Switzerland.

If you have been following Latin American events of late, you know that the Government of Venezuela has made some major territorial claims upon territory of the Cooperative Republic of Guyana, consisting of both land and maritime claims. Many observers believe that Maduro is seeking to distract Venezuelans from the humanitarian, political and economic crises that they are facing, by attempting to focus his people on a bogus foreign emergency. Whether Venezuela will actually send troops into Guyana, in support of territorial claims that were settled decades ago is unknown, but it might be seen by Nicolas Maduro as a necessary distraction.


Any military steps taken by Venezuela, which would violate Guyana's national sovereignty, will most certainly trigger a US and/or UK reaction, and might result in violent regime change in Venezuela, or a civil war. If there is any destabilization of Venezuela, look for the regime leadership to relocate abroad. Some sources have asserted that members of the Maduro Government have already received assurances by St. Vincent's government leaders that they will be protected should they seek refuge in SVG.



If the corrupt leadership of the Maduro government goes into exile in St. Vincent, rest assured that they will use that country's offshore banks to transfer massive amounts of stolen wealth through SVG, and into the world's most opaque tax havens. For that reason, it would be prudent to monitor the Venezuela-Guyana dispute, and to alert front line compliance staff to be looking for unusual international transactions, originating from, or transiting, St. Vincent, should the political or military situation change in Venezuela.

AMERICAN VICTIMS OF HEZBOLLAH ATTACKS SUE BANK SADERAT IN NEW YORK FOR FINANCING TERRORISM


A new civil suit, recently filed in the US District Court for the Eastern District of New York, where many terrorism suits have been previously brought, seeks $50m from Iran's government-owned Bank Saderat Iran, and its UK subsidiary, Bank Saderat PLC, for injuries and damages arising out of Hezbollah rocket and missile attacks upon American citizens.

The Complaint details* Iran's extensive use of Hezbollah as its agent and proxy, in its 40-year terrorist campaign against the United States and Israel, and documents how Bank Saderat was employed by Iran to act as the paymaster to Hezbollah, to fund and finance all its terrorist activities, with special attention to $50m, which was paid out through the bank's Beirut branch. Some or all of that $50m was processed through the Eurodollar market, and passed through the American financial structure.

What is most striking of all the allegations contained within the 36-page Complaint is the sordid list of the major European financial institutions that provided USD payment processing services for Iranian transactions, and the subsequent US regulatory or legal action against them that they agreed to:

(1) LLOYDS TSB BANK PLC. (Deferred Prosecution Agreement)
(2) CREDIT SUISSE. (Settlement Agreement with OFAC)
(3) COMMERZBANK AG. (Deferred Prosecution Agreement)
(4) STANDARD CHARTERED BANK. (Deferred Prosecution Agreement)
(5) HSBC. (Settlement Agreement with OFAC)
(6) BARCLAYS BANK PLC. (Deferred Prosecution Agreement)

We shall be cloesly monitoring this case, and will keep our readers advised of all developments as they occur.
____________________________________________________________________________
Readers who require chapter and verse of  Hezbollah's terrorist attacks, not just upon the plaintfiffs, but all information on all attacks conducted globally since Hezbollah's formation, will find the Complaint useful. Kumer vs. Bank Saderat Iran et al, Case No.: 18-cv-07456 (EDNY).


CHINA'S ACCEPTANCE OF YUAN PAYMENTS IN US COULD FACILITATE MONEY LAUNDERING


This week's announcement in China's government-controlled media, that the Bank of China's New York branch will allow Chinese companies to receive payment for sales of goods in Yuan, China's national currency, has raised fears that this action, while designed to facilitate international trade and commerce, could actually assist international money launderers move and launder the proceeds of crime.

China will permit Yuan payments made through American e-commerce platforms in 2019, according to a press release from the official Xinhua news agency. The transactions will reportedly access the bank's cross-border payment system through additional systems on e-MPay. Though the bank's president and CEO has stated that e-MPay will conform to US AML laws and regulations, using AI, no specifics have been provided, which has caused alarm among some money laundering and financial crime experts.

Chinese banks operating overseas have a history of failure to comply with banking best practices on money laundering and terrorist financing issues, in both North America and the in the European Union, if we take regulatory actions as proof. Money launderers with experience in trade-based money laundering will find it easier to repatriate criminal profits bank to China, because the funds will already be in local currency, and therefore not require conversion. Recent events have shown that law enforcement in Canada has been utterly unable to control the flow of illicit Chinese wealth there, especially the placement phase of money laundering operations, and returning the proceeds of crime to China, through clever international trade transactions US-China is a logical step.


Bank of China 1941

Whether US anti-money laundering efforts, both from regulatory, as well as law enforcement, agencies, can interdict this illicit flow of cleaned dirty money back to China will represent a challenge, and require far more individuals in both types of agencies with both foreign language skills and trade-based money laundering investigative experience than are known to be on duty at this time. You can anticipate that money launderers will be ready to commence operations as soon as the program is in place; will there be a real-time response from the United States ?

We are also concerned that most compliance officers at North American banks are presently ill-equipped to identify and interdict such illegal transactions on a real-time basis, as most bilingual individuals with necessary training and experience are attracted to the the lucrative opportunities in the private sector, not lesser-paying US and Canadian government positions. It remains an open question whether these will be an effective defense to this new asset in the Chinese money launders' tool box.


Saturday, January 12, 2019

VENEZUELAN BUSINESSMAN WHO OWES PANAMA $20m SEEKS TO HAVE HIS DARK PAST DELETED

Today this blogger received a letter from EALIXIR, a company which advertises itself as the "World Leader in the removal of Undesirable Links" seeking to remove online information about Venezuelan MSB owner Pedro José Rojas Chirinos from the Internet. The letter was full of boilerplate language about their "client's" rights, but nowhere was there any evidence about whether the company had any legal right to represent, or speak for, Sr. Rojas. The letter was signed by a company manager, and marked "Off the Record." Is this a joke, or an attempt at extortion ?

Let me respond publicly:

(1) First of all, the blog cited in the article as containing defamatory or incorrect or slanderous information, has no connection to yours truly, and is unknown to me, nor have I ever heard of it, nor have I ever contributed any information to it, directly or indirectly. When we attempted to access the specific blog article cited, we noted that it no longer exists; does that mean that the reputation management firm is using outdated research ? The letter cited some generic Venezuelan statute that the author claims adopts EU data laws. Where is there personal jurisdiction over yours truly and this blog for the blog of another ? Someone is obviously confused.

(2) Second, its client, now calling himself "Pedro José Rojas Chirinos" was known as Pedro Rojas when he ran his MSB in Panama. Is the name change intentional ?




(3) Third, Sr. Rojas, whose father-in-law is a notorious (and corrupt) disgraced former minister in the Republic of Panama, received a $20m loan from the Panamanian government, through his father-in-law's influence. He permanently relocated from Panama, without repaying that loan. No wonder he is trying to have his dark past buried where nobody can ever see it online. That $20m was used by members of the Panamanian Cabinet to purchase Petaquilla Mining stock, using Insider Information, If you are familiar with the scandal, you know the story. That's why Pedro Rojas fled from Panama for Venezuela years ago. No wonder his reputation removal firm is sending out threat letters. His past is catching up to him.


HOW MANY TURKISH NATIONALS ARMED WITH MALTA CBI PASSPORTS ARE RUNNING IRAN'S SANCTIONS EVASION PROGRAM IN EUROPE ?


A close reading of the names on Malta's recently released list of individuals who acquired citizenship through the country's troubled Citizenship by Investment (CBI/CIP) program shows a large number of successful applicants with identifiable Turkish surnames, or using Turkish characters. Many wealthy Turkish nationals have obtained CBI passports, which allow visa-free entry into the EU Schengen Zone, but other names are not those of members of well-known affluent Turkish families. How many Turks with Malta CBI passports are facilitating Iran's reestablished sanctions evasion operations ?

Special characters present in Turkish alphabet

It is worth remembering that the principal leader of Iran's oil-for-gold billion dollar sanctions evasion scheme, Reza Zarrab, was an Iranian national who was using his Turkish passport while he and his confederates, (Alireza Monfared and Babak Zanjani) operated their massive sanctions evasion enterprise. You can expect that the Iranian agents who are working their evasion programs in 2019 have also acquired first, their Turkish passports, and second their Malta CBI passports, based solely upon their bogus claims to Turkish citizenship.
Reza Zarrab
Identifying Iranian nationals working through European banks can be accomplished through face-to-face contacts. Does this individual speak fluent Turkish ? What was his place of birth, as reported on his supplemental government-issued identification ? What city in Turkey does he claim to come from, and what does he know about that city's leading families, private clubs, and local banks ?

Actually, if you are targeting Turkish nationals as potential clients at your bank, you have a native Turkish speaker who can easily, through a 2-minute interview at account opening, out the Iranians posers as non-native Turks. Ask that staff member to speak personally to the new client.

Friday, January 11, 2019

US FILES RESPONSE IN ITS APPEAL OF DENIAL OF FORFEITURE JUDGMENT AGAINST WAKED



 As a part of our continuing coverage of the appeal of the Miami forfeiture case against Nidal Waked Hatum, a principal of the Waked Money Laundering Organization, the United States Attorney filed its Reply Brief today in the Eleventh Circuit Court of Appeal. The trial judge had denied entry of a forfeiture order, notwithstanding the defendant's guilty plea, and the Government appealed that issue only.

The issues argued in the 43-page Reply Brief:
(1) Criminal Forfeiture is mandatory in a money laundering case.
(2) Waked's dissipation of the property subject to forfeiture does not  preclude entry of a forfeiture judgment of an equivalent amount.
(3) A forfeiture amount for Waked's money laundering conspiracy cannot be reduced or eliminated merely because Waked had repaid the defrauded bank.
(4) The District Court's subsequent misinterpretation of language in the Plea Agreement to forego entry of a forfeiture order against Waked is reversible error.
(5) The Court's alternative finding that the requested forfeiture money judgment would be Constitutionally excessive is erroneous. 

The Government's argument is highly persuasive. We will advise when the opinion is handed down.


DEA AGENT NAMED AS CO-CONSPIRATOR IN FLORIDA MONEY LAUNDERING CASE

Gustavo Yabrudi Peña
A money laundering conspiracy case, filed in the Middle District of Florida (Tampa) against a Venezuelan national who was a long-time DEA informant, who later strayed and made "unauthorized money movements," includes an unnamed DEA Special Agent as a co-conspirator and participant in the receipt of criminal profits from the money laundering operation. Gustavo Adolfo Yabrudi Peña, (DOB 6/27/78) whose December sentencing date was rescheduled to May, 2019, executed a Plea Agreement that names, but does not identify, an agent of the Drug Enforcement Administration as a major co-conspirator in the case. Prosecutors from outside the Tampa US Attorney's Office have been handling the case, which presumes that the allegedly corrupt agent is from that area.



Yabrudi employed both the Black Market Peso Exchange and Trade-Based Money Laundering techniques to convert criminal proceeds, in US Dollars, to Colombian Pesos, for his trafficker clients. The defendant allegedly moved $7m to Colombian narcotics traffickers. The unidentified DEA agent, as well as his family members, received funds from the accounts managed by the defendant.

Yabrudi lives in Pembroke Pines, Broward County, Florida, and employed a number of Florida corporations in Miami in his money laundering operations. His Venezuelan Cédula (National Identity Number) is V-13462339, and he previously worked as a DEA informant in New York, Boston and Miami.

Thursday, January 10, 2019

DISREGARD ANY NEW POLITICALLY-MOTIVATED CANCELLATIONS OF OFAC DESIGNATIONS ON RUSSIAN COMPANIES

Deripaska with Vladimir Putin
Given the strong opposition, on the part of the Democratic majority of the US Congress, to any US Treasury removal of OFAC sanctions upon Russian corporate entities linked to sanctioned oligarchs, it is humbly suggested that you do not treat ANY de-listing of Russian corporations as valid, for there will most likely be proceedings to contest such actions, and they may very well be reinstated in the near future. This legal nonsense about corporations "restructuring" to shift some, but not all,  of Oligarch Oleg Deripaska's ownership of corporate stock holdings as the excuse for de-listing may not be sustained in administrative actions, nor in court, the statements of the Secretary of the Treasury notwithstanding.

Compliance officers do not want to pick up the tab for approving transactions involving  OFAC-designated entities whose sanctions are cancelled, and are later reinstated. During that brief window when the listing was revoked, it would be professional negligence to allow bank clients to transact business with those companies, especially given that there is apparently no basis in law or fact for removal of those OFAC sanctions.
 

JOURNALISTS ASK SUPREME COURT TO UNSEAL CASE AND IDENTIFY FOREIGN BANK AT CENTER OF SPECIAL PROSECUTOR'S RUSSIA PROBE


 A nonprofit journalists' group, the Reporters Committee for Freedom of the Press, has filed a Motion to Unseal, before the US Supreme Court, in the case involving objections to the high-profile subpoena issued to an anonymous foreign corporation said to be a bank, seeking to intervene, and obtain public access to the filings in the case. The matter is of great public interest, as the subpoena was issued by the Office of Special Prosecutor, in the Russia 2016 campaign interference investigation.

The issues presented by the Reporters Committee , in its 28-page brief:

(1) Blanket Sealing of Proceedings in this Court violates the First Amendment.
(2) The Public has a First Amendment Right of Access to Appellate Proceedings.
(3) The Public has a Right of Access to Contempt Proceedings.
(4) Particularly where the DC Circuit Court's opinion was filed Publicly, Blanket Sealing of these
Proceedings cannot serve any compelling Governmental Interest. 
(5)  Blanket sealing of the proceedings in this Court violates the Common Law Right of Access.

Readers who wish to review the complete text of the brief filed in support of the Motion to Unseal may access it here.



TREASURY PUBLISHES IMAGES OF VENEZUELA'S GORRIN NETWORK PRINCIPALS



If you have read any of the recent media stories about the OFAC sanctions imposed upon the players in the corrupt Venezuelan system of diverting wealth into the hands of a small group of government insiders, the images of the conspirators, including Gorrin who was indicted in the US, are on a chart located on the Treasury website. You can access a full-size version of the above chart, together with detailed information on the players here.

UK GOVERNMENT FOLDS UNDER PRESSURE FROM TAX HAVENS, GIVES MONEY LAUNDERERS FIVE MORE YEARS OF OPACITY



Cleverly buried at the very bottom of an article on the Cayman Islands is the sad fact that the Government of the United Kingdom has reportedly capitulated in it efforts to enforce the most effective anti-money laundering act since the PATRIOT Act was passed right after 9/11. The legislation that mandated that its Caribbean overseas territories, many of whom are notorious facilitators of money laundering and financial crime, and create public registers of the beneficial owners of its corporations by the end of 2020, now has mysteriously been softened and extended until that faraway date of 2023. What's wrong with this picture ?

Apparently, the political blow back from the Cayman Islands and the British Virgin Islands was too much for British politicians to bear, for now the word, being ever so quietly spread, is that the UK will not expect its Overseas Territories, most of which have long and sordid histories of facilitating criminal conduct through corporation secrecy, and thus have more power than the UK law enforcement community, to become transparent, for it will now be the end of 2023, before the tax havens must publish their public registers. Some observers believe this means that beneficial owner disclosure will never come to the British Caribbean, because five years in the future is no longer a short-term time period during which present UK politicians will still be holding public office in Parliament. Unfortunately, they are eminently correct.

If the UK cannot or will not enforce reform in its own tax havens, then compliance officers must regretfully protect their banks, as well as themselves, from potential regulatory fines & penalties, by redlining (read: blacklisting) all corporate entities incorporated in the British Virgin Islands and the Cayman Islands, both of whom have vowed to never voluntarily institute public beneficial ownership register reform.  

Wednesday, January 9, 2019

MYSTERY CORPORATION, SAID TO BE A FOREIGN FINANCIAL INSTITUTION, FILES PETITION FOR A WRIT OF CERTIORARI WITH US SCT



The mysterious state-owned entity, now listed by major US media as a foreign financial institution, has now filed a Petition for a Writ of Certiorari with the United States Supreme Court. The case continues to be known as In Re Grand Jury Subpoena, and has been assigned case Number 18M93. The Court denied the motion for a stay of enforcement of the DC Circuit Court of Appeal opinion earlier this week, and the petition was filed on January 8, 2019.

The case has been filed under seal, "with redacted copies for the public record filed."

INDICTMENT OF RUSSIAN ATTORNEY FOR OBSTRUCTION IN FORFEITURE AND MONEY LAUNDERING CASE

Attorney Veselnitskaya

Readers who have read the media coverage of the Obstruction of Justice indictment filed in the Southern District of New York against Russian attorney NATALIA VLADIMIROVNA VESELNITSKAYA, but who wish to review the original source material may access the 19-page Grand Jury Indictment here.

NETHERLANDS ISSUES ITS OWN TAX BLACKLIST

 
If you were wondering what the Cayman Islands was making such a fuss about in local media, here are the twenty one low-tax jurisdictions named this week by the Kingdom of the Netherlands. Any company conducting business in these jurisdictions, which all have an effective tax rate of below nine (9%) per cent, are subject to specific anti-avoidance actions, to prevent transfer of profit schemes.

ANGUILLA
THE BAHAMAS
BERMUDA
BELIZE
THE BRITISH VIRGIN ISLANDS
GUERNSEY
THE ISLE OF MAN
JERSEY
THE CAYMAN ISLANDS
KUWAIT
QATAR
SAUDI ARABIA
THE TURNS & CAICOS ISLANDS
VANUATU
THE UNITED ARAB EMIRATES
AMERICAN SAMOA
SAMOA
TRINIDADE & TOBAGO
US VIRGIN ISLANDS

A withholding tax, equal to the Netherlands customary corporate tax rate, of 25%, will be imposed on payments from those jurisdictions, which will subsequently shrink to 20.5% . Compliance officers should factor this Blacklist into their 2019 assessment of Country Risk for these jurisdictions.



Tuesday, January 8, 2019

US SUPREME COURT REFUSES TO HEAR MYSTERY CORPORATION SUBPOENA CASE



As you can see, the United States Supreme Court has declined to hear the Application for Stay, which was filed by an anonymous foreign corporation, seeking to overturn  the DC Court of Appeals decision compelling the corporation to comply with a subpoena issued by the Office of Special Counsel. This 'mystery" case has generated a large amount of public interest, due to fact that it is a foreign corporation, and that its identity was concealed from the public.

$41m SECURITIES FRAUD ALLEGED IN COURT FLING IN REPUBLIC OF PANAMA

  A criminal complaint, filed in the Republic of Panama, has alleged an aggravated securities fraud in the amount of $41m, including the participation of a an officer in the Panama Stock Exchange. An illegal and fraudulent endorsement of 25% of the total shares of stock of a publicly-traded company, a telephone company, is claimed, in an action to open an investigation, and revoke the purported sales as null and void. The shares sold were allegedly pledged to another company.

Named in the case are:
(1) JONATHAN DAVID BETTSACK  MADURO
(2) JOSEPH BETTSACK MUELLER
(3)  NICANOR AQUILES DOSSMAN AMAYA
(4)  ROBERTO ALONSO JIMENEZ ARIAS

Dosman and Jiménez Arias


Sr. Jiménez Arias is the treasurer of the Panama Stock Exchange. The Superintendent of the Securities Exchange has opened an investigation into the charges.

ANTIGUA'S 200 STOLEN CBI PASSPORTS SCANDAL EXPLODES, SCORCHING ITS PARTICIPANTS



We have previously detailed Antigua's sordid tale of 200 blank Citizenship by Investment (CBI) passports, assigned to a seedy Chinese billionaire, but not delivered, after he was kidnapped in Hong Kong and taken into the People's Republic by security agents. Though intended for successful CBI applicants from China, those bank passports were soon stolen by a ring of professional criminals who are familiar to all Antiguans, as they constitute the same corrupt law enforcement and government figures, and their close associates, who sell CBI passports to dodgy criminal elements. Our prior article was titled What did the Antigua Government know and when did it know it ?

When the most senior police official in Antigua was named, and others on the force implicated, most Antiguans thought the scope of the scandal had been exposed; they were dead wrong. This week, a local attorney, cooperating with both US and Antiguan authorities, revealed that additional conspirators were involved in the scandal, and they are the most senior three officials, short of the Prime Minister himself, in government. When their names appear on criminal charges, the government may fall, especially if any of them end up in a courtroom in the United States, facing swift justice.

Just when you thought that systemic Caribbean corruption, involving the lucrative sale of CBI passports to career criminals, couldn't get any worse, it does. The most senior law enforcement officials in Antigua can hardly indict themselves, so the case will most likely end up in a Federal courtroom in the America, especially since payments for prized CBI passports are always made in US dollars. 

Monday, January 7, 2019

APPEALS COURT HOLDS LAW ENFORCEMENT AGENCY IS NOT OBLIGATED TO GIVE NONMATCHES FROM FACIAL RECOGNITION SEARCHES TO DEFENDANTS

An appeals court in the State of Florida has ruled that a criminal defendant, who was identified and convicted after a law enforcement agency matched his photograph to one in the agency's database, through the use of facial recognition software, was not entitled to copies of all the non-matches returned by the program. Readers of this blog may recall that we have previously discussed the issues when the case was pending on appeal. If you identify a Financial Criminal through Facial Recognition Software, must you Disclose that ? Published September 10, 2018.
 
The First District Court of Appeal held that the failure of the trial court to order a turnover of the photographs that did not match the defendant was not a violation of Brady vs. Maryland, as they did not cast doubt on the State's case. Brady requires that the State disclose any material that could exonerate the defendant, to the defense.

The Court reasoned that there was no reasonable probability that the result of the trial would have been different is the suppressed documents had been disclosed to the defense. The photographs not turned over did not resemble the defendant, and therefore would not have supported his argument that someone else in the photos committed the crime. The conviction was affirmed. Readers who wish to read the complete text of the opinion may access it here. The citation is  Willie Allen Lynch v. State of Florida, Case No. 1D16-3290 (Fla. 1st DCA 2018). [There is no Southern Reporter citation available yet].

Sunday, January 6, 2019

FEDERAL JUDGE DECLINES TO REOPEN MONEY LAUNDERING CONVICTION OF FORMER HAITIAN POLICE CHIEF AND DEATH SQUAD LEADER



A United States District Judge in Miami has entered a ruling against Guy Philippe, formerly the police chief of the Port-Au-Prince suburb of Delmas, a rebel leader in a Haitian popular revolt, and the onetime leader of a death squad that reportedly executed suspected gang members. Philippe, who was facing a life sentence on drug and money laundering charges, had entered a plea of guilty to a single count, and was sentenced to nine years' imprisonment. He later filed a §2255 petition, alleging incompetence of counsel, for failure to appeal his pre-trial motions to dismiss the charges. This week, the Court denied his petition.

The Court noted that Philippe had received between $1.5m and 43.5m in bribes, paid to him so that he facilitate free passage to narcotics shipments that were transiting Haiti en route to the United States, and moved those criminal proceeds in and out of the US, using front men to hold Florida bank accounts, hence the money laundering charges. While he had been elected to the Haitian Senate, immunity from prosecution, which exists under local law to protect elected officials, immunity has not been conferred when he was taken into custody.

Philippe alleged that his attorneys had failed to take an interlocutory appeal from the denial of pre-trial motions filed in his case; his counsel had alleged that the circumstances surrounding his removal from Haiti, to face the charges pending against him in the United States, violated the existing extradition treaty between the Republic of Haiti and the United States, and that the criminal charges were purely politically motivated. The Magistrate Judge who was a finder of fact in the 2255 case found that Philippe's claim that his attorneys had ignored his request to appeal from the denial of his pre-trial motions was not supported by the evidence, after reviewing the correspondence, and testimony, from several parties with first-hand knowledge, and those findings were adopted by the District Judge. Philippe is scheduled to be released from custody in 2024.






Saturday, January 5, 2019

RUSSIAN CHARGED WITH EXPORTING RESTRICTED MUNITIONS THROUGH MIAMI ARRESTED IN SAIPAN



Dmitrii Makarenko, a Russian national indicted in the Southern District of Florida in weapons and money laundering charges, was arrested on the Pacific island of Saipan, in the Northern Marianas Islands. Makarenko and another defendant illegally shipping restricted US technology to Russia when one shipment was intercepted by America law enforcement.

The defendants were charged with:
(1) Conspiracy to Export Defense Articles without a License. (1 count)
(2)  Attempt to Export Defense Articles without a License. (4 counts)
(3)  Money Laundering. (2 counts)



Offenses 2 and 3 are 20-year felonies. The restricted technology: night vision devices, a monocular, and firearms ammunition primers. Money was transferred to a bank in South Florida from Riga and Shanghai.

Is this the real reason that the Russian Government took that American hostage in Moscow ?

DO NOT ACCEPT VENEZUELA'S CARNET DE LA PATRIA, ITS "BIG BROTHER" CARD, AS VALID IDENTIFICATION

When compliance officers at international banks are onboarding Venezuelan nationals as new accounts, you may be offered, as official government identification, Bolivarian Venezuela's Carnet de la Patria, (Fatherland Card in English) as supplemental proof of identity. Do not accept this document as sufficient proof of identity. for any reason, for it has a dark purpose, and you do not want to assist in establishing its bona fides.

The Carnet de la Patria, while purported to be an government-issued photo ID, is actually a smart card issued by the tech giant ZTE, which is owned and controlled by the Peoples' Republic of China. It actually assists the Venezuelan government in tracking the holder's social, political and economic behavior, and is patterned after a similar card that China uses to completely control and monitor its citizens, in a reality far more sinister than George Orwell ever created in his classic book, 1984. 


The Carnet has become a necessary evil in Venezuela; required if an individual wishes to receive subsidized food, social and other government benefits. It contains information regarding the holder's political affiliation, voting history, and detailed personal data. It has become a necessary evil, and currently over one half of the population has been, more or less, forced into acquiring one. It is, frankly, a tool to identify regime supporters, and Opposition members, and allows the Government of Venezuela to favor its supporters, and punish those who oppose the present authoritarian government.

It is suggested that you do not accept Carnets as valid government identification, as the source of personal information that ZTE using to create the card is unknown, and therefore the data may include an alias, and not the correct legal name of the holder. Additionally, given the true purpose of the Carnet, to replace the Cédula, the national identity card, with a document that allows the regime to monitor* every aspect of the holder's life, we do not want to help establish it as an acceptable form of international identification. China's plan to export its total control of its citizens system to other countries is to be discouraged, as it is a major human rights violation, and inimical to democracy.


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* It is not known what effect scanning in the Carnet image does to a computer system, if any, but there may be risk of infection or intrusion.



   

FIVE YEARS LATER, FINCEN ADVISORY ON CBI IS STILL REQUIRED READING FOR COMPLIANCE



Back in 2014, the Financial Crimes Enforcement Network, FinCEN, issued its scathing Advisory regarding how one East Caribbean state had so badly handled the administration of its Citizenship by Investment (CBI/CIP) program that it represented a clear and present danger to the United States. The Advisory publicly exposed the scandal regarding how CBI passports had been, and were being, sold to financial criminals and sanctions evaders from around the world.

Unfortunately, here in 2019, the statements in that Advisory have become applicable to all five of the East Caribbean states that presently offer CBI products. Here is the complete text, though we have turned the specific country identified by FinCEN as the violator into a generic category, for all the Caribbean states selling them now fit the description:

                                 "While many countries offer programs offer programs similar to the Country X Citizenship by Investment program, the Country X program is attractive to illicit actors because the program, as administered, maintains lax controls as to who may be granted citizenship. While the Country X government has publicly pledged to improve these controls, FinCEN believes that they remain ineffective. For example, in 2013, the Country X government announced that all Iranian nationals were suspended from participating in the Citizenship-by-Investment program. Despite this public assurance, FinCEN believes that Iranian nationals continue to receive passports through the program. As a result of these lax controls, illicit actors, including individuals intending to use the secondary citizenship to evade sanctions, can obtain a Country X passport wit relative ease". FinCEN Advisory 2014-A004.

As you can see, the Advisory is currently applicable to the CBI programs of Antigua & Barbuda, Grenada, Dominica and  St Lucia, as well as St Kitts & Nevis. Until these dangerous deficiencies are remedied, through either major reforms, or termination of the programs altogether, they will continue to present a clear and present danger to Compliance officers in North America, and in the countries of the European Union.

Friday, January 4, 2019

COMPLIANCE OFFICERS: IGNORE DISINFORMATION WHEN CALCAULATING COUNTRY RISK



Compliance officers whose responsibilities include updating assessments of Country Risk, for onboarding new foreign clients, are cautioned to rely upon only well-established private sources, with proven reliability, for these is much out there online that is disinformation or misinformation.

This includes sources from governments as well; American media commentators* of late have excoriated President Trump, and his administration, for a number of public statements made about international affairs, which are patently false. For example:

(1) Poland was conducting a military incursion into Belarus. False.
(2) Montenegro, which was in the process of joining NATO, was overly aggressive, and might start World War III. False.
(3) Russia was right to invade Afghanistan in 1979. Also false.  

If these examples were easily found by reporters, we wonder what other pro-Russia, completely untrue, false statements have been made by official sources. Considering that politics appears to be interfering with the truth, compliance officers should disregard all such statements, and rely upon legitimate media and research sources, only. While we know now to generally ignore "facts" emanating from authoritarian regimes,  some democratic governments also slant the truth for national security or political reasons. You are best advised to avoid government sources altogether in 2019.
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* Some commentators have suspected that the Trump administration is being stovepiped slanted information directly to the President, and that he is repeating it without having it vetted by his advisers and experts first.

PANAMA'S SUPREME COURT RULES IT DOES NOT HAVE JURISDICTION TO HEAR THE CASE AGAINST ITS FORMER PRESIDENT



The Supreme Court of Justice, the highest court in the Republic of Panama, has issued a ruling that appears to declare that it has no jurisdiction to hear the case against the country's former president, Ricardo Martinelli, on the four criminal charges that he was extradited for from the United States. The ruling, which took the form of an Edict, relies upon "Constitutional Guarantees" to support it. The former president is currently in custody and facing trial in a lower court.

When Ricardo Martinelli left office, he immediately fled to a neighboring Central American country, where he was reportedly sworn in as a Member of the Central American Parliament (Parlacen), and his attorneys have asserted that this act gave him immunity from prosecution.

The Edict provides for the right of appeal by any interested party within five days. Rumors have been swirling around Panama City since Martinelli's extradition, declaring that rampant corruption in the country's court system will result in a dismissal of the charges against him, and that the case will never go to trial. Many of the judges on the Supreme Court of Justice (CSJ) owe their appointments to Martinelli, and he used his influence many time in the past to pervert the process of justice while he was president. Whether he will walk out of prison without being held accountable for his crimes is a real possibility, but this ruling does not fully put to rest fears that he will cheat justice.

Thursday, January 3, 2019

ADVISORS WARN EUROPEAN EXECUTIVES WHOSE COMPANIES TRADE WITH IRAN TO STAY OUT OF THE UNITED STATES


 Business consultants & advisors have been warning executives from the European Union who are their clients, or attendees at their conferences, not to enter the United States if their companies are conducting trade with Iran. The thrust of their advice is that the executives are at risk of arrest or detention, should their companies be found to be violating US sanctions on Iran, and there be a nexus with the American financial system.

Obviously, this newfound concern has surfaced due to the detention of the Huawei CFO in Canada, and pending American extradition request, alleging that the Chinese company violated US sanctions upon Iran, with the assistance of its CFO, who allegedly controlled a Hong Kong company that operated in Iran.

Compliance officers at international banks whose US or Canadian clients send products to EU customers that might be transshipped to Iran, especially dual-purpose goods with possible military applications for WMD or ballistic missile development, might want to take a close look at their clients' lines of businesses, and payments for international trade transactions. Have any of their customers remarked to them that they avoid coming into the United States, or declined invitations to come over and see their production facilities ? Have those individuals displayed a well-founded fear of arrest ?


Candidly, given that many corporations in Western Europe have major business with Iran, retaining US or Canadian bank clients who are known to ship goods to EU companies that are known to trade with Iran might represent an unacceptable level of risk.    

MYSTERY CORPORATION CASE AT US SUPREME COURT APPEARS READY FOR REVIEW

Both the US Government and anonymous attorneys representing an undisclosed foreign corporation owned or controlled by a foreign nation have completed their filings in the mysterious United Supreme Court case involving a subpoena for documents, and the case should now either be rejected by the high court, or accepted for argument and a decision.

There has never been a completely confidential Supreme Court case, where the names of the parties, and even the attorneys representing them, and the issued presented are confidential, and concealed from the public. We do not know whether the request that the file be sealed was at the instance of the Office of Special Prosecutor, or the foreign-owned corporation, or both.

Legal observers have guessed that the corporation is possibly from Russia, Cyprus, Malta, Turkey, Dominica, or one of the other tax havens (offshore financial centers), but there is no information available to even make an educated guess about the identity or nationality of the entity. Others point to the fact that Reza Zarrab, the leading Iran oil-for-gold sanctions evader, has been extensively interviewed by attorneys from the Special Prosecutor's Office, and have linked Turkey to Russia, due to Zarrab's movement of cash, and surmise that there is a connection to the Russian effort to affect the 2016 US Presidential Election Campaign. We await the Court's action.