Wednesday, December 28, 2011


Money launderers thrive on emerging opportunities. China & Japan have just announced that they have entered into an agreement that provides for direct Yen-Yuan trade. This means that, in their joint international trade, their respective currencies will no longer be converted first to US Dollars.

The elimination of the intermediate denomination of currency into US Dollars, which might be employed by prosecutors to confer that extraterritorial jurisdiction of the Money Laundering Control Act of 1986 exists, has not escaped the attention of the money laundering fraternity in Asia, I suspect. The risk of indictment by the US Attorneys' Offices may have decreased.

So, how will the international trade between the two countries, using Yen-Yuan exchange, be utilised by career money launderers ? Are we talking about trade-based money laundering ? Will bulk cash smuggling from one country to another, to facilitate the laundering of illicit profit though Sino-Japanese trade, be made easier ?

Whilst these musings are only theory, they are based upon the established fact that experienced money launderers often exploit even minor changes in the financial system to perfect new, and effective, laundering schemes. 

Tuesday, December 27, 2011


A scandal is emerging in Israel this week; an Israeli software company that manufactures spyware that is reportedly highly effective in surveillance was apparently sold to Iran, notwithstanding the fact that such a sale not only violated international sanctions, the sale was to a country that poses an existential threat to Israel.

How did this sale occur ? It seems that the Israeli company had a relationship with a Danish company, and it was that company that sold the software to Iran. The moral of the story: sanctions facilitators can, and do, operate in a stable, Western jurisdiction that you would never expect that one would come from. Cast aside your preconceived notions that all Iranian sanctions evasions occur in the Middle East.

Monday, December 26, 2011


The United Nations has agreed to resettle the members of the  Mujahedin-e Khalq, more commonly known as the MEK, outside Iraq. The MEK, which opposes the present regime in Iran, which is a designated terrorist organisation under US law, has been lobbying extensively to have that designation removed, engaging the services of a number of prominent Americans who are former senior government officials. Reportedly, the UN and Iraq have signed an agreement providing for transfer of MEK members to third countries.

Several American military and government officials were assassinated by the MEK in Iran, during the periods when the Shah was in power, but the present US Administration supports the organisation, due to its opposition posture. The MEK is believed to be behind anti-government attacks on military forces and government facilities in Iran.

 MEK members, who will be transferred from Camp Ashraf in northeastern Iraq to a location near Baghdad International Airport, whilst resettlement arrangements are being made, have been targeted in the past by Iraqi attacks, and it is feared that, after 31 December, such actions will continue, unless they are resettled outside the country.

Sunday, December 25, 2011


The US Department of State is offering a $10m reward* for information leading to the capture of Al-Qaeda money launderer Yasin Al-Suri, also known as Ezedin Abdel Azil Khalil, a Syrian national. Al-Suri reportedly supervises fundraisers who work with donors in the Gulf states, and moves the money through Iran, to Al-Qaeda units in Afghanistan and Pakistan.

Iran has denied that he is located there. Please note that his photograph appears on the Rewards for Justice webpage, together with a number of additional aliases that he is known to employ.

Rewards for Justice Programme 


The fact that ten of the maritime transport companies, sanctioned last week by OFAC as Iranian fronts, (IRISL) were headquartered in the Republic of Malta, is disturbing. This is not the first time US regulators have come down on Malta for Iranian sanctions issues. When any country in the European Union allows itself to be used for sanctions evasion, it indicates a lack of adequate supervision over both financial services professionals, and government functionaries charged with processing filings. Who was at fault here ? I would certainly like to know.

Whether this was something that nobody caught, and negligent behaviour, or something intentional, I can guarantee you that US regulators, as well as law enforcement agencies, will be taking a cold, hard look at Maltese companies in the future. For that reason alone, compliance officers charged with assessment of country risk may want to reexamine their ratings for Malta. 


The US District Judge handling the fraud case of accused $7bn Ponzi schemer R. Allen Stanford* has ruled that he is mentally competent, and fit to stand trial. Stanford's attorneys had argued that he was not able to assist in his own defense, or testify at trial because of a disability, caused by :

(1)  Head injuries suffered during a 2009 prison assault; and
(2) The effects of the powerful anti-anxiety medications he was prescribed at the beating.

The US Attorney argued that he was competent to stand trial, and that he was faking total retrograde amnesia. The government alleged that he had failed all the tests given to him that were designed to detect
efforts to fake memory loss.

The Court found, by a preponderance of the evidence, that Stanford was competent to stand trial, and that he had suffered no brain damage. Trial is presently set for 23 January, though the defence has a motion for continuance pending.
*United States vs. Stanford,  Case No.: 09-cr-0342 (SD TX).

Tuesday, December 20, 2011


We are continuing to monitor the case of Lourdes Mercedes Cajale, the export firm clerk who allegedly embezzled funds from the company, moving them from Miami, through an unsuspecting Panamanian intermediary,  to accounts she controlled in Panama, and then, after being discovered, had the nerve to sue her employer under a purported oral employment agreement*. Will she ultimately be charged with a violation of the Money Laundering Control Act of 1986 ? We cannot say, but recent developments in the case indicate that the case is heating up**.

(1) Her lawyer, Miami criminal defence attorney Richard Diaz, has moved for sanctions against Financial Crime Consultant Humberto Aguilar, who is reportedly analyzing the facts in the case, on behalf of the export company, to ascertain whether embezzlement and the techniques of money laundering have indeed occurred. Mr. Diaz is bluntly disputing Mr. Aguilar's professional credentials, which is puzzling. Aguilar, himself a former Miami attorney, served a term in Federal Prison for money laundering, and has become known as an international authority in the AML field. He regularly lectures at anti-money laundering conferences and  financial crime seminars around the world. Is attorney Diaz questioning the competency of an obvious expert simply as a delaying tactic or is there another reason ?

(2) Reliable sources indicate that Ms. Cajale, who recently became a US citizen, failed to disclose the existence of this matter in either her application for citizenship, or any subsequent filing.  Most experienced immigration lawyers agree that that concealing such material information is grounds for revocation of her citizenship, even after it has been granted. I submit that concealment of the fact that you have been involved in an embezzlement is material. Why did Ms. Cajale fail to disclose ?

(3) There's more; Cajale reportedly was granted asylum in the United States, based upon her allegation that she kept a residence for penniless Colombian youth, to keep them from joining the country's paramilitary groups, and that her life was threatened by members of the ELN, a designated Colombian global terrorist organisation, due to this activity. She also reportedly claimed that her handyman was himself an ELN agent, sent to report on her to his superiors in the terrorist group, and that he admitted his role to her. It has been alleged that this was a complete fabrication, that there was no such home, which conduct, if true, constitutes immigration fraud. A testimonial letter from local clergy was reportedly given to US authorities, to support her claim, which is curious due to the fact that Cajale reportedly ran no such programme.

If her original asylum in the US was obtained fraudulently, the subsequent naturalisation proceedings were tainted, and therefore revocable by the authorities. The asylum, residence and eventual citizenship of her family members, which was reportedly solely based upon her status, may also be in jeopardy.

(4) The production of bank records requested in a parallel proceeding in the Republic of Panama, alleging that the transfer of funds through a Panamanian intermediary who had no knowledge of their illicit nature, are expected to indicate that the $161,000 was split up into three portions, and transferred to accounts owned by Lourdes Mercedes Cajale and her husband, Didimo Alberto Navarro Reyes. These documents are scheduled to be released on or about the 22nd of December.

Where this matter will end we cannot say, but we shall continue to review the progress of  the court file, ask questions, and report back to our readers on the final outcome; Stay tuned.
*When White Collar Crime becomes Money Laundering - Part 1, Kenneth Rijock's Financial Crime Blog,18 October, 2011. When White Collar Crime becomes Money Laundering - Part 2, Kenneth Rijock's Financial Crime Blog,13 December, 2011.
** A recent high-profile California case, appearing in the media, involved employees who embezzled firm money to fund a transcontinental spending spree, appears to have a number of similarities with the Cajale case. The defendants in that case have been charged with a number of felonies.

Monday, December 19, 2011


Readers who have been asking me when they can pre-order The Laundry Man, my book, for 2012 delivery, upon publication, can now do so on Amazon. Go to the website:

If you bring your copy to me during my forthcoming UK and US book tours, I will be happy to sign it for you. Details about tour dates and venues will appear here during 2012.

There is also information about the book on the Penguin UK website:

Friday, December 16, 2011


A court in France has sentenced the terrorist Ilich Ramirez Sanchez, more commonly known as the Jackal, to a life sentence, for his involvement in four bombings on French trains. The Jackal, who is already serving a life sentence for a previous conviction for  murder, received the maximum sentence permitted under French law.   

Thursday, December 15, 2011

National Bulk Cash Smuggling Centre Expands

The ICE National Bulk Cash Smuggling Centre, located in Williston, Vermont, has expanded to larger quarters, and has added additional staff. Since it opened in 2009, the BCSC has been responsible for 270 arrests, and the seizure of over $170m in cash. We have previously discussed the importance of this law enforcement unit, whose Chief is Joseph Burke.

Remember, experienced money launderers working for narcotics traffickers do not always keep criminal profits in cash form at all times. They know that a successful transcontinental or international wire transfer, not identified and interdicted by compliance officers, can be later withdrawn in cash prior to exiting the Continental United States. Always check requests for large cash withdrawals, and ensure that it is for a valid business purpose, consistent with the client's lines of business, and account history. If not, take a hard look at the transaction.

If you have information on what you believe is an instance of bulk cash smuggling, you can report it by completing this form:

For further information, visit:

Wednesday, December 14, 2011


There are instances where even Enhanced Due Diligence is insufficient. especially where Source of Funds, or absolute identification of Beneficial Ownership is a mandatory component of your investigation. Some instances where this is the case:

(1)  Immigrant Investor Programmes. where government agencies require strict verification of Source of Funds information.

(2) Taking on a new business partner, mergers & acquisitions, and other complex transactions.

(3) Investing in the developing world, where a Western investor is taking a minority share in a local company. You do not want to be associated with someone who i a liability

There simply is no commercially available source of what I can only designate as Enhanced Due Diligence Plus, and it is sorely needed. Where would one go for such business intelligence ? Probably the larger private investigative firms, but they do not always have asset in the specific area you need.

There is a real gap here; I wonder when someone will devise a solution ?

Tuesday, December 13, 2011


New developments in the discovery phase of a case we have been covering here,* which involves litigation over funds allegedly embezzled by an employee in an international export firm, and deposited into Panamanian banks, paint a detailed picture of deceit involved in the movement of reputed criminal proceeds through what can only be described as the layering phase of money laundering. It should be required reading for all officers at companies engaged in international trade.

We have previously mentioned** the deposition of a Panamanian national who appears to have been the unwitting facilitator of the movement of the funds into, and through Panamanian financial institutions .. The transcript*** having since become available, we have learned more details, all taken from his sworn testimony:

(1) The witness, a longtime resident of Panama, and who had previously served as an auxiliary police officer in Colombia, was a childhood friend of Didimo Alberto Navarro Reyes, the husband of Lourdes Mercedes Cajale, the alleged embezzler. He owns a legitimate company in Panama.

(2) Didimo asked the witness to do him a favour, and accept a wire transfer coming from Lourdes, ostensibly because Didimo advised that his lawyer**** told him that the funds must be transferred from a company to a company account. The witness complied because he trusted Didimo, according to his testimony. He had never performed this favour before, nor has he done so since. He did not financially benefit from the wire transfer, which was in the amount of $161,000.

(3) The next week, it was requested of him that the received funds be divided up, and transferred into three accounts. Records of the bank, a major international financial institution, show that these are accounts of Didimo Navarro and Lourdes Cajale. Do these transfers constitute layering ? What do you think ?

(4) The witness was stunned when he subsequently received a visit from a Panamanian judge, accountant, and experts, all investigating the circumstances surrounding the wire transfer. He learned that there was a judicial inquiry into the propriety of the transfer.  The witness ruefully admitted that he no longer trusts Mr. Navarro.

When someone you know asks you to assist with a "routine" funds transfer, solely as a favor to them, and not for any legitimate commercial purpose, you could be exposing yourself to money laundering charges, which in the United States can result in a twenty year sentence in Federal Prison. Always seeks competent professional advice before involving yourself, and your firm, in participation, no matter how minor, in any type of unusual transaction, lest you find yourself under investigation, or worse, for the facilitation of money laundering.

A second development in the case is also ominous; several relatives of the owners of the export company have been anonymously contacted in Colombia, and threatened with kidnapping. The caller advised that the only way that they could avoid an uncertain fate was to pay over $150,000 immediately. The threats were suspiciously made on the day that the above-described witness was subpoenaed for deposition.

These threats have been conveyed to Colombian law enforcement authorities, a formal complaint filed, and an investigation opened. Was this intended to intimidate and deter the owners of the export company from pursuing the judicial proceeding in Panama ? We cannot say, but we are waiting to see what the next deposition of Lourdes Cajale uncovers. Stay tuned.

*When White Collar Crime becomes Money Laundering,  18 October, 2011.
**Key Witness confirms that Fraudster Laundered Money through Panama, 21 November, 2011.
*** Deposition taken 17 November, 2011.
**** The identity of the lawyer who gave this advice to Mr. Navarro is not disclosed in the deposition, but sources in Colombia indicate that one of his attorneys is Abelardo de la Espriella, well known as defence counsel in the Colombian Para-politics scandal, where some members of the Colombian Parliament were accused of ties to the United Self-Defence Forces of Colombia, the Paramilitaries. Sr. de la Espriella's Miami office is in the same building in Coral Gables, Florida where Lourdes Cajale's attorney, Richard Diaz maintains his offices. Please note that Mr. Diaz, though a criminal defence attorney, is representing Ms. Cajale in the civil action. 

Monday, December 12, 2011


The announcement this week, that a major money laundering indictment has been issued in California, with a large number of laundrymen charged, begs the question : should law enforcement agencies ever facilitate the movement of huge amounts of drug profits just for the chance that the actions might result in arrests of high-profile defendants ? I join the arguments made by a US Congressman, who is asking whether aiding and abetting organized crime in laundering money justifies arrests. Was it worth it ?

I can tell you, the sad truth is this;  so-called controlled obey laundering by undercover agents of law enforcement, solely to "follow the money" never results in a 100% subsequent seizure of all that money. Some of it ends up concealed and invested, and out of the reach of seizure and forfeiture actions. Other portions simply are disbursed as payment for services rendered, or the cost of goods sold, or profits.

As we have ruefully seen in the abortive "Fast & Furious" operation conducted by Alcohol, Tobacco & Firearms (ATF), even the best intentions often result in missed opportunities, and the unintentional facilitation of crime, generally due to poor planning, and a good understanding of Murphy's Law.

The $13m reportedly laundered in this case obviously transited a number of US banks, and it appears that some of those millions will not be recovered. That money will buy a lot of drugs, smuggling vessels and aircraft, weapons, bribe a number of corrupt foreign officials, and end up as investments abroad that merely increase the wealth and power of the narcotraffickers.

If you are going to follow the money, by all means, don't lose track of any of it.

Sunday, December 11, 2011


A roadside bomb injured five French peacekeepers serving with UNIFIL in Lebanon. The device, believed to be command-detonated, was employed near Tyre, in southern Lebanon. It is the third time this year that United Nations forces in Lebanon were injured by this type of explosion, which has been attributed by many sources to agents working for the Government of Syria.

Lebanon, beset by the problems of the Hariri investigation, Hezbollah's increased saber-rattling and vocal support of the Syrian regime, and internal political turmoil, presents a major headache for country risk assessors*. Another civil war, a second armed conflict between Hezbollah and Israel, and possible spillover of the Syrian violence, all threaten stability of the financial centre in Beirut.
*Is Lebanon now High Risk ? Kenneth Rijock's Financial Crime Blog, 2 October, 2011;  Raise Country Risk on Lebanon, Kenneth Rijock's Financial Crime Blog, 30 November, 2011.


A man who attempted to smuggle $284,930 out of the United States, hidden inside the spare tire mounted underneath his vehicle, was sentenced this wee, in US District Court* in Arizona, to serve 41 months in Federal Prison, followed by three years of Supervised Release. he had attempted to leave the US at the frontier crossing in Douglas, Arizona.

He was arrested in 2010, and held in Pretrial Detention, after the Court found that there was a serious risk he would not appear for trial.

Adam Currasco, age 48, had a number of prior problems with the law:

(1) A felony narcotics case in 1991.
(2) A felony criminal damage case I'm 1984.
(3) An arrest in 2008 got transportation go illegal aliens.
(4) his vehicle was found to have a hidden compartment in 1998.

A final Order of Forfeiture for the funds seized was entered.
*United States vs. Carrasco, Case No.: 10-cr-02352-DCB-BPV (D AZ). 


Former Panamanian General Manuel Antonio Noriega is presently on board an Iberia airliner, on his way back to Panama, and facing imprisonment there for his conviction in absentia for two murders committed whilst he was serving as President of Panama, more than two decades ago. His extradition was recently approved by the government in France,  where he was serving a seven year sentence for money laundering.

Noriega, who is now in the custody of Panamanian officials, including a doctor, left Orly Airport in Paris early today, bound for Panama, via a stop in Madrid. He will reportedly be held in El Renacer Prison upon arrival. Whether his return to Panama will destabilize the country is a question in the minds of many in the financial service industry; compliance officers involved with the assessment of country risk will be closely monitoring the situation this week.

Friday, December 9, 2011


Twenty eight members of the Florida Senate have co-introduced a bill* that will require Florida banks who have relationships with foreign financial institutions to maintain procedures that will determine if the foreign banks are facilitating Iran's banned WMD programmes. Local banks will further be required to annually certify that their foreign correspondents are clean, otherwise stiff civil fines will be imposed.

Here's the text of the official summary:

" Financial institutions; Requiring a financial institution that is chartered in this state and that maintains certain accounts with a foreign financial institution to establish due diligence policies, procedures, and controls reasonably designed to detect whether the foreign financial institution engages in certain activities facilitating the development of weapons of mass destruction by the Government of Iran, provides support for certain foreign terrorist organizations, or participates in other related activities; requiring the Office of Financial Regulation to to adopt rules establishing minimum standards for the due diligence policies, procedures, procedures and controls; requiring the Office of the Chief Financial Officer to make the annual report available to the public on its website; authorizing the Office of Financial Regulation to impose a civil penalty against a financial institution that fails to make the annual certification required by the act,"

The Florida House, the other chamber of the state legislature has a similar bill pending***.

If and when it becomes law, Florida banks with correspondent relationships with foreign banks will be expected to check, and then certify, that the foreign institutions are not facilitating sanctioned Iranian programmes. If this sounds to you like the "knowable" requirement of the Federal Iran sanctions law, you
understand the ramifications for Florida banks, and foreign banks with US-chartered subsidiaries. Things are about to get much more difficult for compliance officers.
*Senate Bill 792
***House Bill 613

Thursday, December 8, 2011


You are performing due diligence on a wealthy individual who wishes to open an account relationship with your bank. He plans on moving his substantial accounts over to you, but first, have you ruled out that he may just be a clever PEP, who is in reality fleeing a North African country that just became part of the Arab Spring ?

I hear you say that his passport is not from a Middle East country. Have you:

(1) Checked to see what's in the passport he is showing you ? I know that you have already verified its authenticity, using Passport-Check, or some other resource, but are there sufficient visa stamps in it to
indicate international travel during the last five years ? Is it basically clean ? Perhaps he holds dual nationality. is this passport new ?

(2) Where does it say is his place of birth ? is it in a Middle East country, even though his proffered passport is from outside that region.

(3) What about his accent ? Does it agree with his professed nationality ? is he comfortable speaking the language that you would expect, given the jurisdiction he says he is coming from ?

I am making these points to alert you to the possibility that a new client might just be in flight from one of the newly-emerging democracies in the Middle East, and that his wealth was stolen, obtained through bribes or kickbacks, or through some preferential business operated as a virtual monopoly in his home country. The new government in his country may soon be wanting that money back, leaving you with
reputation damage you could have avoided.

The lesson: ensure, through effective due diligence such as is detailed above, that you are not taking in some corrupt PEP, human rights violator, or an enemy of the state. Rule out any chance that he is a PEP on the run from North Africa, before accepting his money, please.


Wednesday, December 7, 2011


Jerry Jarrett, a former criminal defence lawyer from Gary, Indiana, was sentenced this week to serve thirty seven months in Federal Prison, for laundering $67,000 of criminal proceeds for a client. The case should serve as a reminder that Federal prosecutors will often go to great lengths to convict criminal defence lawyers who have been skillful adversaries of the United States Attorney's office, and who are involved in criminal conduct.

Jarretts' jury guilty verdict, which was handed down back in 2004*, was overturned by the trial judge, upon the grounds of vindictive prosecution. Jarrett alleged that prosecutors were out to get him after he obtained a favourable result in a high-profile murder case in which he was lead counsel. The government appealed.

The Seventh Circuit Court of Appeals later reversed** the lower court decision, holding that there was no clear and objective evidence of vindictive prosecution. The Court stated that a defendant must show through objective evidence that the prosecutorial conduct at issue was motivated by some sort of prosecutorial animus, and that it requires direct evidence.

The case was remanded back to the trial court, and the jury verdict reinstated. An order of forfeiture, in the amount of $92,000, was later entered. Though the government asked for 63-78 months of imprisonment, the Court noted that Jarrett had been disbarred, unemployed since 2004, and owing taxes and student loans, gave him 37 months, and two years of Supervised Release.

Obviously, when criminal defence lawyers commit crimes, you can expect aggressive prosecution to follow.

*United States vs. Jarrett, Case No: 03-cr-00087 (ND IND).
** United States vs. Jarrett, 447 F.3d 520 (7th Cir. 2006).

Tuesday, December 6, 2011


In a postscript to yesterday's posting regarding elevating Country Risk for Lebanon*, The leader of Hezbollah, Sayyed Hassan Nasrallah, making a rare public appearance in the south Beirut suburb of Dahiya for the Ashura observance, claimed that Hezbollah, which is a specially designated global terrorist organisation, has upgraded it weapons systems. He stated that the organisation will never disarm.

Nasrallah made a number of anti-American statements, and alleged that the United States was supporting the opposition in Syria; Hezbollah supports the regime in Damascus, with whom it is allied. Consider this information when assessing country risk for Lebanon.
*Elevate Country Risk for Lebanon, 5 December, 2011.

Monday, December 5, 2011


Three disturbing incidents occurring in South Lebanon recently must be factored in by compliance officers who are calculating country risk for Lebanon. As you may not be aware of them, I will cover them in brief:

(1) Four rockets were launched, from Southern Lebanon, in Northern Israel, the first such attacks in two years. Though they were reportedly launched from Hezbollah-controlled territory, a Palestinian group later claimed responsibility.
(2) An unmanned drone, believed to have come from Israel, was captured on the ground by Hezbollah, and later taken to who has been described as an arms depot of that organisation. It is said to have been detonated in a massive explosion.
(3) Hezbollah agents claim to have uncovered, and have captured and displayed, a device it alleges was a remote listening post for electronic communications of the Hezbollah private communication network, which operates independently inside Lebanon.

It is too soon to say whether the risk of armed conflict on the border has increased, but since any military action, whether sustained or of brief duration, would have a disastrous effect upon the Lebanese financial industry, country risk watchers should monitor the situation accordingly.

Sunday, December 4, 2011


Judges that allow arrest bulk cash smugglers to bond out always run the risk that they will run.Vanessa Weaver, who pled guilty to bulk cash smuggling in  Federal Court in South Texas*, failed to appear at her sentencing. She was apparently working for a narcotics smuggling organisation whose ringleader was sentenced to 25 years in Federal Prison.

It appears from the record that she failed to agree to the government's version of the facts, at a hearing. When she failed to appear for sentencing, her bond was estreated and forfeited, and she was indicted for Failure to Appear at Sentencing, which carries a maximum penalty of ten years.

She subsequently appeared in court, with counsel, and was remanded into custody. She has not yet been sentencing on the bulk cash smuggling charges.
*United States vs. Arturo Gomez, et al Case No.: 11-cr-00207 (SD TX).
** United States vs. Weaver,  Case No.: 11-cr-00793 (SD TX).


Last week, the United States Senate passed the bill* that would give the President the authority to sanction any foreign bank that was engaged in any transactions with the Central Bank of Iran, including the right to close correspondent accounts located in the US, which could threaten those bank's ability to service their international clients. If passed into law, and applied, that sanction could put those banks so affected out of business forthwith, as all of their clients with international trade with the US would head for their competition.

Here is the complete text of the provision, Section 1245, Imposition of Sanctions with respect to the Financial Sector of Iran:
"The President
 (A) shall prohibit the opening or maintaining, in the United States, of a correspondent account, or payable-through account, by a foreign financial institution that the President determines has knowingly conducted or facilitated any significant financial transaction with the Central Bank of Iran, or another Iranian financial institution designated by the Secretary of the Treasury for the imposition of sanctions, pursuant to the International Emergency Economic Powers Act; and
(B) may impose sanctions, pursuant to the International Emergency Economic Powers Act, with respect to the Central Bank of Iran."

Will correspondent accounts of major foreign banks in the US actually be closed ? We cannot say; first, the bill must become law, and then we will look at enforcement. Stay tuned.
*Senate Bill 1867.

Saturday, December 3, 2011


The UK Financial Services Authority [FSA] has issued a guidance,*  warning that traded life policy investments** "are high risk, toxic products that are generally unsuitable for the majority of UK retail investors, and should therefore not be promoted to them." The regulator stated that it has found that traded life policies have significant problems with the way in which they are designed, marketed and sold.

The problems specifically cited:

(1) Should the insured exceed the estimated life expectancy, the return upon investment will decline.
(2) There may not be sufficient premiums in escrow to cover the payments if the insured lives longer than estimated and expected.
(3) There may not be an active market for the investment, should the investor need to, or choose to, sell his or her interest.
(4) The company responsible for final payment upon maturity is generally based offshore, making recovery subject to possible exchange rate fluctuation. * It is generally outside the FSAs jurisdiction.

Note that a large number of institutional investors, including major German banks, and some of the world's wealthiest men, have substantial holdings in traded life policies; the FSA limited its warning to UK retail investors.

Will traded life policy investments be eventually prohibited in the UK ? we cannot say, but there are hints to that effect. We will be closely following this story.
*Guidance - Traded Life Policy Investments
** Also known in the English-speaking world as senior life settlements and life settlements, they are investments in the secondary life insurance market. The investor becomes the owner and beneficiary
of a life insurance policy on a third party, and collects when the policy matures after the insured's death. 


Six million US Dollars has been seized, by local law enforcement, at the airport in Luanda, Angola, aboard a TAAG Angolan Airlines airliner. The pilot in command, and six crew members of the aircraft, which was bound for Dubai, UAE, have been taken into custody and reportedly charged with money laundering. The were in possession of the funds.

What is most important about this incident is the opinion of a senior law enforcement agent, quoted by local media, that this was not the first time this crew was engaged in such activity. Note also that there are reports of 140 individuals deported from Angola recently, for "money laundering and terrorism."


A number of forecasters are claiming that the decline in both housing sales and manufacturing in China indicates that the country may be headed for the same place as the West; an economic downturn. If this is indeed occurring, or is about to occur, be advised that money launderers for certain elements will be on the move:

(1) Corrupt PEPs who have, through bribes, kickbacks, or sweetheart deals on government contracts handled by relatives and associates, moved their illicitly-acquired wealth offshore, may need to now repatriate some of it, to support their lifestyles, or prop up struggling businesses that they own through fronts. If business is bad, bribes become more infrequent. They may actually need to bring some cash onshore.

(2) Criminal organisations, regularly laundering and banking their profits offshore, may now need some of their funds for "operating capital."

(3) legitimate business owners, who have been diverting a small portion of their profits to offshore financial centres, in tax evasion schemes, may have fallen upon hard times, and need to access some of their external assets, to maintain profitability.

Individuals in the above groups will depend upon the money launderers who moved their dirty money out, to safely and quietly repatriate a portion of it, as needed.

Look for:

(A) Payments made to Chinese companies, whether in Hong Kong or Mainland China, that have no history of international sales.

(B) Loans to individuals or entities from known tax haven jurisdictions.

(C) Large payments purporting to be for claims submitted to foreign insurance companies for alleged losses covered by existing policies.

(D) Payments that recite that they are investments by foreign lenders or entities.

There may be well-documented, but unusual, transactions, covering the return of illicit wealth. If it looks suspicious, apply Enhanced Due Diligence.

Friday, December 2, 2011


The bookkeeper uncle of convicted Fort Lauderdale attorney/Ponzi schemer Scott Rothstein, who helped perpetrate the massive fraud by preparing bogus trust account bank statements of the law firm, and an administrative assistant who supervised illegal campaign contributions calculated to obtain political influence for Rothstein, were both charged in US District Court with conspiracy yesterday.

Criminal Informations were filed against William Boockvor* and Marybeth Feiss** in Federal Court in Fort Lauderdale yesterday. The details:

(1) Boockvor actually placed his falsified bank statements in genuine bank envelopes, which were presented to new investors. One incident had him creating a non-existent $20m account, which was used to lure in $10m in new money.

(2) Feiss had law firm partners make political contributions in their own names, though they were essentially Rothstein's. They were later reimbursed through payments shown as law firm bonuses and other compensation.

These new charges, filed long after Rothstein was sent to prison to serve his 50-year sentence for operating a massive Ponzi scheme, disguised as a lucrative investment programme relying upon the participation of court settlements, indicate an ongoing investigation of all those involved.

*United States vs. Boockvor,  Case No: 11-cr-60281-DTKH (SD FL).
**United States vs. Feiss, Case No.: 11-cr-60282-KAM (SD FL).


A spokesman from the French Foreign Ministry has stated that all the judicial preconditions have been met, and it is expected that the former Panamanian President, General Manuel Antonio Noriega will be extradited to his native Panama within the next few weeks. Whether Noriega's arrival will affect the Republic of Panama is a unknown, but he enjoyed substantial support during his presidency. Panama is enjoying prosperity and political stability, and country risk watchers are anxiously awaiting a public response, or lack thereof, to his impending his arrival and presence, after serving more than 20 years in an American prison. Panama has greatly expanded its role as an international banking centre since the Noriega era, and it is in the best interests of the financial sector that his arrival not become a distraction.

The other issue is whether he will, pursuant to Panamanian law, be placed under house arrest (home confinement), due to his advanced age (77), and reported health problems. We shall continue to monitor the situation, for country risk purposes, and report back to our readers upon his arrival in-country.

Thursday, December 1, 2011


I am still hoping that American bankers long remember the bitter lessons of Wachovia's compliance malpractice, and the fatal consequences thereof. For a number of years, I watched in amazement, whilst the bank desperately tried to upgrade their unsatisfactory Latin American compliance files, whilst it continued to be the only major US bank who were not using World-Check to vet their clients, and whilst its senior compliance staff remained totally monolingual, notwithstanding the bank's immersion in the Mexican market. What on earth were they thinking ? That Mexico's economy had a multi-billion dollar surplus that needed their bank's services ?

 Can any US bank seriously think that they can adequately control risk when dealing with Mexico's casas de cambio? Many of them are believed to be owned or controlled by criminal organisations. You simply cannot win.

Years ago, I gave a private lecture to the officers of one of the most prominent banks in the Dominican Republic. Afterwards, I asked the bank's owner how it deals with Dominican foreign exchange houses, many of whom are suspected of being conduits for drug money. His answer simple; they don't allow any of them to open accounts at his bank.

I know that the US government has a policy of encouraging banks to engage with NBFIs, but when it comes to Mexico, you are literally playing with fire. Not only will US law enforcement agencies and regulatory agencies investigate, target, and possibly cause your bank to be a party to a Cease & Desist order or indictment, but you could incur the displeasure of cartel leaders themselves, with potentially violent consequences when you terminate their window into the US financial system.

Should US banks decline to open any accounts for Mexican casas de cambio ? Should they close all existing accounts ? Unless the bank has actually sent a officer regularly to the Mexican NBFI location, understands exactly what the company's customers to for a living, and who controls the business, I suggest the answer must now be yes, lest your bank end up as a footnote in a criminal case, gone and forgotten, its branches and clients owned by a bank with a better compliance programme.

Wednesday, November 30, 2011


The Lebanese Government, speaking through its Foreign Minister, has stated that Lebanon will not enforce Arab League sanctions against Syria. This means that any transactions that your bank clients engage in with Lebanese financial institutions, non-bank financial institutions, and that country's private sector could be sanctions evasions for the Syrian Government. Do you really want that exposure ?

Add Arab League sanctions to this the existing EU and US sanctions in place against Syria, and you have a potential perfect storm for violations; your financial institution could be unwittingly facilitating international trade for Syria when it sends payment for goods and services to Lebanese banks, not knowing that they are fronting for Syrian Government interests, the true end user.

You could also run afoul of those Arab League sanctions, and have penalties imposed upon your Middle East branches when it is learnt that you facilitated Syrian sanctions evasion through Lebanon.

Bank officers charged with country risk assessment should evaluate the situation,and make an educated decision on whether to adjust their country risk rating for Lebanon, but, in my humble opinion, any transactions with Lebanese banks are now problematic. You do not know who is in the shadows.


The Office of of Foreign Assets Control has, very publicly, named & shamed a major German bank for violations of the Cuban Assets Control Regulations. The violation, which appeared in the OFAC Enforcement Information for 29 November, 2011, was given to the bank's New York branch. The statement of facts advises that the bank was the advising and confirming bank for a letter of credit, in connection with trade documents that contained the names of a Cuban Specially Designated National (SDN). 

The Miami branch of an unnamed foreign bank issued the L/C in favour of a Canadian Bank. The amount of the transaction was $ 884,157, and the fine levied by Treasury was $ 175,000 .

When regulators find the name of a sanctioned entity in trade documents, you can be sure that they are looking very carefully at international trade documents for violators of Cuban sanctions. 

Tuesday, November 29, 2011


A well-respected source in Venezuela has published an extensive account of officially-sponsored financial crimes occurring in that country. Whilst we certainly want to see proof, evidence to support these sordid allegations, one jumps out at me, almost begging to be exposed. Since the purpose of the blog is, amongst other things, to expand its readers' perspective on money laundering tradecraft, we will summarise it here.

The reputed money laundering route for illegally diverted public funds coming from Caracas is:

(1) large amounts (totaling billions) of US dollars are shipped, via official Venezuelan Government aircraft to Panama, where it is delivered to Chinese diplomats, who deposit it into private accounts, controlled by the Chinese Government.

(2) The funds eventually are transferred to bank accounts in Hong Kong, and on into banks in Mainland China.

Is this scenario feasible ? If I was a money launderer working for senior Venezuelan PEPs who are engaged in stealing dollars from government accounts, I would want my money placed in the one jurisdiction where the United States has absolutely no influence; that country is the People's Republic of China.

Fact or fiction ? Let's see how this drama unfolds; the truth will undoubtedly be exposed by the next truly democratic government in Venezuela, as they will want to repatriate that stolen money. We will follow up on this story when additional information surfaces.


Monday, November 28, 2011


There was a bit of a flap earlier this year when it was revealed that the child of a very senior Chinese government official was studying at an Ivy League university in the United States under an assumed name. In the compliance world, we call that an alias, and it creates a number of potential problems when deciding whether to classify a wire transfer, or other payment, as a reportable suspicious transaction.

Yes, we know that the privileged children of PEPs often attend university in the UK and the US, but what is disturbing is the fact that a number of them are studying under aliases. Why, do you ask, is this a common occurrence ? Since some of the countries where their fathers are senior government officials, general officers, or the managing directors of government-owned companies are dictatorships, or have abysmal human rights records, the schools' management fear, correctly, that they will be targeted for protests, ostracised, identified, or otherwise made uncomfortable for their fathers' sins.

Since PEPs in a number of countries illegally control lucrative private businesses, and might even enjoy a monopoly in a particular industry, at the expense of abused and underpaid workers, or even slave or convict labour, their wealth becomes a compliance issue. They may also be collecting bribes and kickbacks, in violation of the Foreign Corrupt Practices Act or the UK Anti-Bribery Act.

Thus, should the PEPs child receive a substantial amount of money, ostensibly for his or her schooling, but in reality to launder and invest locally, performing due diligence on the student as a bank client becomes problematic when you have a passport carrying an assumed name, not linked to the PEP parent. It is also a compliance issue for a university that accepts payments from a parent whose published annual earnings are less than the cost of tuition and fees.

What we are concerned with, of course, is the receipt, by a foreign student at your local university or college, of a substantial amount of money, which is far more than is necessary for an education.  Factor in these issues, when deciding whether to file a SAR, or take other action:

(1) The amount received. Is it substantial ?
(2) The account history. have there been prior payments ?
(3) The home country of the student. Is it known for corruption ?
(4) The jurisdiction where the funds originated. An offshore financial centre perhaps ?
(5) The student's other known account relationships. Does he have accounts at other local banks ?
(6) The declared home address of the student in their own country. Is it in a known neighborhood where senior officials reside ? Is it merely an accommodation address ?

After looking at these potential red flags, you will be in a better position to make an informed decision.  


When democratic regimes come to power in the Middle East, expect them to seek to recover the fortunes of corrupt PEPs in the former regimes, in addition to bringing criminal charges when possible. These individuals have, for the most part, secreted their illicit cash in offshore financial centres. Why is this of concern to compliance officers at international banks, whether located in the Middle East, or elsewhere ?

There is abundant evidence to suggest that many corrupt Middle East PEPs, including Syrians, have deposited illicit fortunes in financial institutions located in the Gulf. Good money launderers never let "flight capital" repose indefinitely in any jurisdiction where its existence there becomes general knowledge. They move the funds, whether to places like Lebanon or Cyprus, or further afield, to Asian destinations, such as Hong Kong and Singapore.

When the dust settles in newly-democratic Middle East Nations, expect extensive investigations following the money to its final destination, followed by the very public filing of civil suits to recover it, with a major amount of reputation damage sustained by those banks found to be, literally, holding the bag.

Therefore, should you see fresh wire transfers, of extensive wealth, from banks in the Middle East, with an unusual amount of opacity regarding beneficial ownership, decline the funds until and unless EDD rules out PEP status; Watch yourself here.

Sunday, November 27, 2011


The recently released Consent Order* filed by the OCC against Saddle River Valley Bank, of New Jersey, affords compliance officers valuable insight into what some regulators deem important in BSA/AML compliance.

(1) The bank may not initiate any international wire transfers until it has an "automated system for the processing of wires that will enable the bank to identify potentially suspicious activities, and monitor and aggregate transactions by originator and beneficiary."

(2) There cannot be any further Remote Deposit Captures**until the "bank has implemented risk management systems, written policies and procedures, and a BSA/AML programme ... that will result in due diligence on the bank's customers, their lines of business the parties to whom their customers are providing services through the bank, and those customers' lines of business, and the effective monitoring, detection, and reporting of suspicious accounts, in the processing of RDC transactions."

(3)A Look-Back Report, which appears to focus on previous international correspondent banking relationships.
*Consent Order
** The bank customer scans in an electronic image of cheques which he or she wishes to deposit, and then transmits them to the bank.


Whenever you are performing due diligence on a potential client, and you run their name on a commercial off-the-shelf database of high risk individuals, prior, or pending, criminal charges sometimes appear. Whilst a felony record, especially if financial crime is involved, usually disqualifies the person, that is not always the case.

Before you dismiss the individual, out of hand, as an unacceptable risk, ask yourself these questions:

(1) Could the charges possibly be politically motivated, rather than a valid criminal case ? Remember, countries like China, Russia and Venezuela often bring criminal charges against members of the opposition, or individuals that these government perceive as threats, whether commercially, or politically. Look carefully at the country that brought the charges.

(2) Is this something that was brought years ago, never went to trial, but which was never dismissed, due to the nature of that country's criminal justice system ? Notwithstanding the total absence of a factual basis for the charge, it may linger in some systems indefinitely, through corruption, neglect, poor case management, or political influence.

(3) Was a conviction reported by local media, even though a conviction never occurred ? bribes paid to journalists, on behalf of persons with interests adverse to the individual you are investigating, can result in totally fabricated stories.

(4) Did the individual leave the jurisdiction where the criminal charges were filed, not to avoid prosecution, but to escape a corrupt criminal justice system, where either bribes, or government influence, trumps the rule of law.

Therefore,  in criminal cases brought in jurisdictions where justice does not generally prevail, things as seldom what they seem.

Saturday, November 26, 2011


The South African Parliament has passed the Protection of Information Act*, which severely restricts the publication of any information that is deemed to be classified. With criminal penalties ranging from 5 to 25 years, this new law will seriously discourage not only whistle-blowers and reformers, but it will seriously handicap all efforts to conduct effective due diligence on South African companies, and individuals.

Information deemed to be a state secret may not be published for 20 years. This new law, once it becomes effective, will especially interfere with the activities of compliance officers looking to vet PEPs who may (or may not) have accepted bribes or kickbacks, in connection with their official duties. Investigative journalism and whistle-blowing by media will be dealt a fatal blow.

As a former compliance officer, I know that frank and candid business intelligence is necessary for any enhanced Due Diligence investigation; negative information will simply not be available and accessible, even when it is a known and documented fact, in internal South African journalistic circles.

This new law essentially makes it impossible to rule out corrupt activities of South African Politically Exposed Persons (PEPs), with the result being that country risk will increase for  the Republic of South Africa.

Friday, November 25, 2011


Venezuela has seen its share of cleverly forged instruments sting foreign investors; bogus bonds, promissory notes and other purportedly legitimate negotiable instruments, so forgive me if I ask that someone verify that the $2bn Sovereign Guarantee, allegedly issued by the Central Bank of Venezuela, in favour of a new Isle of Man company, is valid and has value.

The story, as it appears on the blogs, is that the money was destined for charitable purposes, the first one being the construction of a hospital in St. Kitts. A letter, ostensibly written by a US law firm, has strangely appeared, as well as a number of additional "Red Flags" that should cause a compliance officer performing due diligence to avoid the transaction entirely. Some, but not all, of the participants have declined to talk to the press.

Whilst the truth is often elusive in the world of financial crime, let me point out two constants:

(1) If the documents are real, a charitable activity in the billion dollar range, but vague in scope, on the part of a national bank of a country known to be riddled with corruption, screams corrupt diversion of government funds and/or money laundering.

(2) If this is a bogus transaction, it is well-documented fraud, intended to fool third parties, expertly prepared, with inside information on the workings of Venezuela's central bank. If so, who or what is the intended target ?

Venezuela's economy is reeling; the president of its central bank could not prudently authorise this level of charitable gift when his own country has needy citizens. is this simply a sophisticated means of moving government funds offshore, before President Chavez dies, and his utterly corrupt regime collapses ? we cannot say, but if you see any sort of "unusual" transaction originating from Venezuela, think long and hard before agreeing to participate; you may get badly burned.

Thursday, November 24, 2011


Readers of Compliance Alert, which serves Lebanon, the Middle East and North Africa, can now access this blog directly from the Compliance Alert webpage ( Click on my caricature on the right-hand side of the home page to go to Kenneth Rijock's Financial Crime Blog.

Our thanks to Compliance Alert for providing the link.


Though it has not yet appeared on the official court docket, the attorney for convicted arms dealer, Viktor Anatolievich Bout, has reportedly written to the trial judge, Shira Sheindlin, advising that the jury was prejudiced by the Nicolas Cage film Lord of War,  which purports to be Bout's life story. Attorney Albert Dayan is said to have based his position on a post-verdict interview of the jury foreperson, who  stated that she had seen the film.

Dayan has asked for a new trial, or, in the alternative, an evidentiary hearing, to determine whether members of the jury were prejudiced against Bout, prior to the trial, due to the motion picture.

Bout, who is scheduled to be sentenced on 8 February, 2012, faces 25 years in Federal Prison*.

The controversial role of the Confidential Informant in the case continues to trouble court observers. the CI, whose identity was revealed at trial, is said to have earned $9m over the last fifteen years, for his assistance to US law enforcement. Whether he engaged in entrapment in the Bout case remains an issue.
*United States vs. Viktor Bout, Case No.: 08-cr-00365-SAS (SDNY).


Reports from France confirm that former General Manuel Antonio Noriega, who is presently serving a seven year sentence in that country for money laundering, can be extradited to his native Panama. Noriega, who has been convicted in absentia of murder, embezzlement and corruption, will be headed to Panama as soon as the French prime Minister executes a decree, authorising his extradition.

Noriega, who reportedly had a stroke, and suffered from prostate cancer, whilst he was serving a long sentence in the United States, is believed to be eligible for house arrest in Panama, due to his advanced age. Whether he will become a destabilising force in Panamanian politics, due to his support base, is unknown, and Panama watchers will be closely observing the statements of the current government, and the media, after he arrives in country.

Wednesday, November 23, 2011


US law enforcement interdiction, at the border, of southbound smuggled bulk cash, continues to be ineffective. Mexican law enforcement authorities have reportedly now seized just under $15.4m in narcotics profits in the border town of Tijuana. The funds were linked to a major cartel. Just how does a shipment of this size elude detection at the US-Mexican border ?

Remember, since it is basically impossible to place US Dollars into the Mexican financial structure, due to new and effective legislation that bans anything other than token dollar deposits, that money, if it was not seized en route, was probably bound for Guatemala, Honduras or Panama.  Are you accepting large wire transfers from those countries for the first time ? Where did the funds come from ?

Tuesday, November 22, 2011


The decision, taken by the US Treasury, to designate Iran as a jurisdiction of "Primary Money Laundering Concern" is a wake-up call for any financial institution whose clients are trading with Iran, whether directly or indirectly. It doesn't matter where your bank is located, there is increased risk:

(1) If a US financial institution, you risk fines & penalties in the highest multi-million dollar range, plus possible indictment for providing material support to a terrorist organisation, for assisting that country's WMD and ballistic missile programmes.

(2) If a non-US entity, you risk not only Draconian fines, but the distinct possibility of being shut out of the US financial structure, a situation certain to result in eventual bank failure, due to your inability to service your international clients' needs.

(3) All your clients' trade transactions involving the Middle East, especially Dubai and the rest of the UAE, must now receive special attention, lest you fail to identify shipments of goods that end up being transshipped to Iran.

(4) All the newly-sanctioned Iranian companies*, government agencies and shell entities should be closely examined, to ascertain whether any of your bank clients had historical dealings with them. You do not want any surprises later regarding OFAC violations.

(5) Those countries that are known to trade with Iran have a greater chance of facilitating sanctions evasion; are they purchasing dual-purpose goods that Iran is especially interested in ?

Remember how the global banking community abandoned contact with North Korea when it was similarly designated, to minimise the risk of incurring the wrath of US regulators and law enforcement ? My considered opinion is to advise your bank client to exit all Iran business forthwith, and if that does not happen, terminate the client.

Monday, November 21, 2011


The deposition of an important witness, taken this week in a Miami civil suit pending between a Brazilian cattle export company and an employee accused of embezzling funds and thereafter wiring them to accounts she had access to in Panama, has confirmed that the fraudster used part of the money to pay off what appears to be a debt in Panama, and then had the balance remitted to the personal account of her husband, Didimo Alberto Navarro, reportedly adding her on as a signatory.          

 The case, involving the former clerical employee, Lourdes Cajale, which was detailed here recently in an article entitled When While-Collar Crime becomes Money Laundering*, is a classic illustration of the fact that, when the proceeds of most crimes (known as predicate acts) are deposited into the global financial system, or even when such deposits as attempted, unsuccessfully, the crime of money laundering, with its maximum 20-year penalty under US law, generally occurs.

Since the last article, further discovery in the case has indicated that Ms. Cajale, who left a number of unhappy creditors behind in her native Colombia, including one who holds an unsatisfied final judgment, moved some of the stolen funds from the US, into Panama, and back into the United States. The extended family of the owner of the company has recently received a number of kidnapping threats, telephoned to relatives in Barranquilla, in an attempt to discourage them from seeking justice in the United States. That is an indication of the true character of the individual who embezzled from her employer.

Thus, even a minor white-collar crime will frequently morph into a money laundering event. In addition, prosecutors often also charge individuals having relatively minor roles with money laundering conspiracy. The significant penalties that these charges bring often convince defendants to enter guilty pleas to lesser counts, rather than risk a potential long sentence upon conviction after trial, for laundering. The next time that a client asks you to do a favour for him or her, and facilitate a financial transaction that is unusual, think twice, if you want to keep your freedom and your job.

Will the evidence produced in the civil case** result in a Federal criminal money laundering indictment against the fraudster in Miami, and others who facilitated the financial transfers in Panama ? We cannot say, but we will continue to follow all developments in this case, as they occur.
*The article first appeared on 18 October, 2011.
**Case No.: 09-64119 CA (15) Eleventh Judicial Circuit, in and for Miami-Dade County, Florida .


A Texas-based bulk cash & narcotics smuggler who was carrying $462,000, concealed in his truck, has entered a guilty plea to conspiracy to launder drug profits. Aldo Montalvo, who pled in US District Court in Waco,* admitted that he was transporting the cash to a Texas border town, Eagle Pass, and was to return with a load of cocaine, will be sentenced on 18 January, 2012. The money was discovered during a traffic stop. Montalvo was previously convicted of transporting marijuana, which was seized. He was sentenced to probation for the marijuana.

The money seized is the subject of a forfeiture. Obviously, bulk cash smuggling into Mexico is still alive & well, notwithstanding new strict Mexican law regarding deposits of US Dollars into Mexican financial institutions. 

Sunday, November 20, 2011


On a recent visit to Iran, the Iraqi Army Chief of Staff, Lt. General Babaker Al-Zaibari, met with Mohammed Ali Jafari, a senior leader in the Iran Revolutionary Guard Corps (IRGC). He also held meetings with commanders of the Iranian Air Force and Army.

Press releases regarding his trip, which were full of positive statements attributed to Zaibari, are extremely disturbing, for the US plans on having all its combat troops out of Iraq by 31 December, leaving behind only sufficient security to protect American diplomats and contractors.

If there is going to be close cooperation between the two countries' military in 2012, some of the goods destined for the Iraqi armed forces could end ultimately up in the hands of the IRGC, a sanctioned terrorist organisation. You need to do all that you possibly can to ensure that your bank does not facilitate this. I suggest:

(1) It is suggested that compliance officers at US and EU banks whose clients  are trading with Iranian governmental and military entities ask their legal counsel to prepare an End User Certificate, attesting that Iraq is the final destination for use of the products exported. I suggest that it be prepared in Arabic, with a certified English translation, by an approved translator, and notarised, with an Apostille affixed by the US Embassy or Consulate.

(2) You also should guard against unusually routed payments for goods being shipped to Iraq, for the Iraqi military may not wish to pay for items they will covertly transship to Iran. Watch for atypical source of payment, especially from jurisdictions known to trade with Iran, or assist it in any way in sanctions evasion.

Whilst I am certainly not accusing the Iraqi military of facilitating Iranian sanctions evasion at this time, you need to take precautions, in the event that some elements in Iraq commence cooperative efforts with the IRGC, whether with official approval, or on their own.    


The next of kin of a number of Colombian political activists murdered by the AUC*, the right-wing paramilitary organisation linked to senior officials in former Colombian president Alvaro Uribe's government, have brought a civil suit in US District Court **in Miami. The defendant is imprisoned AUC  leader Carlos Mario Jimenez Naranjo, a/k/a Macaco, currently serving a thirty-three year sentence on narcotics trafficking and terrorism charges.

The action, which was brought under the Alien Tort Claims Act, alleges that Jimenez is guilty of:

(1) Extra-judicial Killing
(2) Torture
(3) War Crimes
(4) Crimes against Humanity

The pleadings explain the AUCs efforts to dominate coca production in Colombia, for material gain, which the deceased were opposing. Graphic details of their torture and murders include chain-saw amputations and dismemberment. Some of the parties are listed as John Doe and Jane Doe, to protect their identifies from reprisals inside Colombia.

Most important are the allegations that the Colombian military and police failed to protect them, actually ignored the threats to their lives, and cooperated with the AUC. Will this suit expose previously unknown connections between the Uribe administration and the Paramilitaries ? Stay tuned.
* Also commonly known as the United Self-Defence Forces of Colombia, or the Autodefensas,  The AUC is a Specially Designated Global Terrorist (SDGT) organisation, and a Foreign Narcotics Kingpin.
**Jesus Cabrera, as the Personal Representative of the estate of Alama Riosa Jaramillo, et al, vs. Carlos Mario Jimenez Naranjo, case No.: 10-cv-21951-EGT (SD FL).


A court in Portugal last week declined to extradite the American fugitive, George Wright, to the United States, where he has been wanted since hijacking a Delta Airlines aircraft to Algeria in 1972. Wright, who was serving 30 years  for an armed robbery of a petrol station, where the proprietor was killed, had escaped from prison in 1970.

Wright, disguised as a priest, commandeered a flight from Detroit to Miami, with some armed associates, and forced the crew to ultimately fly him to Algeria, collecting $1m before departing Miami. He lived in France, and later in Africa, settling in Portugal in 1993, living under an alias.

The Portuguese appellate court ruled that Wright, now a citizen of that country, could not be extradited. It also found that the Statute of Limitations for his crimes had expired, though that reasoning is flawed, in my humble opinion, since the statute is tolled when the offender is outside the jurisdiction.

The United States is clearly disturbed by the court's ruling, since the violent crimes Wright pled guilty to are "within the terms of our bilateral extradition treaty with Portugal," according* to the US State Department, and Wright was a member of the Black Panther Party, a violent extremist group involved in anti-American terrorist acts in the 1960s and 1970s.

Since 9/11, the decision, by any state, to refuse to extradite any fugitive who is known to have been a member of a terrorist organisation, has been condemned by the European Union, of which Portugal is a member. What impact this case will have in the future is unknown.

*Portugal: Decision to Deny US Extradition Request for George Wright ( US State Department)

Saturday, November 19, 2011


An Idaho Falls automobile salesman was sentenced top forty months in Federal Prison for Conspiracy to Commit Money Laundering this week. He placed bogus purchaser names on sales documents, and failed to submit the required cash sales reports, for individuals whom he believed paid him with criminal proceeds. Joseph Monte Johnson also received three years of Supervised Release,  the successor to parole, and was fined $6000.

US law enforcement agents, who targeted Johnson, and other individuals who will be going to trial in their cases,  advised the defendants that they were career criminals who wanted to launder their money through automobile purchases. Was the 40 month sentence appropriate ? What do you think ?


Recent political developments in Myanmar, more commonly known as Burma, whether bona fide or merely the regime's clever PR campaign to simulate reform, could suffer from the Law of Unintended Consequences. Even the remote possibility of democracy in some far-off Burmese future may be perceived as a threat to its corrupt PEPs, and its narcotics kingpins, and they may choose to vote with their feet.

Most observers agree that financial institutions in Singapore have been the recipients of the illicit wealth of senior Burmese PEPs, most of whom are general officers in the military. Additionally, narcotics traffickers who enjoy a symbiotic relationship with the government also are believed to hold much of their criminal profits in Singapore. These funds, which are presently safe and secure, and maintained anonymously, may not remain so, should anti-corruption reformers come to power in Burma.

if I am a money launderer for Burma's generals and/or its narcotics kingpins, I am watching the unfolding developments with alarm, for I do not know whether true reform will arrive arrive in their country, whether peacefully, or after a violent struggle. In either event, I do not want to lose my clients' illicitly-acquired wealth.

I will therefore take the appropriate precautions. Personally speaking, since the Hong Kong financial centre appears to be the closest, and safest, place to keep my "flight capital," I would move much of it there. Let some future, democratic, Burmese government try to seize it; I doubt whether it would have any success.

The point of this article is to alert compliance officers to be on the lookout for large wire transfers exiting Singapore, as the Burmese reform stories increase in the media, and heading for jurisdictions that would be immune from Western influence, or the international laws of Comity. Whilst I have selected Hong Kong, for illustrative purposes, there will certainly be other financial centres targeted. Please try not to accept funds that turn out to be Burmese heroin profits, whether held by PEPs, or narcotraffickers.


In the midst of calls for the President of the United States to impose sanctions upon the Central Bank of Iran, following the ominous disclosures last week by the IAEA*, regarding Iran's illegal nuclear programme, a US Senator has introduced an amendment to a pending bill that would do just that.

Mark Kirk, a Republican Senator from Illinois, on Thursday filed a Senate Amendment to the Fiscal Year 2012 National Defence Authorisation Act**. Amendment 1084 would require the President to impose sanctions on foreign financial institutions that conduct transactions with the Central Bank of Iran (CBI). The proposal would have a six-month delay on the effective date for petroleum transactions, so as not to destabilise the world oil price structure.

When it becomes law, as is generally expected, either by Executive Order, or this legislation, you can expect the use Iranian sanctions evasion techniques to expand exponentially, and become far more complex. Countries that currently conduct trade with Iran, such as China and North Korea (DPRK), would probably employ even more opaque and indirect methods of payment than occurs at present.

This represents a danger to those financial institutions that fail to identify, on a real-time basis,  a CBI hand in the transactions, and interdict them in progress. The imposition of large fines and penalties by US regulators, or even charges of Providing Material Support to Terrorist Organisations, is a distinct possibility.

Thus, complex international transactions will require more scrutiny by Compliance after passage of this bill, or presidential action. We notify our readers forthwith, should this occur.
*International Atomic Energy Agency
**Senate Bill (S.) 1867

Thursday, November 17, 2011


Reports have been received today that a Hamas court in the Palestinian Territory of Gaza has levied multi-million dollar taxes upon the Bank of Palestine and the Palestine Islamic bank. Apparently, these West Bank-based financial institutions have been paying taxes solely to the Palestinian Authority, and not Hamas in Gaza.

Whilst we would not consider such actions are relevant to compliance officers, it might be prudent to raise your level of awareness for any unusual funds transfers from the Middle East, which could possibly represent a portion of these taxes upon these, collected but diverted for either corrupt purposes, or being moved to a more secure (and stable) environment.

Alternatively, there could also be a knee-jerk reaction from either bank, moving funds ahead of Hamas' confiscation orders.

In either case, remember well the Western sanctions existing against Hamas, and the problems which might arise with charges of Providing Financial Support to Terrorism.  


The General Secretariat of the Revolutionary Armed Forces of Colombia, more commonly known as the FARC, has named Rodrigo Londoño, also known as Timoleón Jiménez, also known as Timochenko, the Supreme Commander of the designated global terrorist organisation. Jiménez, a trained medical doctor, is known to be a Communist hardliner, and is reportedly opposed to any negotiated settlement with the Government of Colombia.

He is wanted in Colombia on charges of kidnapping, murder, rebellion and terrorism, and has a $5m price on his head in the United States. Reports say that he is presently living in Venezuela, evading arrest by the Colombian Army, and that his wife and children reside permanently in Venezuela. Most of the FARC  senior leadership is also known to hide inside Venezuela, from where they direct their rapidly declining rank & file to engage in drug trafficking, kidnapping, extortion, and other organised crime activities, to support their guerrilla war in Colombia, and for profit and gain.

Compliance officers in North America and the European Union should always be aware that funds originating in Venezuela could be FARC criminal profits, and ensure, through mandatory Enhanced Due Diligence, and where necessary, verification in the field, that you are not banking FARC funds; be careful.

Wednesday, November 16, 2011


The Solicitor General of Venezuela, Carlos Escarrá, has publicly stated that the current murder & terrorism trial, in France, of Ilich Ramírez Sánchez, a/k/a Carlos the Jackal, is improper and illegal, and that the results have been determined aforehand. Escarrá argues that, since his arrest in Somalia, by French agents, was illegal, both his prior life sentence, and the present case, which could also result in another life sentence, are improper.

The "Jackal," arguably the most prominent global terrorist of the 1980s, is on trial this week, charged with masterminding four terrorist bombings in France that resulted in eleven deaths, and one one hundred injured. Venezuelan president Hugo Chávez Frías has also declared his support for the Jackal, who is a Venezuelan national.

If you were looking for an additional reason why many Congressmen in the United States have called for Venezuela to be designated a State Sponsor of Terrorism, look no further. The Jackal is one of most reviled individuals in Europe, for committing multiple terrorist acts that resulted in creating chaos, including the OPEC Meeting incident, and the attack on the 1972 Munich Olympics. That Venezuela supports him speaks for itself.


Aaron Castro, a Denver trafficker of methedrine, sentenced this week to serve forty five years for his crimes, had a somewhat unique way of laundering his narcoprofits. He bought extremely rare comic books, such as the first issues of Superman and Batman, with his money. Whilst you may think this in and of itself is comical, let me explain.

What's the test of a satisfactory subject for a money launderer ?  Any item that:

(1)  Has value.
(2)  Is marketable.
(3)  Changes hands mainly for cash,
(4)  Whose dealers and collectors rarely keep records.
(5)  Is easily concealable and transportable.
(6)  Whose value cannot be easily ascertained by non-experts.
(7)  Hopefully appreciates in value.

Now you may understand why antiques and fine art make great investments for laundrymen, and why I have always directed US law enforcement to attend the annual Latin American Art auctions, in New York, at Christie's and Sotheby's. One can roll up a multi-million dollar canvas, toss it in the boot of your automobile, and take it anywhere in the world. Who, when looking at it, will understand its value, save art dealers and experts ?

For the record, the value of the small amount of rare comic book editions seized when Mr. Castro was arrested: $500,000. I wonder where the other copies were.

Tuesday, November 15, 2011


The United States continues to seek to bring to justice foreign PEPs who use American financial institutions to launder their ill-gotten gains. The extradition, to the United States, of Alfonso Antonio Portillo Cabrera, the former president of Guatemala, has been approved by the country's Constitutional Court, and its current leader, president Álvaro Colom. Portillo, who faces money laundering charges* in US District Court in New York City, is accused of laundering $70m through US banks.

Portillo allegedly embezzled state funds, and diverted (and laundered) funds from a children's charity. The Indictment also mentions funds received from Taiwan. The Guatemalan Government has stated that he stole $15m from the Guatemalan Ministry of National Defence. There are also reports that more than $1bn was illegally transferred abroad during his presidency.
*United States vs. Alfonso Portillo,  Case No.: 09-cr-01142-RPP (SDNY).


Expatriate Lebanese Shia, who are sending funds to Hezbollah from overseas, represent a potential problem for compliance officers at Western Hemisphere banks. The United States, Mexico, Venezuela, Argentina, Brazil, Paraguay, and Colombia all have a number of ethnic Lebanese, some of who are Shiite Muslims who contribute financially to Hezbollah.

There have been a number of arrests in the United States, as well as in Latin America, of Hezbollah operatives and financiers, but there is also the danger that legitimate Lebanese businessmen, who are supporters of Hezbollah, are using your bank to fund a specially designated global terrorist organisation. We are talking about a possible criminal charge of Providing Financial Support to a Terrorist Organisation.

Thus, whilst you should not profile all Lebanese bank clients as potential terrorist financiers, you may want to consider the following measures:

(1) Search your records for all your Lebanese bank clients who regularly send funds to Beirut.

(2) Eliminate all purely commercial ongoing matters, where value is actually exchanged in international trade. There may be some that can only be ruled out through Enhanced Due Diligence.

(3) Eliminate small remittances that appear to be to family members.

(4) Regarding the remaining clients, do any of the wire transfers go to banks known to be owned or controlled by Hezbollah ? Do you now need to file suspicious Activity Reports (SARS) ?

Take your results, and after performing Enhanced Due Diligence enquiries, have your board of directors make a command decision on closing some, or all, of the accounts. You may want to seek the advice of outside bank counsel at this point.

Saturday, November 12, 2011


PEPs involved in corruption often find themselves the target of US or UK sanctions, particularly efforts to deny them entry into Western countries, regardless of the official purpose of their visits.

United States Senators Benjamin Cardin and Roger Wicker have asked the State Department to bar two Russian generals from visiting America. Generals Tatiana Gerasimova and Nikolai Shelepanov are  believed to have been involved in the torture, death, and subsequent cover up, in the case of Russian anti-corruption attorney Sergei Magnitsky. Regular readers of this column are aware of the scandal, and fallout in the US, surrounding the whistle blower lawyer's death in custody*, in the Hermitage Capital Management fraud.

The two generals are coming to the United States to discuss the Russian government's lack of enforcement of intellectual property rights. There is a bill pending in the US Senate to ban visas, and to freeze the assets, of the sixty Russian officials linked to the case.
*US implements Visa Ban on 60 Russian PEPs for Corruption and Death of Lawyer,  World-Check 27 July, 2011.


Country Risk evaluators who were nervously awaiting the ruling of the African National Congress disciplinary committee have now heard the news. The ANC has suspended its Youth League leader, Julius Malema, for a period of five years, after finding him guilty of;

(1)  Reckless behaviour
(2)  Lack of discipline
(3) Bring the ANC into disrepute
(4) Creating factions within the ANC

A major ratings agency downgraded South Africa earlier this week, citing increased political risk. Malema has been an advocate of nationalising the country's major industries, and has been accused of playing the race card for purely political gain. His influence amongst South Africa's unemployed youth is strong, and his attorneys have stated that they intend to file an appeal of the ruling.

Should you increase Country Risk on South Africa at this time ? Review the facts, ascertain what level of exposure your bank has, and govern yourself accordingly.



Candid details about the systemic corruption inside China will now be much harder to access in Chinese media. The General Administration of Press and Publication, a government agency, has announced the implementation of regulations that effectively bar the reporting of news that cannot be verified from two independent sources. The new rules also require personal interviews, when information is collected, prior to its publication.

Though disguised as "fact checking," the effect of the regulations will be to force the print media to ignore allegations of governmental corruption and official abuse of authority, because this information frequently originates on China's blogs, and cannot be verified, under the new guidelines. Violation of these new regulations can result in suspension of revocation of media licenses. Information on corruption will now be harder to find.

Compliance officers searching for data on individuals, or PEPs, for due diligence purposes, will now find it harder to find truthful information on corruption, as the direct result of these new regulations. It may actually cause some compliance officers to raise country risk on China.



Friday, November 11, 2011


I have a Rendezvous with Death
at some disputed barricade,
When Spring comes back with rustling shade
and apple blossoms fill the air
I have a Rendezvous with Death
When Spring brings back blue days and fair.

It may be that he shall take my hand
And lead me into his dark land
And close my eyes and quench my breath
It may be I shall pass him still.
I have a Rendezvous with Death
on some scarred slope of battered hill,
When Spring comes round this year
And the first meadow flowers appear.

God know 'twere better to be deep
Pillowed in silk and scented down,
here Love throbs out to blissful sleep,
Pulse nigh to pulse, and breath to breath
Where hushed awakenings are dear ...
But I've a rendezvous with Death
and midnight in some flaming town,
When Spring trips north this year,
And I to my pledged word am true,
I shall not fail that rendezvous.

Alan Seeger  (1888-1916)


Let me suggest to you that it is dangerous to continue to provide banking services to any Politically Exposed Persons who, for one reason or another, have either been barred from entering the United States, or have had their visas cancelled. These individuals are generally the worst of the worst: corrupt PEPs who are taking bribes and kickbacks, looting government treasuries, violating human rights, or engaging in illegal activities, and there is sufficient evidence to bar them from coming into the US, spending their dirty money, and enjoying all that America has to offer.

 I am particularly offended at those Haitian PEPs who maintain multiple mistresses in Miami, ladies who freely and lavishly spend their paramours' money, which is often stolen from the poorest country in the Western Hemisphere. Why those individuals still have multiple entry visas astounds me.

In many cases, when a corrupt PEP has his or her visa taken away, it means that an OFAC sanction, or criminal indictment is not far behind. Do not get caught with an open account for this individual when the shoe drops. Many commercial off-the-shelf high risk databases list this persona non grata status when it is known, and rumours of such pariah status also surface on the Internet, particularly on opposition websites.

Do not let the lure of a well-heeled new foreign client trump your compliance prudence. Is the client sending in funds from overseas ? Does he no longer come into the US in person ? Why not ? Find out why he sends emissaries to make his large deposits.

Thursday, November 10, 2011


Yesterday, another earthquake struck in Eastern Turkey, reportedly measuring 5.7 on the Richter Scale. The disaster was in the same general area as the 7.2 quake that occurred last month, and resulting in over 600 deaths. Though initial reports are incomplete, there has been substantial property damage, and emergency efforts are underway to rescue people from the rubble of collapsed buildings.

Coming so soon after the October quake, expect global relief and recovery efforts to ramp up again, and for aid and assistance to flood in from other countries, especially financial help. Whilst desperately needed, such activities often allow money launderers and other financial criminals a window of opportunity to provide material assistance to terrorist organisations, masked as aid relief.

As we warned you after the first earthquake*, it is highly possible that PKK** financiers will seize upon this natural disaster to send funds to their organisation, which is also located in the area. Remember to carefully examine any charitable organisation, NGO, fund, or other entity,  not well known to you, who seeks to avail itself of your bank, and send funds.

Recent PKK attacks inside Turkey were especially violent, causing the Government of Turkey to conduct a major cross-border raid, into northern Iraq, in response. given that the PKK is a specially designated global terrorist organisation, do not expect any leniency from regulators,  should your compliance department negligently assist in funding this terrorist group. Expect the US, in particular, to be severe with the imposition of fines and penalties, should you send funds to the PKK, to further cement the Turkish-American relationship. Do not let your bank be a casualty of the war on terror, due to 2011 Middle East politics.

*Earthquake in Turkey = Possible Terrorist Financing Opportunity
** Kurdistan Workers' Party.

Wednesday, November 9, 2011


The President of France, Nicolas Sarkozy, has named eleven jurisdictions he labeled tax havens for their lack of transparency, and failure to maintain effective information exchange with other countries on tax evasion matters. In a speech delivered at the G20 Summit, he called upon all nations to ostracise these countries. He named the following:

(1)   Antigua
(2)   Barbados
(3)   Botswana
(4)   Brunei
(5)   Panama
(6)   The Seychelles
(7)   Trinidad & Tobago
(8)    Uruguay
(9)    Vanuatu
(10)  Switzerland
(11)  Uruguay

Compliance officers charged with the assessment of country risk at their financial institutions please note that all the remaining G20 countries have now ratified the Convention on Mutual Administrative Assistance in Tax Matters*. The failure of the jurisdictions listed above to qualify may directly affect their country risk levels.