Monday, November 28, 2011


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.

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