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.