Monday, January 30, 2012


Venezuelan President Hugo Chávez Frias reportedly stated yesterday that he would consider nationalising any banks that refuse to finance agricultural projects sponsored by the government. presently, approximately one-quarter of the country's financial institutions are government controlled.

The banks reportedly named by Chávez are;

(1) Banco Mercantil
(2) Banesco
(3) Banco Provincial

Whether this threat will actually result in the nationalisation of these, or other privately-owned banks, is not known, but due to the fact that the corrupt judicial system cannot be relied upon to redress such actions, and that compensation is rarely paid for nationalised property in Venezuela, there is a risk that bank owners could lose everything.

Risk managers whose banks deal with Venezuela would do well to monitor the situation closely.  

Sunday, January 29, 2012


Thirteen Mexican permanent residents of the US, living in Georgia, were sentenced to prison terms ranging from six months to three years, for bulk cash smuggling, in US District Court in McAllen, Texas*. The defendants, who all were on board a bus bound for Mexico, and interdicted at the Hidalgo-Reynosa border crossing in South Texas, were found to be smuggling $31.9m in US currency.

The defendants, who were expecting to be paid for their long journey from Georgia, were transporting cash sealed in air mattresses hidden their luggage. their sentences were:

6 months
18 months
18 months
Tine Served (27 months)
6 months
6 months
18 months
36 months
Time Served
28 months
21 months

*United States vs. Blanca Tapia-Pineda et al,  Case No: 10-cr-01508 (SD TX). 


Last week  the long-awaited criminal trial, in US District Court in Texas, of alleged $7bn master Ponzi schemer R. Allen Stanford (Stanford International Bank) finally started. There are a reported 22 witnesses on the US Attorney's list, and the trial is expected to last several weeks.

To date, two early witnesses have presented extremely damaging testimony which corroborates the government's allegations about the Ponzi scheme nature of the bank's operations:

(1) A senor Stanford staff member stated that he saw that Allen Stanford has loaned an estimated $15m to himself out of deposits, when the bank told investors that all funds would be placed in conservative, liquid investments.

(2) A graphics designed charged with creating Stanford bank's annual report saw Stanford, and his CEO, who has since pleaded guilty,  changing the figures in the report draft, to make it appear more favourable. They did so in such a haphazard manner that the addition was incorrect. The designer brought the inaccuracies to their attention, whereafter the two officers abruptly changed the figures again.

We will be closely monitoring the trial, and shall continue to bring you updates periodically.


Thursday, January 26, 2012


For those readers who have not read any of my early articles on the subject, when using search engines to make due diligence enquiries about a prospective bank client, remember this: never perform searches based solely upon relevance. To put it another way, do not limit yourself to the first couple of pages, when examining results.

Internet manipulation has gone mainstream; firms now advertise that they can minimise, or even delete, adverse information of the world wide web. It is not new; criminal organisations have been doing it for years. Here's how it is done.

Let's say that you are a career fraudster, with a number of articles about your recent arrest, for securities fraud, in an Asian country. You go to a skilled operative, because you want then off the Internet, as it is frightening away prospective victims.

Since the search engines operate under the relevance of a query, the trick is to put up, in front of the offending material, favourable and positive postings, web pages, news items and the like, to push the
negative articles about the client further and further back. Some of the tactics employed:

(1) Have the "client" sponsor a local sports team and/or event. The Internet site of the team, local media, and a self-serving posting, will all end up on the Internet, ahead of the unfavourable articles, when a search for the target is made.

(2) Charitable contributions, donations to non-profits, and social and fraternal organisations, generally result in Internet entries, all of which keep pushing the negative material to the rear.

(3) Blogs, letters to the editor, and other web entries, all of which are indexed by Google and the other major search engines, all contribute further to filling the first couple of pages of a search result with positive information.

So, what does a compliance officer do when conducting due diligence or enhanced due diligence investigations ?  

(A) NEVER stop looking at search engine enquiry results, until you get the last entry on the absolutely last page. That way, if there is something negative, and it has been cleverly shunted to the back of the query, you will still retrieve it.

(B) ALWAYS access multiple search engines when performing Internet searches of a client, including regional, local, language-specific, and lesser-known sites, to ensure that you do not become a victim of Internet manipulation. Whilst search engines are helpful to the compliance officer, guard against the techniques discussed here by performing a very complete search, and go all the way to the end of the line on search results.


Readers who failed to read my recent article* on the subject of the money laundering consequences of the vote, Watch for Large Funds Transfers to Croatia after Sunday, which originally appeared on 19 January, are urged to do so at this time, due to the results of the voting.


Wednesday, January 25, 2012


A Bermudian who traveled from St. Lucia to Bermuda to Bequia, in the Grenadines, is on trial in Serious Offences Court in St. Vincent, charged with two counts of money laundering. Winston Franklin Robinson, of Sandys, is accused of secreting $1.7m in US Dollars within the freshwater tank of the sailboat. 

His testimony to date has been that the cash represents his personal savings, earned since the 1980s, from his jobs in hotels and through fishing. What is interesting about the case is the fact that he probably picked up the cash in Bermuda. Since it might be difficult to amass such a large amount of currency in a small island nation with strict anti-money laundering laws, we ask the question: where did the money come from ?

Obviously, it was bulk cash smuggled into Bermuda, but how ? On a vessel, coming from the United States, delivering consumer goods ? By private aircraft, secreted in the fuselage ? By cash couriers, concealed on their persons, over a number of trips ? We cannot say, but it shows you that bulk cash smuggling, even into a jurisdiction not known to be a favoured destination, is alive and well.

Tuesday, January 24, 2012


A reader, writing about this column on a KYC website, declared recently:

"Great tips, found in between the quite opinionated commentary, from the bloke who wrote 'Confessions of a Money Launderer' on World-Check."

He was kind enough to include a hyperlink to this blog. So what about it, am I too opinionated, and if so, why ? My answer can be found in what I refer to as ...


Your spouse finally convinces you to take the children on a trip to Disney World. When you deplane at Orlando, and process through Immigration & Customs, you are unexpectedly detained by the authorities, and turned over to Federal Marshals, who transport you to the District Court. 

There, after being held in a lockup for several hours, you are brought before a Magistrate Judge, and informed that a warrants exists for your arrest, on the charges of money laundering, and conspiracy to commit money laundering. You are stunned, for you have never gotten more than a speeding ticket before this day.

The Court advises you that you are but one small cog in a complex criminal indictment of over two hundred individuals involved in a global narcotics narcotics conspiracy. You know only one person in the entire case, a former client from years ago.

The judge finds that you have no ties to the United States, and are a flight risk, ruling that you shall be held in Pretrial Confinement, meaning that you cannot be released on bond. Your family lawyer in the UK quickly hires local defence counsel, who tells you that you are facing a potential twenty-year sentence, in a country where parole has been abolished by statute, meaning that one must serve 85% of one's sentence.

You vaguely recall the client who is your co-defendant as a good source of income for the bank at that time. You are fired by your employer, are crucified in the local press as a money launderer & danger to society, and your wife files for divorce.

The reason that I am so opinionated about many issues, is that I wish to spare all my readers that dreadful experience. In the compliance world, professional negligence may later develop into a criminal charge in a faraway jurisdiction where they are not very understanding about your failure to adequately monitor client activities.

If I can shake you out of your complacency about important topics, and cause you to be proactive as gatekeeper, and therefore effectively suppress money laundering in your shoppe, I will be as outrageous as I can be. I do not want you to have my experiences; going to prison for money laundering, and later working in compliance at a very large firm where a clandestine Ponzi scheme reigned.

Please, do not think that my strong opinions are not without cause; Thank you for your interest.

Saturday, January 21, 2012


Amongst those Palestinians released from prison by Israel as part of the agreement through which the hostage, Gilad Shalit, was freed are a number of individuals who were responsible for the deaths of 83 US citizens, as well as inflicting serious injuries on 53 others, all by terrorist attacks. There has been a call to indict those Palestinians in the United States for those crimes; Most of them were serving long prison terms before their release.

These terrorists released from a Israeli custody included "General" Mahmoud Awad Damra, who commanded a unit whose aim was to assassinate Israeli government leaders. He was responsible for directing terrorist attacks that resulted in the deaths of American citizens. Damra was subsequently appointed a personal advisor to the Palestinian Authority senior leader, Mahmoud Abbas.

The Parents Forum for Justice, an NGO composed of the parents of the American dead and injured, on 19 January, asked the US Attorney General, Eric Holder, to bring criminal charges, pursuant to the 1991 Anti-Terror Act,* which deals with acts of "international terrorism."

Compliance officers may be interested to know that some of these individuals, who were welcomed as heroes by the Palestinian Authority in the West Bank, and by Hamas in Gaza, are now living outside the Palestinian Territories, or are engaged in international travel. Some of them have publicly boasted that they intend to engage in new acts of terrorism in the future. Should they be allowed to open accounts, and later be indicted, not only is there a risk of reputation damage through media exposure of an account relationship, but of indictment for terrorist financing, or aiding and abetting.

You are reminded that these names have been transliterated from the original Arabic when appearing in the media in English; therefore, multiple variations in spelling are possible.

Ahlan Tamimi
Sana'a Shehadeh
Qahara Al-Saadi
Walid Al-Hadi Anjas
Fadi Muhammad Ibrahim Al-Jaaba
Maedh Waal Taleb Abu Sharakh
Muhammad  Ynuis dar Musa

These men and women represent an unacceptable level of risk for any bank, including those located in the Middle East.
* 18 USC §2331

Friday, January 20, 2012


Readers of the many articles appearing in this blog on bulk cash smuggling can see me lecture on this important subject at the Border Security Expo 2012*, on 7 March. The event, which is presented annually by EJ Krause & Associates**, takes place this year on 6-7 March, once again at the Phoenix Convention Centre.

I will again be sharing the topic with Joseph Burke, Unit Chief of the National Bulk Cash Smuggling Centre. You may obtain event details by contacting EJ Krause VP Michael Rosenberg at:


Thursday, January 19, 2012


On Sunday, the voters in the Republic of Croatia will cast their ballots, in a national referendum, on membership in the European Union. It is believed that there will be sufficient "yes" votes to form a majority, meaning that, after approval of member countries, Croatia will join the EU on 1 July, 2013.

Why is this of interest to compliance officers at international banks ?

(1) History teaches us that money launderers and financial criminals regard EU new membership as a target of opportunity. The new member generally has poor and ineffective AML laws and enforcement, making it a prime candidate for placement of criminal proceeds.

(2) Illicit funds, once placed and invested in the new member, are often allowed to remain. The new investments then often appreciate, as the businesses and assets owned increase in value with the expanding economy. This is a typical middle, not short-term, money laundering strategy.

(3) When the country ultimately joins the Eurozone, a few years in the future, adopting the common currency, the cycle is complete. Profits can now be taken as Euros, and any chance that their illicit origin will be discovered is near zero.

Therefore, should you see any large wire transfers to financial institutions in Croatia, after Sunday's election, institute Enhanced Due Diligence on the sender, including all its officers and principals if a business entity. Scratch below the surface, and you may find that there is a Source of Funds issue; check it out.

Wednesday, January 18, 2012


The long-await trial of accused Ponzi schemer, R. Allen Stanford, is scheduled to commence on 26 January, in United States District Court in Houston, Texas. I am hoping that the testimony at trial, and the evidence introduced will answer a number of questions about Stanford Financial that remain unanswered:

(1) Is there any truth to the persistent rumour that Stanford accepted narcotics profits at his Antigua bank and thereafter engaged in laundering those funds ?

(2) Did Stanford Bank Venezuela evade taxes, and did Allen Stanford cause the Venezuelan Government to bring bogus criminal charges against the whistleblower, Stanford's then-manager, Gonzalo Tirado ?

(3) Did Stanford engage in a pattern of bulk cash smuggling, from North America to Antigua, of client funds, using corporate aircraft and Stanford Bank staff ?

(4) Was Stanford a Confidential Informant for a US law enforcement agency, and did that agency interfere with investigations into Stanford's solvency ?

Do you think these questions deserve an answer ?

Tuesday, January 17, 2012


                                                  Peter Paul with Bill Clinton

The Fifth Circuit Court of Appeals* has held that Peter Franklin Paul, who was under House Arrest (Home Confinement) for 53 months in a securities fraud case, could not receive credit for that time towards his Federal Prison sentence, and the Bureau of Prisons did not err in refusing to grant him credit in the computation of his release date. The case affirmed a District Court Decision* that challenged the BOPs sentence calculation. He had filed a Pro Se Federal Habeus Corpus petition, seeking immediate release from custody.

 Paul, a former Miami attorney with a colourful history, pled guilty to Securities Fraud in US District Court in New York***,  and was sentenced to ten years' imprisonment, three years Supervised Release, and Restitution of $11.4m. Did his controversial civil series of civil lawsuits, brought against Hillary Clinton, for whom he served as Hollywood fundraiser, until his narcotics conviction surfaced, cause him to be placed on home confinement for four and one-half years, or was it the government's failure to assess the measure of damages ? Either way, the sentencing was inordinately delayed.

The District Court made a factual finding that, whilst the US Attorney at the trial court level agreed not to oppose Mr. Paul's argument that he was entitled to credit for his home confinement time, the judge ruled that there would be no jail credit for time spent in home confinement. The appeals court, citing a US Supreme Court decision****, held that home confinement was not a "jail-type" environment, and that there was no statutory eligibility for credit for time spent in Home Confinement. It dismissed the appeal as frivolous and without merit at law. Mr. Paul is currently scheduled for release on 26 December, 2014.
*Peter Franklin Paul vs. Warden M. Travis Bragg, Case No.: 11-50728 (5th Cir).
**Paul vs. Biggs, Case No.: 10-cv-470 (WD TX).
*** United States vs. Paul,  Case No.: 01-cr-00636-LDW (EDNY).
****Reno, Attorney General vs. Koray, 515 US 50 (1995) [a money laundering case]. 

Monday, January 16, 2012


You know that Syrian President Assad, his extended family, and those regime insiders that have been raping their local economy for decades, with their enforced monopolies and sundry other offenses, are already moving literally billions of US Dollars, Swiss Francs, Sterling, and other assorted hard currencies, out of Syria, as fast as they can. Unless you want to risk a EU or US sanctions violation, I humbly suggest that you follow these simple guidelines:

(1) Accept absolutely no present, or former, Syrian PEPs as clients, and make no exceptions.

(2) Watch carefully for increased and unexplained wire transfer activity involving any present client who has done business with Syrian companies. You do not want to unwittingly facilitate Syrian "flight capital" that your client's client is front for.

(3) Look carefully at the Place of Birth listed on any new Middle Eastern client's passport. Is he a Syrian PEP who was a dual national, or who managed to acquire residency or citizenship in the region lately ?

You can fully expect any future Syrian democratic government to aggressively seek the funds of PEPs who flee the country during the last year that the present regime is in power. Do not take suspect Syrian flight capital.

Sunday, January 15, 2012


Those readers who have been following the story of the M/V Chariot, the St. Vincent-registered freighter that carried an estimated 35 tonnes of bullets to the Government of Syria this week,  deserve to know the backstory. The vessel, carrying munitions for Russian exporter Rosoboronexport, was boarded in Cyprus, when it was forced to make port in Limmasol for refueling, reportedly due to rough weather.

An inspection by Cypriot authorities revealed "dangerious cargo," suspected explosives, which was a violation of the EU ban on arms shipment to Syria. Cyprus is a member of the European Union.
 Unfortunately, the ship's captain disregarded Cypriot orders to divert to Turkey, and docked at Tartus, in Syria. The moment that vessel dropped anchor in an EU jurisdiction, the sanctions law was violated.

Reliable reports say that payment for the ammunition was made by Hezbollah, from Latin America, using a Venezuelan corporation, to pay for the purchase. Are you verifying the beneficial ownership of Venezuelan companies, to rule out government-controlled entities, especially in countries where governments that actively facilitate terrorist organisations ? The company involved could only have been empowered to take such action if it was controlled by the Government of Venezuela.

Remember also that the senior officers of government-controlled companies are Politically Exposed Persons, or PEPs. That means that personal bank accounts of these officers are subject to extra scrutiny and monitoring. Have you identified any corporations as government-owned ? If so, do the personal accounts of the officers exceed their probable incomes ? Government-controlled companies engaging in international business are always to be regarded as high-risk, because they may have hidden, political or geopolitical, agendas. Watch yourself with them.

Saturday, January 14, 2012


Spencer Barasch, who was the Director of Enforcement at the Ft. Worth Regional Office of the Securities & Exchange Commission for seven years, has agreed to pay a $50,000 civil fine, to settle conflict of interest charges. The fine levied is the maximum amount permitted by law in a civil case.

The Settlement Agreement, the complete text of which can be viewed here*, involved a dispute over Barasch's post-SEC representation of Stanford Financial Group before the Commission. The document, which also settles any potential criminal liability, recites that Barasch violated an SEC permanent bar to the representation of Stanford. Barasch performed services for, and billed, Stanford, after he left the SEC, which was actively investigating Stanford Financial Geroup's alleged $7bn Ponzi scheme during his employment there.

The Department of Justice press release** provides additional information for readers who require further details.
** Former Head of Enforcement for the Ft. Worth Office settles Conflict of Interest Allegations

Friday, January 13, 2012


A Michigan woman who was transporting over $250,000 in cash has been sentenced to serve six months in jail by a Michigan court. The funds, which were secreted in the boot of her automobile, were being taken across the state line by a young mother, who had a prior case involving possession of a controlled substance.

The total amount seized, which was $265,800, was in a hidden compartment in the smuggler's Hundai automobile. She pled guilty to a single count of money laundering.

Thursday, January 12, 2012


I have always wondered why the United States Government has never disclosed publicly that five Hezbollah operatives were arrested at the US-Mexican border a couple of years ago. They were all carrying valid Venezuelan passports. Is there a reason why the United States does not want to alert the public to a danger literally in our backyard ?

Let's talk about those facts about Hezbollah that nobody wants to discuss:

(1) Many experts now estimate that Hezbollah narcotics trafficking activities in the Western Hemisphere are larger than those of any criminal organisation, including those in Colombia.

(2) The extensive Hezbollah money laundering programme in Panama, which involves using drug profits to purchase and later sell, real estate, ultimately results in clean sale proceeds cheques, which provide a major portion of Hezbollah global income. Most of it ends up in Beirut, using normal financial channels.

(3) Hezbollah narcotics operations in Venezuela, Colombia and Panama, all focus on its terrorist financing objectives. I imagine most  bankers are not even aware that there is an active organisation called Hezbollah Venezuela. They've got their own website.

(4) Many Ethnic Lebanese living in these three countries are deeply involved in the facilitation of Hezbollah programme.

(5) Hezbollah is also deeply involved in training and assisting designated global terrorist organisations inside Colombia, especially the United Self Defence Forces of Colombia, also known as the Paramilitaries, or the  Autodefensas.

From a banking perspective, the failure to educate the financial sector of these facts raises the risk that banks will fail to be sufficient vigilant, and that they may unwittingly facilitate terrorist financing of Hezbollah funds. Will regulators and law enforcement agencies then impose Draconian fines & penalties, Deferred Prosecution Agreements, and indictments ?  Would it not be better to have an informed private sector, rather than classifying the information, and keeping it from the public ?

Wednesday, January 11, 2012


Giving the primary defendant in a major case a reduced sentence for providing what the US Sentencing Guidelines refer to as "Substantial Assistance," does not serve the ends of justice when he has inflicted serious economic damage upon individuals or entities not charged with criminal conduct. Often, when sentencing is delayed for a period of years, to allow the defendant to assist law enforcement, there is no media coverage of the lenient sentence.

The case against Rama Vyasulu, the manager of Rosemont Financial, in US District Court* in Boston, also involved the seizure, in Miami,  of over $151m in deposits of 48 broker-dealers and non-bank financial institutions located in Venezuela after Vyasulu became involved in a money laundering sting brought by the DEA. Although there was no connection between the Defendant's criminal actions and his client's accounts, they were all frozen by a Federal Judge.

The broker-dealers were forced to negotiate the return of their client's money, a process that took many months, and they did not recover all their funds, because the US Attorney exacted hefty penalties for their lack of Federal, or state, money transmitters licenses. The economic costs, and resulting business losses, cannot be measured, but they were extremely high. Had Mr. Vyasulu not assured them that they needed no licenses, many of them probably would have been in full compliance with the registration requirements.

Two years later, the defendant comes up for sentencing; His sentence:

(1) one year and one day in Federal Prison ! If you were wondering why the additional day, it is a courtesy extended to him, allowing him to receive 2 months' gain time, for good behaviour, which will reduce his already short sentence to a mere ten months.  As a prominent Miami criminal defence attorney is fond of saying, "You can do that standing on your head."  He's not joking, and remember that money laundering has a maximum sentence of 20 years.

(2) The Court has recommended that he serve his sentence "in the Southern District of Florida," which is close to his family. Most defendants initially are sent far, far away from their home states. Preferential treatment as a reward for his cooperation ?

(3) A period of two years Supervised Release, the modern form of post-incarceration parole. Why he did not receive the customary three years is not known. A good attorney can seek early termination of the Supervised Release after several months, and he will certainly get no opposition from the US Attorney's Office, I am sure.

(4) No fine or restitution is ordered and adjudged; only a $300 court cost payment. The Judgment and Notice of Commitment stated fine waived. Whilst  Rosemont Financial accounts seized were forfeited to the United States, no fine was imposed.

I doubt that the affected business owners, and their clients, even know that the individual responsible for their plight has received little more than a slap on the wrist. Was justice served ? I will let you be the judge. Vyasulu ruined a number of peoples' lives and businesses.

Reports received from Venezuela indicate that Mr. Vyasulu was not the owner of Rosemont, only the managing director. The true owners are several Caracas businessmen Why, I wonder, were the true owners of the company neither charged nor identified ?  

One year for a money laundering case that resulted in the largest seizure of funds in the history of the criminal justice system; there's something very wrong with this picture.
*United States vs. Vyasulu, Case No.:  09-cr-10081-JLT (D MASS). 

Tuesday, January 10, 2012


The Internal Revenue Service has announced that it will reopen its Voluntary Disclosure Programme, which affords taxpayers the ability to disclose hidden offshore accounts, and avoid potential criminal penalties. The individuals who avail themselves of the programme must disclose the names of the financial institutions where they have been secreting their overseas assets, which is a valuable tool for US law enforcement agencies investigating foreign financial institutions that actively assist American taxpayers in evading the taxman. The most egregious offending banks have paid extremely high civil fines to settle their transgressions.

Amended tax returns must be filed that reflect the individuals' true income; some taxpayers may be eligible for a mere 5% penalty, but the maximum rate that will be levied has increased to 27.5%. Whether this new round of Voluntary Disclosure results in many additional banks being called to account for assisting Americans in hiding their cash is not known, but rest assured there will be some naming & shaming in the future.
* More information will be made available at:

Monday, January 9, 2012


The detailed disclosures, this past week, of how senior North Korean PEPs are able to obtain luxury items through China, is not a surprise, but it should serve to remind international bankers that, one way or another, payment must be made, directly or indirectly, for those goods. Therein lies a substantial amount of risk for bankers working in those countries in North America or the European Union where sanctions exist. I have analysed the problem logically:

(1) Somehow, somewhere, North Korea, or Iran, or Burma, or any other country against whom global sanctions lie, must find a way to pay for those expensive handbags, or sports cars, or premium liquor. When we see specific brands of products in photographs taken inside sanctioned countries, the manufacturer usually disclaims any responsibility. Their public relations department generally puts out a press release documenting how all their distributors are thoroughly screened, and only sell where authorised. Don't you believe it.

(2) In truth and in fact, so-called end users transship the goods to sanctioned jurisdictions, and there isn't much that can be done to stop this practice, as the countries where the transshipment occurs are generally chosen because the authorities there turn a blind eye to that sort of "commerce."

(3) Here's your problem: should your bank customer accept payment, in an indirect manner, for goods or services that have been sent to a sanctioned nation, and regulators discover it, you may be in for fines and penalties, or worse, in today's take-no-prisoners enforcement environment.

(4) Iran is definitely your worst problem; the America sanctions regulation that raises the benchmark on best practises to holding your bank responsible for any facts that are "knowable," holds you to a very high standard of compliance. Can you consistently maintain that level ?

(5) When international payment for goods or services comes, not from the country where your customer has sold & delivered, but a third country, ask yourself: is this a normal and consistent practice, and why ?

(6) If you do not have a satisfactory answer to (5), then it is time to observe "Know your Correspondent's Correspondent". Take the bank in the third country that transmitted the payment to you; who are its correspondents ? is there one or more in a sanctioned jurisdiction ? If so, you might want to consult with bank counsel about whether a Suspicious Activity Report should be filed, whether you might want to take certain protective actions regarding future business with your customer, including terminating the relationship.

(7) A smart sanctions evader might transfer the funds to at least one other local bank, domestically within the third country, before sending it to you, and there's no way to protect against that, unless the wire transfer room there gets careless, and fails to delete all the intermediary banks. Therefore, always check the information carefully.

Whilst sanctions evaders can be very innovative, these steps will greatly reduce the risk that your customers are using your bank to sell good and services to users in sanctioned countries; Good luck.

Sunday, January 8, 2012


With presidential elections looming in October, Venezuela's President, Hugo Chavez Frias, has named General Henry Rangel de Jesus Silva as Defence Minister. Gen. Rangel was named, in 2008, as  Specially Designated Narcotics Trafficking Kingpin (SDNTK), by the US Treasury Department,  due to accusations that he was assisting the Revolutionary Armed Forces of Colombia, the FARC, transport drugs into, and through, Venezuela. The FARC is a Specially Designated Global Terrorist organisation.

A former head of the Venezuelan intelligence service, Rangel's appointment is not only a direct affront to the United States, it is a cause for major concern amongst country risk assessors.

(1)  Will purchase contracts with Venezuelan government agencies, or military entities, be considered sanctions violations by US regulators ? What if Rangel, or his adjutant*,  actually signs the contract ?

(2) Will he appoint other sanctioned Venezuelans, or entities, to posts in the Defence Ministry ? The authoritative  publication El Universal listed no less than 35 Venezuelan individuals, and companies, that are sanctioned by the US for allegedly facilitating narcotics trafficking.

(3) Will the United States subsequently designate Venezuela a State Supporter of Terrorism, and/or sanction government agencies, and what will that do to pending contracts, Letters of Credit, goods en route, and accounts receivable ?

Bottom line: I humbly suggest that you consider raising country risk on Venezuela, and that you ensure that your financial exposure there is extremely limited.

UPDATE: The United States Government has advised that it is expelling Venezuela's Consul General in Miami. A recording of her seeking codes of nuclear sites in the United States appeared in the Spanish-language media, and her membership in the Venezuelan intelligence service has been revealed. She has 72 hours to leave the country.

* A junior officer who assists a military commander with administrative tasks, generally on a full-time basis.  The Adjutant is more than an agent; he or she speaks for (and signs for) the senior officer in many administrative matters, rather than the commander.

Saturday, January 7, 2012


Gregory Whitworth, an American who formerly resided in Bahrain, was sentenced recently, in  US District Court* in Buffalo,New York, to serve a sentence of eighteen months in Federal Prison, for money laundering. Whitworth worked for a payment processing company that facilitated payments for a number of  Canadian telemarketing schemes that reportedly defrauded consumers out of $20m. He cooperated with US law enforcement agencies in the case, and received a lesser sentence.

Apparently, the defendant continued to forward funds to Canada, to the fraudsters, even after he had actual knowledge of the illegal practises of the telemarketing firms. The principal of another company that was forwarding the proceeds of telemarketing fraud received a 2-year sentence for money laundering, plus a $100,00 fine, from the Court.
* United States vs. Whitworth, Case No.: 10-cr-00324 (WD NY) 


Concepcion Gomez-Alvarez was arrested* this month, by Customs and Border Protection (CBP), when he attempted to enter Mexico from Southern California. Charged with Bulk Cash Smuggling, the defendant's vehicle contained $442,113 in cash, in wrapped bundles.

The funds were concealed within the left- and right-rear quarter panels of his automobile. He claimed that he was going to Mexico to purchase some items. During questioning, he admitted to at least five prior trips, and stated to the arresting officers that he was paid only $700 per trip. Under Federal law, he faces a maximum of five years in prison for the offence. This case is but another verification of the law enforcement claim that many bulk cash smugglers engage in this activity on what seems to be a career basis, until apprehended.
*United States vs. Gomez-Alvarez,  Case No.:  11-mj-09780-PCL (SD Calif). [note that this is the Magistrate case number].

Thursday, January 5, 2012


We continue to follow developments in the Miami civil case where Lourdes Cajale*, a staff member at an international export firm allegedly repeatedly embezzled funds from her employer, and then hid the funds in accounts in Panama, in what I consider to be the textbook example of how white-collar crime often turns into money laundering.

Here is what has transpired since we last reviewed the case :

(1) A Motion for partial Summary Judgment is pending, and will be heard on 10 January,  2012. Dealing with Ms. Cajale's purported claim for a percentage of the revenues of the company that employed her, a review of the court file indicates that there does not appear to be a factual basis for her claim.

(2) The Magistrate's Report and Recommendation, filed on 18 November, required Ms. Cajale to turn over emails to her. Additionally, she will be ruling on her refusal to respond to specific questions at her deposition. Her counsel has asked for an extension of time to translate the emails. There are unconfirmed reports that she is planning on leaving Florida for Colombia, and permanently moving out of the United States, in January. Should she leave the jurisdiction, and deliberately make herself unavailable for deposition, the court can, and probably will, impose sanctions, which may result in her losing the civil case. Is she seeking to evade something more serious ? We cannot say, but a review of the deposition transcripts of testimony taken so far does not show that she has been questioned about her travels to Beirut.

(3) We are still trying to understand why her attorney of record, in the civil case, is one of the most prominent criminal defence lawyers in Miami. In our last article, we discussed his link to a major Colombian attorney, known for his defence of individuals charged with ties to the Autodefensas, the Paramilitary organisation of Colombia, a designated terrorist group under US law.

An article in the Colombian press*** affirmed that Paramilitary leader Carlos Mario Jiménez Naranjo, who was extradited to the United States on multiple narcotics charges, would be represented by Mr. Diaz. He did not formally appear as attorney of record, and the defendant  later pled guilty to two of the eighteen counts, (the money laundering count was dropped) and received credit for time he spent in Colombian prisons.A subsequent article**** in the Colombian media advised that he had withdrawn from representation of Sr. Jiménez over "conceptual differences." Jiménez was then sentenced to 396 months in Federal Prison**. What was his role in this case ?

Readers of this column will recall that I recently wrote about Sr. Jiménez in an article entitled  Suit Against Colombian Paramilitary Leader in US Court alleges Government Corruption*****,  a civil suit alleging war crimes, crimes against humanity, torture, and extrajudicial killing******.  

We shall continue to monitor this case, until its conclusion; Stay tuned.
* Ms. Cajale, who marital status remains unclear, is a Colombian of Lebanese ancestry who recently became a naturalised American citizen. It is unknown whether the outcome of this case will affect her immigration status, because she reportedly failed to disclose the details during the application process.
** United States vs. Naranjo,  Case No.:  07-cr-20794-CR-JAL (SD FLA).
******Jaramillo vs. Naranjo,  Case No.: 10-cv-21951-EGT (SD FLA). 


Readers who have enquired about the release date on my autobiography, The Laundry Man, please note that it will be released during the first week of June. You can pre-order it online at any one of a number of booksellers, and be the first in your office to have a copy. Alternatively, some book websites allow you to reserve a copy, or leave your email address for further information.

There will be a number of book tours; whilst they are in the planning stage, expect to see me in the United Kingdom, and the United States, this summer. Thank you for your interest in The Laundry Man.

Wednesday, January 4, 2012


Tijuana Cartel Kingpin Benjamin Arellano-Felix has changed his plea to guilty in US District Court in San Diego*. The Plea Agreement, which saves him from a potential 140-year sentence, reportedly states that he will receive a maximum sentence of 25 years.

Arellano-Felix has pled to:
(1) Money Laundering Conspiracy
(2) Racketeering (RICO)

There is also a forfeiture of $100m in assets, which may not be recoverable in the US.

*United States vs. Arellano-Feliz, Case No.: 97-cr-02520-LAB(SD CALIF).


A gang of Eurothugs*, defrauding online purchasers of automobiles in the US of an estimated $4m, have been charged** with a number of offences, including bulk cash smuggling and stucturing. Their method was to accept orders for cars, create bogus documents, accept payment, but never deliver the vehicles. They used more than 110 bank accounts to structure $9900.00 withdrawals, and purchase money orders for $2800 each, to avoid reporting requirements.

One bulk cash smuggling attempt alone involved $1,089,300 in cash. The charges;
(1) Money Laundering
(2) Bank Fraud
(3) Wire Fraud
(4) Structuring
(5) Manufacturing False Documents
(6) Bulk Cash Smuggling

Purchasing an automobile online, from individuals who are not established and known dealers,  has now become a high-risk exercise.
* The organisation's members came from Germany, Russia, Romania and Latvia.
**United States vs. Corneliu Stefan Weikum et al, Case No.: 10-cr-000579-GMN-RJJ (D Nev).

Sunday, January 1, 2012


Bulk cash smuggling appears to be alive and well over the holiday season, but fortunately law enforcement agencies are doing their jobs efficiently. The Government of Antigua & Barbuda now has four individuals in custody, and charged with attempting to smuggle cash into the country, as well as money laundering offences. They are nationals of:

(1) Dominica
(2) Venezuela
(3) Dominican Republic

Note that they attempted to smuggle in Euros as well as US Dollars, and that one flew in from St. Maarten with cash concealed on her person.


The President of Nigeria, Goodluck Jonathan, has declared a State of Emergency in four northern Nigerian provinces, due to recent outbreaks of sectarian violence. Reports from Nigeria state that at least 52 are dead, and blame has been laid at the feet of an outlawed radical Muslim organisation, Boko Haram.

This far, the central government has been unable to stop the spread of Muslim vs. Christian violence, and for that reason, compliance officers charged with the assessment of country risk should review the situation, and make a decision on whether to raise country risk for Nigeria at this time,


This week, literally at the eleventh hour, the winning $14m ticket in the Iowa Lottery arrived to claim the prize. It would have been disqualified for tardiness, had it not come in when it did. Why is this of interest in the world of financial crime ? It seems that the claimant was not an individual, but a trust, and that it was sent in by an attorney, acting solely in representative capacity, and without identifying the beneficial owner. What's wrong with this picture ?

The last thing that I want to see in everyday application is the use of money laundering techniques of opacity to foil transparency in the world of legitimate commerce.  I'm sorry, but I do not approve of this clever attempt at privacy. How do we know who the beneficial owner is, and whether he or she is the original ticket owner or not ?

I understand that the matter has caused no small amount of consternation in Iowa, judging by the huge amount of media coverage.. For those who are not familiar with this subject, the United States Supreme Court has held that, in the absence of unusual circumstances, the identity of an attorney's client is not privileged. A court of competent jurisdiction can compel the lawyer to identify his client.

Why am I am disturbed by the placement of a winning lottery ticket into a trust ? During my money laundering days, the quiet purchase of winning lottery tickets was a favoured method of legitimising drug profits. A particular client, working in Miami, would get the word out in San Juan that he would pay more actual winners more than the face value of the ticket. That way, the real winner had the cash in his pocket, unreported to tax authorities, and the drug trafficker could pass the winning ticket to any member of his organisation that needed to prove his income was legitimate.

Whilst I understand the need for privacy when you win $14m, the trust beneficiary could now be a career criminal, an individual specially designated by OFAC, or a foreign national involved in terrorist financing. I will sleep a lot better when we learn that the winner is an ordinary US person, who wants to hide his winnings from his friends and neighbors, because I pointedly do not like the way was structured.