IRAN WANTS CANADA TO TURN OVER BANK MELLI MANAGING DIRECTOR

Khavari

The Iranian Foreign Ministry has asked Canada to extradite Mahmoud Reza Khavari, the former Managing Director of Bank Melli, the Iranian government-owned bank sanctioned for its participation in Iran's illegal WMD and ballistic missile programmes. Khavari reportedly was involved in the $2.6bn embezzlement fraud that resulted recently in four fraudsters being sentenced to death*.

Khavari, who obtained dual Canadian citizenship in 2005, reportedly is the subject of an Interpol Red Notice and a "Verdict to Prosecute" in Iran, which does not recognise his Canadian status. Canada can revoke his citizenship, if it determines that his citizenship application was fraudulent. There is no bilateral extradition treaty between Iran and Canada.

His Canadian cottage

Whilst there is a presumption that Khavari is innocent of these charges, one wonders exactly how such a high profile PEP, who was the MD of a major Iranian bank, passed the investigation for citizenship. I know that Canada's immigrant investor programme has brought in CDN$350m, but there must be adequate Enhanced Due Diligence performed, before allowing obvious PEPs to use suspect funds to gain Canadian citizenship.
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*Iran sentences White Collar Criminals to Death for stealing Trillions

IRAN SENTENCES WHITE COLLAR CRIMINALS TO DEATH FOR STEALING TRILLIONS

Yes, you read the headline correctly, that is trillions of Rials. Iran's Revolutionary Court has sentenced two embezzlers to death, and gave two others life sentences, in a case that appears to be the country's largest financial scandal to date. A total of thirty nine other defendants were also sentenced to prison terms of up to 25 years. Another report, unconfirmed, states that four were given the death penalty.

Reportedly, the defendants obtained forged Letters of Credit, which they used to get loans for the ostensible purpose of purchasing state-owned companies that were being privatised. The identities of the defendants are being withheld; Bank Melli, Iran's largest bank, is thought to be one of the banks defrauded.

Bank Melli

 The capital defendants were charged with "Corruption on Earth," a criminal charge that declares the individual is an enemy of God.  As soon as more details are disclosed, we shall publish the information.

Iranian justice

TRADE WITH VENEZUELA HAS UNIQUE PITFALLS

Last week, in US District Court in Florida, a third Venezuelan national, Alberto Pichardo*, entered a plea of guilty to charges of Conspiracy to Violate the Arms Export Control Act. The defendants conspired to sell to the Government of Venezuela F-16 fighter jet parts, aircraft engines, munitions and engines for unmanned aerial vehicles (UAV). Export of these items to Venezuela is strictly prohibited.

Remember the recent disclosure that Venezuela dismantled shipped an F-16 to Iran, together with pilots to assist in training Iran's air defence system in how to detect and shoot down invading aircraft.. Israel, Iran's most likely adversary, employs the F-16 extensively.

Anything that your bank clients are shipping to Venezuela may transshipped straight to Iran. Dual-purpose goods, in particular, are a danger. You do not want your bank to be named as a facilitator of WMD or ballistic missile sanctions evasion. Check all your clients' documents carefully before accepting payments for exports, please.
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*One defendant has not pled out. United States vs.  Alberto Pichardo,  Case No.: 12-cr-20478 (SD FL).

VIKTOR BOUT IS LEARNING ARABIC IN PRISON

Viktor Bout's attorney has stated that his client, who is currently serving his 25-year sentence at USP Marion, is housed with convicted Islamic terrorists. He is reportedly learning the Arabic language. Does he know something that we don't ? Does he already have a long-range plan for the future ?

Bout, who is multilingual,  already speaks English, Russian, French,  and Portuguese.   

BULK CASH SMUGGLING CAN BE HAZARDOUS TO YOUR HEALTH

Information, released in a Baltimore marijuana case involving a Jamaican organisation, showed what happened to one of their bulk cash smuggling couriers, When the individual, who was transporting $1m, came up $200,000 short, and could not explain the deficiency.

He was beaten so badly that one of his eyes came out, and his life was threatened with a firearm. When he still failed to own up to the cause of the missing money, he was drowned in a bathtub. His body was later dismembered, and the pieces deposited in various places around Baltimore.

Perhaps the next time that someone in South Texas agrees to smuggle cash into Mexico, in exchange for $500, they might want to remember the cost of failure in a sordid business.

$3.1m JUDGMENT ENTERED AGAINST ATLANTIC RIM FUNDING AND DEAN KENNEDY

The long arm of justice has reached out and touched Advance Fee & Ponzi scheme fraudster Atlantic Rim Funding. US Bankruptcy Judge Eric L Frank has entered a final judgment in the Elkins Park Adversary proceeding, in favour of the Plaintiff, and against Defendants Dean Kennedy and Atlantic Rim Funding Inc., in the amount of three million, one hundred thousand dollars ($3,100,000).

The Court entered the judgment after an evidentiary hearing was held on 13 June. It was granted after the defendants utterly failed to honour their discovery obligations, and a Motion to Compel Discovery, and for Sanctions, was filed by Elkins Park counsel.

If this does not convince desperate commercial borrowers to avoid Kennedy,  his associates, and his new Advance Fee company like the plague, then nothing will.

IGNORE INTERNET INFORMATION ON CORRUPT VENEZUELAN PEPS

A large number of senior Venezuelan PEPs, who are either taking bribes and kickbacks, or engaged in drug trafficking, or in general stealing from their own government, have been pushing hard to have negative information about their exploits removed from the Internet. They have employed spurious copyright allegations, identity theft, and threats of dire legal action, to hide their dark deeds from compliance officers. They have also engaged IT professionals to flood the www with bogus, positive information, obscuring your access to the truth.

Therefore, it is strongly recommended that you do NOT use the Internet to check out any Venezuelan national. Use commercial off-the shelf high-risk databases and Enhanced Due Diligence providers. The Internet will now give you an artificially skewed view of these individuals; ignore it when conducting your checks. 

COUNTRY RISK COULD RISE FOR TURKEY

The predominantly Kurdish areas in Northern Syria, up against the Kurdish frontier, which appear to have passed from Syrian to local Kurdish control, have generated ominous statements from the Government of Turkey. This Turkish nervousness could result in a cross-border operation, in the event that PKK forces commence working openly with local Kurdish PKD units operating there. This would add a whole new dimension to the Syrian Civil War, none of its positive.

Please note that the Kurdish areas are not all contiguous with each other, though a portion abuts the Kurdish Region of Iraq. Compliance officers whose bank client are involved in transactions with Turkish clients, or whose banks have exposure in Turkey, would be well advised to monitor unfolding developments closely, and to adjust country risk for Turkey upwards, should Turkish troops engage in anti-Kurdish operations inside Syria.

NEW INFORMATION IN GU KAILAI CASE POINTS TO SON'S MONEY LAUNDERING

Bo Guagua (with admirer)

Are the children of China's "Princelings" the real money launderers of the illicit bribes and kickbacks of their parents ? A small published reference in the Bo Xilai/Gu Kailai scandal indicates that the reason that British businessman Neil Heywood was murdered was the couple's son, Bo Guagua. Remember, what little has been released publicly indicates that Mr. Heywood was poisoned, by a staff member of Gu Kailai, because he refused to participate in a money laundering operation.

One more tidbit you should factor in; whilst Bo Guagua was being educated in the UK, Gu Kailai lived there under an alias, as she was rebuffed, in a money laundering attempt, by a British company that was sending products to Chongqing, at the time when Bo Xilai was a senior official there.

Father, mother, son and victim

Finally, friends ands family are stating that Bo Guagua, now freshly graduated from an American institution of higher learning, has chosen to remain in the United States.

My conclusion: it is the children of the corrupt Princelings that you must assume are the true money launderers of their parents' illicit wealth. The danger is that many Western countries have allowed such privileged offspring to register under aliases, lest other students discover that they are the children of senior officials of a non-democratic state.

It is humbly suggested that you perform an Enhanced Due Diligence investigation upon any and all foreign student bank clients, registered at nearby universities, at this time. You may be unwittingly  banking a money launderer-in-training.

WATCH LEBANON CLOSELY ON RAISING COUNTRY RISK

The Syrian Opposition has claimed that the Government of Syria has moved its chemical weapons to its frontiers. Israel has categorically stated that, if it appears that such weapons systems are about to fall into the hands of Hezbollah, that it will attack to prevent that occurrence.

Add to this the fact that Israel has tied the terrorist attack in Bulgaria to Hezbollah and Iran. Lebanese March 14th and Future Movement officials have warned that, unless Hezbollah disarms, Israel may choose to attack it, bringing Lebanon once again into a war on its borders. More ominously, Israel has threatened to target all of Lebanon this time, not just the areas dominated by Hezbollah. An attack on Beirut's business centre would seriously disrupt its banking and business structure.

Watch the situation carefully, if you have clients who trade with Lebanese companies, or you have financial exposure there.
   

USING FORMER MONEY LAUNDERERS AND WHITE-COLLAR CRIMINALS FOR AML/CFT IDENTIFICATION

Readers who enquired about locating and engaging former money launderers and white-collar criminals who are compliance qualified, and available for AML/CFT duties, can contact me for that information.
Such individuals generally work as independent contractors for financial institutions who engage them to examine all suspicious activity matters in real-time. I can refer you to such individuals, or, if appropriate, will consider creating a team, under my personal supervision, to handle this task.


Email me at:  miamicompliance@gmail.com

  

WILL ANYONE EVER BE INDICTED AT HSBC FOR MONEY LAUNDERING ?

Today, Mexico's national Banking & Securities Commission (CNBV) fined HSBC Mexico (Grupo Financiero HSBC SA de CV) 379m Pesos, or the equivalent of $27.5m, for money laundering failures. That fine represents one-half of HSBC Mexico's 2011 net profit.

Inasmuch as the bank was the largest transmitter of US Dollar notes from Mexico to America, though it was not the biggest financial institution, and HSBC processed what were obviously an obscene amount of drug profits, should not there be an indictment of the senior officers at the Mexican subsidiary ?

If neither the US nor Mexican prosecutors ever charge any HSBC leaders with money laundering, then they will simply accept employment elsewhere, and do it all over again. Who will stop the rain ?

PKK ACTIVITIES IN NORTHERN SYRIA COULD BE A PROBLEM

The latest news from the civil war raging in Syria is that Kurdish organisations affiliated with the sanctioned PKK are wielding substantial power in the northern part of the country. Assisting any sanctioned guerilla organisation, even if it is seeking to overthrow the Assad regime, brings with it the possibility that providing financial support to a terrorist organisation charges could be brought against even a well-intentioned donor, and/or his or its bank.

Watch yourself here on bank clients who may be funding the Syrian Opposition; is the money going to the Kurdish region of Syria ?

CAN YOU REALLY STAMP OUT MONEY LAUNDERING AT YOUR BANK ?

Last week, an interviewer asked me whether it was really possible to eradicate money laundering. We will never stop the most innovative money launderers from practising their dark craft, but you can virtually banish money laundering from the bank where you work. Unfortunately, banks do not  assemble the necessary human resource tools to get the job done.

Here is my formula for unqualified anti-money laundering success. You compliance "Flying Squad" team must include at least one individual with these qualifications :

(1) A former or retired law enforcement detective or investigator who formerly specialised in white collar crime. Federal or national experience is preferred. You may already have such a person, if you have a Financial Intelligence Officer on board.
(2) A former money launderer or white collar career criminal, now working on the correct side of the street in AML.
(3) A businessman formerly employed at a large public company, who has an acceptable level of AML/CFT experience and education.

Why these three ? The ex-law enforcement agent has investigative skills, and experience, that you in compliance frankly lack. The former criminal's skills speak from themselves. He is best suited to identify criminal activities. The former businessman can bring his experience in working in the private, non-financial sector to bear, as he knows what it is like to work in the types of firms that are your typical bank clients.

This team would take all the Suspicious Activity Reports, bank officer queries, and information received by bank staff that appears to be inconsistent with the customer's trade or business, and provide real-time identification, and interdiction, of active money laundering at your bank. You need to be proactive if you are serious about money laundering suppression; think about it.

WATCH OUT FOR YOUR BANK CLIENTS SHIPPING GOODS TO SANCTIONED IRANIAN COMPANIES IN VENEZUELA

At least six Iranian corporations, sanctioned by OFAC or EU nations for participation in illegal WMD or ballistic missile programmes, have set up shop inside Venezuela, and are actively manufacturing materials for Iran, directly or indirectly. If you are a compliance officer at a North American or EU financial institution, whose clients trade with Venezuelan companies, it is strongly suggested that you ramp up your efforts to ensure that these clients are not trading with Iran, through Venezuelan factory sites.

Let me suggest the following:

(1) Immediately perform, either internally, or through established, trustworthy outsourcing, Enhanced Due Diligence investigations upon all clients who trade with Venezuelan firms. Do you have photographs of the Venezuelan factory operation, and documents, that rule out any Iranian involvement ? if not, why not ?

(2) Have your bank counsel prepare an affidavit, attesting to the fact that there are NO Iranian end users of the goods and services that your client supplies to Venezuela, directly or indirectly. Have the president of the clients' company execute the document, before a notary public. This may sound extreme, but present US law requires that you do everything possible to ensure that you are not violating international sanctions on Iran.

The Presidents of Iran and Venezuela together recently

You do not want to be listed in OFACs "Name & Shame" monthly ( Fines and Penalties) Enforcement Information press release. This is also about reputation damage, for if your bank's name shows up on  OFAC, even as a small fine, you will lose business, and the fine could precipitate a Federal criminal investigation.

Iranian Coat of Arms

Also, government auditors, any of whom I regularly lecture to in Washington, are fully aware of the Iranian threat. Be prepared to answer questions about what you are doing to ensure your bank clients do not trade with Iranian companies working abroad, particularly in Venezuela.

NEW THREAT: CHINA COVETS THE RYUKYU ISLANDS

Commentary in Chinese media, which generally reflects official thoughts, has ominously moved from assertions about the Japanese-occupied Pinnacle (Senkaku) Islands, to a claim that the entire Ryuku Island chain (which is a part of Japan) is Chinese territory. This "claim," which is based solely upon the fact that Ryukyus once paid tribute to the Emperor of China, flies in the face of Japan's lengthy history of dominance over, and annexation of, the island chain.

If this new territorial aspiration of China, which some observers believe is linked to China's wish for unfettered and direct access to the Western Pacific, for its expanding oceangoing navy, is bolstered by warlike moves in the region, China will not only run up against a century and a half of Japanese dominion, but head-on into the United States Navy Pacific Fleet. This is sovereign Japanese territory

China needs to discontinue this new territorial claim, lest it waken the sleeping giant, the US, which is expanding into the Western Pacific, and will not share its domination.The US has military bases in the Ryukyu chain; How will China avoid a nasty incident ? Wars have started for less.

THAI COURT TO HEAR VIKTOR BOUT CASE IN SEPTEMBER

Victor Bout's American lawyer has stated that the court in Thailand that originally heard the case against his client will hear his case on 17 September. Bout's counsel has long asserted that his client was illegally extradited to the United States, where he is currently serving a 25-year sentence, after being convicted of providing material support to terrorism. Will they find, after consideration, that his extradition contravened Thai law ?

The grounds alleged by lawyers in Thailand, acting on behalf of Bout are:

(1) His extradition was illegal, under both Thai and international law, because the Thai court had jurisdiction.

(2) The Extradition order was insufficient, because the Court was required to also issue a permit for Bout's release from prison, and this was not done when was taken out of the country.

It is not known exactly why Bout's attorneys are pursuing this avenue, because under existing American Federal case law, most Federal Courts have not questioned the legality surrounding the circumstances concerning how a defendant has come to be brought before it in a criminal proceeding. There are, however, a minority of cases where illegal extraditions have been held improper. Is that their goal ? Perhaps we shall see in September.

FRENCH ARCHITECT LINKED TO BO XILAI SCANDAL HELD IN CHINA

Bo Xilai & son

Asian media are reporting that the elusive Patrick Henri Devillers, the French architect who is linked to the Chinese attorney, Gu Kailai, accused of murdering British businessman Neil Heywood, is in custody in China. Devillers is said to have voluntarily gone to China to answer questions, solely as a witness, but was taken into custody upon arrival in Shanghai.

Neil Heywood

The Bo Xilai case, which involves the allegation that Heywood was poisoned when he refused to take part in a money laundering operation involving a senior Chinese PEP, has laid bare the culture of corruption practised by the descendants of senior Chinese leaders, who apparently feel that they are immune from the rule of law. Devillers is himself thought to have been involved in money laundering whilst he and Kailai lived in the UK.  

Was it this Princeling's money that Gu Kailai sought to launder ?

Will this scandal reveal the extent to which some Chinese PEPs, known as "princelings," launder their illicit funds overseas ? We expect it will; stay tuned.

CHINA TO POST MILITARY GARRISON IN SOUTH CHINA SEA

China's Central Military Commission has advised that it intends to post a permanent military garrison in its self-declared Sansha municipality, which includes a large portion of the South China Sea. This act, which could provoke a response from either Vietnam or the Philippines, or both, will seriously raise the levels of country risk in the region.

Central Military Commission

I am certain that Vietnam still remembers that China seized the Paracel Islands by force of arms forty years ago, and Chinese troops based in the South China Sea will not sit well with the Philippines, who claims a number of the islands in the Spratleys, as well as nearby reefs, which it regards as Philippine soil, pursuant to both a valid historical claim, and the EEZ rules.

The last thing we need in 2012 is a shootout in the South China Sea, and China has now moved all the parties in the region closer to that eventuality.

New PLA medal for heroism

YOU WERE WARNED ABOUT ECUADOR FIVE YEARS AGO

All the recent media chatter about Ecuador being a conduit for Iranian sanctions evasion, especially the fact that the Central Bank of Ecuador, through a private bank* that it controls, begs the question: who is paying attention in your compliance department ?

(1) Several years ago, yours truly disclosed details of a classified memorandum from the Director of Compliance at the Central Bank of Ecuador.  That document discussed ways to evade the consequences of international sanctions against Iran, whilst generating expanded banking with financial institutions in Iran. This information appeared in a major article that I wrote.

(2) Thor Halvorssen, the former Anti-Drug Minister in the last democratic Venezuelan government, in a major television appearance, discussed Ecuador's increasing links with Iran, at that time. The information was widely covered in the Spanish-language press.

Ambassador Halvorssen

Inasmuch as the official currency in the Republic of Ecuador is the US Dollar, Ecuadorian banks can easily assist Iran in obtaining the coveted dollars its needs to continue to purchase dual-use goods for its illegal WMD and ballistic missile programmes.

I wonder whether there is anyone in the compliance departments, at major international banks, who was actually there on staff five years ago. Where is the storehouse of accumulated compliance knowledge that is supposed to reside within the brains of staff  ?
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 *Cofiec Bank