Friday, August 31, 2012


The take-no-prisoners approach to Iran  sanctions violations, which US regulators have visited upon a number of European international banks, now appears to have focused upon Venezuela's well known and highly organised pattern of sanctions evasion. It is possible that there is a political basis for this zealous enforcement effort, because a Presidential Election looms in November, and the Republican Party has been quite vocal about how it plans a sea change in how it will deal with Venezuela, in large part because of its close toes to Iran.

Whilst we do not know whether this is the underlying cause, one must assume that US law enforcement agencies are closely examining international transactions involving Venezuelan banks, looking for evidence of sanctions violations. Since many Venezuelan companies have extensive trade with the United States, all major Venezuelan banks have either correspondent relationships, or actual branches or subsidiaries in North America. Increasingly, signs are pointing to ongoing criminal investigations of Venezuelan financial institutions, some of whom are pointedly ignoring the risks of covert financial transactions with sanctioned Iranian banks and government entities. The profits those banks are deriving are simply not worth the risk, in my humble opinion.

Therefore, compliance officers at US banks with regular contact with Venezuelan financial institutions would be well advised to take a hard look at wire transfers:  Caracas-US-Middle East . You do not want to be caught with your proverbial pants down by American regulators or law enforcement; be careful out there.

Wednesday, August 29, 2012


The forced resignation of James Freis, the Director of FinCEN, was rumoured to have occurred due to his reported failure to move swiftly on Iran sanctions evasions issues. Now, the appointment of a senior Justice Department official with both seizure expertise, and experience prosecuting what the agency  describes as "professional money launderers" serving international organisations, means that FinCEN is expected to make a greater contribution to America's recent focus on banks that facilitate Iran sanctions evaders. She is expected to assume her new position in September.

 Jennifer Shasky Calvery was the chief of the DOJ Asset Forfeiture & Money Laundering Section, which reportedly seizes over $1.5bn annually. Look for increased cooperation between FinCEN,  US law enforcement agencies, and other Federal and state regulators, in their campaign against financial institutions that assist Iran in its circuitous methods of evading international sanctions against its prohibited Weapons of Mass Destruction and ballistic missile programmes.

It would be prudent to assume that seizures of US assets of foreign banks accused of facilitating illicit Iranian transactions will now increase. Many major foreign banks have US branches, subsidiaries, agencies, and representative offices, whose accounts are vulnerable to seizure by US law enforcement agencies. Additionally, correspondent accounts of foreign banks, located within US financial institutions, can also be forfeited. Since literally every major foreign financial institution has access to the US financial structure, their US assets are at risk if they violate Iran sanctions.

Tuesday, August 28, 2012


The President of the Republic of Colombia has announced that formal peace talks will commence in the near future, in Norway, between representatives of the Colombian Government and the Revolutionary Armed Forces of Colombia, the FARC, a designated global terrorist group. It is believed that emissaries from the National Liberation Front, or ELN, Colombia's smaller terrorist organisation, will also be invited to attend.

Since the talks could start as early as September, Compliance officers at international financial institutions who have Colombian correspondent banks should immediately ramp up their inspection of all large transactions exiting Colombia. Should the FARC and ELN come to an agreement with Colombia, it is fair to assume that some of the FARC leadership will be moving some of the organisation's massive narco-profits overseas, and far from the reach of the Government of Colombia.

Another possibility: Other, more radical elements of the FARC or ELN may decline to accept any government amnesty, spin off from the main units, and seek to continue their campaign against Colombia from abroad. They will need funds to operate, and may seek to hide them in offshore financial centres.

A final thought: a number of the Communist FARC members, having enjoyed obscene capitalist profits form the organisation's drug trafficking, may wish to go private, into the narcotics business, and will need seed capital.

Bottom line:  compliance officers at international financial institutions with Colombian correspondent banks, or clients conducting international trade, will want to carefully examine all large transactions originating in, transiting through, or returning to, Colombia, to ensure that the money is not FARC or ELM " flight capital."

Monday, August 27, 2012


Strong words this week, from one of China's generals, infer that naval combat, between his country and the Philippines, is probable, is extremely disturbing and unsettling for compliance officers who are computing Country Risk, as well as the banks whose clients are involved in ongoing international trade with both nations. PLA Major General Luo Yuan, in discussing the dispute over the Scarborough Shoal (Panayag Shoal), who was referring to a possible naval engagement between China and the Philippines, intimated that such action would be forthcoming.

Students of Asian history will recall that, according to China, one of the causes of the Sino-Vietnamese War, of 1979, was Vietnam's continued possession of the Spratley Islands. Though the Scarborough Shoal lies only 124nm. from the Philippines, therefore lying and being within the country's Exclusive Economic Zone (200nm.), China has claimed it, together with all other islands, reefs and shoals in the South China Sea (West Philippine Sea).

Any military actions between the two countries, albeit how minor it be, could have far-reaching consequences for the Philippines. Will it expand into land warfare in the Philippines ? China executed a total "scorched earth" policy when it withdrew from the Vietnamese territory it occupied during the short conflict in 1979, which resulted in high casualties on both sides. Obviously, there are nationalistic elements in China that favour military action, to demonstrate the country's resolve in support of its sovereignty claims over all of the South China Sea. The Philippine military, weakened through years of systemic corruption, and with outdated equipment, is no match for China.

Compliance officers at international financial institutions with business in the Philippines should watch Chinese media closely; if the rhetoric and jingoism increases, you may want to advise management to reduce the bank's exposure.

Sunday, August 26, 2012



The Ministry of Foreign Affairs of the Socialist Republic of Vietnam has entered its objection to the announcement that the Republic of China (Taiwan) will conduct live-fire military exercises on Taiping Island, which is  located in the contested Spratley Islands, long claimed by Vietnam, in the South China Sea. The published schedule indicates that the actions will take place from 1 September to 5 September.

Taiwan's defence reinforcement of Taiping, which it occupies, has been made despite Vietnamese protests. Reports from Taiwan indicate that its Ministry of National Defence has delivered 40mm anti-aircraft guns, and 120mm mortars to Taiping, and has warned countries whose frontiers border the South China Sea to avoid the waters around the island. ROC soldiers on Taiping are also armed with 106mm recoilless rifles, and 81mm mortars, and a special airborne Quick Reaction Force (QRF) was created in May, to respond to perceived threats to Taiping, employing C-130 transports from Taiwan.

It is the position of Vietnam that Taiwan's actions encroach its sovereignty over the Spratley Islands. Candidly, the Taiwanese military exercise, and expansion of military capability could result in an international incident or accident, could be deemed a threat by Chinese naval vessels in the area, and might provoke a military response.

Taiwan's militarisation of its base will not reduce tensions, and seems to line up on the side of China in the South China Sea dispute, and against Vietnam and the Philippines. It is an unwise move, and may result in a further increase in Country Risk amongst all nations who are disputing sovereignty over the Spratleys.



Iran has reported that it has produced or manufactured new Uranium Enrichment Centrifuges, and that it is producing its own nuclear reactor fuel plates. Coupled with the failure of last week's international efforts to dialogue with the Government of Iran on its sanctioned nuclear programme, the question arises; does this mean that one must now raise country risk for all the countries in the Persian Gulf, as well as Israel and the United States ?

If the possibility of armed conflict has increased, compliance officers who are responsible for the computation of Country Risk at their financial institution, need to also fully examine their situation: clients with ongoing international trade in the region, your bank's own financial exposure, including debt and repayment schedules, Letter of Credit, branches, correspondent relationships in the region, and the potential for default.

It is suggested that you closely monitor unfolding developments in the Persian Gulf in September, lest you be caught unawares.

Saturday, August 25, 2012


Readers in Latin America please note that the Spanish-language version of The Laundry Man,  Lavado de Dinero, is available online, through the publisher, Ediciones B, of Mexico City, or a number of Internet resources.


Law enforcement authorities in Nicaragua have arrested 18 Mexican nationals at the frontier with Honduras. Claiming to be employees of the Mexican media giant Televisa, arriving in six Chevrolet trucks bearing the company's logo, and carrying video and audio equipment, microphones and satellite telephones, they stated that they were in Nicaragua to cover a major drug trafficking and money laundering trial. The group claimed that they were journalists, and included their own security staff.

In truth and in fact, they were a group of very well-disguised bulk cash smugglers, for in their vehicles, the authorities found 25 packages, containing approximately $7m in cash. Televisa confirmed that the detailed individuals were not their employees, and that they had no such news crew in the field. The apparent leader of those arrested was stated to be Raquel Correa Alatorre.

It is likely that Nicaraguan authorities received advance information about the operation, for its appears to have been extremely well planned and executed. Since Mexican law now prohibits most deposits of US Dollars in banks and casa de cambios, most bulk cash narco-profits are being smuggled into Panama, or into Central American financial institutions that cooperate with the Mexican cartels.

Money launderers directing bulk cash smugglers often create credible cover stories for their cash couriers, similar to the tactics employed in the field by intelligence operatives , but this elaborate hoax, in support of a cash smuggling operation, appears to be unlike anything seen before.   

Friday, August 24, 2012


Reports from Russia government press releases indicate that the wife of imprisoned arms trafficker Viktor Bout has asked the Foreign Ministry to request that her husband be transferred to Russian custody. A Russian official has met with Bout at USP Marion, where he is serving his sentence.  Apparently, a request has been made to the US State Department for the appropriate forms necessary to apply for Bout's extradition.

A treaty, to which both Russia and the United States are a party to, provides that a foreign national can be transferred to his or her home country, and serve their sentence there. Bout has appealed his conviction. Whether he will be required to abandon or dismiss it is not known.

Bout also has an additional Federal Indictment pending against him, as well as against his former associate, Richard Chichakli, believed to have been his money launderer, who remains a fugitive, and reportedly lives in Moscow. Under America  law, the United States Government could only try Bout for the charge for which he was extradited from Thailand, but thus far, the second case has not been dismissed.

The controversial, severely restricted manner in which Bout is presently being held by the Bureau of Prisons, with convicted terrorists, and literally unable to communicate with the outside world, and his lawyers,  together with allegations of entrapment, appears to have caused the Russian Government to enter the matter. Whether the US will release him we do not know.

Thursday, August 23, 2012


If you are a compliance officer at a foreign financial institution that has a branch, subsidiary, agency or office in the United States, you would be wise to ascertain immediately whether any of your clients is using your bank to trade with Iran, in violation of international sanctions. The US Department of the Treasury is reportedly ready to impose fines and penalties upon a number of foreign banks, including one major bank in the United Kingdom, and elsewhere in Europe.

You need to rule out the possibility that any of your bank clients is covertly selling sanctioned goods to Iran, in light of the disclosures that the names of OFAC-designated Iranian originating banks have been deleted (stripped) from inbound wire transfers, by the world's biggest banks. The huge investment in time, on the part of US regulators, may result in the identification of one or more of your clients, with serious regulatory and reputational consequences.

Have you updated your file on bank clients who ship what could be dual-purpose goods to the Middle East, or South Asia ? Iran could be the end user of such shipments. Enhanced Due Diligence (EDD) may be the best way to ensure that you are not unwittingly facilitating shipments to Iran.

Remember, sanctions evaders can be extremely clever. They can transship goods through your country, which will show up solely as imports. Those goods, which have then been paid in full by Iran, are exported, and since there is not subsequent financial transaction,  the bank is unaware of the shipment.

Given that the present national policy of the United States is to vigorously pursue all instances where a financial institution has facilitated illicit trade with Iran, it would be prudent to identify, and exit forthwith, any of your bank clients who are involved. You do not want to receive a mandatory "invitation" to negotiate the size of a multi- million dollar fine, which will be assessed against your US subsidiary, for Iran sanctions violations.

Wednesday, August 22, 2012


Reports have surfaced that the American regulatory agency responsible for the Iran sanctions violations charges it filed against a major international bank has caused subpoenas to be issued this week, against a number of financial institutions. Another US regulator is said to have also issued subpoenas for documents. Both agencies reportedly are looking at Iran sanctions violations.

Who are they looking at ? Many legal experts believe that it is Venezuela, whose government has had an extremely close relationship with the Islamic Republic of Iran for several years. Why now ? it is believed that the OFAC sanctions filed against six Panamanian corporations linked to the sanctioned IRISL, Iran's shipping conglomerate provide a clue. Apparently, Venezuelan nationals are now known to be the beneficial owners of these, and other, Panamanian companies that quietly purchase, ship and deliver import huge quantities of US and EU-manufactured goods to Iran, cleverly evading international sanctions. This scheme has attracted the attention of the leadership of certain US regulators, whose mission against Iran might even be described as an obsession.

Should compliance officers tasked with the assessment of Country Risk consider raising their considered estimate of risk for Venezuela ? This may be prudent, for any sanctions visited by US regulators against Venezuelan nationals, their Panamanian companies, and the banks facilitating payments from Iran, will occur without notice,(The names of the banks involved have not been disclosed) and may result in the inability of US entities to receive payments on outstanding obligations, loan repayments, or other debts. OFAC could also sanction Venezuelan individuals or entities, which would be in addition to regulatory sanctions imposed by other agencies.

If your bank clients are engaged in international transactions with Venezuelan businesses, or through Venezuelan financial institutions, it may be best to monitor this blog daily, as any sanctions issued relevant to Iran sanctions evaders will be reported here, upon release.


Take it as a given that many individuals involved in narcotics trafficking, terrorist financing, and many other major crimes have now resorted to the use of Internet technicians to interfere with the valid results of any routine Due Diligence investigation using Internet search engines. I have found that literally everybody with something to hide is doing it, which renders your searches useless, in most cases.

I am seeing what looks like a DOS ( Denial of Service) attack on one specific article on this website, which is attempting so many visits to that article, which names Colombian money launderers, and their lawyers, to interfere with the access of others. You all know, from my articles in the past, that many Venezuelan PEPs with dark pasts have flooded the world wide web with dozens of favourable articles, to push any existing negative information far to the rear pages of any Internet search.

Therefore, one must now assume that many high-risk individuals, concerned about their negative Internet portrayal, have engaged IT professionals to "correct" the truth. Frankly, the accuracy of open-source research about such targets has been greatly reduced, if not totally compromised. This mean that only Enhanced Due Diligence investigations, which accesses non-public information, will return satisfactory results; Accept no less, if you are responsible for the research.

Is the Internet now filling up with disinformation and misinformation, placed through artful "Information Management" professionals ? You bet it is; govern yourself accordingly.

Tuesday, August 21, 2012


OFAC has issued what it calls General License C, a limited exemption for non-governmental organisations (NGO) who wish to send funds in support of relief efforts assisting recovery from the earthquake that struck northern Iran on 11 August. It limits eligible entities to NGOs that are tax exempt, and the amount of the relief cannot exceed $300,000, and will expire in 45 days.

The license, known as Funds Transfers related to Earthquake Relief Efforts, in the hands of an adroit money launderer, could become a useful tool for sanctions evasion, as prior notice to regulators is not required. Ensure that, if a client notifies you that it intends to utilise License C to send funds to Iran, that you have thoroughly examined both the transaction, and the client, before approving same, and wiring funds.There is also a mandatory report that your client must file; you need to have a copy of that from in your file. The license* should be reviewed by bank counsel, who may propose additional protective steps to perform in advance of the wiring of the funds for the client.



Chinese anti-Japanese protest this week

What on earth were Japan's leaders thinking, when they encouraged their countrymen to continue to advance Japan's dubious claims to a small island group in the East China Sea, literally on the doorstep of China ? The outpouring of Chinese ultra-nationalist outrage shows that emerging China is not about to tolerate it. Doesn't anyone remember that Japan was required to give up all claims to overseas territory it acquired, after the Second World War ? Read the Cairo Declaration, please.

The last time Japan insulted China over colourable territorial claims, the Chinese abruptly stopped the shipments of  rare earth minerals,  commodities that are absolutely necessary to the operation of Japan's hi-tech manufacturing industries. Since all major "spontaneous" demonstrations  in China are orchestrated by the government, assume that there is de facto support in official quarters.

Another protest against Japan

Japan does not need to lose access to raw material that is a mandatory component of its finished products. Please, tone it down, before you find yourself in a bind. Based upon the vehement Chinese response, I suggest you seriously consider raising Country Risk on Japan.

PRC and ROC flags land in disputed territory

Don't we have enough trouble right now in the South China Sea, where the claims of China's neighbors are more valid than those of China, to have another flashpoint in the region ? Japan should back off, right now, or I fear they will pay dearly for their new attitude, and it will be reflected in an adjustment upward of Country Risk.


Monday, August 20, 2012


George Orwell must be turning over in his grave lately, for certain British bankers, who are creating words straight out of the Doublethink vocabulary of 1984, have been giving those terms meanings never contemplated by  their creators. In both the HSBC and Standard Chartered cases, pursuant to orders from the leadership, rank and file staff routinely engaged in wire-stripping, which is the removal of SWIFT codes indicating that the originating banks on thousand of the transactions, en route to the US, were OFAC-sanctioned government-controlled Iranian financial institutions.

The term that the sanctions evading bankers used was Repair Procedure. In truth and in fact, the "repairs" performed were the unlawful substitution of the UK banks' London SWIFT codes, for those of the Iranian banks, as the originating bank. Since the UK banks' New York offices were the beneficiary banks, the deception went undiscovered for years, even after American regulators tumbled upon suspicious transactions.

The scheme begs the question: is this not a pattern of Racketeering (RICO) activity, and will the United States bring Federal criminal charges against the leadership of both banks ? We cannot say, but for starters, can some brave soul in law enforcement put the senior officials in both banks on the No-Fly List please. Frankly, I do not want these greedy bankers in the United States. Let them remain in the UK, under the Iranian nuclear threat that they helped create.


Sunday, August 19, 2012


Rama Krisna Kuchibhotla Vyasulu, the former head of Rosemont Financial, is presently completing his short sentence at a halfway house*; he will be released on 14 September, after serving less than one year for money laundering, in a matter where he agreed to launder what he was told was drug profits in the amount of $900,000, for undercover DEA Agents. The true amount of damage that he caused to the international financial community, however, cannot be measured, and his punishment amounts to a mere slap on the wrist from the criminal justice system.

His arrest resulted in the seizure of a reported $240m, from the accounts of 48 money service business clients, maintained through Rosemont, serving the parallel market for dollars in Venezuela. Mr. Vyasulu had represented that their use of "sub-accounts" was covered by Rosemont, but the US Attorney's office in Boston disagreed, asserting that MSB registration was required for both FinCEN & the State of Florida. The result was that huge fines were levied, extracted directly from the seized funds, after months of uncertainty and negotiation through counsel, during which time pointed threats of criminal indictment were directed at the principals of these companies. Some of the MSBs suffered greatly from lack of access to their accounts, which held mainly client funds, the MSBs being currency exchange houses that obtained dollars for Venezuelan buyers.

I was personally engaged to perform Enhanced Due Diligence on the client lists of two of the MSBs, and I failed to find any narcotics traffickers, money launderers, or OFAC-sanctioned parties therein. There was no smoking gun; much ado about nothing. The seized bank accounts did not contain dirty money, plain and simple.

The United States ended up with an obscenely large windfall, due to what some observers have deemed were purely unintentional, technical violations of the registration requirements. Clearly, justice was not served here. Granted, money service businesses must follow the law, but such Draconian penalties are excessive.

I would hope that the cause of this MSB nightmare, Mr. Vyasulu, does not find his way back into the financial services industry after his release.

Saturday, August 18, 2012


Yesterday, the only remaining fugitive narcotics kingpin client from my old money laundering days entered a plea of guilty in United States District Court in Gainesville, Florida*. Christine Marie Dickinson was the head of the "Human Resources" section of a large drug trafficking organisation. That means she was responsible for hiring and supervising the boat crews that smuggled marijuana and cocaine through the Caribbean, and into the Continental United States. Unfortunately, she became extremely arrogant after she had all those drug profits, and she moved some of her narco-dollars to Switzerland, against my advice. (Those of you who have already read my book, The Laundry Man, know her as Kelly). The United States and Switzerland, in their first joint money laundering investigation, seized her Swiss funds in 1991, together with those of other clients who didn't listen to me.

Christine then.

A fugitive from justice for eighteen years, she returned to the US after her drug case was dismissed by a Federal Judge, after the DEA reported that it could no longer assemble a winning case, due to the fact that it was from the late 1980s. Whoever the lawyer was who advised her that it was safe to return apparently neglected to check for any other pending criminal cases, for she was still a fugitive in my money laundering case, from 1990. She was arrested at a local government office in small-town Florida, when she attempted to obtain a Florida Identification Card. The clerk ran her name, and found the arrest warrant. Since Florida now requires proof of citizenship for driver's licenses, there was a law enforcement officer present, and he made the arrest.

As you can imagine, the case against her, as the last major defendant, was probably ironclad. A pre-Sentence Investigation Report (PSI) will now be prepared, and a sentencing date will be scheduled for sometime later this Fall.

Christine now

Two of Christine's boat crew members, and her ex-boyfriend, Michael Gruener, all at that time already in Federal custody and seeking leniency, offered evidence against me, and that is the reason that I was charged with RICO and a lesser offence. They actually did me a favour, for if I had continued my career as a money launderer, I would probably not have survived the Miami Vice era. She was on the run for the past two decades, looking over her shoulder, and waiting for the proverbial "Knock on the Door," which is no way to live, no matter how much money you have in your tax haven bank accounts. Crime does not pay; You cannot put a value on the stress involved; it is not for the faint at heart.
*United States vs. Christine Marie Dickinson, Case No.: 90-cr-01014-MMP-GRJ (ND FL).


We are all familiar with the BMPE, where US Dollar drug profits are exchanged for Colombian Pesos in Panama, through a broker who matches up the traffickers with legitimate Colombian businessmen, who have Pesos, but need dollars, to purchase American manufactured goods. The traffickers end up with Pesos, so that they can invest their narco-profits inside Colombia.

There is a variation of this method; I will call it the Black Market Dollar Exchange. As you know, I an currently covering the billion dollar case of David Helmut Murcia Guzmán, the Colombian prepaid-card/Ponzi schemer, who placed his criminal proceeds (as well as drug profits, reportedly from Colombia and Mexico) into assets in Panama. Here is how it was done for him:

(1) With the yacht purchases, Murcia paid the dealers, who sold the vessels, in cash, smuggled in on fast boats from Colombia. The dealers then obtained financing from the manufacturers of the yachts' engines, giving back a lien on the completed yachts.

Then, using the loan proceeds (and NOT the dirty money they were paid), the dealer put down deposits , and progress payments, with the US manufacturers/builders.  The dirty money was deposited directly into the dealers' Panama bank accounts, at financial institutions where cash deposits are simply not questioned by compliance. The dealer eventually took delivery, and turned over the yachts to Murcia. The loan was paid off from the dealer's accounts. Nothing came from Murcia.

The boat manufacturer in the US had no issues, because the payments were made with funds borrowed from the engine manufacturer. Murcia this effectively laundered many millions through this method, which requires the cooperation of the yacht dealer.

(2) With the luxury automobiles,  the scheme was effectively the same. Murcia also used this method to purchase real estate. Here again, cooperating dealers, deceiving the sellers, are instrumental in ensuring that Murcia's cash prepayments was never disclosed.

So long as we have corrupt businessmen in Panama, who let abject greed rule their actions, dirty money will continue to be laundered in this manner, and turned into high-value assets, which can be sold outright, given as a gift to local Panama City politicians, to buy their loyalty, or safely kept in a remote location, all to further the ends of organised crime.

Thursday, August 16, 2012


The United States Court of Appeals for the Second Circuit* has granted Viktor Bout a 90-day extension to file his Brief & Appendix. Albert Dayan, Bout's attorney, had filed a sworn Declaration in support of his request; Dayan stated that the brief was originally due on 1 November, but that he needs an extension due to:

(1)  the size of the trial transcript (over 1700 pages), plus voice tapes, which is a massive amount of information to review.
(2)  The fact that there were extensive pre- and post-trial motions, and a two year extradition process, all of which must be examined for error.
(3)  The existence of 8-10 "significant issues that must be raised on the appeal," and Bout must assist in the preparation of the brief.
(4)  Bout is being held in a severely restrictive environment, where he could not ably assist in the preparation of his appeal; his permitted communication with his lawyer is extremely limited.
(5) Bout's attorney visits are actually monitored, which is fundamentally unfair.
(6) It will take months to resolve the problem of access to Bout, by moving him out of the Special Monitoring [Terrorism] Unit,  and to a prison in New York, through an "internal appeal" process that may not even be successful.

Albert Dayan, Esq.

The court's ruling:

"IT IS HEREBY ORDERED that the Appellant's Motion for an Extension of Time, until January 30, 2013, to file his brief and appendix is GRANTED. No further extensions will be granted."

*Bout vs. United States,  case No.: 12-1487 (2nd Cir. 2012).