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.

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