Friday, May 31, 2013


The announcement, this week, that the Swiss and United States governments have reached an agreement whereby Swiss banks will disclose information on their American clients who hold accounts, will save the banks from criminal indictment, but it will also stimulate the capital flight of funds whose owners fear criminal tax evasion charges, as well as seizure of the proceeds of crime.

Actual client names, and account data, in the hands of US law enforcement agencies, could result in action, both in the United States, and in Switzerland, to seize assets, which is a real problem if you are a career criminal secreting criminal profits abroad, and at home. Information produced by Swiss banks could identify criminal assets held in the United States.

Some criminal organisations have already transferred funds out of Switzerland, principally to Asian countries, but you can expect a groundswell of additional transfers, once the money launderers for such groups learn the details of what their clients will universally regard as  bad news.

I would look carefully at any new, substantial Swiss funds transfers, coming from corporate entities that are not known to be engaged in actual business operations, or any trusts, foundations, NGOs not known to be active, or other unusual business associations, as they may be carefully cleaned criminal proceeds, that has been residing in Switzerland for several years.


Some of the Hezbollah weapons seized

Nigeria, already reeling from the violent clash of religions amongst its population, rampant corruption at the highest level, and a powerful militant radical organisation, is now facing new terrorist threats from the Middle East. A large weapons cache, including anti-aircraft missiles, was found by the authorities in Kano, in northern Nigeria; it is said to belong to Hezbollah. Arrests have been made at the residence, where a sophisticated underground storage facility was located.

There have been reports of late in Nigeria, of Lebanese nationals that the government asserts are members of Hezbollah, including the arrest of a reported Hezbollah agent at a Nigerian airport, where he was attempting to travel to the Middle East with $60,000 in cash.  All the indicators point to an intention to conduct multiple terrorist acts in  Nigeria.

This weapons cache seizure raises Country Risk to a new level, as the authorities have asserted that Hezbollah's intentions are to attack Western, American and Israeli interests in the region. Such actions could severely impact foreign investment, and thereby the local economy. It is suggested that you  carefully review the facts, and make an educated decision on whether to raise Country risk for Hezbollah for Nigeria at this time.

Thursday, May 30, 2013


Those readers who found the Liberty Reserved digital currency money laundering case of interest should be aware that two of the Russian-Americans who were Liberty principals lived in the Republic of Panama, owned luxurious residences there, and spent a substantial amount of time in Panama City.

 Liberty reportedly operated twenty offices there, though old Panama hands have remarked that these facilities engaged in a very small amount of business, which is unusual, given the nature of the multi-billion dollar criminal enterprise that the United States has accused Liberty's principals of operating through Costa Rica. Were these merely fronts ?

There are other virtual currency exchange system operators located in Panama, including Perfect Money, and CashU. None of these entities reportedly actually performs KYC (Know your Customer) on its clientele, though they profess to do so, and many are known to have sold their own proprietary prepaid closed-loop cards, as well as debit cards issued by major US card companies.

It appears that Panamanian regulators and law enforcement agencies were aware of the operations of a dozen virtual currency companies, as they are registered with local regulatory agencies, but to date have failed to take any action against them, notwithstanding complaints from local money service businesses.  It has been alleged that the owners of these digital currency entities have taken in partners prominent in the local community, which ensures that these companies will neither be investigated, nor closed down.

Since Liberty Reserved allegedly exclusively served criminal organisations and enterprises, it is suggested that:

(1) Any new client attempting now to transfer a large amount funds into your bank, from or through a money transmitter or money service business with any variation of the following names be checked thoroughly, to eliminate the client as a former customer of Liberty: EuroGold, AsianaGold, Swift Exchanger, and Exchange Zone.

(2) You thoroughly vett any customer payments to what appear to be  money service businesses, acting on behalf of digital currency traders.

(3) Until and unless an adequate regulatory regime is installed in your jurisdiction, and the digital currency firms fully comply, such as FinCEN registration in the US, avoid digital/virtual currency traders at this time, lest you draw fines & penalties later, not to mention possible money laundering charges.

Be extremely careful; should you feel that there is some type of virtual currency being redeemed through your bank, immediately notify, and consult with, outside bank counsel, to protect the bank from exposure to high-risk activity.  

Wednesday, May 29, 2013


Extradited fugitive money launderer, Richard Chichakli, reportedly had his First Appearance, before a United States Magistrate judge last Saturday, but the court file curiously fails to show, not only no record of that event, but the file has nothing newer than the Superseding Indictment filed in January. That is indeed a mystery.

There is no Notice of Appearance of counsel for Chichakli, though you would have thought that his family would have made arrangements during the past 30 days, when he agreed to extradition, to face multiple Federal charges in US District Court in Manhattan. He does not show up on the Bureau of Prisons website as being custody. One wonders where Mr. Chichakli is, and whether he has decided to render Substantial Assistance, to reduce his ultimate sentence.

Is the United States seeking to seize, and forfeit, Viktor Bout's arms trafficking profits ?


How were the principals of Liberty Reserve able to operate for so many years before they were indicted ? It appears that they took full advantage of a number of weaknesses in the global financial structure:

(1) They employed digital currency as the medium of exchange, which required customers to first send funds in dollars to third parties, who then forwarded them on. This additional step, which involved money transmitters in notoriously unregulated, and remote, jurisdictions, effectively provided an additional layer of protection, insulating Liberty from their customers. That makes law enforcement's job much more difficult, as there was lack of direct contact with the clients' money.

(2) Liberty took advantage of the lax regulation in Costa Rica, to operate as an unlicensed entity; it also repeatedly deceived regulators there about its activities. (Do you have any bank clients operating there, and if so, what sort of financial activities are they engaged in) ? Is it not now finally time for Costa Rica to clean up its facilitation of illicit commerce, or should the US impose sanctions until it does ?

(3) Most of the third-party money transmitters used as intermediaries were reportedly not licensed in their countries. Where were the local law enforcement agencies and regulators, allowing these illegal operations ? Bank accounts were located in offshore financial centres. Why didn't regulators in those tax haven jurisdictions investigate the huge cash flows ?

(4) Law enforcement, and the financial community, are just now starting to learn how digital currency can be used for illicit purposes, and the legal systems of developed countries has not yet enacted specific legislation to deal with it. See the recently released FinCEN material on the subject.

The scheme allowed criminal organisations to move, and store, billions of dollars of the proceeds of crime as digital wealth. You can expect that all manner of businesses involved in digital currency commerce will come under law enforcement's microscope in the near future.

Tuesday, May 28, 2013


If you had any illusions left about the fairness of the criminal justice system in the Bolivarian Republic of Venezuela, they have now completely evaporated; the government has announced that members of all branches of its armed forces shall now be tasked with law enforcement duties in that Latin American nation.

What little protection remains, under the country's Constitution, against arbitrary arrest, and detention without trial, or assistance of counsel, will certainly disappear, as the Venezuelan military does not answer to those few members of the judiciary who are not Chavista appointees, and actually follow the law.

This is but one additional factor in my current opinion, to the effect that Country Risk levels in Venezuela are so high at present, to recommend that you engage in no new investment, no major extension of credit, and no exposure of your staff to the possibility of arrest.


Richard Ammar Chichakli, the Syrian-American accountant who, with his partner, Viktor Bout, attempted to evade international sanctions, and illegally purchase aircraft for their clients, has been extradited to New York, where he faces several Federal charges*:

(1) Money Laundering Conspiracy.
(2) Wire Fraud.
(3) Conspiracy to commit Wire Fraud.
(4) IEEPA violations.

Chichakli, whose other aliases include Robert Cunning and Raman Cedorov, was arrested in Australia when he applied, under still another alias, for a law enforcement position. He agreed to be extradited over a month ago, but arrived in the United States at the end of next week. He reportedly was denied bail, at a First Appearance on Saturday, but due to the long holiday weekend, the court file does not yet contain any corroborating information.

The defendant is believed to have been the primary money launderer for convicted arms trafficker Viktor Bout, and he may have information on where Bout secreted the lucrative profits he received for supplying arms and ammunition to both sides, in many armed conflicts in Africa and Asia. The question is: will he cooperate with law enforcement, and enter into a plea agreement, to reduce his potentially long sentence ? Stay tuned.  
*United States vs. Richard Chichakli et al, Case No.: 09-cr-1002-WHP (SDNY).

Monday, May 27, 2013


The Havana closed non-jury trial of Canadian businessman Sarkis Yacoubian has concluded after two days of hearings that will surely be regarded as a travesty of justice; a judgment is expected at the Peoples' Tribunal for Havana Province shortly. Mr. Yacoubian could receive as much as twelve years on corruption charges. The fact that he was the whistle blower of major institutional governmental corruption notwithstanding, he will be spending a substantial amount of time in one of Cuba's notorious prisons. Apparently, the embarrassing exposure of corruption will result in conviction of the messenger.

Since his arrest, several foreign business executives, as well as government officials, and leaders of state-controlled corporation have been detained. Inasmuch as bribes and kickbacks are required to open, and maintain, any foreign-owned business in Communist Cuba, you can expect the current purge, of officials as well as the foreign businessmen who paid them, to be extensive, and dangerous to foreign investors, businessmen and professionals.

Investing in Cuba, for foreign individuals and entities, appears to be out of the question at this time; keep your Country Risk for Cuba at the highest level, which strongly discourages investment, any banking relationships, and any expenditure of significant amounts of capital.



The Mujahedeen Khalq, the Marxist/Islamist militant cult group more commonly known in the West as the MEK, is not cooperating in the orderly departure of its members, from camps in Iraq, to resettlement sites in Europe. This far, only a dozen of the expected 3100 members have been transported out of Iraq, to their new homes.

The MEK, who opposes the regime in Iran, but has a history of violence to Americans, was delisted as a terrorist group in the US, after extensive lobbying efforts in Washington. It promised the United States it would agree to resettlement, but its leadership has proven to be uncooperative, notwithstanding the danger to MEK members, should they remain in Iraq, whose Shiite militants have attacked them several times, since they disarmed after the Second Gulf War.

Perhaps now all those who expressed reservations to the US delisting of the MEK can now remind the American Government that the presence of the MEK, which is not well-regarded in Iran, has no place in the current political situation in the Middle East, and it should be disbanded forthwith. The many prominent former US military officers and retired politicians on its lobbying payroll notwithstanding.

The US & Iraq need to dissolve the MEK, lest it cause trouble again in the region. It has been  described by its detractors as a fanatical cult that requires absolute loyalty from its members; non-democratic, and employs a cult of personality in its leadership. It has no place in the Arab (or Persian) Spring.


Nevin Shapiro

Another reason why you must identify possible Ponzi schemers banking with you early on; they tend to lie on the witness stand to improve their chances at sentencing, meaning that their perjured testimony could convict innocent parties, whilst the Ponzi enjoys a reduced sentence, and other benefits.

Nevin Shapiro, whom we have covered extensively on this blog*, is presently serving a 20-year sentence for securities fraud, in a $900m Ponzi scheme; he has now admitted that, during his testimony against the owner of a Miami money service business, he committed perjury. The businessman, Juan Rene Caro, was sentenced to an 18-year sentence in 2009, whilst Shapiro received immunity for his role. Shapiro's own criminal case came a year later, in 2010.  More recently, it was revealed that he cooperated with the NCAA, in its internal investigation into corruption in college sports at the University of Miami. 

T-shirt marketed after Shapiro's testimony

Shapiro has now sent a letter to the Court admitting his misconduct, and has also accused his former criminal defence attorneys, both ex-Federal prosecutors, of knowingly allowing him to lie on the witness stand. Shapiro has filed a Florida Bar complaint against his former counsel. Lawyers who represent Ponzi schemers can find themselves later on the receiving end of professional misconduct, when their client, post-sentencing, and desperately seeking a sentence reduction, lashes out at his counsel, on a wide variety of grounds. Perhaps attorneys should better weigh the risks of representing Ponzi schemers, before undertaking to represent this particular variety of fraudster, lest they live to
regret it later.

The facts represent a casebook illustration of the importance of identifying, and exiting, any client whom the evidence confirms is operating a Ponzi scheme, lest you later get drawn in, due to lies told by your client, who is seeking to save himself from the consequences of his acts, when the long arm of justice descends upon him. 

If several of these red flags are present, they may help you identify a Ponzi scheme in progress:

(1) Was the client's atypical business success on the fast track, rather than over a period of time ? Is "instant" success unknown in the client's business or profession ?

(2) Is the heavy cash flow supported by payments for customary business operating expenses, costs and are there identifiable customers  ? 

(3) Are the client's principal officers keeping the long hours, and supreme effort, typically required by achieve such success ?

(4) Is the client's actual business activity commensurate with the income ?

(5) Is the client flamboyantly spending money, rather than reinvesting it into the business ? Is money going into offshore financial centres ?

Though some of these red flags may indicate merely a successful business, the presence of a number of them could mean Ponzi scheme.

Remember, always seek the expert advice of your outside bank counsel forthwith, if you suspect that a client banking with you is engaged in a Ponzi scheme.
*Published January 24,2013, Jan. 25, 2013, February 1, 2013.

Thursday, May 23, 2013


The Attorney General of the State of Vermont has brought a Deceptive Practices action against a company that is known to be managed by Jay Mac Rust, the Texas attorney for the notorious advance fee fraudster Steven "Dean" Kennedy, whose now-defunct company, Atlantic Rim Funding, defrauded businesses seeking business loans, by taking "escrow" funds, failing to deliver funding, and keeping their clients' escrow. The style of the case is State of Vermont vs. MPHJ Investments LLC*, Superior Court, Civil Division. There have been literally dozens of shell LLCs created to demand spurious patent license fees from victims, many of whom have paid purely to avoid costly litigation, that they can ill-afford.

Rust reportedly supervised several shell companies, who agents threatened patent infringement litigation against American businesses, in order to coerce them into paying bogus license fees to email scanned pdf images from their commercial facsimile machines. Such companies, who merely seek to force businesses to pay fees, and do not produce the products themselves, are known as patent trolls.

Patent Troll

Apparently, there has never been an adjudication, in a court of competent jurisdiction, of the validity of Rusk's client's patents, but the scheme is to threaten costly litigation, as a means of extorting fees from legitimate businesses. There are also issues of misrepresentation of material facts, according to the Attorney General's complaint, which seeks injunctive relief, and  money damages.

Jay Mac Rust a/k/a/ J "Mac" Rust

Mr. Rust, who had previously claimed to be just another victim of Atlantic Rim Funding's fraudulent activities, and innocent of any misconduct, but was still sued**, now has a lot of explaining to do, both inside and out of, court.
*Attorney General of Vermont website has link to Complaint
**Atlantic Rim Funding Victim sues Escrow Lawyer for Malpractice and breach of Fiduciary Duty

Wednesday, May 22, 2013


Major American fraudsters have been sentenced to fifty to one hundred and fifty years in Federal Prison, for Ponzi schemes, but those prison terms pale beside the sentences meted out in the Peoples Republic. A Chinese businesswoman, perpetrating a Ponzi scheme upon her investors, has been sentenced to death in Wenzhou, by the Intermediate People's Court, for "illegal fundraising." She accepted the equivalent of $100m from her clients, and later, after her speculative investments in Chinese securities resulted in massive losses, began to pay her early investors with funds received from the later victims.

Lin Haiyan, a 39 year old businesswoman who promised high returns, with low risk, has an automatic appeal of her sentence to the Supreme People's Court, China's court of last resort, but the fact is that the equivalent of $46m was not recovered will be a major aggravating factor. If you have read any of my earlier articles on capital punishment for white collar crimes in China, you know that the firing squad, and the mobile execution chamber for lethal injection, are the methods du jour, but the firing squad still is the principal means of execution.

Supreme People's Court

Do Ponzi schemers, who frequently bring financial ruin to their elderly victims, deserve the ultimate punishment ? I know what many of their victims will say, if asked.

Chinese mobile execution chamber



A supboena, issued by a US District Court Judge in Maryland, requiring the seizure, at a local credit union, of an account used to trade the digital currency known as Bitcoin, has demonstrated the position of the United States on digital currency exchanges. Bitcoin traders, which are not regulated by a financial institution or governmental body, must register as money transmitters, with both the financial Crimes Enforcement Network, and the state where they operate, according to a recently FinCEN Guidance on digital currency.

The United States has a take-no-prisoners attitude towards unlicensed money service businesses, as we learnt to our dismay in the Rosemont Financial case. If Bitcoin traders, and other digital currency exchange houses, where the digital items are redeemed for dollars, fail to register with Federal and state regulators, the Bitcoin industry could suffer an early exit from the United States.

Apparently, the trading company, targeted by Homeland Security Investigations, told the credit union that it was not required to register as a money transmitter. Should your bank have any current customer who may be engaged in the cash redemption of Bitcoins, you should turn all your information on that customer to outside legal counsel immediately, and request an opinion on whether the account should be closed, and whether your bank should take other action.


Monday, May 20, 2013


Carrizales Airbase
Eyewitnesses have confirmed that Iran is operating two military bases, located at at remote sites within Venezuela. Iran and Venezuela concluded an agreement for such facilities several years ago, but the existence of these bases has never been made public. Both bases, which are strictly off-limits to Venezuelan nationals, appear to have global communications capability.


The first base, which is attached to Captain Manuel Rios (Carrizales) Base Area and Airport, is located here:  9 25' North, 65 33' West, which is in rural Guárico State. it has access to the base's 3000m runway; The field's ICAO designation is SVCZ, and it is more than adequate for the largest military transports, capable of delivering ballistic missiles.

 Whether this Iranian facility possesses the Shahab 3 ballistic missile (range: 1930km.), which has the range to reach the United States, is not known, as is the size, and composition of the Iranian force stationed there, though it is logical to expect that the IRGC Al-Qods Force, which operates outside Iran, has troops stationed in both bases, for security purposes. Agents of Hezbollah Venezuela could also be in residence, but no verified information about troopstrength of the base is known. What units are operating there ?

Carrizales location
The second base, which is near la Esmeralda, in remote Amazonas State, is located here:  3 10' North,
65 33' West.  Whether it is a Command & Control center for field operations is not known, but there are a number of strategic Iranian mining operations in the country, and gold and Uranium are known to have been among the principal commodities exported to Iran from Venezuela. There is no information available on its tactical functions.

Obviously, the Government of the United States is fully aware of the existence of these bases, as they represent a clear and present danger to American military facilities in the Caribbean, as well as in Key West, but their presence has never been revealed to the public. Readers will recall that I warned that Iran's Kayson Company was building ballistic missile silos in Venezuela back in 2009, and one finally became operational in 2012*, notwithstanding US statements that there was no silo construction programme in progress.

Considering that the United States has ignored these emerging Iranian threats for more than a decade, and they are fast approaching critical mass, it may soon be time to consider raising Country Risk on America.
*Iran's Kayson Company Denies it is Building Missile Silos in Venezuela


Readers who are asking themselves how to determine whether negative information they are looking for in an online search have been altered, by reputation management techniques, which seek to conceal that data behind literally dozens of artificially-created websites, should ask themselves whether the search results involve one or more of the following tricks:

(1) Posting multiple websites, with .net, .org, .biz. and other suffixes, under the target's name.
(2) Creating pages on all of the social networking sites ( e.g. Facebook, Twitter) in English, and in any other language relevant to the target's activities.
(3) Creating pages on business networking sites, as in Linked-In.
(4) Creating national & international news pages under the target's name.
(5) Creating sports-oriented webpages, containing the target's name.
(6) Photo pages, even if the photos are not relevant to the client.
(7)Miscellaneous Internet postings, on bulletin boards, as replies to existing postings, or as new postings, which depict the target in a positive manner.
(8) I have even seen suggestive photographs posted; does the reputation management firm honestly think that this will sidetrack the searchers ?

All of the above reference the target; many are pure surplusage, irrelevant to his history and interests, but serving to clog the world-wide web search results. If you see such garbage, know immediately that you cannot trust the search results. 

Sunday, May 19, 2013


Albert Dayan, Viktor Bout's New York criminal defence attorney, has filed a fiery Reply Brief in Bout's Second Circuit* appeal of his criminal conviction. Though short on citation to legal authorities, the brief states boldly that:

(1) Bout is an innocent man who was convicted by an American jury overwhelmed by emotional, political and national feelings for US servicemen and women.

(2) Senior officials at the White House and the State Department doggedly targeted Bout, in their pursuit and prosecution, not for an conceivable law enforcement reason, but for purely political and personal reasons.;Two are specifically named.

(3) There was no evidence Bout ever intended to target US interests.

(4) There was no evidence of unlawful transportation of arms.

The issues framed in the brief are:

(A) The case should be remanded to the District Court to hold a hearing on the violation of Bout's right to due process, resulting from the outrageous governmental pursuit, from the inception through the extradition process.

(B) Conspiracy to Commit Reckless Murder is a non-existent Federal Crime.

The United States has filed a request for Oral Argument, provided that Bout's counsel also requests the same. This means that the Second Circuit Court of Appeals will hold a hearing on the appeal, which will provide additional insight into the issues. We shall continue to follow the appeal.
* Bout vs. United States, Case No.: 12-1487  (2nd Cir.).


It is a given that one cannot obtain any objective information about the activities of prominent Chinese, including the country's  PEPs, due to the total and complete censorship and control that China maintains over its domestic media. If you, as a compliance officer, were requested to conduct an accurate and complete due diligence investigation of a Chinese PEP for account opening purpose, Internet news, and postings, would not tell you whether the individual is corrupt, or has a history of acts in office that would cause you to recommend that they not be served as a client. So, what are you to do ?

Buried in a recent article about Hong Kong is the answer: when mainland Chinese wish to lean the dirt about their public servants, they journey to Hong Kong, where freedom of the press remains relatively intact, due the former British Territory's degree of autonomy, and pick up magazine and books published there, and overseas, in Chinese, that detail the many sins of the country's corrupt PEPs. Reportedly, many Chinese attempt to smuggle those extremely damaging works home, when they return.

Therefore, should you have significant new account business with Chinese nationals, it is suggested that you secure a local firm, to act as information resource, in Hong Kong, for these purposes:

(1) To determine whether a specific prospective Chinese client is a Politically Exposed Person (PEP).
(2) To determine whether the individual, or his entities, have been the subject of negative information, in Hong media, or book published outside China, and exactly what that information is.
(3) To confirm that Chinese clients are not, in truth and in fact, actually military or government staff, who are concealing their true occupations or professions.

 It is strongly suggested that, should the business support it, you engage an individual, inside your Compliance department, with the appropriate linguistic skill, to  review the material you receive, for accuracy and relevancy.

China is a black hole for the negative information that you must have to judge the suitability of these potential clients, and you now have an avenue for your enquiries.


The explosion of the so-called reputation management industry recently has rendered most due diligence Internet searches useless. These companies, which reply upon placing literally dozens of pages of positive PR into the worldwide web, so as to push any negative information about their clients well to the rear of any search engine enquiry, have so diluted the search results that you need in a due diligence investigation, as to deprive you of the sole important item you are searching for.

While some compliance officers, upon seeing this garbage on the first page of their Internet search results, have taken to searching from the rear forwards, but that is generally not the solution, for that one gem of negative information is buried somewhere within 750 search results, it may not be readily ascertainable from the headings, and you have another 22 names to conduct due diligence upon that day. Manual searching, through an infinite amount of bogus search results is not only labor-intensive, but it is inefficient and causes you to lose your edge later on in the workday.

If anything , there reputation repair firms will proliferate during the future, as more financial criminals realise their worth. Therefore, cast aside the technique altogether, and abandon traditional web searches for software that delivers  strictly negative search results. You can find more information about how that works here.

Friday, May 17, 2013


An article discussing the defendants in a major criminal case in the Northeast noted that the attorney for one of the principal defendants had been since suspended from the practice of law in Massachusetts* for three years, due to the fact that he had a felony conviction for Conspiracy to Possess cocaine, with intent to Distribute, in the State of Florida, and had served several years in Federal Prison.

What the article did not tell you is that the attorney was not a member of the New Jersey Bar, but was actively advising clients in that state, and holding himself out on the Internet as a lawyer there. The story does charge that the lawyer had maintained an attorney trust account in New Jersey, which is clearly improper.

Clients should always institute due diligence on any attorney or law firm that they plan on retaining. Though the vast majority of lawyers and law firms can, and do, properly assist you with your legal needs, a very small number of bad actors can:

(1) Take your funds out of their trust accounts, and spend or otherwise misappropriate them.
(2)  Unethically share your confidences and secrets with others, for financial compensation.
(3)  Deliver your privileged information to law enforcement agents, to whom they owe a debt, due to an arrest, a grant of immunity, or some other from of cooperation that they were forced into, due to criminal misconduct they were guilty of. You do not want to be indicted with information furnished by your own lawyer.
(4) Favor your adversaries in a legal settlement, by misrepresenting to you the strengths and weaknesses of your position.

Therefore, it is humbly suggested that you:

(A) Check out your lawyer's license status, including disciplinary history, with the state bar association.
(B) Check his personal litigation history - is he being foreclosed, or sued for malpractice; does he have a handful of Federal Tax Liens, or judgments filed against him ? Those make him unsuitable.
(C) Are there any negative articles in the local media ?
(D) Was he ever arrested, but not yet tried or convicted ?

Always reduce your risks by a pre-engagement check of any and all professionals that you retain, with particular attention to your new lawyer; not knowing negative information could prove to be very expensive, embarrassing or even expose you to criminal charges.

*In Re: Michael W. Burnbaum,  Case No.: BD-2011-121 (Mass. 2012) Attorney suspended from the practice of law for three years.


If you have visited my Red AML Toolbox this week, you have seen the first chapter, Arrests vs. Convictions. The second article has been posted, entitled The Shortcomings of Search Engines in Due Diligence investigations. This material is designed to assist compliance officers performing customer identification tasks. There will be new articles posted there on a regular basis, so check it at least twice a week.

Click on the Red Toolbox; it will take you to a page which also has the same Toolbox icon. Then click on that to access my articles. 

Thursday, May 16, 2013


Two prominent Canadian businessmen* are languishing in Cuban jails, one already charged with corruption**, and admitted his involvement, and the other incarcerated for two years without formal charges. The Canadian who had admitted giving large bribes, and gifts, to secure government business, has detailed the depth of rampant corruption in Cuba.

He has gone so far as to reportedly make a video explaining exactly how bribes are paid to high-level Cuban officials, to obtain contracts with government entities, and this program has been shown to a large number of senior officials, as a part of a widespread anti-corruption investigation. The businessman has alleged that virtually all foreigners doing business with Cuba must continually pay illegal compensation, before, and during, the performance of contracts with Cuban agencies and entities.

Businessmen from  Canada, and the European Union, working in and with Cuba, now face possible arrests, seizure of their assets inside Cuba, and closure of their commercial operations, as fallout from the high-profile Canadian cases drives the corruption enquiry. Inasmuch as one must take it as given that all the major foreign businesses have paid illegal compensation, to secure Cuban business, expect a witch hunt in Havana.

Is this a good time to consider doing business in Cuba ? I doubt it, and if you are financially exposed, it might be the appropriate time to reduce risk by divesting yourself of your holdings there, if that is possible.

Compliance officers should review all available material, and decide whether to raise Country Risk on Cuba at this time. I recommend that you do, lest a bank client, or your bank itself, risk a total loss of investment, due to the investigation, and resulting crackdown on corruption,  and/or arrest of your people there.

*Sarkis Yakoubian abnd Cy Tokmakjian.
** The specific charge is Crimes Against the Security of the State.

Wednesday, May 15, 2013


The Federal trial of prominent El Paso Attorney Marco Delgado is set for next Monday, but his attorneys are seeking a delay, and are reportedly asking the District Judge to subject their client to a psychiatric evaluation.  The reason will surprise you.

Delgado allegedly has refused to enter a plea in the case, claiming that he is innocent of laundering drug profits for a Mexican Cartel, and of illegally diverting millions of dollars, destined for an energy construction project in Mexico, to his own use, in an account in an offshore financial centre. Considering that the maximum penalty for money laundering is twenty years, you may wonder why he will not agree to a plea bargain, which would result in a lesser sentence.

By now, your curiosity is certainly aroused; Delgado, as a practising attorney, certainly knows that any plea agreement will require him to be extensively debriefed, and probably testify against his cartel boss, and some of the lieutenants in the organisation. he know that, wherever he goes in the Federal Prison system, he will in mortal danger of assassination.

His attorneys think he has possible mental problems, because he refuses to plead out, and will forfeit several more years of his life in custody, but Delgado knows that his life would end shortly after he arrived in prison, of he testified against the cartel leader that he worked for. As I always say, money laundering is a white collar crime,  but remember who your clients are.


The OFAC designation of two currency exchange houses in Dubai this week contained the revelation that one of them had assisted Iran, over a three-month period in 2012, in obtaining $55m for its foreign exchange needs. In other words, the NBFI assisted Iran in evading global sanctions. It lost its government-issued license just this month, meaning that it was quietly permitted to operate openly in the UAE, without timely regulatory or law enforcement response. What's wrong with this picture ?

If that is the best that the UAE can do when there is a massive, overt operation to assist Iran in obtaining US Dollars, and the government simply practices what can only be described as willful blindness, then you will want to consider red-lining all non-bank financial institutions in the UAE, because the combination of the longtime financial relationships with Iran, coupled with regulatory inaction, means that the lure of compensation from Iranian commerce trumps global sanctions every time.

I leave it to you to choose, (A) or (B), or both:

(A) Consider all non-bank financial institutions ( especially foreign exchange, currency houses, money service businesses, and currency transmitters) in the United Arab Emirates to be high-risk.

(B) Raise Country Risk for the United Arab Emirates. If the UAE will not act within a reasonable period of time after obvious sanctions violations are occurring, then they may be other areas of its financial sector that could be cause for concern. If your bank clients, or your institution, have financial exposure there, consider the attendant risks before increasing your exposure.


If you have been on the web since the early 1990s, and consider yourself both computer and Internet literate, this is not for you, but the younger members of your compliance staff may benefit from  an NSA publication now unclassified. It is an extensive white paper entitled Untangling the Web: A Guide to Internet Research*, which I recommend for those whose Internet research exposure is not a broad as they would like it to be.

 Even some of the more experienced researchers may find some interesting resources that they were not aware of, in the 640 page white paper. The document does point out shortcomings and drawbacks of some of the sites, in a candid manner, which is useful, and a feature that does not exist on many commercial reviews of web resources. Much of the content may not be of interest to you, so use the table of contents for relevant chapters. Some of the material is dated, so update anything that you find of interest.
*Untangling the Web

Tuesday, May 14, 2013


With all the attention paid to the billion dollar Ponzi scheme run in Florida by former Fort Lauderdale attorney Scott Rothstein, using phantom out-of-court damages settlements, you may want to get an inside look at some of the techniques he employed, as well as his mindset. There is one publicly-available transcript of a deposition, taken of Mr. Rothstein, that provides valuable insight into his methods, as well as his state of mind while perpetrating the massive fraud. Readers who wish to access it, can find it here*. You will find him brutally blunt discussing how he conducted his illicit enterprise, but it is informative.
*Deposition of Scott Rothstein

Monday, May 13, 2013


Albert Dayan, the attorney for convicted arms trafficker Viktor Bout, who has taken an appeal from his conviction and sentence,  has made some unusual comments on the merits of the brief filed by the US Attorney's office. Whilst the ethics rules do not appear to prohibit attorney comments on pending appeals, as the case has already been adjudicated, it is strange that he has chosen to criticize the Government's arguments in the media.

Basically, Bout's counsel has stated that the US Attorney has admitted that there were errors committed during the investigation and extradition, and at trial, but is claiming that such errors are harmless error, meaning that the conviction should not be set aside. Dayan claims that reversible error was committed.

 He is free to assert this argument in his Reply Brief, as he may very well do, but claiming that the US Attorney's brief shows that the government is "desperate," seems either unprofessional, or pandering to Bout's many Russian supporters, who firmly believe that his arrest and conviction was purely political. When the Reply Brief is filed, we shall cover it in detail.


I call it Tradecraft, the techniques and resources I use to detect money laundering and other financial crimes, calling upon my decade of experience as a practicing money launderer. At times, I have been able to share some of this knowledge at lectures I have given, but the lectures only reach a small portion of the compliance community.

Therefore, I have created KEN RIJOCK'S AML COMPLIANCE TOOLBOX, where one can draw upon my techniques, which you will find extremely useful in due diligence investigations. Look on the right-hand side of this page, and click on the red icon that says "OPEN THE TOOLBOX, " which will take you to a new page featuring the same icon. Click on that one, and you are there. 

Sunday, May 12, 2013


Remember, during the Iraq War, when the US Army distributed 52 playing cards, showing the fugitive most wanted military commanders of the Hussein regime ? This week, an NGO, the Institute for Russian Research*, in order to raise awareness in the American law enforcement and financial fields, has published, and will distribute free of charge, a deck of 48 cards, all showing the key figures that it alleges are in the Russian Mafia.

If you ask why is this important to me as a compliance officer in the United States, be advised that more than half of them reside in America. EU compliance officers please note that fifteen per cent are based in Spain, according to the Institute. It further reminds us that these individuals, many of whom have substantial illicit business in Latin America, generally deal strictly in US Dollars ($) in their lines of work.

Who is on the list:



Remember that the transliteration of the Cyrillic alphabet into the Roman means that, like Arabic, there are variations; some spellings are phonetic translations, but others are Anglicised. Considering that they will be using aliases, with genuine passports when they come into your office, it is suggested that you print out the photographs on the cards, which appear here:

and circulate the photos around the bank, as well as checking them against passport photos of any current bank clients who are Russian nationals.



A number of disturbing factors regarding the Republic of Panama concern me, and once more the issue of whether to raise Country Risk on Panama is before us. Here's why:

(1) A prominent journalist this week raised the alarm about the ongoing attack on Panama's free press by the current government, accusing the Martinelli Administration of tactics more suited to Chavista-dominated Venezuela, rather than Panama's tradition of freedom of the media.

(2) Though they will never be charged in their own country, several Panamanian Ministers, and the country's president himself,  have been publicly accused of massive corruption. Whether US authorities bring criminal charges, for Insider Trading, is not known, but is a distinct possibility.

(3) Martinelli's exposure, due to his former association with convicted Ponzi schemer David Eduardo Helmut Murcia Guzmán, remains an open question, as Guzmán is reportedly cooperating with American authorities, and literally billions of dollars of DMG money is still missing an unaccounted for.

(4) The National Assembly is rumoured to be planning to pass legislation recognizing Palestine as an independent state, which will further alienate it from a United States Government that has tracked suspicious container shipments from Panama-Venezuela-Iran.

(5) The total and complete lack of enforcement of the money laundering laws, especially where they involve illicit funds being couriered in from Venezuela, and placed in willing Panamanian banks.

I will leave it to your personal assessment, after due consideration of all the available facts, but risk levels for any financial exposure in, or international trade on credit with, Panamanian private entities or its government, may cause you to raise Country Risk with Panama at this time.

Will Panama, whose economic boom continues unabated, implode politically before the 2014 presidential election, and will such an event hit the economy hard, is not known, but if you have any exposure in Panama, you had best pay close attention to unfolding events.