A reader wrote in that she had seen some information, on a law firm website, that cited to an old article I once wrote for World-Check, covering the unique money laundering risks presented by Venezuela. I regret to report that the 5000+ articles I wrote for the website, between 2006 and 2011, are no longer available online, with the exception of those that have been reprinted, or translated into Spanish, on other sites. I will, however, update that original information here, on the unique money laundering risks presented by Venezuela.
1. Banking best practices anti-money laundering compliance in Venezuela is uneven, and generally unreliable. When bank owners take calls from the Central Bank of Venezuela, ordering them to accept money from Iran, upon pain of prison, and the loss of their bank, should they refuse. AML/CFT clearly does not exist in Venezuela. Govern yourself accordingly.
2. Massive Iran and Syrian sanctions evasion operations are ongoing in Venezuela, and the purchase of dual-use goods, and other goods which are being transshipped to Iran, makes any international transaction high risk. US regulators have a zero-tolerance policy about violations of Iran sanctions, and the civil penalties that appear weekly in the media are extremely high, not to mention reputation damage.
3. The black market for US Dollars, which are much in demand in Venezuela, due to the fall in the value of the currency, and the need for hard currency for imports, has spawned an entirely new criminal class of financial professional, many of whom also receive favorable deliveries of dollar-denominated Venezuelan bonds, deeply discounted. One cannot tell, at this point, which banks and MSBs are clean, and which ones are involved in money laundering, banking of bribes and kickbacks from PEPs, or other criminal pursuits.
4. The overt involvement of the leadership of the National Guard, in protecting, facilitating, and engaging in drug trafficking is an indicator that no government agency can be trusted to be honest, or totally free of corruption. US law enforcement agencies have been investigating these cases for years, and there are OFAC sanctions, and major trouble ahead for the participants. You do not want to be collateral damage in a major criminal case, trust me.
5. The established presence of Hezbollah Latin America in Venezuela adds terrorist financing risks to an already overflowing bowl of trouble. The funds are couriered into Panama, and arrive in other, more circuitous ways. Remember, two Venezuelan banks have branches in Panama, and also in the US. You never want to be on the receiving end of a terrorist financing case.
To sum up, any financial transactions with the private or public sector in Venezuela has become so dangerous as to present an unacceptable level of risk. The court system is totally corrupt, ignores the rule of law, and frankly, rules in accordance with the orders of government officials. Any financial institution, or private company that engages in international trade, who disregards these warnings, and incurs financial exposure, is asking for money laundering trouble on a level that I would not wish on any bank, MSB, or private company.