Tuesday, March 31, 2015


By now, most readers have become familiar with the details of the non-Prosecution Agreement, between the US Government, and the Swiss private bank, BSI SA, especially the $211m civil penalty, but buried within the information released are techniques, employed by bank staff, that are typically used by money launderers, not legitimate bankers. Therein lies the shame of this case, as no individuals apparently are being indicted for their crimes & transgressions.

Here are a couple of the tricks used by the BSI bankers:

(1) Giving their American tax-cheating clients blank debit cards, drawn on two US banks, which allowed them to draw on their Swiss cash. I would surely love to know which banks were involved.

(2) Using Panamanian corporations, possessing, of course, bearer shares, to totally conceal beneficial ownership of the assets.

(3) Placing the clients' funds into accounts allegedly owned by a bogus insurance company ( known to BSI as an insurance wrapper).

(4) Formation of trusts. and other non-transparent vehicles, purely to conceal their clients' identities.

I suggest you review the complete text of the stipulated Statement of Facts* to fully understand the depths to which BSI bankers sank, to protect their clients from the taxman.
*Statement of Facts


Monday, March 30, 2015


Panamanian airports remain the principal destination of flights of illicit bulk cash, originating from Venezuela; the volume has increased to the point where Panama's principal organized crime syndicate has found it necessary to open its own business jet operation, from a hangar located at the Albrook Marcos A. Gelabert International,* general aviation airport. In addition to the Caracas-Panama route, the company is offering flights throughout the Caribbean tax haven region, and even into the Continental United States.

Regular readers of this blog know that the members of Panama's organized crime syndicate, most of whom are of Middle Eastern ancestry, and are related through blood ties, own portions of, and in some cases, have 100% ownership in, many of the country's local banks and NBFIs. It is therefore in the group's best interests to facilitate transport of "flight capital," much of which ends up in their own banks.

It had been hoped that the new, reformist government in office in Panama would shut down all the illegal bulk cash smuggling operations at Marcos Gelabert, which is the best known private aviation facility in the country, but it seems to be that smuggling business there has continued uninterrupted. When will Panama's self-styled "reformers" finally shut down money laundering ?

* Better known as the former Albrook Air Force Base, when it was part of the US-administered Canal Zone; before 1947, it was designated the Albrook Army Airfield. Rwy is 5900 ft.

Sunday, March 29, 2015


According to confirmed information from China, there is a "priority list " of more than 150 corrupt Chinese PEPs, all wanted on criminal charges by the Peoples' Republic, and believed to be living in the United States. Deemed "Economic Fugitives' by China, they are accused of money laundering, and other major crimes, in their native country.

Reports indicate that the United States is actively seeking out these individuals; though it appears that Federal criminal charges have only been filed against two of them to date. There is no extradition treaty between the US and China at present, and any extradition request would raise issues of whether a fair trial would be granted, and whether the death penalty was being considered. Money launderers have frequently been executed in China, and laundering was conspicuously missing from reform legislation in China, where some white-collar crimes were declared no longer subject to the ultimate penalty. The death penalty has never been available in the US for money laundering offenses, and this is an obvious sticking point with the Department of Justice. We have previously covered the use of capital punishment in China for money laundering offenses.

 The names on the list of 150 have not been released to the public, which creates an identification issue for US financial institutions, since it is believed that these fugitive PEPs have accounts with US retail banks. Given that in the active case involving those Chinese PEPs known to have been charged, the defendants lied about the source of funds, which was embezzled from a state-run funds. They alleged that the money, which was used to purchase real estate in British Columbia, was from the sale of two privately-owned corporations, and hid their PEP status. They moved the money into the US through shell companies.

It is suggested that you conduct a comprehensive review of all your large expat Chinese account holders, especially those who have moved into the United States during the past five years, to rule out your clients as possible fugitives from justice, banking dirty money in your shop.

 Canadian bankers please note that real estate inside Canada was the investment of choice in the one known case, even though the PEPs resided in the United States. You may also want to revisit your newest Chinese clients, especially those with millions of dollars in liquid assets, on deposit in Canadian banks, or invested in real estate.


The primary objective of any country's economic citizenship/economic passport program is to drive local economic development. Unfortunately,  a major aspect of the program being offered to wealthy foreign nationals, by the Government of Antigua & Barbuda, may have violated that prime directive. It may also have, unwittingly, facilitated access, by criminal elements, to a passport from a Commonwealth of Nations jurisdiction, with all the privileges appurtenant thereto.

There's a reason that economic citizenship programs require applicants to purchase, and establish, a residence in the country they are seeking a passport from: those new properties must be built, by local labor, using materials obtained from local businesses, and subsequently maintained by locals. Taxes must, eventually, be incurred, and paid, by the property owner. All this creates local jobs, adds to the tax base, and develops the economy.

Antigua's Citizenship by Investment Program has chosen to allow applicants for its economic passport program to qualify, not be purchasing a residence in Antigua or Barbuda, but overseas, in Ajman, United Arab Emirates, through what must be a lucrative arrangement with local builders in the UAE. Both the Antiguan Prime Minister, and the Foreign Minister, have visited the Ajman headquarters of UAE-based Sweet Homes, who is building the structures that qualify investors to apply for the A & B Citizenship by Investment project.

These new residences, not being located in Antigua, neither benefit the Antiguan construction work force, nor its local businesses and suppliers of construction materials. I fail to see how any direct payments to Government will be an adequate substitute for the purchase of land from the public, the creation of new local jobs, both during constriction, and post-completion infrastructure/vendors/ service suppliers, and the purchase of construction materials by the developers & builders.

Furthermore,  the Antiguan economy still has not fully recovered from the imprisonment of its formerly largest employer, Ponzi schemer Allan Stanford. Its working class needs as much in the way of new job opportunities as the government can furnish, and by participating in a scheme where only funding ( which could be diverted through corruption) direct to government occurs, there will most likely be little, or none, in the way of trickle-down, to its blue-collar majority. Are the people being cheated ?

Also, how many of these Middle Eastern nationals, who are purchasers in Ajman, and that therefore will be awarded Antiguan passports in the program, will be from countries where broad-based international sanctions are in place, or who are of dodgy backgrounds, but are passed nevertheless ?

Whether Antiguan economic passports will become, like those issued in St. Kitts & Nevis, suspect by definition, and therefore not qualified for a waiver on visas, remains to be seen, but you can be sure that  the Government of Canada will take a hard look at the identities of the holders when they travel, especially if they are Iranian- or Afghan-born. Some immigration authorities may agree, conclude that Antigua has sunk to a new low, and act accordingly, to restrict the entry of these new passport holders. American Customs & Immigration could follow suit, and who could fault such an action ? The granting of economic passports raises risk levels for compliance officers; any country that is playing fast & loose with the process could find itself with clients whose passports are more of a problem than they bargained for.

Saturday, March 28, 2015


The Government of Spain is close to enacting legislation that will grant Spanish citizenship to individuals whose Jewish ancestors were expelled by the country's rulers in 1492. The program, which appears to be a modern, good faith effort to right a wrong that occurred in Spain's dark past, unfortunately will also be a target of opportunity for the world's financial criminals, as an EU passport is regarded by them as a valuable tool, affording them visa-free travel to many international financial centers.

It does not seem that proving one's Spanish Sephardic roots, to the satisfaction of the Spanish Government, will be difficult, meaning that bogus applicants should not find approval difficult:

(1) The flexible methods of proving that one's Hebrew forebears were forced to emigrate from Spain, rather than convert to the Catholic faith, due to the extreme length of time since the event occurred, add to the problem. Written accounts from foreign religious figures, to confirm family histories, can unfortunately be bought, and counterfeit confirmation can also be obtained.

(2) A Sephardic family name, or proof that one engages in Sephardic customs at home, are the alternative methods of proof. Again, this can be constructed.

(3) A working knowledge of Ladino,  the unique language spoken by Sephardic Jews, which is an amalgam of traditional Spanish, and Hebrew, is another listed  qualifier. This skill can be acquired by anyone with sufficient drive and patience, irrespective of their actual religious background.

Please note that applicants themselves do not now have to be practicing the Jewish religion, only that their ancestors were Sephardic, and were expelled by King Ferdinand and Queen Isabella at the end of the fifteen century. They need a basic knowledge of the Spanish language, and of Spain itself. All this can be easily learned, if they do not already have it in hand, from work experience.

Just as they did when taking advantage of Israel's Law of Return, organized crime figures will most certainly construct Jewish backgrounds, to make themselves eligible for these EU passports. Their places of birth, however, may give them away, when using these Spanish travel documents. That may be your only means to identifying individuals who hold these passports. Possession of a Spanish passport could vastly facilitate the global reach of any financial criminal.

These new passports will probably be issued late in 2015, so find a way to upgrade your compliance program to flag any incoming Spanish passport holder whose place of  origin, or place of birth, is outside Latin America. 

Friday, March 27, 2015


Palestinian media sources have been circulating a scathing report that is critical of OFAC for its sanctions programs against Iran & Syria. The article, which I have seen reposted to a number of Internet sites outside the Middle East, appears to be part of a campaign to pressure OFAC to make changes which could limited its effectiveness.

Basically, the article accuses OFAC of taking actions which are inconsistent with the protections afforded by the United States Constitution, described as "fundamental Constitutional requirements.". Unfortunately, those who are running this anti-OFAC campaign forget to mention a critical detail: Due Process, notice and the opportunity to be heard, and to challenge and other civil rights, are simply not available to a suspected terrorist living outside the United States; They are not United States persons, and are not entitled to such rights.

What the Palestinian, and obviously pro-Iranian/pro-Syrian viewpoint seeks, is to fatally weaken OFAC, by granting some major rights to individuals sanctioned by OFAC, by requiring that Treasury regulations be amended as follows:

(1) List specific criteria on which activities are proscribed, to merit a designation, and develop evidentiary standards for determining designations.
(2) Provide targeted individuals with a statement of reasons for violation that OFAC claims were committed, and give them access to the evidence that allegedly formed the basis for the designation.
(3) Require a deadline by which OFAC must respond to a designee's petition to be removed from the sanctions list, so that assets are not frozen indefinitely.
(4) Give specific advice on delisting procedures to applicants.
(5) Establish an online redress program, so that petitions for delisting can be filed online.
(6) Designate an Ombudsman to oversee the program of delisting requests.

OFAC is NOT the Freedom of Information Act, for G_d's sake. To give a sanctioned terrorist living in a cave the right to remotely file a delisting petition,  allow him access to all your classified intelligence, and impose a deadline on the process (with an outside monitor) would be the end of OFAC as we know it.

Obviously, the Iranian backers of this movement are looking to use delisting petitions as potential sources of the limits of US knowledge of their sanctioned WMD and ballistic missile programs, which America would either have to disclose, under the above guidelines, or delist the SDN designation. We trust that this proposal will receive little or no consideration from Treasury, lest it lose its most valuable tools for containing sanctioned activities.

Thursday, March 26, 2015


Ii is not just the big transactions that result in OFAC civil penalties for sanctions violations. Pay Pal Inc., the electronic payments processing firm, had a program, for four years, that did not deliver results on scanned payments on a real-time basis, allowing sanctions violations in payments to & from Iran, Cuba, and Sudan.  The system was therefore inadequate to block payments. One notorious SDN was specifically identified.

The fine: $7.7m . Any computer program designed catch OFAC-blacklisted individuals and entities must feature instant readouts on the results. What was the company trying to do, save money on the software ? Pay Pal, which provides a valuable service for clients who do not wish a vendor to know their personal financial data, needs to upgrade their compliance to banking best practices, as many NBFIs now do.


The Republic of Panama formally revoked former President Ricardo Martinelli's immunity from prosecution, clearing the way for the filing of multiple additional charges against him, for corruption, and misuse of power. Martinelli is believed to have fled to Paraguay; there is no extradition treaty between Paraguay & Panama. 


You've got to hand it to those Swiss; when it comes to the Middle East, the country's banks have a major blind spot for corrupt PEPs, and their large accounts. Corrupt Palestinian PEPs have been hiding money in Swiss banks for decades. Also, not being a member of the European Union, it is not bound by international sanctions in place against Hamas. You are not going to like where Switzerland is going next.

A public announcement indicates that the Swiss intends to fund Hamas salaries, and other "expenses" of the specially-designated global terrorist organization. This means that wire transfers, originating from Swiss banks, could be orders fore goods and services for Hamas. Will banks in the European Union, and North America, now require written assurances from Switzerland, that transfers do not involve Hamas ? I see a definite increase in Country Risk for Switzerland could result from this new, dangerous Swiss policy.

It will also further alienate a portion of the global financial community, for we all remember Switzerland's dark record of business dealings with Nazi Germany, and its its denial of access to wartime accounts and insurance policies, for next of kin of Holocaust victims. Hamas' stated objective is the destruction of the State of Israel, the only democracy in a despotic Middle East, and its attack on civilian targets was condemned this week, in a report filed by Amnesty International. Its anti-Semitic platform does not play well with European democracy.

Doesn't Switzerland, already sporting a black eye from its support of wealthy American tax cheats, have enough problems on its plate ? Working with known terrorists is a major mistake. a real lapse in judgment, and there will be consequences.

Wednesday, March 25, 2015


The Federal District Court in Connecticut has scheduled a hearing to determine the amount of restitution that will be imposed upon Convicted hedge fund Ponzi schemer, Francisco Illarramendi, for June 15, 2015, at 2:00 PM. The sum may be as high as $500m dollars, though the defendant alleged that, since the court-appointed Receiver was reportedly able to recover sufficient funds to reimburse the victims, he does not think that he should be required to pay any restitution; that kind of faulty reasoning will only cause him to lose little what credibility he still has left with his sentencing judge. The subsequent recovery of losses that occurred, due to criminal conduct, by a receiver assembling assets, does not excuse either the crime, or the fact that restitution lies for the amount of the original losses.

Illarramendi has appealed his conviction & sentence, though the evidence against him was more than sufficient to obtain a conviction, in my humble opinion. Perhaps he needs to get on with serving his sentence, and discovering whether any information that he possesses could result in a sentence reduction. eighty-five per cent of thirteen years is a long time to serve in prison. Given the new focus on Venezuela as a clear and present danger to the United States, he may find his intimate knowledge of Venezuela's utterly corrupt government might be useful to American law enforcement agencies.

 He also has information about two wealthy businessmen who were sources of short-term funding that he utilized, to keep his hedge fund afloat; certainly those individuals are potential targets for US law enforcement.

A final note: Illarramendi is serving his 13-year sentence in The Federal Correctional Institution (FCI) Fairton, in New Jersey, but BOP records show his estimated release date as "unknown." The defendant spent approximately 2 years pre-trial, in-custody, when his bail was revoked. Why has nobody calculated his release date ? Is it because he was not only a difficult defendant, before the Court, he apparently was difficult as a pre-trial detainee, while in custody ? Perhaps it is time that he recognize that the game is over, and stops trying to bend the rules for his own reasons.


When the so-called Lagarde List, which details those wealthy EU PEPs who have undisclosed accounts with HSBC in Switzerland, was delivered to former Greek Foreign Minister George Papaconstantinou in 2010, he not only kept the approximately 2000 names of Greek nationals secret, he went one step further. He deleted the names of three relatives from the list, which identifies tax evaders, as well as possible corrupt government officials.

After  trial, a Greek Court abruptly reduced the felony charge, of doctoring a document, to a misdemeanor, and gave him a one year suspended sentence. A second charge, attempted breach of faith, was dismissed. Papaconstantinou was only 53 years old, and definitely not a candidate for a suspended sentence. The sentence sends the wrong message to wealthy Greek nationals, that they can skate on tax evasion, as the Greek power structure will not punish its own for protecting the country's corrupt PEPs. Remember this the next time a client asks your advice about the risks of doing business in Greece.

Tuesday, March 24, 2015


Investors in the Republic of Panama, and the United States, who have placed funds with Gary James Lundgren, the Chairman of the Board of Interpacific Investors Services, Inc., are reporting that they are no longer receiving scheduled interest payments, and that Mr. Lundgren, a Panama resident, cannot be located. There have been rampant indications, for years, that Lundgren's promised eight per cent return was due to the fact that his venture was a Ponzi scheme, and that he paid existing investors with funds from new participants.

 Lundgren is a defendant in a number of pending cases in Panama, and he is charged with engaging in repeated frauds and theft of real estate. He forged identity documents, obtained the notarization of forged signatures, appropriated bearer share certificates of his victims, and was the major participant in organizing, and executing, the Financial Pacific/Petaquilla Mining Ltd. insider trading scandal.

 Interpacific Investors Services, Inc. is not a licensed broker-deal in Panama, but Lundgren evaded regulators, due to his close personal relationship with disgraced former Panamanian President, Ricardo Martinelli. Lundgren and Martinelli are known to have laundered criminal proceeds of David Murcia Guzmán's DMG pyramid scheme, and have been linked to the theft of millions of dollars of his cash, which had been bulk cash smuggled into Panama from Colombia, after Murcia was deported.
Whether Gary Lundgren faces justice in Panama will be the test of whether Panama is truly reforming its corrupt court system, where justice can be bought, or whether it remains business as usual. He has defrauded investors, homeowners, and businessmen, and it remains to be seen whether he will be adequately punished for his sins. Lundgren is reportedly under investigation by both US law enforcement agencies, and American regulators. 


The news of the week included a reference to a possible move, by the Department of Justice, to go back, and revisit, some of the Deferred Prosecution Agreements, and Non-Prosecution Agreements, granted to some of the world's largest international banks, for massive AML/CFT and sanctions violations. The concept is to increase the monetary penalties, should the banks involved fail to reform, or worse, engage in repeated bad acts.

While I support this proposed program, since a number of the guilty banks have engaged in repeated violations,  notwithstanding multiple regulatory actions, such increased fines will be insufficient to change corporate culture based upon profit, which accepts fines as the costs of doing business, and returns to the illicit conduct, again & again. They do not care about a fine that takes 5% of their banks' annual profits.

Gentlemen, the only satisfactory deterrent is to put a number of senior bank executives in Federal Prison for money laundering, so that all the others recognize that this is a threat to them personally. Nothing less will work. Only when they truly fear DOJ enforcement action against them will they think long and hard before placing lucrative profits, earned illegally, before obeying the law.

Monday, March 23, 2015


For those readers who wondered why no senior executives at TD Bank have been indicted for allowing the Bank to facilitate the billion dollar Rothstein Ponzi scheme, it could still occur. Remember, TD Bank Regional Vice President Frank Spinosa has already been charged, and if anyone has first-hand knowledge regarding whether any bank senior executives authorized him to assist Rothstein in defrauding investors, it is Spinosa.

While Spinosa has entered a plea of not guilty, and has two capable and experienced attorneys representing him, there are a few hints that a plea agreement is possible:

(1) Mr. Spinosa, in his civil settlement with the Securities & Exchange Commission, has agreed to be bared, for life, from the financial industry; however, the amount of his fine was not set, and it is to be entered at a later date. Did he get such favorable treatment because the amount could not be computer, or for other reasons ?

(2) The case was originally set for trial in December 2014, but was rescheduled, on an Ore Tenus motion of defense counsel, to October 2015. Though the declared grounds was the huge amount of discovery that defense counsel had to review, it could also have be granted to allow Spinosa to give evidence against his superiors.

(3) The lead attorney for Spinosa, Samuel Rabin, Jr., obtained an exceptionally favorable sentence, for his client, Ramakrishna Vyasulu, for cooperating in the Rosemont Financial Corp. case. He has the experience, and the skills, to engineer a good deal for his client, in this case. If Spinosa received a green light from upper management, and testifies about it in court, he could get a short sentence.

Finally, for those who recall that the five-year Statute of Limitations has run, for indictments to be timely filed in the Rothstein case, there is a notable exception: Racketeering, or RICO charges, which can be filed up to ten years after the last criminal act. TD Bank senior executives can still be charged; They are not out of the woods yet.

We shall be monitoring the Spinosa case, and will update our readers with all developments, as they occur.


Saturday, March 21, 2015


Recently, Allen Stanford, who is appealing his conviction and 110-year sentence, asked the Fifth Circuit to repeal the gag order imposed by the District Court. That order prohibits him, as well as the prosecutors, from commenting to the press regarding his case.

Stanford asserted in his motion that both the Receiver, and the trial judge, have publicly commented on the case, and that he desires to meet with the press, to tell his side of the story. I noted that the date which the Government had to respond had passed, and there was no reply, and wondered why.

We now have have our answer; rather than rule on Stanford's motion, the Fifth Circuit simply filed the original September 30, 2010 Order that prohibited the defendant, as well as prosecutors, and the agents of both sides, from commenting, "until the final disposition of this case*," which means the decision of the Fifth Circuit Court of Appeals. The case is still pending, and the order is still in full force and effect.

Regarding Stanford's complaint about public statements made by both the Receiver and the Court itself (the trial judge), please note that neither is included in the list of persons who cannot talk to the media. That is probably another reason why the appeals court saw fit to merely post the gag order, and not rule on the appellant's motion. It does show that Allen Stanford, as well as the jailhouse lawyers working on his appeal with him, are guilty of failing to pay attention to detail; otherwise, they would have known that any request to modify, or revoke, the gag order was not going to be granted; Pay attention, Mr. Stanford,
* Order at 4; case No.: 09-cr-00342 (SD TX).


General John Kelly is the ranking officer at the United States Southern Command, which is responsible for American military activities in Latin America. On March 12, 2015, he presented his status report about the region, known as a Posture Statement*, to a committee of the United States Congress. Contained in that testimony is information about an aspect of Iran's operations in the Western Hemisphere that is of relevant interest to all compliance officers at financial institutions that maintain offices in America.

The General stated that Iran has opened more than eighty "cultural centers" throughout Latin America, to spread information about Shiite Islam, which is curious, because many countries in that region have very small Muslim populations. SOUTHCOM regards this as a potential threat. A report issued from Argentina by Nisman states that the cultural centers are a cover, giving Iran the capability to provide logistic, economic and operational support for possible terrorist attacks upon the United States.

Remember also that Iran's Ally, Hezbollah, is actively engaged in narcotics trafficking throughout Latin America, for terrorist financing purposes, and its agents may be using the centers as a cover for their operations, including the forwarding of narco-profits to Beirut.

Other sources report that Latin Americans who show interest in Iran, or Islam, have been given free passage to Iran, ostensibly to institutions of higher learning, at which places strong political content, anti-American in nature, is part of the program, Whether they are being recruited as intelligence operatives is a open question. Iranian websites, in the Spanish language, and Iranian television programming, in Spanish, and directed to Spanish speakers, confirm Iran's increasing interest in the region.

Obviously, there is serious exposure, should any US-based banks be found to be involved with Iranian entities located in the Western Hemisphere. Compliance officers at banks operating in the United States are cautioned to carefully examine any transactions with Muslim religious organizations located in Latin America or the Caribbean, as any overt connection to Iran will not appear in either the name, or the operators of these "cultural centers."

 If the facility appears to be of the Shi'a sect, an enhanced due diligence investigation should be performed, prior to commencing any transactions, and establishing an account relationship is most likely too high-risk to contemplate, due to your inability to conduct unannounced visits to the center. Do not be misled by the fact that all communications will be in Spanish; ensure that, if there is any hint that this entity has any connections to Iran, you decline any relationship, lest you run the risk of violating multiple international, and  OFAC, sanctions.

*Posture Statement of General John F. Kelly, United States marine Corps, Commander, US Southern Command


In the world of financial crime, Smurfs are not those cute blue cartoon characters; they are individuals who move money, without triggering any reporting or accountability requirements. Former Panamanian President Ricardo Martinelli, who is suspected, with his associates, of stealing many millions of dollars while in office, knows how to smurf money, too.

What Martinelli did was to use Panama's national assistance agency, known by the acronym PAN, as a cash source. He and his allied embezzled millions from it, and they funded it periodically, using smurfing techniques. The fact that former PAN director Rafael Jaén, was arrested in Panama, and faces corruption charges, was found to have $18m in his personal bank accounts, confirms that the scheme was highly successful.

Here's how it worked: Inasmuch as any government funding, into PAN accounts, of $300,000 or more, required approval of the National Assembly, Martinelli and his associates would transfer exactly $299,000, thereby avoiding an role of the legislature. The boldness of this scheme is stunning, and is probably based upon the reality that Martinelli exerted absolute control over Panama's law enforcement sector, and did not fear either disclosure or the criminal consequences of the smurfing activities. The money transferred was used to pay grossly inflated prices to vendors, who then kicked back millions to the participants. Testimony already taken implicates ex-president Martinelli as the direct supervisor of the illicit scheme.

Jaén, now charged with embezzlement, and Crimes against Public Administration, is reportedly cooperating with Panamanian authorities. His predecessor, Giacomo Tamburrelli, has also been charged with corruption, and is under house arrest. Thirty-one other Panamanians have reportedly also be charged in the case, including the brother of the former president, Mario Martinelli.

Friday, March 20, 2015


A leaked internal EU report, allegedly critical of Israel for reputedly failing to move forward with peace talks, and for initiating new construction in East Jerusalem, indicates that the European Union may decide to impose sanctions. Bankers in countries that are members of the European Union, and whose client base includes companies that import goods from Israel proper, or the settlements in Judea and Samaria, which Arab residents want as part of their proposed state, should be on the alert for any announcement that might affect their ability to transfer, or receive, funds, on behalf of customers.

Tensions are particularly high in the region this week; Israel has stated that it will only accept defensible borders, and a demilitarized Palestinian state, but PLO and PA officials have demanded a Right of Return for Arabs who left Israel in 1948, all the territory west of the Jordan River that was annexed by Jordan*, and East Jerusalem for their capital. Israel annexed East Jerusalem in 1967, in a defensive war with the Arab countries. Additionally, the PA has created a unity government with Hamas, which is supported by the Palestinian Islamic Jihad in Gaza, and  the stated aim of both is the total destruction of Israel. Under these circumstances, a negotiated solution that would result in the creation of a new state of Palestine is highly unlikely. Israel knows that the presence of these two radical Islamist groups in Judea and Samaria would result in all-out missile attacks upon it, from that territory.

Whether actual economic sanctions against Israel, or products originating in the Israeli settlements located outside the Green Line (the 1948 Armistice line from the Israeli War of Independence) is not known, but compliance officers should be on standby, and ready to implement sanctions, if they are declared.

* Post-World War I international treaties, which were ratified and adopted by the League of Nations, and later by the United Nations, stated that all of the new British Mandate of Palestine was to be a Jewish National Home, with all minorities resident therein to have their rights protected. Jordan, which was part of the original 1920 Palestine, was unilaterally separated by the British Government, who imposed a monarchy there, installing the Hashemite Kingdom of Jordan.

 The Golan Heights, part of the League Mandate, was transferred to France by Britain, in exchange for certain petroleum rights in Iraq. All these the British actions appeared to violate the terms of the League Mandate, and left a number of territorial issues unresolved to this date.


Panamanian Justice José Ayú Prado
Magistrate Justice José Ayú Prado, the president of the Supreme Court of Justice of Panama,  who already has been charged in Panama with multiple counts of corruption, is now facing an even more serious threat: a rumored sealed indictment in the United States. Will he be extradited to America, or will he cut a favorable plea agreement in the Republic of Panama, as did his predecessor, former Chief Justice Moncada Luna ?

Ayú Prado has pending Panamanian charges filed against him as follows:
(1) Obstruction of Justice.
(2) Abuse of Authority.
(3) Acting outside his Authority.

Now, rumors are swirling around Panama City that he is the subject of an indictment, in Federal Court in the United States, for misconduct that he committed while serving as Attorney General of Panama. Inasmuch as he is residing outside the United States, any and all information about this pending case will be under seal, and unavailable to anyone except American law enforcement agencies, to avoid tipping off the target, so that evades arrest by remaining outside US territory. Whether he will be extradited, or have his case heard in Panama, is not known at this time,  but his remaining tenancy at the Supreme Court of Justice is certainly going to be short.


Is HSBC really serious about reforming its sordid record on ignoring customers who engage in money laundering ? An HSBC customer, a financial professional, who advised the bank that one of its major clients was involved in money laundering, and other illegal activities, had his own accounts abruptly closed by the bank. Not only that, but it also closed the accounts of the customer's family, according to the customer, who related to me the facts.

His accounts were closed, not only in Latin America, but in North America as well, and the bank actually threatened to sue him for making slanderous allegations about money laundering. Of course, he invited the bank to proceed, but to date, it has not brought suit. I imagine the information that would emerge from discovery in such a case could cause the bank serious reputation damage. One wonders when HSBC will truly reform its compliance culture, and not just give us lip service, through press releases, concerning how things have changed.

Wednesday, March 18, 2015


The date was September 11,2001; A Venezuelan businessman was obtaining a line of credit for his company, and he was completing the forms at his bank, which was located on Margarita Island. He was required to obtain the signature of a senior bank officer, and he made his way up to the executive floor. When he arrived there, to his utter surprise, there was a champagne party in progress, for the bankers, whose bank was controlled by a Middle East terrorist organization, were celebrating the attacks upon the United States. Neither the bank, nor any of its senior staff, who were regularly engaged in sending money to terrorist groups in the Middle East, were ever sanctioned by OFAC, or ever charged with moving terrorist funds through the New York banking center.

The bank also had a unique arrangement with the FARC, the Colombian SDGT; not only did it allow FARC funds to transit the bank, their relationship was so incestuous that the FARC actually maintained a teller on the floor of the bank, whose role was to process that organization's transactions.

A large number of sanctioned terrorist organizations have blossomed in Venezuela, where the Chavez regime gave them not only safe haven, but facilitated their operations. Venezuelan government agencies handed out passports and national identity cards (Cédulas) to their agents, when they arrived in the country, even giving them bogus Hispanic names in many cases, to further conceal their true Syrian or Lebanese identities.

Venezuela is a rogues' gallery of terrorist organizations, which seriously complicates the work of American and Canadian compliance officers at major banks, because there is always a chance that front-men are moving funds through their banks, on behalf of specially-designated global terrorist groups. Who can be found operating with impunity inside Venezuela:

(1) Al-Qaeda; a number of its agents found refuge there right after 9/11, to the dismay of the FBI.
(2) A number of Palestinian organizations. Some have actually conducted training in the Venezuelan countryside, with Chavez' blessing and encouragement. He is even known to have visited a Palestinian group in the field.
(3) The FARC; most of the FARCs senior commanders have been living on the Venezuelan side of the border with Colombia for years,  cleverly evading capture by Colombian armed forces. The location of FARC base-camps inside Colombia have been known for years, but no effort has ever been made to attack or destroy them, for fear of creating an international incident, like what happened in Ecuador, when a cross-border raid resulted in the death of one of the FARCs most senior leaders.
(4) ETA: Members of this Spanish terrorist group, that have found their own country to hot for them to avoid capture,have been given sanctuary by the Venezuelan Government, and monthly cash US Dollar stipends of around $2500 arrive by courier from Caracas, to support them while they are guests in Venezuela; The money is reportedly paid weekly, to ensure that they are financially comfortable, and want for nothing.

Should one of these sanctioned groups, entering the Continental United States with Venezuelan passports, commits a terrorist act, then tough questions will certainly be asked in Congress, as to how such an unthinkable event was allowed to occur. Moreover, many of these groups raise money through drug trafficking, kidnapping, human trafficking, and other criminal pursuits, the profits of which often find their way through American financial institutions, which expose US banks, as gatekeepers, to civil penalties, should they fail to timely identify such transactions. The fault lies somewhere in the United States Government, for its failure to suppress the activities of organizations whose goals include attacks upon the United States, and its interests, just because they enjoy sanctuary inside Venezuela.

 US regulators have never alerted the banks about the magnitude of the threats, nor have they identified the senior terrorist leaders known to be operating inside Venezuela; instead that information is classified, under the guise of monitoring their activities. meanwhile, American bankers are in the dark, and when a close relative, or associate, of a terrorist comes into the bank to open a substantial account,  their ignorance allows it to happen. The United States knows very well who the terrorists are in the Western Hemisphere; how about sharing that information with your bankers ?
For further reading:
American Hands-off Policy on Venezuela has resulted in a Proliferation of Middle Eastern Terrorist Groups in Latin America


Tuesday, March 17, 2015


You may have read all the media comments, regarding the fact that the 2015 Worldwide Threat Assessment of the US Intelligence Community*, which is produced by the Director of National Intelligence (DNI), pointedly minimizes the threats posed by Hezbollah to the United States, and the rumors of active cooperation between America and Hezbollah, concerning ISIS/Islamic State actions in Lebanon and Syria, but be advised that the OFAC sanctions remain in place.

 Compliance officers, notwithstanding any reported cooperation between US intelligence agencies and Hezbollah, regarding information sharing, still must act act as the gatekeepers, insuring that there is no Hezbollah terrorist financing being facilitated through their banks. Inasmuch as drug trafficking is the principal means of fundraising for Hezbollah, what appears to be the movement of narco-profits may in reality be terrorist funding. Panama remains a pipeline for Hezbollah funds in transit for Beirut and the Middle East, and Hezbollah drug shipments to that region, and to Europe through Africa, continue unabated.

What happens overseas, in the murky world of intelligence, does not change the fact that the SDGT status, which occurred in part due to the bombings of the US Marine Barracks, and the American Embassy, by Hezbollah, remains in effect; govern yourself accordingly.

Monday, March 16, 2015


Whatever was left of democracy, and the rule of law, in Venezuela, is now totally gone, for yesterday the country's National Assembly has given President Nicolás Maduro the power to rule by decree, until the end of 2015. This absolute power, usually the province of a dictator, rather than an elected official, was reportedly granted as a response to the sanctions imposed upon seven prominent Venezuelan PEPs by the United States.

Without any checks and balances, from the legislature, and the court system, Maduro can now impose his will, on demand, upon any sector of the economy, and all foreign companies, and nationals, who are within his country. Such powers make Country Risk calculations meaningless, for there will be no redress available for the president's Acts of State, and individuals, and/or their wealth, can be seized without due process. Foreign investment may now become a thing of the past, unless you are an Iranian company. It is pure folly for foreign investors, or banks, to place, or to continue to hold, any sizable interest or investment in Venezuela, for you are at the mercy of Sr. Maduro and the inner circle of the Bolivarian Elite.

Many Venezuelans have moved to the Republic of Panama.Will the last middle-class person leaving Caracas remember to turn out the lights ? ( This assumes that the electricity is still working).



Ashraf Rifi, the Justice Minister of Lebanon, in an interview with a Saudi newspaper, said that Hezbollah is engaged in global money laundering and international corruption. This statement was made in connection with the deportation of 70 mostly Shiite Lebanese nationals from the United Arab Emirates. Although the UAE government gave no grounds for declaring those deported persona non grata, Minister Rifi definitely implied that he was aware of the criminal conduct, and that it also extended to evasion of customs duties, and of other taxes. 

Other Gulf Cooperation Council states, including Qatar, Bahrain, Oman and Kuwait, have reportedly also removed Lebanese nationals suspected of having links to, or financial transactions with, Hezbollah.  Compliance officers who update Country Risk should bear this in mind, especially when you are tempted to assign low risk levels to GCC countries.

Sunday, March 15, 2015


Take a good look at the photograph above; it was released this week, in connection with a terrorist case brought in Federal Court in the United States, and it is symptomatic of what is wrong with American foreign policy, with respect to Venezuela. Due to what are now seen as misplaced concerns about maintaining the uninterrupted flow of oil from Venezuela to the United States, and a preoccupation with Iraq and Afghanistan, America has pointedly declined to respond to the rise of Middle East-based terrorist groups in Latin America. This is a clear & present danger that was ignored, for no valid reason.

The red-headed individual sitting with Osama Bin Ladin, in a 1990s-era photograph, taken most likely somewhere in the Afghan mountains, is none other than Al-Qaeda's leading theoretician, Abu Mus'ab Al-Suri, also known as Mustafa Setmarian Nassar. A Syrian national, he became associated with Bin Ladin early on, and is the author of the definitive AQ treatise, a 1600-page work entitled The Call for Global Islamic Resistance. He is also known to have run jihadist trainings camps in Afghanistan.

Considered to be the intellectual author of the Madrid Train Bombing, Nassar departed Spain, where he had been living, immediately after that terrorist event, and arrived in Venezuela, where he enjoyed the protection of the Chavez government, traveling around with a security escort, and regularly visiting the mosque in Caracas, as well as a travel agency that was an AQ front. He also spent a great deal of time on Margarita Island, a well-known base of operations for a number of terrorist organizations, including the FARC.

All this time, his presence in the Western Hemisphere was well-known to American intelligence agencies, but no effort was made to apprehend this high-value target, considered by many then to be one of the top five most influential AQ leaders; His movements were merely monitored. He was seen at the Venezuelan port city of Puerto Cabello, by eyewitnesses who stated that he was supervising the shipment of Uranium to Iran.

There is a possibility that his role in a covert weapons shipment, involving an American intelligence agency, of which the possible public disclosure would have embarrassed the agency, might have been a factor.  The matter involved the transport of Stinger surface-to-air (SAM) missiles, from Afghanistan, where they were irrelevant, due to the departure of the Russian occupiers, to Zaire, for an unknown purpose. (They were supposed to be repatriated to the United States).

Raytheon/General Dynamics FIM-92 Stinger

During the time Nassar resided in Venezuela, he reportedly conceived, and supervised, the London Bombings, and he is also said to have contributed his input to the creation of the improvised explosive device (IED) program, which was used against American and Coalition Forces in Iraq. It is noteworthy that he lived in London for a time, prior to his residency in Spain. He later traveled back to the Middle East, where he was captured in Afghanistan, and reportedly spent some time in custody in an American "Black Site" in the British Indian Ocean Territory, more commonly known as Diego Garcia. He was subsequently transferred to a prison in his native Syria, where he had previously engaged in anti-regime activities. Why was he not sent to the Guantanamo Bay Detention Camp ?
British Indian Ocean Territory
Unfortunately, he was released during the Syrian Civil War, and is whereabouts at this time are unknown. Could his arrest and detention, early on, in the Western Hemisphere, have prevented the London bombings ? Is he now in command of AQ units, in one of its theaters of operation ? These questions persist.

On another related topic regarding terrorist operations in Venezuela, Hezbollah Latin America has had cadre there for several years; its leader was sanctioned by OFAC, yet there is no record of any Hezbollah agents being arrested or detained, by US forces, in Venezuela, or adjacent areas. Moreover, the organization has used the convenient banking structure in Panama, to move criminal proceeds, for years, without US interference.  Considering that Hezbollah's main source of income is narcotics trafficking, and its agents' identities are known, one wonders why it is allowed operate free of any American response, either by action against Panamanian banks, or by capturing the terrorists themselves. Venezuelan oil, and its importance to the American economy, seems to be the only logical answer.

Now we are faced with a well-established Hezbollah presence in Venezuela, and one wonders, since American oil production is reaching the point where the US can actually export oil, why there are no efforts to reduce the influence of this dangerous, sanctioned global terrorist organization, which has the potential to wreak havoc in the Continental United States ?


You have probably have seen the news regarding devastation visited upon the Republic of Vanuatu by the Cyclone Pam this week, but one must always keep in mind that successful money launderers thrive during national disasters, for they ply their dark trade best in the midst of chaos.Vanuatu*, which has been deemed one of the most opaque of the world's offshore tax haven jurisdictions, has become a target of opportunity.

Let me translate that for you; money launderers, having learned that 90% of the buildings in the capital, Port-Vila, have been destroyed, and utilities, including power, have been disrupted, perhaps for weeks, may find a way to take advantage of this lack of communication in several possible ways:

(1) They may create a totally bogus Vanuatu corporate entity, by editing existing corporate documents, and presenting it at account opening, knowing that you cannot verify corporate existence, given there is no electronic access to information in-country.

(2) They could arbitrarily re-designate the name of a shell corporate entity they hold at present, from another jurisdiction, as one from Vanuatu, and you could not corroborate that ploy. Companies from Vanuatu are non-transparent, and even directors names are unavailable. At a later date, they would "correct" their error, and switch corporate jurisdictions. By doing so, you have been denied the names of corporate officers & directors at the critical juncture of account opening. remember, Vanuatu's corporation laws allow suffixes to corporate names, such as Limited, B.V., and GmbH, which further confuses bankers who see such names, as to the origin of such companies.

I am sure that there are other permutations and combinations, ploys and dodges, that money launderers, when confronted with a closed companies house, can attempt, which I am not aware of; my thoughts are that one should, for the time being, decline to accept any Vanuatu corporate or other entity, as a vehicle to own a bank account, or securities account, for so long as the national emergency there persists.

* If the country is still unfamiliar to you, it was formerly a joint British-French possession known as New Hebrides.

Saturday, March 14, 2015


Fast & Furious, Venezuelan style.
Remember Guido Antonini Wilson ? The Venezuelan-American racing car driver, from Key Biscayne, Florida. who was intercepted with $800,000, while attempting to smuggle the cash into Argentina, allegedly as an illegal presidential campaign contribution for Sra. Cristina Kirchner ? The case ended up as a criminal prosecution, in Federal Court in Miami, involving the charge of being an unregistered agent of the Government of Venezuela. It was the subject of several articles on this blog. Of special interest was the Venezuelan offer, to Antonini, of a payment of $2m for his silence, and threats made against the life of his son, if he did not cooperate. The unwanted presence of Venezuelan intelligence officers in Miami, who were not properly registered as foreign agents, made the story one of great public interest, especially within the Venezuelan expat community.

The controversial death of death of Argentinian prosecutor Alberto Nisman has focused attention upon Argentina once more. Now,  a magazine article from a Brazilian writer, and a book by an American journalist, which are based, in part, upon information gleaned through interviews of former senior Venezuelan officials who have obtained asylum in the United States, add to the original suitcase gate backstory. Reportedly, the money Antonini sought to smuggle into Argentina came directly from Iran, which was buying not only Argentine delays in the investigation into the 1994 AMIA bombing, but also purchasing critical nuclear technology, which would assist Iran in converting Uranium into Plutonium, for its nuclear bomb program.The $2m hush money for Amtonini was also from Iran.

Apparently, there exists a Memorandum of Understanding, between Iran and Argentina, whereby Argentina will receive large payments, and in exchange, will make its classified nuclear program available to Iran, as well as stall the AMIA bombing investigation, and remove the INTERPOL alerts, filed against the perpetrators of two Iran-sponsored bombings of Jewish targets in Argentina.

These connections, between Iran & Venezuela, are sell known and documented, but the new intelligence regarding the developing relationship, between Argentina and Iran, could result in a substantial increase in Country Risk for Argentina, due to international sanctions in place against Iran.


If you have read the complete text of the Settlement Agreement* between Treasury's office of Foreign Assets Control (OFAC), and Commerzbank AG, you should be sick to your stomach, for the egregious nature of a decade of flagrant and intentional Iran, Cuba, Sudan and Burma sanctions violations, which resulted in a $258,660,796 civil penalty, is one of the worst we have ever seen. Notwithstanding the monetary penalty, I consider the Settlement Agreement to be an utter failure, on the part of OFAC, to impose a penalty commensurate with the magnitude of the violations, and the damage that the bank deliberately caused, by choosing to violate international sanctions, for pure monetary gain.

The shortcomings, in my humble opinion:

(1) Commerzbank neither admitted, not denied, the statement of facts in the Settlement Agreement. OFAC is NOT the SEC, and to give Commerzbank pass on taking responsibility for its actions is not only wrong, it could affect any subsequent civil litigation against the bank, filed by parties who have been damaged by the bank's actions. The full effect of the Arab Bank  case has not yet been determined, but individuals who, now or in the future, may choose to bring an action against the bank for physical injuries they suffer, should Iran deploy weapons of mass destruction, or ballistic missiles, outside its borders. The bank's admission of wrongdoing would have facilitated such claims, and possibly shortened discovery during litigation.

(2) Where are the rumored mass firings of the Commerzbank executives that have appeared previously in the media ? Unless it is is specified in the Settlement Agreement, how can it be enforced ? If you saw the correspondence in the document, you know that there was organized deception, perjury to regulators, and behind-the-scenes alteration of incriminating information. That had to come from the top, and there has been no press release published, detailing resignations or terminations.

(3) Many of the earliest violations date back to a period close to a decade ago; are we to believe that OFAC did not have evidence of massive Commerzbank violations at least five years ago ? Why the unexplained delay in enforcement ? The turtle-like slow nature of OFAC operation resulted in many, many millions of dollars of Iranian money moving into, and through, the US financial structure.

Given the number of violations, and total amount of money involved, anything less than a suspension of Commerzbank's ability to maintain any branch, representative office, or agency, in the Continental United States is any insufficient penalty. Why allow a bank whose conduct rises to such a level to operate in the United States ? This settlement will only encourage additional international banks to
choose to further flaunt international and US sanctions. OFAC will be continued to be regarded by international banks as a paper tiger, and one not to be feared.

is this how the world's banks see OFAC ?
*Settlement Agreement

Friday, March 13, 2015


Panama's Supreme Court of Justice has announced that there is insufficient evidence to proceed with an investigation into the reputed use of $403.4m during the reelection campaigns of 34 Deputies in the National Assembly. This money, was were allegedly used by the Deputies to secure votes in their favor, were said to come from government funds, and from kickbacks received from individuals who were awarded lucrative government contracts.

The announcement, that the investigation was being abruptly closed, was made by all the magistrate Judges of the Court. It stated that there was insufficient evidence of both the source of funds, and the identities of the recipients, according to the Comptroller General's Office. Coming during a period of major investigations into corrupt activities of senior Panamanian government officials, the cancellation of this investigation has raised serious questions as to whether there will be any significant inquiry into suspected corruption in the National Assembly, Panama's legislative body.

 Unless the legislative, executive and judicial branches of Panama's government are all part of the reform process, it is feared that Panama's systemic corruption will never be eradicated to the point where the rule of law trumps the use of bribes and kickbacks in government operation.


The US Attorney's Office in Houston has filed its brief of Appellee in Ponzi schemer Allen Stanford's appeal of his criminal conviction and sentence. In the 196-page filing, which first discusses the fraud,  cover-up, bribery and obstruction, in a detailed statement of facts, the Government makes these points:

(1) Stanford's jurisdictional challenge, regarding the SEC, failed because the SEC is not a party to the criminal prosecution.
(2) Under Plain-Error review, the Superseding Indictment sufficiently apprised the defendant of the charges against him.
(3) The Court properly acted properly within his sound judicial discretion, in denying Stanford's request for a 90-day continuance of the trial.
(4) The parallel civil proceedings, brought by the SEC, and the criminal proceedings brought by the United States, did not violate the Double Jeopardy clause.
(5) The Court correctly denied Stanford's motion to suppress evidence obtained by the receiver, and produced to investigative agencies.
(6) The Court properly responded to Jury Notes on the definition of "scheme", and the meaning of CDO [collateralized debt obligation].
(7) The Court properly applied the Sentencing Guidelines enhancements.
(8) The Court showed no partiality, toward the United States, during the trial.
(9)  No Cumulative Error exists (two or more errors at trial that are harmless error individually, but when taken together can amount to reversible error).

The Government's position is that Oral Argument is not necessary in this case.
*Stanford vs. United States, Case No.: 12-20411 (5th Cir). 

Thursday, March 12, 2015


The photograph above is the Grady County Jail in Chickasha, Oklahoma. If you are wondering why that is relevant to Richard Chichakli's case, he was transferred there, from the Metropolitan Detention Center, in Brooklyn, New York, where he was detained prior to, and during his trial. Chichakli wrote to the Second Circuit Court of Appeals, from Oklahoma, seeking information on the status of his appeal. Exactly how did Chichakli end up in faraway Oklahoma, you ask ?

Well, it wasn't because his last name, and the name of the town where the jail is located, are similar. Chichakli received a large dose of what is referred to as diesel therapy, where a Federal inmate thought by the Bureau of Prisons, or the Department of Justice, to be troublesome during his confinement, is shuttled around the United States, in an indirect and delayed route, from his point of origin, in this case New York City, to his final prison where he will serve his time, in this case, Miami, Florida.

In this way, the BOP demonstrates to the inmate that it can be punitive, without breaking the law. if you have never been a "guest" in a rural county jail, the accommodations are rudimentary, at best, sometimes dangerous, and not anywhere near the relative comforts of a Federal correctional institution. I once was dumped at the Escambia County jail, in Pensacola, Florida, because I was being transported during a weekend, and felt compelled to make a weapon upon arrival, for my own protection.

Chichakli had a lot of problems with the corrections staff in Brooklyn, and in Manhattan, during his Pro Se trial preparation, as he felt his conditions of confinement made adequate trial prep impossible. He obviously made some enemies with the staff, and someone took it out on him, by seeing that his transfer was neither direct, nor efficient, and gave him some intermediate stops that were clearly unnecessary.

Now, he will be unable to meet with his appointed attorney, as that individual maintains his law office in New York. Was his designation to a Florida prison made to interfere with his ability to assist in his appeal, or merely a routine assignment ? Think about it.   


The Panamanian Cabinet has this week approved a draft of a major bill intended to suppress money laundering, terrorist financing, and financial transactions in support of weapons of mass destruction programs; the proposed law has now gone to the National Assembly, where there will be intense pressure for prompt passage. Do you want to know why ?

Panamanian businessmen are extremely upset, due to recent actions, of the US banking system, to block all transactions in three key Panamanian industries, resulting in the inability of companies to either make, or receive, payments from American banks. As you may know, Panama does not have a central bank, and all its US Dollar transactions are cleared through the Federal Reserve.

Additionally, a number of prominent Panamanian banks have had their transactions blocked in the United States, ever since the FATF placed Panama on the "Grey List," designating it as high risk for money laundering. Some Canadian banks have reportedly followed suit, and not approved any wire transfers that exceed CA$5000. Most North American compliance officers are painfully aware that there are very few effective compliance programs in Panama's banks, many of which are known to accept dirty money, and turn a blind eye to the source of funds of the money being deposited. We have decided to decline to identify the names of the banks whose transactions have been blocked, as there is  an ongoing criminal investigation in progress, and we have no wish to obstruct justice.

When he was in office, former president Ricardo Martinelli received a blunt warning, from US regulators, that continued rampant money laundering by Panamanian banks would result in a total block upon all funds, coming from, or directed to, Panama. Martinelli's response was to visit several European financial centers, especially Lugano, in Switzerland, seeking possible alternative solutions to being frozen out of the US financial structure, but he returned without obtaining the assistance that he sought.

Of course, mere passage of tough AFT/CFT/WMD legislation, alone, will not reduce American pressure; actual enforcement, meaning the filing of criminal charges against the most visible violators in the financial industry. Will Panama ever lift itself out of its present status, as the preferred destination for narco-profits, and the proceeds of corruption ? We cannot say, but if it fails to truly reform itself, look for some very nasty US sanctions to be imposed, resulting in not only capital flight, but a major shock to the economy, when its financial services industry is forced to severely contract.


The new Venezuelan visa, which all US citizens and permanent residents must now acquire to travel to that country, may have effectively ruined the ability of Americans to go to that country on business. Whether this was the intention of the Government of Venezuela is not known, but the net effect of the  imposition of mandatory visas, will certainly be to rule out any timely business travel, if needed.

First of all, there has been a statement that there will be a 90-day waiting period for processing; any urgent visits, by Americans to Venezuela, to examine ongoing investments, purchase or sell, and close, a transaction, will be out of the question. Liquidation of assets will also be problematic, especially where the presence of the owner or operator is necessary, or required by local law.

Second, the application must be presented in person, forcing American businessmen who do not have a Venezuelan Consulate in their city, to undergo travel, probably multiple times, to secure a visa. I painfully recall making repeated trips to the Russian Consulate in Washington, when I needed a visa to lecture there; those trips can be expensive, and time-consuming.

Third, the requirements that the applicant must demonstrate that he or she has the financial capability to cover expenses while in Venezuela means that personal banking information must be given to officials in a corrupt country, where crime is rampant and uncontrolled. How will American applicants know that their personal information will not result in them becoming victims of financial crime ? Add this to the requirement that applicants must prove that they are residents of the US, through ownership or rental of real property, and you have a recipe for potential financial disaster. Would you give up this information to a dangerous foreign country, just for a visa ?

If one cannot travel there, when necessary, in real-time, Country Risk for Venezuela becomes a clear and present danger for investors, businessmen and financial professionals with interests in the country. It is suggested that those few remaining Americans whose risk appetite still allows them to do business inside Venezuela, should now consider an exit strategy, lest they sustain a total loss.

Wednesday, March 11, 2015


Flight capital, coming from Venezuela, and largely of dubious origin, has played a major role in funding many of the real estate projects that have improved the quality of life in the Dominican Republic in recent years, but there has been another source, which traces back to convicted Ponzi schemer & pyramid operator, David Murcia Guzmán, the man behind DMG.

When he moved the financial end of his criminal enterprise to Panama, Murcia, flush with cash, placed much of it with many prominent Panamanian businessmen, who promised to invest it in real estate. As we know, after Murcia's arrest, and what some say was a deportation orchestrated by some of the very individuals whom Murcia had entrusted his cash, much of those bags of currency were kept by the recipients. Remember, not all of that money was collected from participants in DMG's program; a large portion is generally believed to have been drug profits that Murcia was seeking to secrete within his massive business operation, and ultimately launder, for unknown criminal entities.

The expanding corruption investigation, that is presently taking place in Panama, has reportedly uncovered the fact that no less than $40m of that cache of Murcia's dirty money, was bulk cash smuggled into the Dominican Republic, and has since been used to fund many important real estate projects there.

While the identities of the cash smugglers has not been made public, the final destination of that money, in the opinion many Panama observers, may have been the former Homes Real Estate principal, Alexandre Henrique Ventura Nogueria, whose success story as a real estate developer in the Dominican Republic, has certainly been on the fast-track. We should also remember that Ventura himself indicated that he had first-hand knowledge of the payments that Murcia made, which were large cash "donations" to presidential candidates.

Alex Ventura
Unfortunately, Dominican authorities are not about to inquire too deeply into the source of funds of money that has made a substantial contribution to development in the Dom Rep, but the resulting double trouble for compliance officers in North American banks, possible Venezuelan narco-profits, blended into Colombian Ponzi scheme proceeds, may cause compliance officers to raise their assessment of Country Risk for the Dominican Republic, and they are correct, should they do so. Perhaps it is indeed time to pay more attention to foreign businessmen operating in the Dominican Republic.

Tuesday, March 10, 2015


This week's Executive Order, sanctioning seven senior Venezuelan government officials, military commanders, and secret police leaders, seems to have caused a large number of Politically Exposed Persons (PEPs) to start looking for the door, lest they be the last ones to cooperate, when American indictments are unsealed. Those that are not already set up in Panama, or the Dominican Republic, may be thinking of becoming Cooperating Individuals, in exchange for a grant of immunity from prosecution in the United States.

Rumors abound, in Palm Beach, that the prominent Venezuelan banker, Victor Vargas, has been talking to certain parties there, about subjects that might make his country's most senior officials nervous. The names of other Venezuelan PEPs who are quietly considering an exit strategy have come up, but I have no wish to jeopardize any active investigations; let  justice take its course.