Much has been made, in Dominica, of the adequacy of the due diligence investigation, performed upon the Iranian national, Alireza Monfared, prior to his acquisition of a Dominican diplomatic passport, and it is time to clear the air about whether there was a failure to identify, in advance, an individual who was a major partner in a global Iranian oil-for-gold illicit sales program, which was outlawed by the United Nations, the United States, the European Union, Canada, Australia, Japan, and many other countries.
Tony Astaphan*, apparently the unofficial spokesman for the Dominican Prime Minister, Roosevelt Skerrit, who, with others, operates a nonpublic program that sells diplomatic passports to foreign nationals, has detailed a long list of what he claims are all the databases and resources consulted by an American search firm, prior to approving Monfared for his passport. Mr; Astaphan claims that the named firm is duly licensed to provide due diligence services, although no such government or regulatory licenses exist, in the United States, to support his allegation, and his biography failed to show that he himself has had any training or experience in the field of compliance, so his status as an authority on this subject is questionable.
While we have not been privileged to see the report, (as all documents and correspondence, records of payments, and files, have never been made public to Dominicans) none of the resources listed by Astaphan indicate that any inquiries were made in Iran, or Malaysia, where he was conducting business. Any such investigation demands enhanced due diligence, which requires field inquiries, and review of local language resources, such as articles in principal newspapers, including those controlled by the government, court records, official notices, and information on associates, relatives, and corporate entities.
Furthermore, compliance firms in the United States follow what we call banking best practices, which are the benchmark standards set, either by law, customary practices in the industry, or regulatory agencies rules and regulations.
In the United States, Congress passed, in 2010, the Comprehensive Iran Sanctions, Accountability, and Divestment Act, more commonly known as CISADA. Like the Money Laundering Control Act of 1986, CISADA has been interpreted to have extraterritorial reach.
This law raised the bar, for compliance officers conducting investigations, related to matters within the Iran sanctions regime. The new standard became what 'should have been known,' incorporating a new standard, referred to in CISADA as "knowingly." If significant or relevant information is available, the compliance officer is charged with that knowledge.
(1) I personally knew that Monfared, Babak Zanjani, and Reza Zarrab, were engaged in Iran sanctions evasion activities, in 2012, due to inquiries I made into sanction evasion, and I was even aware that Monfared used Zanjani's middle name, Morteza, to conduct oil business in the Labuan tax haven of Malaysia. The use of a middle name is a common technique, to evade detection by those who restrict their inquiries to databases of high risk persons. If I personally knew about Monfared in 2012, certainly many other compliance officers also were familiar with his name, and illegal business activities.
(2) Any competent enhanced due diligence investigation, conducted in 2014, upon Alireza Monfared, should have included a check of local Iranian media. During which time, the inquiry would have confirmed that the target of the investigation was a Politically Exposed Person, or PEP, due to his business arrangement withe Government of Iran, and association with several other known, prominent Iranians, who were themselves PEPs. If an individual is deemed to be a PEP, he may have access to government, or other funds, and the inquiry must then insure that source of funds used for the diplomatic passport was legitimate, not the proceeds of corruption, or theft.
(3) I see no listing, in Astaphan's resources, named as having been, consulted, of any Iran sanctions-specific database, which do exist as commercially available to subscribers. When I was the Financial Crime Consultant at World-Check (now Thomson-Reuters), from 2006 to 2011, there was such a database available, known as the Iran Economic Interest (IEI) Solution, created in 2010, in response to CISADA, and United Nations Security Council Resolution 1929.
If this case is an indication of the level of enhanced due diligence performed upon diplomatic passport applicants, then all the previously-accepted individuals, who "qualified," and were approved, should be reviewed, by an independent, non-Dominican investigator, and those who are found to be unqualified should have their passports cancelled.
* Some Dominicans actually believe that Astaphan controls the actions.and decisions, of the Prime Minister, much as did the Russian "mad monk," Grigori Rasputin, with the Royal Family in Czarist Russia, but I have not found any medical or psychological evidence to support that claim, which may be more urban legend than fact.
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