Saturday, September 30, 2017


The Department of Homeland Security published a regulation effective October 18, 2017 adding social media information to the data collected on all new immigrants to the United States. This new requirement, which will result in additional information that can be used to determine possible connections to terrorist activity, underscores the importance the US Government attaches to social media background checks as a source of intelligence generally not available through conventional investigative procedures.

The specific items to be collected are stated to be:
(1) Social media handles.
(2) Aliases.
(3) Associated Identifiable Information.
(4) Search results.

Previously, USCIS has only reportedly collected social media information when specific Syrian refugees were flagged, or when question were raised during interviews with applicants. The DHS Office of Inspector General recently conducted a number of pilot programs concerning the use of social media to screen applications for immigration, and an unclassified version of the report can be reviewed below*. Platforms employed included one from DARPA and one, with its identity redacted, from the private sector, which may be from government contractor Giant Oak, Inc.

The new regulation recites that the sources of the information shall include "publicly available information obtained from the Internet, public records, public institutions, interviewees and commercial data providers."

Readers who wish to review the complete text of the document may access it here. The citation is 82 Fed. Reg. 43556 (September 18, 2017).
*DHS Pilots for Social Media Screening need Increased Rigor to Ensure Scalability and Long-Term Success

Thursday, September 28, 2017


The US Attorney for the Southern District of Florida has filed a motion to withdraw its pending Motion for Reduction of Sentence for attorney Scott Rothstein, asserting that the mega-Ponzi schemer violated his plea agreement. A Rule 35(b) motion was timely filed by the Government, for Rothstein, but it provided that it expressly reserved its right to withdraw it.

A specific statement of the defendant's violations appears in the motion, "In the judgment of the United States the defendant provided false material information to the Government and violated the terms of his plea agreement."Motion at 2. Case law regarding Rule 35(b), and cited in the motion, affirms that the Government has sole discretion to file such a motion, and to file a motion to withdraw it. Rothstein's defense attorney has objected to the motion. You may recall that, when Scott Rothstein's wife was seeking to conceal their valuable jewelry collection, and sell it covertly, Scott committed perjury while attempting to assist them. He was untruthful in an affidavit. At that point, the US Attorney's Office appears to have properly lost all interest in continuing with any efforts to reduce his fifty-year sentence.

At this point it might be appropriate to remember that Rothstein forged court documents, including judge's signatures, to create bogus structured settlements of sexual harassment and employee discrimination claims. He used his special qualifications as an attorney specializing in such cases to defraud investors, even hedge funds, of many millions. If anyone deserves an effective life sentence, it is clearly this Ponzi schemer.

Wednesday, September 27, 2017


The use of social media investigative tools by law enforcement agencies in the United States and abroad appears to be increasing, and the results typically obtained are often superior to information gleaned through traditional investigative methods. Here is a recent example that illustrates the utility of social media platforms in identifying key connections previously impossible to detect.

The Juggalos are a loosely organized fan organization, devoted to the music and culture of the Insane Clown Posse (ICP), a hardcore "horror rap" group known for extremely violent anti-police, anti-establishment, and misogynistic lyrics. The Juggalos, many of whose followers are themselves active gang members, were designated a criminal gang by the Federal Bureau of Investigation, and classified as such by several states, as well as by the National Gang Intelligence Center, in an unclassified white paper entitled Juggalos: Emerging Gang Trends and Criminal Activity.

Some Juggalo members do not participate in criminal activities, and appear to be groupies, but there is no generally accepted investigative method to determine who is merely a fan and can be ruled out, and who is a career criminal involved in violent crime, including homicides. Furthermore there is no central organizational leadership, and the identification of members of the local affiliates can become a difficult task for law enforcement. This is a task ideally suited for social media investigation.

Some agencies have conducted their intelligence gathering of rank-and-file members in their state through the use of social media tools. One such search identified a Virginia parole officer Jessica Bonometti through her social media postings reportedly supporting Juggalos, and who thereafter was terminated by government officials*. Her affiliation was totally unknown to her superiors but has now been deemed an unacceptable risk by them as she could have unwittingly assisted other members in criminal activities, or even been subject to blackmail herself. Credit social media search tools for making a connection where none could otherwise been detected.
*Juggalos Fans of Insane Clown Posse protest FBI Gang Label


In a recent interview, Panama's Minister of the Economy and Finance, Dulcidio de la Guardia, discussing the impact of the Panama Papers, correctly pointed out that less than twenty per cent (20%) of the offshore corporations formed by the law firm of Mossack & Fonseca were Panamanian. The vast majority were incorporated in the British Virgin Islands. Given the "expertise" displayed by the Mossack firm, in tax evasion, money laundering, drug proceeds, and hiding the proceeds of official corruption for sleazy PEPs, you should understand why they took that action, more often than not.

the BVI company, with its untraceable bearer share ability, makes the identification of beneficial owners a practical impossibility, even if you are a powerful North American or European law enforcement agency. Remember, when foreign journalists show upon in Tortola, to interview the local financial service providers, they are promptly deported or expelled, for the lion's share of government revenue is derived from the island's sordid offshore financial industry.,

Chinese clients are especially interested in acquiring a BVI company, which they can generally obtain in Hong Kong, due to the opaque nature of the corporate structure, distance from the People's Republic tax authorities, and user-friendly BVI government practices, facilitating potential global clients, irrespective of their national origin, sanctions evasion scheme, or transfer pricing  agenda.

Should ALL British Virgin Islands Companies be treated with suspicion ? I would answer in the affirmative, unless the client actually has a physical presence there, such as sailboat rentals, or some other actual brick-and-mortar tourism business. To do otherwise could expose your bank to unnecessary risk, including prior owners/holders of the company, who sold it to your client, leaving a footprint of criminal, or terrorist financing, activity. And forget about all the public relations pap, about the fact that it is British territory; there's total local autonomy for legislation, and protection of homegrown financial services businesses. Do not accept BVI companies that do not exist to service local businesses, there if you sincerely want to reduce your risk.

Monday, September 25, 2017


The trial judge in the Reza Zarran/Mehmet Hakan Atilla Iran criminal sanctions evasions case, pending before the US District Court in Manhattan, has reset the October trial date. A Superseding Indictment was recently filed, naming additional parties defendant. The trial will now commence on November 27, 2017. Pre-trial Conference will be held on November 16.


The US Government has now placed Venezuela on its list of primarily Middle Eastern countries subject to major restrictions on visas, and you can expect to see a Venezuelan reply to these sanctions. This may mean that American businessmen could face restrictions upon their ability to enter Venezuela, which could seriously impact efforts to conduct financial transactions, react to problems, and put out fires that arise.

By any measure of risk management principles, Venezuela could make it impossible for bank clients, and US banks themselves, to collect on debt, resolve commercial disputes, and do business in Venezuela. If you do not already show Venezuela as unacceptable, for Country Risk purposes, you should immediately reexamine your position, reduce financial exposure, and advise clients accordingly.

Saturday, September 23, 2017


If you live in Canada, and work in financial services, then you are aware that the Foreign Minister of Canada has sanctioned forty prominent Venezuelan nationals. Unfortunately, the articles covering the sanctions fail to list the full names of each of the individuals included in the Special Economic Measures.

Therefore, we are making that information available by posting a hyperlink to the government website. Please access the names, as well as the Regulations, here.

Friday, September 22, 2017


Reports from China indicate that the country's Central Bank has notified Chinese banks to cease extending credit to North Korea, to refrain from accepting any new clients from the DPRK, and to wind down all business with that rogue nation. It is said this is in response to massive United Nations, and American, financial sanctions.

Thursday, September 21, 2017


By Executive Order, President Donald Trump has today given the Secretary of the Treasury authority to close correspondent accounts of foreign banks that have transactions benefiting North Korea, in addition to massive other sanctions. Readers who wish to review the complete text of the Executive Order may access it here.


 We have been covering Venezuelan governmental corruption, and the dangers that it poses to US banks and NBFIs, for many years. This week, the Financial Crimes Enforcement Network, or FinCEN, issued an alert, FIN-2017-A006, entitled Advisory to Financial Institutions on Widespread Political Corruption in Venezuela. The advisory details many of the Red Flags that have previously appeared on this blog, and it is humbly suggested that it be  required reading for all compliance officers whose bank clients have any international trade with Venezuela, in both its private, as well, as public sectors.

Readers may access the complete text of the advisory here.


The authoritative American think tank, the Gatestone Institute, has reported that ISIS is in possession of 11.000 valid, blank Syrian passports*. This statement, if verified, means that compliance officers must consider ALL Syrian passports invalid, for the purposes of due diligence and enhanced due diligence. Only through alternative methods of investigation, can any compliance query of Syrian nationals, be considered adequate, and given the current state of the civil war in Syria, there is no
acceptable means of vetting Syrians.

Whether ISIS is using those passports to place terrorist agents into the countries of the European Union is not known, but it must be assumed, given ISIS acceptance of responsibility for a number of terrorist acts committed recently in Europe. Could ISIS terrorist financiers, or terrorist operatives, masquerading as refugees, make their way to the United States and Canada ? Compliance officers, who operate a risk-based system, must now regard all Syrian passports as suspect, and not true evidence of identity.
* The use of blank passports by terrorist organizations is not new. Though there was a concerted campaign to keep the story out of the media, American Forces in Afghanistan in 2011 confiscated a large number of valid, blank passports, issued by the Republic of Haiti, in Taliban-controlled territory. Sources from Haiti alleged that they has been purchased, by Palestinian businessmen, before 9/11, and shipped to the Middle East.

Tuesday, September 19, 2017

Gary James Lundgren, banned from selling securities for the rest of his life by FINRA*, after a long history of violations, capped by a flat refusal to open his books to the agency, is still thumbing his nose at the American regulator, by selling bonds to Americans, while he resides in the Republic of Panama, an offshore sanctuary, outside the reach of American justice.

Lundgren, who has a long and sordid career involving the sale of suspicious High Yield Investment Products (HYIP), and defrauding expats by stealing their real estate, is believed to have stayed out of the Continental United States for years, due to the fact that there are warrants for his arrest. He is operating as a broker-dealer, but he has no license to sell securities.

Above is a screenshot from one of his websites; note that he is using the name "Interpacific Investors," which was the name of his US firm,  reportedly closed at the insistence of American regulators.

Additionally, Lundgren is acting as a finance company in Panama, though he is not authorized to do so, as he is not licensed to provide financial services. 
* Readers who are not familiar with Mr. Lundgren's case are advised to read our prior blog articles, which detailed the FINRA proceedings against him.


Donald Trump and Ricardo Martinelli
More than two weeks after a Federal magistrate judge in Miami ordered his extradition, to face massive criminal charges in his native Panama Ricardo Martinelli's defense team has not yet filed the Habeus Corpus proceeding that they stated would be filed on his behalf, to contest the decision. Given that Martinelli, the former president of the Republic of Panama, could be shipped out at any time, their failure to act is puzzling. he faces more than a dozen corruption charges, including Insider Trading, plus the illegal surveillance case, which is the specific subject of his extradition.

Martinelli remains in custody in the downtown Federal Detention Center, as his efforts to bond out were met with failure. Some Panama sources claim that he intended to flee the United States for the "safety" of the Dominican Republic, should he have succeeded in obtaining release on bond. The Dom Rep is home to a number of fugitives from justice, wanted by Panama, and who have, bluntly, bought their freedom from extradition, through payoffs.

The final order to extradite Martinelli must come from the US Secretary of State, and Panamanians sincerely involved in reforming their country are anxiously awaiting his decision, as he is the poster child for the corruption, and financial crime, that Panama wants to relegate to history, as it moves forward towards true reform.

Monday, September 18, 2017


The upcoming September 25 referendum on independence, to be held by the Kurdish Regional Government, has spawned not only anti-Israeli, but also anti-American anger in Turkey. Elements of the ruling party in Turkey have staged anti-American protests, including one at the American airbase at Incirlik. 

Iraq, which was artificially created in 1920, by the victorious European powers, is composed of a number of diverse ethnic and religious groups, and Kurdish territory was divided among several countries. Statements to the effect that the loss of Kurdistan will affect Iraqi territorial integrity and history are not supported by fact. Some officials in the Middle East are calling Kurdistan the "next Israel," as it is a movement by a specific ethnic group for independence, and could threaten the existence of a number of countries in the region, by oppressed ethnic groups

 Israel is the only country that has supported Kurdish independence, drawing further Arab wrath, but the fact that the US, which is not a supporter, is being targeted by Turkey, does not bode well for American financial interests there, meaning that Country Risk on Turkey may have to be increased substantially, if the officially-sponsored anti-American demonstrations continue.

Turkey is also unhappy with the American criminal prosecution of the Iranian oil sanctions evader, Reza Zarrab, and the other defendants, and compliance officers who are charged with assessing Country Risk in the Middle East should be be watchful.

Sunday, September 17, 2017


Vladimir Kokorev, an aging, frail Russian businessman who, with his wife & son, has been held for two years as a material witness in a bogus money laundering and corruption investigation targeting the president of Equatorial Guinea, will be the subject of proceedings before the European Parliament, on September, 28, 2017.

 A Spanish investigative judge, Ana Isabel de Vega Serrano, recently extended Kokorev's material witness custody order for two more years but no evidence or information implicating Kokorev has ever been produced, notwithstanding the demands of Kokorev's counsel, who have accused Spanish business interests of fabricating a criminal case for financial gain in Equatorial Guinea.

The case is considered to be a major human rights violation, by a number of MEP members, who have repeatedly brought it up in the press. The European Parliament hearing,  entitled Justice, Human Rights and Due Process in the EU - The Case of Vladimir Kokorev," will be presided over by MEP Fulvio Martusciello, and will feature testimony by attorneys and experts, and will be open to the press.


Twenty three prominent human rights organizations have petitioned the Secretary of the Treasury to impose sanctions upon Ricardo Martinelli, the former president of Panama, who is fighting extradition to his country,where he faces an obscene amount of criminal charges pending against him.  Copied on the letter is the Secretary of State, who will make the final decision regarding Martinelli's extradition from the United States.

The organizations have invoked what is known as the Global Magnitsky Human Rights Act, which authorizes the US Government to impose financial sanctions and visa restrictions upon foreign nationals involved in corruption and human rights violations. Martinelli, and his associates, are accused of having stolen over $100m for government social projects aimed at assisting the citizens of Panama.

Whether this petition will accelerate the conclusion of Martinelli's extradition is not known, but it demonstrates the universal disgust of the NGOs with the massive corruption he is accused of participating in during his term in office. Panama's anti-corruption prosecutors are eagerly awaiting his extradition, and many Panamanians have questioned why the United States allowed him to enter in the first place, given his sordid record on corruption, insider trading, and illegal surveillance, all of which were well known when he fled to Miami, just ahead of criminal charges.

Readers who wish to review the letter may access the complete text here.

if Panama is going to move towards real reform, Martinelli, his corrupt cabinet members, and his criminal associates, all must end up in a Panama City courtroom, to face justice, and the stolen millions recovered and returned to government accounts.

Saturday, September 16, 2017


Ponzi schemer Franicsco Illarramendi, who pled guilty in US District Court in Connecticut, and is presently serving a sentence of 156 months, is now seeking to be released from confinement, while his Habeus Corpus petition is pending. He is asking that the Court place him under Supervised Release until there is a ruling on the petition, which alleges that his constitutional rights were violated during the proceedings.

Illarramendi claims that his Sixth Amendment rights were denied, due to his inability to select counsel of choice, and due to ineffective assistance of counsel. A fair reading of the petition when it was filed did not indicate that it has any legal merit.Ponzi schemers, when caught, frequently deny liability, and seek to portray themselves as victims.

Additionally, he pleads that he cannot adequately defend all his pending civil proceedings, and that he should be released to properly assist his stand-by counsel. His two hedge funds were not registered with the appropriate regulatory agencies, and he has been a primary target of civil action by the US Government.

Readers of this blog may recall that the defendant changed lawyers multiple times, delaying sentencing the case for five years, from 2011 to 2015.  His release pending sentencing was revoked, and he was returned to custody, in 2013, for violating the terms of his release. It is doubtful, given his prior conduct during the case, that there will be any release granted, and in any event his motion to be released at this stage has no basis at law, notwithstanding a 15-page pro se motion, detailing his reputed clean prison record, and alleged non-existent flight risk status.


If you are a senior officer at an international bank whose clients are engaged in financial transactions with Venezuelan entities or nationals, or is considering extending credit to them, look at the present value of the Bolivar to one US Dollar. It is one of the reasons were have raised Country Risk on Venezuela to the highest, meaning unacceptable, level. The country's creditors are owed billions of dollars, and and utter default is looming in the near term.  

Friday, September 15, 2017


The US Magistrate Judge presiding over the extradition proceedings against the former president of Panama, Ricardo Martinelli, has denied Martinelli's counsels' motion to stay the extradition order pending against him. Magistrate Judge Edwin Torres ruled that there is little likelihood of success, and no irreparable harm if no stay is granted. Additionally, the Court stated that, due to the work already completed by defense counsel, a Habeus petition could be prepared without much  effort, and without the need for a 30-day stay, which is not necessary.

I would  think that Martinelli's counsel should prepare the Habeus Corpus petition without delay. it has been 15 days since the extradition order was issued, and we have not seen it filed yet.


Do any Taliban hold Dominica passports ?
 Pakistan, the home of the Taliban and Lashkar-e-Taiba terrorist groups, is one the most dangerous countries on earth. So why does an authorized agent for the sale of economic citizenships (with passports) located in Islamabad, a Pakistani city that is located right near Kashmir and Afghanistan ?

The company is called Reliance Immigration Law Advisers. Ltd., and it is listed on the Dominica CBI website, only it cleverly only shows a Karachi address. The Islamabad office, which sits right in the middle of the world's prime hotspots for terrorism, should have disqualified it for approval as an agent for any Caribbean passport program; so why was it approved ?

There is no website listed on the Dominica government webpage. If you do locate and visit the company's webpage, you will see no mention that it is selling Dominica CBI products, as only UK visas are advertised. The fact that it is an agent for Dominica seems to be a dark secret.

Reliance's website, and name, seems to suggest that it has lawyers on the premises, but nowhere on the website are any qualified attorneys shown, listed, or even hinted at as being on staff.

Minister Francine Baron

The local Dominica agent for Reliance is Caribbean Consulting Services, Ltd., which has been linked to Dominica's Foreign Minister, Francine Baron. As a former Attorney General, we wonder why Ms. Baron would approve of a CBI consultancy with its primary office in Islamabad. Who in Dominica will terminate Reliance's authority to sell CBI ?


 In the dark and sordid world of Washington lobbyists. where lawyers seek favorable legislation, as well as foreign aid for their clients, some are, regretfully, engaged in laundering the proceeds of their foreign governmental leaders' corruption. They receive illicit capital, and disburse it, according to their clients' orders.

Joseph Szlavik, who formerly held a number of government positions, including with the While House, and at US Customs, is the subject of a 2017 Federal civil forfeiture complaint,  alleging that he moved over eight million dollars for the present and former president of the Republic of Gabon. Ali & Omar Bongo. The Government seized $475,000 in cash, held by Szlavik in a network of accounts, owned by companies controlled by Szlavik.

Szlavik, whose FARA registration lapsed decades ago, appears to have been the front man for the corrupt leaders of Gabon for decades. Reports from Washington indicate that he will probably be indicted shortly for making false statements to Customs & Border Protection agents, as he repeatedly lied about the status, and disposition, of large sums of cash that he brought into the United States for his corrupt clients.

The complaint alleges that another American was also a career cash courier for Gabon's leaders, Derek Ashby, who reportedly resides in Gabon. 

This case makes one wonder how many Americans in D.C. are moving criminal proceeds for corrupt foreign leaders, who get rich by stealing from the national treasuries of their countries. 


A criminal court judge in the Republic of Panama has entered two adverse rulings against attorneys from the law firm of Mossack and Fonseca, in the money laundering cases pending against him. The law firm, whose name has become synonymous with dodgy bearer-share corporations, international corruption and the facilitation of massive tax evasion, was outed by the disclosures contained in the so-called Panama Papers scandal, and its partners face long prison terms for facilitating money laundering, on a global scale.

First, the Court has denied the motion to dismiss all charges, filed on behalf of Mossack attorney María Mercedes Riaño. She was affiliated with the Mossack Brazil office.

Second, the Court denied a motion, filed by Panama attorney Guillermina McDonald, on behalf of Mossack name partners, Jurgen Mossack and Raul Fonseca Mora, to consolidate the two pending money laundering cases filed against them. Those two cases arose out of the Panama Papers disclosures, and the Brazilian Lava Jato (Car Wash) corruption case. The Court found that the facts in the two cases were completely different, and therefore, consolidation was not permitted.

Anti-corruption prosecutors in Panama are zealously pursuing evidence in the case; They have requested judicial assistance from the governments of Uruguay, Ecuador,  Colombia, the Ukraine, Switzerland, and the United States.

Thursday, September 14, 2017


If you were wondering why it is so important to pay so much attention to Dominica, with its dodgy CBP program, and illegal diplomatic passport sales scheme, look at the country's bloody visa-on-arrival laws. They allow nationals from the most high-risk nations in the world to enter, without applying for, and being granted, a visa, of any kind. This means international terrorists, Islamic radicals, career criminals, and even individuals who are a danger to society, all get a free pass into Dominica, where they can purchase a CIP passport, or even a diplomatic passport. There is no screening process applied to arrivals

Alone among the nations of the East Caribbean, Dominica allows nationals from these countries to enter, and obtain their visa upon arrival:

(1) The seven Middle Eastern countries banned by executive order of US President Donald Trump from entering America.

(2) The eight Muslim-majority countries, all of whom have elevated levels of Country Risk.
Saudi Arabia
United Arab Emirates

If anyone can enter Dominica, and when there may easily change their nationality (and identity), the risks posed by criminals and terrorists who, armed with a new name & passport, can then enter any country in the Western Hemisphere, there is a clear and present danger to the Americas.

Is it now time for all immigration & customs agents abroad to detain arriving Dominican passport holders, for extensive secondary screening, and possible deportation ? When will it reach the point where Dominicans are banned from entry, due to the well-placed fear that they may be criminals or terrorists ?


The use of platforms that employ Artificial Intelligence and deep cognitive learning to social media (SM) inquiries which have applications to both criminal law enforcement as well as in civil due diligence investigations, has yielded useful information that generally cannot be obtained using conventional techniques. They have been critical in criminal gang member identification, successful insider trading investigations, Politically Exposed Person (PEP) verification, and to identify the associates of terrorist organizations.

Criminal syndicates, whether they be engaged in violent acts, or of the while-collar variety, or be radical terrorists, react, on a real-time basis to existential threats, and we must presume that some of these criminal organizations are seeking to implement forensic countermeasures against investigations that troll social data for relevant intelligence. Simply asking their members to refrain from all social media activity is not feasible, nor can it be properly policies, given the wide variety of social media outlets freely available in the marketplace.

There are a number of social media management and social media marketing (SMM) programs commercially available which might be adapted to uncovering one's own gang members, criminal conspirators, or terrorist organization SM footprints, with the goal towards, having once found that information, terminate its future use, but that simply will not work.

Here's why:
(1) Archived information will be available to investigators, even after the current SM information has been deleted. Some of the information deleted will have also migrated to other sites, not necessarily known to the criminal element attempting to shut down its SM information flow.

(2) Criminals are not known for following orders issued by their superiors, especially rank-and-file members working on the street, or in the field. They are generally non-conformists who are only engaged for the fast money that is attracting them. Some may just find alternative SM site to play on.

(3) Family members, close associates not in the organization, friends, followers, and members of their  local social circle are not bound by orders issues by syndicate leaders. Their postings can lead investigators to targets who are themselves deliberately staying offline. 

(4) Many individuals do not realize how much information is already available on SM, on multiple sites, some of whom are obscure but very useful, and closing down all of the places where conspirators either have posted information, or where information has been posted about them by a third party, makes total SM recall impossible.

(5) What about those individuals who have their postings mirrored to many other major SM sites ? One can never find, let alone delete, all those entries. The posters themselves might not even know how many other sites their postings appear one. You cannot put the genie back in the box.

To summarize, even through the use of SMM programs may be able to identify the extent of relevant information, of interest to investigators or compliance officers, one simply cannot remove it all from the Internet, to seal that information resource. Social media investigative platforms will continue to ferret out the data, notwithstanding any efforts to deny it to investigators. SM Platform capabilities will trump any attempts to deny investigators the critical intelligence they require for a successful outcome.


The Superintendent of Banking of Panama (SBP) has levied fines upon three of the country's financial institutions, all for money laundering and regulatory violations. Named were Multibank, Banco Nacional de Panamá and Banvivienda. These actions are part of recent efforts, by the Superintendent, to modernize and reform the country's banking industry, and to elevate local compliance programs to the level of banking best practices.

The fines imposed are:
(1) Multibank: $300,000 for AML/CFT violations and $100,000 for regulatory violations.
(2) Banco Bacional de Panamá: $106,750 for AML violations, and $21,875 for regulatory violations.
(3) Banvivienda: $90,000 for AML violations, and $40,000 for regulatory violations.

The banks named have reportedly instituted improved internal controls, and increased regulatory compliance procedures, as well as improving controls on Politically Exposed Persons (PEPs).

Readers who are bilingual, and who wish to review the SBP Sanctions Announcement, may review the complete text here.

Wednesday, September 13, 2017


 The United States Attorney's office in Miami has filed its opposition* to Ricardo Martinelli's Motion to Stay Certification, or to Stay Surrender, in the extradition case filed by the Republic of Panama. Martinelli has been certified as extraditable, and his defense counsel is seeking a 30-day suspension of the extradition order, to allow his attorneys time to file a petition for Habeus Corpus.

The Government asserts that, due to the specific circumstances of this case, there will be no decision takenby the Secretary of State to issue a surrender warrant. Therefore, Martinelli cannot meet the standard for the issuance of  stay, as he cannot be irreparably harmed if it is not issued.
*Opposition to Ricardo Alberto Martinelli Berrocal's Motion to Stay certification, or, in the Alternative, Stay Surrender,  filed September 11, 2017.


The Department of Homeland Security has implemented Visa Sanctions against four nations that have failed to cooperate with American deportation efforts to repatriate their nationals who are convicted felons. This action may drive financial criminals who wish to operate in the United States into acquiring Citizenship by Investment (CBI) passports from countries in the East Caribbean offering economic passports. Compliance officers in North America should be alert to this possibility, lest their banks fail to identify them at account opening.

The countries that have refused to cooperate with deportation of their criminal nationals who have been ordered removed from the US are:
(1) Sierra Leone
(2) Guinea
(3) Eritrea
(4) Cambodia

The Secretary of State will no longer issue "B" Visas, for business or tourism, with some exceptions. Given the ease which Citizenship by Investment passports can be obtained in certain East Caribbean jurisdictions, compliance officers should closely examine the Place of Birth on any passport they encounter from any of the five East Caribbean countries, to determine if the holder is from one of the above countries.

Financial criminals often swiftly adapt to changes in circumstances, well in advance of the dissemination  of information about their tactics. If These African and Asian nationals are found to be claiming to be citizen of an East Caribbean nation, enhanced due diligence, at the very least, should immediately be conducted; you may consider such individuals to be unsuitable as clients, as part of your risk-based compliance program.

Readers who wish to review the complete text of the DHS Announcement here.

Tuesday, September 12, 2017


 White collar criminals know that immediately after a natural disaster, bankers are often focused upon providing services where they are solely needed, resulting in an understandable lack to attention to routine, but vital, AML/CFT compliance matters. They often take advantage of such chaos, to move or launder dirty money. Controlled charities, nonprofits and NGOs are often the chosen vehicle.

The method might be a disguised payment, from a bogus or controlled charitable organization, or a contribution that is diverted prior to reaching its stated destination. It might be as crude a request for a large amount of cash, to send to a stricken Caribbean country. It could be a "donation," where the recipient is not exactly whom it professes to be.

Please do not send your compliance staff of on other duties, when they must be at their assigned posts, as gatekeepers, to suppress, at real-time, any attempts to move or launder the proceeds of crime into the Caribbean. Yes, please authorize genuine relief payments, but be on the alert for anyone who attempts to take advantage of your bank's efforts to assist in charitable, nonprofit or NGO funds payments abroad.


Defendants Reza Zarrab and Mehmet Atilla
The trial judge in the landmark Reza Zarrab oil-for-gold Iran oil sanctions evasion case, pending in US District Court in Manhattan, has set a status conference i the case for  September 27, 2017. The case is set for trial on October 30, and it was rescheduled from a previous December, 2016 date. Will the Court reset the trial date again ? The recent filing of a Superseding Indictment, naming additional parties defendant, and pending defense discovery issues raised, regarding adequate time to conduct the same before trial, may result in a new trial date.

PM Roosevelt Skerrit and Alireza Monfared

If that occurs, there may be additional defendants named, as there are a number of individuals who certainly must be nervously following the conduct of the trial, especially the filing of the Superseding Indictment. Zarrab's Iranian partners, additional Turkish bankers and businessmen, as well as certain individuals who moved Iran's oil profits, and who sold passports to some of the scheme players, rightly fear that they may, belatedly, become part of what has become a massive case, most likely intended by the US Government to demonstrate the extraterritorial jurisdiction of American sanctions against Iran.

Babak Zanjani


 A proposed Panamanian law, intended to prevent capital flight, will impose a five per cent tax on all remittances sent abroad. Specially targeted are money service businesses, as bank transfers and payments by post will be exempt form the law, as drafted, as well as remittances from the country's Free Zones.

According to figures from the Ministry of Economy and Finance, remittances abroad have reached a figure of $800m, which the ministry feels is a drain upon the Panamanian economy. Whether this law, if passed, will force the MSBs in Panama out of business, leaving the banks with major new business, is a question that deserves serious study.

Sunday, September 10, 2017


 Hernán De León, a Panamanian Magistrate acting for the country's Attorney General, has traveled to Canada to seek the judicial assistance of the authorities there, to determine whether in Panama's Insider Trading case of Petaquilla Gold, former Panamanian President Ricardo Martinelli traded on non-public information. Martinelli allegedly doubled and tripled the amounts he paid for Petaquilla stock, which was publicly traded on the Canadian Securities Exchange.

Martinelli, most of the members of his Cabinet, and a number of his close associates, allegedly made millions of dollars, by trading upon inside information he reportedly acquired, and shared with them, defrauding investors in Panama, Canada, the United States, and elsewhere.


 According to public statements made by the Deputy Director for the development of technology at the Central Intelligence Agency, the CIA is presently running 137 pilot projects that utilize Artificial Intelligence, to collect information from big data, a large portion of which is extracted from social media. Another CIA conference speaker gave credit to AI to increase the volume and velocity of the Agency's social media data collection, which is a major improvement upon the previous method, the use of intelligence analysts to search and locate information.

While little in the way of specific details were provided during a public seminar on intelligence and national security, AI was credited with facilitating a project that automatically tags objects in videos for future analysis, and in predicting future events based upon big data and correlational evidence. Social data mining and surveillance is reportedly the primary focus of a number of companies receiving Agency funding, as AI provides a unique tool to mine big data from social media platforms.


Barbuda damage due to hyrricane.
  If there ever was a more appropriate subject for the application of revenue received by the nations of the East Caribbean who offer Citizenship by Investment programs, hurricane disaster relief is it. Some islands, such as Barbuda, have suffered catastrophic damage and, barring major US intervention, the CBI funding stands out as the best source of much-needed recovery capital.

There are a couple of problems, however, that should be solved, before the CBI Caribbean nations will be able to count on the funding actually be certain to be applied where it is needed most:

1. Substandard Due Diligence; while some countries are applying Enhanced Due Diligence to vet CBI applicants, to rule out those who are unacceptable, others, drunk with the prospects of cash, fail to protect their programs from the approval of high-risk, or even criminal, foreign nationals. The proposal , advanced by Antigua, of a unified program, administered by a master transnational entity, would probably eliminate that issue.

2. Corruption; the illegal diversion, of CBI payments, including padding the normal fees with additional "surcharges" that go right into the pockets of the consultancies, and their referring parties, must stop, lest the cost become so high that applicants look outside the Carribbean.

3. The illicit diplomatic passport programs; these passports, which seem to be generally affiliated with CBI consultancies, often through corrupt senior government officials, and which violate the requirements of the Vienna Convention on Diplomacy, must be publicly terminated and disavowed. They give CBI programs a bad name, what we call guilt by association, and they must be stopped.

Will the East Caribbean CBI jurisdictions step up, reform their programs, and having reaped the increased benefits, fund disaster recovery ? We cannot say, but we are hoping it will occur.   

Saturday, September 9, 2017


Atilla & Zarrab

In case any reader is wondering about the status of Turkish banker (Halkbank deputy CEO) Mehmet Atilla's pending motion to dismiss, the filing of a Superseding Indictment, which added two  more Halkbank executives, and a Reza  Zarrab associate, rendered Atilla's motion moot, and it has been dismissed by the Court for that reason.



The recent Israel Defense Force Intelligence Branch "Operation Social Resistance," used Facebook to simulate a Hamas-like organization posing as a new female friend, to initiate online chats for the purpose of eliciting soldiers to click on a link which would activate mobile telephone or computer surveillance and tracking. It was conducted after six Hamas operatives, complete with attractive photos, sought to convince soldiers to download a program, ostensibly for chat access, which gave Hamas complete access to multiple devices. The operation demonstrates that there are dangers posed by users unaware of such threats, which could thereafter result in unauthorized access to critical confidential information and intelligence.  

On the non-military side, this issue does present risks, which the proper use of social media resource tools can mitigate down to acceptable levels. The public and private sectors where such risks exist include:

(1) Government leaders who are concerned that their rank-and-file staff might give attackers access to confidential or even classified information, through social media targeting similar to that detailed above,

(2) Executives in the private sector who are fearful that their employees may become the targets of industrial espionage, giving opponents' agents access to proprietary information, or even trade secrets.

In both types of situations, the prudent use of a social media platform, employed within a work environment where staff are aware of and consent to social media monitoring for internal security purposes, could expose external operations conducted by adversaries, seeking to gain illegal access to communications, to capture information. If any staff have been penetrated, they can be identified through the use of a program utilizing an AI/algorithm searching for such enticements, and any damage which may have occurred can be dealt with, or disinformation can be disseminated.

 Additionally, the use of proactive operations by your company, such as deployed by the IDF, where those who were tricked into providing access, receive a warning message, indicating that they could have been penetrated, will raise the level of awareness among staff members.

It is suggested that leaders create both programs to raise the level of awareness of critical staff members and employees, and also use social media research tools to identify possible  penetrations, by adversaries,using the social media tactics illustrated in this article. The optimum result would be prudent social media use by the potential targets, and exposure of any possible penetration/security violation that has already occurred.

Friday, September 8, 2017


The Iran oil sanctions evasion case, which is centered upon Reza Zarrab, the billionaire oil trader, has been expanded through a superseding indictment to include a former Minister of the Economy of Turkey, two more Halkbank executives, and a close business associate of Zarrab. The defendants, who disguised illegal oil transactions as humanitarian shipments of food, medicines, and medical equipment, violated the IEEPA, and committed bank fraud and money laundering.

Named as additional parties defendant are:

(1) Mehmet Zafer Caglayan, formerly the Minister of the Economy and Foreign Trade Minister.
(2) Suleyman Aslan, a former General Manager at Halkbank.
(3) Levant Balkan, Assistant Deputy Director at Halkbank.
(4) Abdullah Happani, a known business associate or subordinate of Zarrab.

Readers who wish to review the Superseding Indictment, can access the complete text here.

Many court observers have been waiting to see whether any of the original defendants in the Zarrab case would change their plea, and render cooperation sufficient to result in the indictment of others. We are waiting to see whether any of the original defendants will be the subject of a superseding information,  which is a good indicator of such cooperation. 

Turkey's President, Recep Erdogan, has labeled the new indictments both political, as well as an action against the Turkish state. It also reminds us that a related massive Turkish official corruption case surrounding Zarrab, that was abruptly dismissed, prior to the New York indictment.

Wednesday, September 6, 2017


Check back for new articles after hurricane passes through the State of Florida.

Monday, September 4, 2017


The National Liberation Army, more commonly known as the ELN, has signed a bilateral cease fire with the Government of Colombia, which is believed to be the first step towards a comprehensive peace treaty. The agreement goes into effect on October 1, ends January 12, and can be renewed with mutual consent.

The ELN financed its terrorist operations through kidnappings, and extortion,  especially targeting oil pipelines. If a peace treaty is eventually signed, a future political party that the ELN could become, will probably need the billions of dollars that it has cached, as the result of its criminal conduct.

if you are a compliance officer at an international bank, be alert for any unusual US Dollar transfers, with a destination in Ecuador, where the ELN has power, or in Panama. The ELN may soon break open its piggy banks abroad, or some of its leaders may seek to divert cash to their own personal use.


 Diezani Alison-Madeuke in Dominica, Alizeera Moghadhan in St Kitts, Walid Juffali in St Lucia, and Eric Resteiner in Grenada. These dodgy individuals are well known to European and North American compliance officers, as they were all purchasers for millions of dollars, of diplomatic passports from the nations of the English-speaking East Caribbean that participate in Citizenship by Investment a/k/a economic citizenship programs. While the CBI programs are legitimate, the diplomatic passport passport sales schemes are not, and they are tarnishing, and even poisoning, them, in the eyes of the international community.

We have previously detailed precisely why these diplomatic passports are illegal; they violate the Vienna Convention on Diplomatic Relations, which imposes specific requirements on diplomats, regarding their accreditation, duties and responsibilities, travel, and residence. None of the career criminals, tax evaders, fraudsters, international sanctions evaders, and nationals from OFAC-sanctioned countries qualify as working diplomats, due to their utter failure to discharge those duties. In fact, their erratic and meandering travel itself disqualifies them from any claim of diplomatic immunity, which they universally qualify, the moment arrest warrants are issued, with little or no success.

Corrupt leaders in the East Caribbean, who line their pockets, employing Swiss bank accounts, and US real estate investments, issue these diplomatic passports, which are not authorized by local law, and the domestic law enforcement structures in those countries are generally too weak, or corrupt, to control this grossly illegal activity, and other nations choose not to interfere in their internal affairs.

Add to this mix the fact that a small number of the CBI consultancies, the ones without any moral fiber, actually assist diplomatic passport purchasers in their quest for a get-out of-jail passport. While there are several firms that choose to ignore those requests, a notorious few enthusiastically facilitate this illegal practice. These few bad apples are tarnishing the good name of the reputable firms.

Finally, the scandals surrounding the exposure of criminals with diplomatic passports, rubs off on the CBI programs of the East Caribbean, as bank compliance officers, foreign law enforcement agencies, and customs & immigration officers, are now associating the dirty diplomatic passports with the CBI industry, and its passport holders. Even worse, events such as the reimposition of visas, by Canada after a bogus St Kitts "diplomat" tried to gain entry, shows that blow back can be universal, even affecting the holders of all passports, from a nation that issues the dirty passports.

 Unless lawmakers in the legislatures and parliaments of the East Caribbean act to specifically ban the issuance of diplomatic passports to foreign nationals, without exception, this abuse will continue, and the privileges CBI passport holders presently enjoy abroad could start disappearing, rendering them without significant value.  


Sunday, September 3, 2017


Readers who wish to review the complete text of the 93-page Final Order on the Government's Motion for a Certificate to Extradite to Panama, entered on August 31, 2017, may access the document here.

Saturday, September 2, 2017


Attorneys for the Panamanian national Abdul Waked Fares, the leader of what the US Department of Justice refers to as the Waked Money Laundering Organization, have filed their initial brief, in their appeal of the District Court's adverse ruling, against their challenge to massive OFAC sanctions, entered against the Waked organization's financial empire.

To summarize Waked's argument:

(1) Procedural Due Process requires that there be a meaningful opportunity for one to rebut the evidentiary basis of an SDNT designation.
(2) The OFAC disclosure violated Due Process, as it provided appellant no opportunity to meaningfully rebut the evidence against them.
(3) The lower court decision produces an absurd result.

The appellants had a Summary Judgment entered against them by the District Court. If the DC Circuit reverses, it could mean that future OFAC actions would be required to afford Procedural Due Process, meaning the specific evidentiary basis for each sanction, to nonresident foreign nationals, and entities.

Nidal Waked Hatum, who is facing an October trial in Miami, on money laundering charges, is being held in pretrial confinement. 




The successful use of social media AI/algorithm tools has proven their effectiveness, in both civil as well as criminal investigations. There are remote and indirect relationships, all of which are key connections found by the platform that would most likely never be uncovered using conventional investigative techniques. There is also an  application that is not generally known but is extremely useful, when deployed to find offline targets.

Certain types of investigations require learning the identities of individuals linked to known targets, but who are not users of social media. These include important investigations of:

(1) Gangs, not all of whose active members or associates might be social media literate, or who are so far down on the pecking order as to be offline. Law enforcement must identify all the individuals in the table of organization.
(2)Terrorist groups, whose rank and file may be inclined to individually stay off social media, while the organization itself extensively and adroitly exploits social media. They exist in both hierarchical and leaderless versions.
 (3) Verification of the status of an individual as a Politically Exposed Person (PEP), and whose  identification as a close associate of a corrupt government official means that his financial dealings overseas thereafter shall be closely and continuously monitored by his banks, if he is even found acceptable on a risk-based  assessment.

Information obtained on the individuals identified as the results of such inquiries are sometimes referred to as Shadow Profiles, for they rely upon information collected solely using open-source social media resources, to identify non-user targets, even though they are presently outside the social network. 

Shadow profiles are constructed by a close examination of potential associates who are already known, across the complete spectrum of social media, using Artificial Intelligence.  The information collected using algorithms is employed to infer that certain non-users are a part of the targeted group organization. Among the tools utilized are Internet Archive data sets, the use of information from defunct or disappeared social networking sites,  individual pages previously deleted, photographs of & references to nonusers appearing on social media, and user contact lists where nonusers are also listed.

The goal achieved is the near real-time identification of individuals who intentionally or incidentally are absent from conventional social media sites, but are known to be critical to building a complete and accurate picture of your target organization or group. The individuals identified as Shadows fill in many critical gaps in the target's table of organization.

Friday, September 1, 2017


This the new political party logo of the FARC which, since the peace treaty was signed has changed its name, but kept the acronym. Yes, it is still a Marxist organization, and no accounting has been made of the billions of dollars, in drug profits, that it holds outside Colombia. Keep the FARCs OFAC SDGT designation in mind, should you encounter any Colombian nationals, seeking to wire funds from known tax haven jurisdictions. The peace treaty is NOT an excuse to ignore OFAC sanctions.