RUSSIANS ACQUIRING CBI PASSPORTS FACE RESTRICTIONS AND CONTROLS AT HOME

Our recent article regarding the fact that an Indian purchaser of a CBI passport from Antigua & Barbuda apparently was never informed that acquisition resulted in severe consequences, is not a unique situation. Russian nationals who obtain a dual citizenship thru CBI also face restrictions and controls, and if they were adequately advised, in advance, of those issues, they might choose to reconsider becoming dual nationals.

Here are the restrictions and prohibitions:

(1) Russian citizens who acquire dual citizenship are required to notify the Government of their country within sixty (60) days. Should they fail to do so, fines on an increasing scale are imposed. There are reports that violators oft he notification regulation have had their Russian passports summarily confiscated, and all subsequent efforts to obtain a replacement are not successful. Inasmuch as most CBI passport holders do not wish to inform their home country about that fact, for tax, law enforcement or other reasons, Russian government action is a real threat.

(2) Dual nationality is expressly prohibited for Russian nationals who hold most government, administrative and political positions, and violators face severe criminal penalties. Given that the rule of law essentially does not exist in the Russian court system, convictions will invariably occur upon the orders of the country's leadership.

 Corrupt PEPs happen to constitute a large segment of CBI passport applicants. It is doubtful that East Caribbean CBI jurisdictions ever notify their Russian clients, in writing, of these restrictions. Given the large number of Russian nationals known to have acquired CBI passports in St Kitts & Nevis, and in Dominica, we wonder how many have run afoul of the Russian criminal justice system, or will the next time they pull out that CBI passport at an international airport.

How many other foreign nationals are in violation of the law when they are handed a CBI passport ? Why don't the CBI agencies warn their applicants ?

PROPOSED LEGISLATION WILL EXPAND GTOs NATIONWIDE

No, not this type of GTO; the FinCEN Geographic Targeting Orders that require real estate purchasers in Miami, New York, Texas, California & Hawaii who pay cash and use shell companies to disclose the identities of the Beneficial Owners of those corporations. US Senator Marco Rubio wants them extended to cover the entire United States; He has a valid point.

We salute him, and support any bona fide effort to crack down on foreign nationals laundering criminal proceeds through American real estate investments. According to a report, cash sales using shell companies declined 95% when the GTO was placed into effect in Miami-Dade County. This isn't about privacy, it is about money laundering.

UK PARLIAMENT COMMITTEE WHITE PAPER ON CARIBBEAN ELECTION CORRUPTION

While there have been many articles about the House of Commons Interim Report Disinformation and 'Fake News', hyperlinks to the original source are not being inserted in the stories, so readers who wish to review it may access it here.

CHOKSI CASE CONFIRMS THAT CBI JURSIDICTIONS ARE NOT CONSULTING THE LAW BEFORE ISSUING PASSPORTS

The ongoing flap over how a prominent fugitive fraudster from India was granted a CBI passport last year by Antigua & Barbuda has just gotten worse. Reliable sources with expertise in the law of India have declared that Choksi's acquisition of a second passport was a violation of the Constitution, as India does not allow dual citizenship, under any circunstances.

The punishment for an Indian national obtaining dual citizenship is automatic forfeiture of Indian citizenship, as well as other criminal penalties. Furthermore, every Indian passport always carries a printed warning to that effect. Readers are directed to the image appearing below:

This means that:


(1) The CIP unit in Antigua, which would have received the applicant's Indian passport, failed to even read it, because if they did, the warning that appeared therein would have required them to give the applicant written notice of the forfeiture of his Indian passport. Prudently, they should have rejected his application forthwith.

(2) The CIP unit obviously never checks local laws of applicants' jurisdictions, to ascertain whether the issuance of a CBI passport causes the applicant to violate the law. This leads me to believe that virtually all CBI applications are processed by clerks and secretaries, and that in-house attorneys, if they even exist, do not review applications. Even the most junior lawyer would have researched the law, before signing off on the applicant. Again, this is further evidence of zero due diligence.

This brings up the issue of validity of CBI passports in general. Are a number of them void as a matter of law, due to the laws of the applicant's country of origin, or voidable, at that country's option ?  Can banks in North America and The European be found liable for onboarding new customers presenting CBI passports that are later held to be void ab initio ?  Without a historical  look-back at all the outstanding CBI passports, issued by Antigua, St Kitts, Dominica, St Lucia & Grenada, we will never know for sure.

CARIBBEAN CCTV VIDEO FOOTAGE, LOADED IN A FACIAL RECOGNITION PLATFORM, COULD CATCH MONEY LAUNDERERS AND FINANCIAL CRIMINALS IN THE ACT

Remember this Wanted poster of Boko Haram members from last year ? Agents of the Government of Nigeria took news photographs, newsreels and captured video footage of the members of this sanctioned terrorist organization, and employed facial recognition software to identify the individuals, using social media resources*. This was a textbook lesson in the utility of facial recognition software, in the field of counter-terrorism.

We all know tbat many law enforcement agencies extensively use facial recognition software to identify suspects, witnesses, and sometimes even victims of crimes, but what about if we take it a step further, into uncharted territory. Could facial recognition software identify not only money launderers and financial criminals, but actually place them in dodgy jurisdictions and circumstances as well ?

For example, I know that suspect A is a well-known money launderer for Asian organized crime groups, but what if I was to place him in Basseterre, the capital of St. Kitts, outside the offices of an attorney who that very day formed a number of shell companies later linked to the Suspect ?

Or, what if I had information regarding Suspect B, a Russian national involved in a massive ponzi scheme, and what if I had an image of him entering a Venezuelan-controlled offshore bank linked to him, in Roseau, the capital of Dominica ? And what was in all those obviously heavy suitcases his assistants were lugging in the door ?

Or,  Supect C, a Chinese national, known to be a fugitive from justice at home for corruption, but convenientlyt holding a CBI passport, is identified making a large real estate investment in Antigua, and is seen leaving a real estate office with his sellers ?

All these scenarios are possible, due to the explosion of CCTV installation in the Caribbean this decade. Although ostensibly placed for the purposes of suppressing the increase in violent crime in these countries, it is also a window upon Opposition activities, protests and other threats to the parties in power. An unexpected additional benefit to the proliferation of CCTV cameras is the possibility that the footage, if made available to Western law enforcement agencies , would greatly increase the changes of conducting successful money laundering investigations.

Suspects' actual itineraries in dodgy tax havens could be constructed from CCTV footage, that documented their appearance in the jurisdiction, visits to financial service providers, or local banks, as well as the identification of known associates and professionals who may themselves also be charged.

The addition of this Caribbean CCTV footage into facial recognition software platforms would greatly assist prosecutors who happened to be users of the platform, using these products seeking to prove money laundering charges, as the footage would prove suspects travel into a specific tax haven, or offshore financial center, on specific dates, confirm via images many of the locations he visited, and who accompanied him in these operations.

The question remains, however, how will international law enforcement agencies arrange to receive feeds of the Caribbean CCTV footage ?
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* Terrorist Wanted Poster drew information from Social Media

NEW JOINT ENGMONT GROUP/FATF WHITE PAPER ON CONCEALMENT OF BENEFICIAL OWNERSHIP

Readers are urged to review the new white paper on Concelment of Beneficial Ownership, recently published as a joint effort of the Financial Action Task Force and the Egmont Group. The outstanding 100-page effort contains extensive case studies. The complete text of the pdf document may be accessed here.

 

AUTOMATED COMPLIANCE CHECKS ! NO WONDER THERE ARE AML PROBLEMS

A United Kingdom bank that onboarded new clients, via automated compliance checks, has reportedly discovered potential money laundering activity. What's wrong with this picture ? Given that money launderers are nothing if not innovative, how can any financial institution rely upon non-human compliance policies and procedures to interdict them, on a real-time basis ?

Compliance officers use their experience, as well as their familiarity with current money laundering tactics and strategies, to identify, and suppress, suspicious techniques, whether they follow a pattern, or are unique or mutating. How can an automated program match the critical thinking of a compliance officer, who can sense emerging threats and trends; The answer is it cannot.

It is the seasoned frontline compliance officer, backed up by his or her director of compliance, who is the gatekeeper best equipped, by both training and experience, to spot possible money laundering trends. Since money launderers are skilled at creating credible profiles, automated compliance programs could be easily manipulated, hence the admission by its user bank that it was ineffective.

PROOF OF CONCEPT SHOWS THAT NOT ALL FACIAL RECOGNITION SOFTWARE PROGRAMS ARE RELIABLE

Some of the members of the US Congress

 A test, conducted by the American Civil Liberties Union (ACLU) on a prominent facial recognition software platform, confirmed that compliance officers who are considering what program to acquire should carefully check the effectiveness of each program, prior to purchasing it for Enhanced Due Diligence AML/CFT investigations.

The ACLU, using a commercially available FRS program, ran the photographs of the Members of the United States Congress through it, and, to its consternation, returned 28 positives from criminal mugshots. While the provider immediately noted that the ACLU was working with 80% confidence, and stated that a 95% rating would be more appropriate, 80%, which is the default rating, is the rating curently in use by American law enforcement agencies using that specific tool.  Members of Congress who were Persons of Color had More than 40% of the false positives, although they represent less than 30% of the group, which has fueled concerns that the program is neither accurate nor effective.

Before committing to a specific FRS product for AML purposes, you need to be assured that it will be effective, through actual testing, until a consistent pattern of effectiveness emerges. Just as many data companies jumped on the AML compliance bandwagon after 9/11, althrough they had no background in the field, and their products were often ineffective, the emerging facial recognition software industry has had its share of eager firms, all  seeking a part of the market share, but without an effective product; Let the buyer beware.

WHAT CAUSED A 90% INCREASE IN SAR FILINGS IN THE CAYMAN ISLANDS ?

The Interim Report,* for the second half of 2017 of the Financial Reporting Authority of Cayman Islands Government, shows a curious deviation from the norm. Suspicious Activity Reports, more commonly known as SARs, increased ninety per cent from the same six month period in 2016. One noteworthy statistic: 220 SARs were filed during the month of December, 2017.

The most commonly reported subjects were:
(1) Suspected tax evasion.
(2) Suspicious financial activity.
(3) Fraud.
(4) Corruption.
(5) Money Laundering.


This anomaly may have been caused, say Caymanians, by compliance officer awareness of the 4th round of the CFATF, Mutual evaluation, but there may be another cause. Was the increased SAR activity a response to the pressure of media coverage of what came to be known as the Cayman Gang of Four scandal, which was the theft of a reported hundreds of millions of dollars of assets owned by elderly Canadian pensioners and retired businessmen and professionals.

 Although the stress of loss of their life savings caused at least two of the victims to pass away, none of the four Cayman Gang of Four, who were all residents of the Cayman Islands, were ever charged or arrested for their crimes. The Cayman Islands Royal Police Service opened a criminal investigation, and the Cayman Islands Monetary Authority made inquiries, but justice was never served. Perhaps the heat from the Cayman Gang of Four scandal served to further sensitize Cayman financial services professionals to suspicious transactions.
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*Financial Reporting Authority Interim Report (1 July-31 December

US AGENCY DISCLOSES THAT ANTIGUA HAS NEVER APPROACHED IT FOR ENHANCED DUE DILIGENCE ON CBI APPLICANTS

Readers who have heard and seen the public statements of the Prime Minister of Antigua & Barbuda, Gaston Browne, stating that his country's Citizenship by Investment (CIP/CBI) Program receives Enhanced Due Diligence reports on all its applicants from the United States Government Embassy in Barbados, we made inquiries with the individuals who would have received such queries, and we have learned that no such requests for information have never been made by Antigua's CIU. Browne's assurances, which the global banking community has relied upon, when dealing with CBI passport holders, have turned out to be without a basis in fact.

When you add this information to our previous article*, which confirmed that INTERPOL is not being used to supply information to Antigua, through its members, one must regretfully conclude that there is little to no due diligence being initiated on CBI applicants, notwithstanding the hefty fees being charged. An audit, if conducted at the CIU, will quickly determine where those fees were diverted to, and who the recipient was.

The problem is that, in the rush to process CBI applicants for the programs being administered by the five East Caribbean states, shortcuts have been taken by government officials, to reduce processing time, and proper Enhanced Due Diligence investigations appear to be the first items cut out. That is why the programs require effective and qualified experts in the EDD field, from outside government, to administer the investigations. Anything else is pure folly, what we call governmental malpractice.

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*India says Antigua CBI Agency did not perform necessary Due Diligence Inquiry on Indian Fraudster

INDIA SAYS ANTIGUA CBI AGENCY DID NOT PERFORM NECESSARY DUE DILIGENCE INQUIRY ON INDIAN FRAUDSTER

The Indian fraudster and fugitive, Mehul Choksi, was granted a CBI passport by the Citizenship by Investment Unit (CIU) of Antigua & Barbuda, in November of 2017, without previously conducting even a modicum of due diligence in advance, and later lying about it when Antiguan media, and the voters of the country, demanded answers. This is proof positive that a complete housecleaning at CIU is in order.

When the CIU was confronted on the issue, it alleged that INTERPOL was consulted during the due diligence process, but the Indian government agency that handles such inquiries, the Central Bureau of Investigation, has stated that it received no such inquiry. This means the Antigua CBI made a material misrepresentation of the facts surrounding its due diligence efforts.

Mehul Choksi, fugitive, flees to Antigua

This was not some five year old case; Choksi got his passport at the end of 2017. It is conclusive proof that Antigua's CIU continues to approve criminal applicants for CBI passports, without any meaningful due diligence whatsoever. Without meaningful Enhanced Due Diligence in place, you can expect to see much more of the same in 2018.

WILL THE UK REGULATION ON PUBLIC DISCLOSURE OF BENEFICIAL OWNERSHIP OF FOREIGN CORPORATIONS THAT OWN UK REAL ESTATE KILL THE BVI'S GOLDEN GOOSE ?

 
The BVI government's perennial position, that it will not release to the public a register of beneficial owners of BVI companies, until other jurisdictions follow suit, has just lost that argument. The United Kingdom, by 2021, is requiring foreign corporations that own real estate in the UK to publicly disclose their ultimate beneficial owners. Both the BVI and the Cayman islands have been playing that game for years, but fortunately they will no longer be able to hide behind that excuse, and it may result in a major decrease in their lucrative shell company business.

Violators will reportedly face potential prison terms of up to five years, and an unlimited fine. The British Virgin Islands has been the global jurisdiction of choice for attorneys whose clients wish to conceal their ownership of expensive real estate, and the majority of pricey London real estate sales in recent years have been to shell companies, including many from the BVI.

We wonder how many top-drawer London estates will now be put up for sale by their Russian owners, ahead of the effective date of this reported amendment to the Criminal Finances Act, which became effective in 2017. 

 

IDENTITY MANAGEMENT TECHNIQUES MAKE FACIAL RECOGNITION SOFTWARE MANDATORY FOR AML/CFT COMPLIANCE

 A large number of compliance officers at international banks, where they regularly onboard affluent foreign clients, continue to regard the use of facial recognition software as optional, or ignore its usefulness altogether. This is a major mistake, for criminals, whether they be engaged in money laundering operations or other financial crimes, terrorist financiers or sanctions evaders, all enploy what has come to be known as Identity Management, to successfully outwit even the most experienced compliance officer., unless he employs a facial recognition platform, to confirm identity.

Here's how it works:

(1) the criminal actor, through payment to a corrupt government agencies and entities, obtains solid, albeit bogus, proof of identity, generally a passport & drivers' license, from his home country. He will supplement this alias identity with all the usual indicia of identity that confirm who he is, and where he ostensibly lives and works.   

(2) Having established his counterfeit identity, he will open bank accounts,  buy into, establish or acquire a business relationship, to satisfy and routine queries into his wealth.

(3) Finally, using third  parties, he will apply for, and obtain, a Citizenship by Investment, known as CBI/CIP, passport from one of the European or Caribbean jurisdictions engaged in their sale. He now has created two layers of protection, between the truth and his documented evidence of identity.

Now, this individual seeks to open a major account relationship with a North American or European financial institution, professing to be a wealthy international businessman. In truth and in fact, he has either a criminal record, links to countries or entities supporting terroriasm, or is an accomplished evader of international sanctions. His new identity is totally clean, and if a compliance officer engaged in Enhanced Due Diligence of data alone makes inquiries, he will most likely pass scrutiny.

However, if that same compliance officer were to utilize an effective facial recognition platform, he would learn of the prospective client's true identitty, and his scheme would be foiled before any funds could be deposited and transferred globally. Either an image from his dark criminal past, passport photograph, social media image, or other photographic evidence would immediately serve to rule him out as a client or customer.

Given the expansion of jurisdictions issuing CBI passports over the last decade, the use of facial recognition software to properly identify new clients has become a mandatory element of AML/CFT compliance programs; it is time for all compliance officers, in any financial industry, to move into the twenty-first century and incorporate it into their programs, lest they be continually fooled by Identity Management techniques.

FATF PUBLISHES AML/CFT WHITE PAPER FOR PROSECUTORS AND JUDGES

The Financial Action Task Force recently published a President's Paper entitled Anti-Money Laundering and Counter Terrorist Financing for Judges and Prosecutors. Readers who wish to review the white paper may access it here.

FBI RELEASES APPLICATION FOR CARTER PAGE FISA WARRANT

The Federal Bureau of Investigation has released the complete text of the 412 page Verified Petition that was filed to obtain a FISA warrant against Carter Page. Readers who wish to review the document may access it here.

While the document has been declassified, kindly note that a substantial portion has been redacted, but enough remains to detail the multiple elements of Russian intelligence activity that were alleged in support of the petition.

UBS CONSENT ORDER WITH OCC DETAILS AML COMPLIANCE DEFICIENCIES

The media has been covering the Consent Order, between UBS AG, both its Swiss headquarters, as well as its US branches in New York, Connecticut and Florida, and the Office of the Comptroller of the Currency, regarding its BSA/AML deficiencies; readers who wish to review the complete text of the 34-page order may access it here.

 

MALAYSIAN FRAUDSTER'S ST KITTS CBI PASSPORT DOES NOT SAVE HIM FROM ARREST IN CHINA

Jho Low, accused of diverting billions of dollars from Malaysia's sovereign wealth fund 1MDB, has been a fugitive on the run from his country's law enforcement agencies. International media from China is reporting that Chinese authorities arested Jho when he attempted to  enter the Peoples' Republic from Hiong Kong. I imagine he was quite surprised when taken into custody.

Jho was reportedly depending upon his Dt Kitts CBI passport to protect him from the law in his home country, and abroad, but apparently China disagreed. It detained Jho, when he attempted to further evade justice by entering China.  Some sources claim he was en route to St Kitts, from which he could not be extradited.

This is a testbook lesson in the reality that a CBI document is not the Golden Passport that its sellers claim it to be. Jho might not be extradited to face the music in Malaysia, for political reasons, but might now be doomed to spend a couple of decades behind bars in a nasty Chinese prison, trapped in a form of legal limbo which he cannot easily escape from.  

UNITED STATES OPPOSES RICHARD CHICHAKLI'S MOTION FOR EARLY TERMINATION OF SUPERVISED RELEASE

Viktor Bout's former partner, Richard Chichakli, has filed a Pro Se motion for early termination of his two year Supervised Release obligation, which was a part of his sentence. The US Attorney in New York has opposed it, stating that his conduct is not exceptional, and therefore early termination is not justified. Chichakli paid all the costs assessed against him, including the $70,000 restitution, and he has lived and worked without incident since his release in 2017.

What's wrong with this picture ? The purpose of Supervised Release is to monitor the post-incarceration conduct of a criminal defendant, to kep close tabs on him, and to prevent him from re-offending, as recidivism is a major problem in our criminal justice system. Chichakli, like most white-collar defendants, has served more than half of his Supervised Release, and as is customary, when the defendant is clean, the courts often terminate it early.

In this case, the interests of justice are not the motivation. It appears that the Department of Justice, not able to charge him with serious crimes, has made every aspect of his sanctions case as difficult as it could, from giving him "diesel therapy," where he was shipped all over the US, for no valid reason, to obviously interfering with his ability to prepare for trial, the ends of justice are not served. These were punitive actions, from any objective viewpoint.

Since he is a United States citizen, he cannot be deported; I am sure that the US Attorney's office in New York City would have loved to have kicked him out of his adopted country, but alas, they could not. So now, they must be satisfied with a cheap shot. Let us hope that the Court is objective regarding his motion.

EGYPT SEEKS TO GET ON THE CBI CASH COW BANDWAGON

A draft law pending in the Parliament of Egypt will, if it becomes law, allow foreign nationals to obtain Egyptian citizenship, in a move reported to have been made due to the country's large sovereign debt. An applicant, who will pay the equivalent of approximately $400,000, and resides in the country for five years, will receive citizenship, while his deposit goes into the country's national treasury. This legislation, which faces some opposition in the country, is also intended to invite foreign investment, which left when the Arab Spring began, to return, as it allows foreign investors the opportunity to reside there whole overseeing their holdings.

Inasmuch as Egyptian passports require visas to visit Europe, North America, and even the Middle East, they are not deemed to be desireable in the traditional CBI sense, but visa-free travel to the East Caribbean states who also sell CBI is strangely available, probably as an incentive to Egyptians to travel there and pick up a second passport.

If the bill becomes law, we shall report back with further details.

ST KITTS SOLD CBI PASSPORT TO BUYER FROM MALAYSIA, WHICH PROHIBITS DUAL CITIZENSHIP

East Asia media, which is extensively covering the billion dollar Malaysian 1MDB corruption scandal, continues to focus upon a major player in that case, Low Taek Jho a/k/a Jho Low, who remains a fugitive from justice, thanks in large part to his St Kitts CBI passport, which he reportedly relies upon, given that his Malaysian passport was cancelled by the authorities.

Jho is a Malaysian citizen, and Malaysian law, as the Immigration Director-General Datuk Seri Mustafar Ali has publicly stated, not only does not allow dual citizenship, it is an offense for a Malaysian nationals to have two passports. He further explained that, in Malaysia, dual citizenship is strictly prohibited.

As we have repeatedly explained, the international CBI consultancies that vend economic passports generally fail to cover any of the negative aspects of CBI passports; they rarely, if ever, dicsuss tax liability, and other legal restrictions that specific clients may find themselves in violation of, should they purchase those CBI passport the consultancies are selling. Their sales staff are not international lawyers, any in-house lawyers they have call themselves "legal experts" not attorneys, and are definitely not in any way qualified to give advice on the applicants' local legal issues, for they are not admitted to practice law there. Mainly, the CBI consultancies tell the clients only the favorable information.

Here, obviously, whichever CBI consultancy sold Jho his St Kitts CBI passport failed to research Malaysian law, to ascertain whether there are any legal impediments to Malaysian nationals buying CBI products. Therefore, his St Kitts passport is void, not voidable, under Malaysian law, and could subject Jho to arrest by any customs and immigration, ending his flight to escape justice.

It makes you wonder why intelligent, affluent applicants always fail to retain independent counsel to advise them on all the legal aspects of a potential CBI passport purchase. They are later very unhappy when they run afoul of the law and the CBI issuer revokes their passport. Perhaps if they had secured competent legal advice, the result might ahve been different.

MARYLAND DISBARS PROMINENT CRIMINAL DEFENSE LAWYER FOR MONEY LAUNDERING

The Court of Appeals of Maryland, the state's highest court, has disbarred* prominent  College Park attorney Walter Lloyd Blair, who served a lengthy sentence for money laundering, witness tampering, and ten other charges, which were affirmed on appeal. Blair filed an unsuccesful action against then-US Attorney Rod Rosenstein, whom he accused of being prejudiced against him, due to his Jamaican origin.

Blair on right, civil rights case co-counsel Johnnie Cochran on left.

 Blair, who was suspended in 2010 after his conviction, applied to be readmitted after his release in 2017. The high court denied his Petition for Reinstatement.
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*In the Matter of the Petition of Walter Lloyd Blair to the Bar of Maryland

IRAN SUES USA IN WORLD COURT TO REMOVE SANCTIONS

The Islamic Republic of Iran has filed an action in the International Court of Justice, against the United States, asking that sanctions and other restrictive measures, that the US will now reimpose on Iran, after withdrawing from the Joint Comprehensive Plan of Action (JCPOA), are a treaty violation, and must be withdrawn, and Iran compensated.

Iran's action is based upon a 1955 treaty with the United States, though there are issues regarding whether Iran itself violated that treaty many times, including the seizure of the US Embassy in Tehran in 1979, and the taking of American diplomats as hostages.

The ICIJ has published a summary of the proceedings, including the prayer for relief, which may be viewed here. The Court site advises that the complete text will be available shortly.

WITH RUSSIAN INTERFERENCE UNDER THE AMERICAN MAGNIFYING GLASS, THE CBI EAST CARIBBEAN COULD BE TARGETED

If you have been following the American outrage, over the repeated confirmation of Russian penetration of US institutions, we can expect to see its law enforcement and intelligence agencies continue in taking a closer look at Russian operations in the Caribbean, especially the user-friendly East Caribbean CBI states.

In the East Caribbean, where revenue-hungry politicians court obviously dirty Russian money for CBI and diplomatic passports, offshore banking licenses, and investment capital, with the attendant bribes and kickbacks, the United States is painfully aware of what is occurring. Its intelligence agencies are in the field, reporting back on the Russian footprint, and not much gets past them.

Take Dominica, who sends a CBI consultant from North America to Moscow, as its resident ambassador. Obviously, his posting there is to sell CBI passports to Russians, and given the dysfunctional level of due diligence Dominica performs upon applicants, those applicants may be GRU intelligence officers, working undercover, or sowing disinformation or misinformation, or moving money in support of Russian foreign policy.

Sooner or later, the welcome mat that the CBI states have put out for soiled Russian greenbacks will draw the wrong kind of attention from the US, if it hasn't done so already. In an effort to bar Russian influence seeping into the US from the Caribbean, expect strict measures, including sanctions, more de-risking, money laundering investigations, other financial crime cases filed in US courts,  and visa restrictions. All this may be painful to already depressed Caribbean economies.

Therefore, inasmuch as the CBI republics will always seek to maximize cash flow, expect that there will be a price to pay, so long as the officials there turn a blind eye to Russian capital, and those who use it to move against United States' interests.

EUROPEAN BANKING AUTHORITY HITS MALTA FOR PILATUS BANK SCANDAL

The European Banking Authority has issued a lengthy Recommendation, directed to the Financial Intelligence Analysis Unit of Malta, involving its major AML/CFT failures regarding Pilatus Bank. The Recommendation outlines the extensive work that the FIAU must undertake, to remedy its shortcomings and to comply with the European AML Directive.

Readerds who wish to review the complete text of the Recommendation to the Maltese Financial Intelligence Analysis Unit (FIAU) on action necessary to comply with the Anti-Money Laundering and Countering Terrorism Financing Directive can access it here.

 

IS THIS HOW RUSSIANS ARE PAYING FOR THEIR DOMINICA DIPLOMATIC AND CBI PASSPORTS ?

Meet Dmitrijus Apockinas, a Lithuanian banker, educated in Moscow. He is so close to Dominica's Prime Minister, Roosevelt Skerrit, that the PM named his son after him; Skerrit's first-born legitimate son is named Dimitri. Apockinas, who has a fistful of Dominica passports, currently lives and works in London.

It was not always so; longtime Caribbean observers may recall that he was the owner of Griffon Bank, Ltd., an offshore Dominican bank then located in the Government finance Centre, on Kennedy Avenue, precisely where Skerrit maintained his offices. Griffon was later sold to his Russian partner in crime, Vladimir Antonov, who needs no introduction. Antonov is currently in custody in Russia for bank fraud, among other charges. He allegedly was involved in criminal activity, including money laundering, in both the Baltic countries (Bank Snoras), and in Russia, which has been previously reported on this blog.

 Both Antonov and Apockinas own the West Indies Power Company (WIPO), which was rumored to have paid a substantial bribe to secure a government license from Dominica, to engage in geothermal drilling on the island nation.

 The bank was renamed Banco Transatlantico, and a branch was organized in the Republic of Panama as Banco Transatlantico SA. Antonov was the Vice President, and Apockinas was Secretary; the president was Jorge Jelinsky. Transatlantico subsequently went into liquidation in Dominica, and bank customers lost all their deposits.

After the bank's failure, Apockinas holds a number of positions, including at Net Element, Inc., a payments processing company on South Florida. His LinkedIn page claims that he was the CFO there. He relocated to London, currently residing in Penbroke Gardens.

Last year, he sets up a tele-pay company in the United Kingdom, PayAlly Limited. His partners are:

(1) Rafal Andzejevski, a Lithuanian engaged in trading with Russia, primarily petroleum products.
(2) Maxim Ivanchenko, a Russian national, and IT specialist, and the founder of Advapay OU, which is registered in Estonia.

Though PayAlly has a London base, it also maintains a customer support facility, for Russian-speaking clients, located in Warsaw, according to the published telephone number.

The question remains:  is Apockinas facilitating payments, by wealthy Russian nationals, for Dominica diplomatic and CBI passports, through Payally, and its affiliates ?

PAKISTAN'S UNITED BANK LIMITED SIGNS AGREEMENT WITH NEW YORK FED ON BSA/AML DEFICIENCIES

 
Readers who have clients doing business in Pakistan should review the complete text of the Agreement between the Federal Reserve Bank of New York  and Karachi branches of United Bank Limited, regarding the remediation of serious BSA/AML deficiencies. You can access the Agreement here.

RETRACTION OF ARTICLE ENTITLED "WILL THE LAW SOCIETY OF UPPER CANADA NOW INVESTIGATE LAWYER FOR ST KITTS CORRUPTION ALLEGATIONS ?"

PLEASE TAKE NOTICE that the article which appeared here, formerly entitled "Will the Law Society of Upper Canada now investigate lawyer for St. Kitts corruption allegations ?" has been duly removed and is hereby retracted and cancelled in full, due to the fact that the source of the information has failed to provide an evidentiary basis for his statements, which were the sole source of the article. Our apologies to all persons or parties concerned or involved.

CONSULTANCY: CBI APPLICANTS ARE MOSTLY FROM HIGH-RISK COUNTRIES

The principal of a major CBI consultancy in the United Arab Emirates (UAE) has noted, in a recent interview, that the country which represents the largest number of their CBI applicants is Pakistan. The executive also named the other nations whose nationals have been his firm's CBI clients.

Here is the list that was published in the article:

(1) Syria
(2) Lebanon
(3) Egypt
(4) Palestinian Arabs
(5) Jordan
(6) Iran
(7) Iraq
(8) UAE

The consultancy stated that it matches up applicants with the two CBI jurisadictions in Europe (Malta and Cyprus), and the three located in the East Caribbean (St Kitts & Nevis, Dominica and St Lucia). These are principally countries that are not democracies, and which have Specially Designated Global Terrorist organizations operating within their borders. Assuming that the CBI applicants from these countries present clean and authentic alias identification, sanctions violators, terrorist financiers or foreign intelligence agents, such as Pakistan's ISI, could obtain CBI passports, allowing them to enter the Schengen Zone, visa-free, seriously raising risk-levels.

It is issues like this that keep counter-terrorist agencies up at night. CBI passports allow both criminal, as well as terrorist, elements, to successfully enter, and operate, inside Western democracies. That is why jurisdictions that sell economic passports become high-risk targets for foreign law enforcement and intelligence agencies, and anyone that holds a passport from such jurisdictions are regarded as suspects. This is the unintended consequence of all that CBI cashflow.

READ THE INDICTMENT AGAINST THE 12 RUSSIAN INTELLIGENCE OFFICERS FOR CYBERCRIME

If you want to read the Indictment, filed today in US District Court in DC against a dozen Russian intelligence officers from the GRU, the complete text may be accessed here. The Style of the case is United States vs. Viktor Borisovich Netyksho, et al. 

EXECUTIVES WHO HAD THEIR SECRETARIES DO THEIR COMPLIANCE TRAINING IN THEIR PLACE RECEIVE A PROPER PUNISHMENT

You've gotta love those people at FINRA, the regulator for the securities industry. When a number of executives at Credit Suisse Securities had their secretaries do their required compliance training for them,  FINRA ruled that they had to give back a portion of their bonuses, as a penalty.  As we always say, let the punishment fit the crime. Imposing a financial penalty, individually, for failure to participate in compliance training, is just that.

Readers who wish to review the complete text of the FINRA Letter of Acceptqnce, Waiver and Consent may access it here.

FUGITIVE MASTER MALAYSIAN FRAUDSTER FLEES USING HIS ST KITTS CBI PASSPORT

Low Taek Jho, also known as Jho Low, a Malaysian financier alleged to have siphoned off billions of dollars from 1MDB, the Malaysian development fund, is a fugitive from justice, whose Malaysian passport was cancelled. How is he still at large, you ask ? Simple, he has a CBI (Citizenship by Investment) passport from St Kitts & Nevis, one of a long list of accused criminals who possess SKN CBI passports, and use them to evade justice elsewhere.

Low is alleged to have stolen $700m from the 1MDB, which he had access to;  he is on the run, and has reportedly been seen in Mainland China, Thailand, Taiwan, Hong Kong and Macau. Malaysian authorities believe he will eventually end up in St Kitts, as have a number of major white-collar criminals, who have sought refuge there. All you need is deep pockets and that prized CBI passport. If the government of St Kitts was wondering why visa restrictions, imposed by the US & Canada are not being lifted, this case should serve as a reminder.

THE MOST HIGH-RISK COUNTRY IN EUROPE INITIATES A CBI PROGRAM

 The Republic of Moldova, a country where widespread money laundering scandals and billion dollar frauds are rampant and uncontrolled, has announced that it is creating the Moldovan Citizenship by Investment Program (MCBI). While neither a member of the EU or the Schengen Zone, Moldovan nationals have visa-free access to Europe through a treaty, making a Moldovan passport attractive for citizens from high-risk or sanctioned jursidictions.

Unfortunately, the visa-free privileges come at a high personal cost, as Moldova's image as a center for organized crime more or less paints a red bull's eye on the back of any foreign national who presents a Moldovan passport at an international port of entry. CBI consultancies generally never inform their clients about the specific negative aspects of acquiring the passports of certain CBI countries, including whether you will draw unwanted international law enforcement attention with your new passport. Though the Schengen Zone access is tempting, any foreign investor who chooses to purchase a Moldovan passport is probably asking for more trouble than they bargained for. Nobody wants their banks accounts checked out by law enforcement, just because their passport states where they come from, but it is the logical outcome. Do you really want to be under a legal microscope ?

Lengthy interrogation by customs officers, strip searches, and extensive bags and baggage inspection most likely lay ahead for the Moldovan CBI passpot holders. Some might even call it guilt by association. while the  CBI programs of Cyprus and Malta are more expensive, they will come with a lower level of risk. As always, before making any important decision, prospective applicants for CBI passports are advised to seek the advice of a qualified attorney., but in my humble opinion, rule out Moldova for the reasons listed above.

WHO WILL UNLOCK THE GIBRALTAR PAPERS ?

In any offshore financial center, there are always a couple of rotten apples; professionals who walk on the dark side, which means money laundering of bribes and kickbacks, covering up tax evasion, and washing criminal proceeds. The Panama Papers and the Paradise Papers are but two examples of law firms who have passed from the grey area, into criminal facilitation, and what damage they inflict as the result.

One of Gibraltar's law firms is currently representing a gang of master cybercriminals, who have left a trail of victims in three continents. On this side of the Pond, over in Trinidad, the losses reportedly exceed $100m; the SEC and US law enforcement agencies are actively investigating them. Obviously, they will leave European victims in their wake, and the law firm will profess its innocence, and go right back to doing the same thing again: facilitate financial crime.

So how did this prominent law firm fail to conduct the most rudimentary due diligence upon their new clients, before undertaking to reprsent them ? Even a cursory Google search would have exposed their sins and transgressions. Don't attorneys in Gib engage in Know Your Client ?

We hope that some cencerned citizens in Gibraltar unmask this law firm, hopefully by exposing their sordid activities. Let a Gibraltarian post the passport pictures here, and the story of this gang's cybercrimes.

AMERICAN BANK BLOCKS ALL ATM & CREDIT CARD TRANSACTIONS IN DOMINICA

A Dominica expat, visiting the country on vacation, was denied access to any use of VISA ATM or credit cards wille there, which were cards issued by a major American bank. Given that this individual had just recently used those cards in other adjacent East Caribbean states, an inquiry was made. Here is the information that was received from bank representatives and managers:

"Due to security and fraud concerns, blacklists, OFAC sanctions and FATF lists, [deleted] Bank does not allow any transactions in Dominica". Our bank has decided not to process any transactions in Dominica, as it is a blocked country."

" This country [Dominica] may be subject to international sanctions, and [deleted] Bank is committed to compliance with those sanctions. While we work worldwide, and your card can be used everywhere VISA cards are accepted at this time, we do not allow our products and services to be used in blocked countries, which means ATM & credit card transactions are not permitted. You can resume use of your debit/credit card when you are outside the Commonwealth of Dominica."

"In accordance with the international sanctions and mutual rules of corresponding banks, we are sorry but the country you are currendly in is a blocked country. For compliance and the protection of the bank, [deleted] Bank is unable to have their customers use their VISA Debit/credit cards while traveling to blocked countries like Dominica."

"I am sorry for the inconvenience but our bank/VISA have blocked ATM/debit activity in the Commonwealth of Dominica."

It appears that Dominica is now regarded as so high-risk that the use of VISA debit and credit cards of one of the largest US banks there has been completely blocked.







 

WHERE IS THE MUSLIM BROTHERHOOD HIDING ASSETS STOLEN FROM EGYPT'S COPTIC CHRISTIANS ?

Although the Western press has primarily focused blame upon the remnants of ISIS for attacks upon the sizeable population of Coptic Christians is Egypt, in truth and in fact, it is the Muslim Brotherhood that has engaged in systematic destruction of the last major Christian community in the Middle East. The Coptics, who number close to ten per cent of the Egyptian people, are being  murdered, their assets plundered, and their churches ad schools set on fire.

Sources inside Egypt have stated that the Brotherhood has specifically targeted the most affluent of Egypt's Coptics, for the purpose of stealing their significant assets after their deaths. Given that the Copts have existed in Egypt for two milennia, these holdings are substantial. Many Coptics have chosen to emigrate abroad, to Western countries where freedom of religion is assured. 

International banks in Europe, particularly those who have branches or correspondent relationships, in Egypt, should be alert for large new and unexplained deposits, from Egyptian nationals, as they may represent assets taken from Coptics who were killed. The holders may wish to remove these funds from their country, to escape their possible seizure, at a later date.  As they represent the proceeds of crime, any such deposits constitute money laundeing offenses. Check the prior lines of business, and account history, for those who are making substantial new deposits, and obtain Source of Funds verification, from an independent entity, before accepting any large and unexplained amounts, lest you later are identified for cleaning stolen money, and sending it abroad.

SOCIAL MEDIA RESOURCES IDENTIFY HIDDEN PEPS

 The problem that compliance officers face, when dealing with new foreign customers who declare that they are merely successful businessmen in their home country, is ruling them out as Politically Exposed Persons, or PEPs. Individuals fronting for corrupt government officials will go to extreme lengths to create a false profile, consistent with the trade or industry that they claim to be engaged in, all to cover up the fact that they are seeking to move the proceeds of either corruption, or other criminal activity, into your bank.

 The best method of identifying them as PEPs is to utilize social media resources. This does not mean you go on Facebook, or some other media website, searching for their presence. it means that you utiilize  a social media souce that searches all potential social media sites, for both direct, as well, as indirect, confirmation that your target is indeed a PEP.

While a well-prepared hidden PEP will most likely have no direct connection to the government officials that he is moving or laundering money for, these platforms search for indirect, aged, and even irrelevant material, on spcial sites which will lead you to conclude whether or not he has PEP status. These platforms search for not just friends & family, but for old school connections, fraternal associations, prior business associations, or some which can show your target present at media, charitable sports or social events, which may confirm his relationship with individuals who have known access to either government assets, and/or are suspected of corrupt activities.

When your prospective client is photographed sitting next to someone at a New Years' party, wedding, social club annual dinner, or charitable function, a rebuttable presumption arises that he is not with that individual by accident. When he gives an award, at a dinner, to someone who you would not have as a bank client, alarms should ring in your head. When your target shows up at a function, at a private club, look at the members sitting at his table; you can do that only through social media images, collected for you by your platform.

Social media search platforms use artificial intelligence to find your target when he is off duty, and when he thinks nobody is watching, but eager social media posters just may have taken his picture, having drinks with some bad people, and your search found him there in a posting. He may be artfully concealing his PEP status, but you now know better. 

MAURITIUS CHOOSES TO FALL DOWN THE SLIPPERY SLOPE OF CITIZENSHIP BY INVESTMENT

 Mauritius has announced that it will be offering citizenships for USD$1m, and passports alone for $500,000, though many citizens of that nation, the sole democracy existing in Africa, have objected, saying that their nationality is not a commodity to be bought and sold. They also fear that Mauritius' growing reputation as a tax haven and money laundering center will be further tarnished by criminal elements purchasing their passports, which offer visa-free entry in most of the Middle East.

The Republic of Mauritius, it appears, has also failed to learn the bitter lessons that have been experienced by the five Citizenship by Investment (CBI/CIP) East Caribbean States. They also chose to sell economic passports, to fund their countries' recurring budgetary expenses. When the budgets blossomed, as expected, but an insufficient number of legitimate applicants came calling, the EC states obviously lowered their due diligence standards, with unfortunate results, when CBI passport holders were arrested, in the act of committing financial crime.

Perhaps the good people of Mauritius can nip their CBI problems in the bud, before their government's CBI agency, under major pressure to deliver cash for the nation's swollen  budget, allows unsuitable, and yes even dangerous, applicants to receive their Mauritius passports, by ignoring due diligence requirements.

DOES ONE RUN FACIAL RECOGNITION FIRST OR LAST IN EDD INVESTIGATIONS ?

There appears to be a difference of opinion among compliance officers conducting enhanced due diligence investigations: do you run the target's image through your facial recognition program at the very beginning of your EDD, or do you access it when your work is complete, to validate your findings ?

One school of thought states that, in a world where bogus identities, through passports that can be easilty obtained under clean aliases, including second passport programs, one must check first, before wasting valuable time, in any investigation of a target and his identity. Check the primary official documents of identity, including passport, drivers' license, identity card, and whatever additional items that the client presents first, to rule out any inconsistency between images that are known to be of the client, and that which have been presented to you as genuine at account opening.

The second group believes that the entire due diligence program should be completed, and then the facial recognition program should be run, to insure that your findings are correct. If you were totally deceived by a target's false identity, after the facial recog is completed, then you must reexamine the strength of your compliance program, as that means identity documents presented to you by supposedly trusted sources were faulty from the start. How is it that they passed the initial sereening?

Whether you choose to initiate facial recognition inquiries at the beginning or at the end, it is an indispensable component of your EDD program. It is your positive verification of identity, using multiple resoures, including official, unofficial, social, media, and other image sources. Rely upon it for a result more accurate than any other platform.     

NEW CBI APPLICATIONS SHARPLY DECLINE IN THE EAST CARIBBEAN STATES

Affluent foreign investors, who have been seeking economic passports through the Citizenship by Investment (CBI) Programs being operated in five East Caribbean States, are making application there in far lesser numbers this year, when compared to the two previous years, and are reportedly looking at programs in other regions, especially in Europe.

The reasons for the step decline in applications appear to be:

(1) Rampant negative news coverage of rampant official corruption in those countries.
(2) The continued failure of each nation's CBI agency to institute Enhanced Due Diligence investigations upon all applicants, resulting in career criminals, terrorist financiers, and the usual suspects being approved, but later are arrested by the authorities for criminal conduct.
(3) The collapse of Petrocaribe, which delivered Venezuelan (and some say Iranian) oil to the East Caribbean under extremely favorable terms. The failure of Venezuela to ship any petroleum products  has spawned riots this week in Haiti, and vocal public discontent in Antigua & Barbuda.
(4) the foreign misperception that the last hurricane seriously damaged all the island republics.

Both St Kitts & Nevis, and the Commonwealth of Dominica, have published obviously grossly inflated figures of the number of their applicants, whereas the true 2018 figures are extremely small. Will the standards for new applicants be lowered even more, to increase revenue, which was never meant to meet local recurring budgetary expenses ? If so, expect even more career criminals to come calling, and be eagerly accepted.

Whether the high net worth applicants will continue to divert their interests to Malta, Cyprus, and other more stable countries depends upon whether the East Caribbean States suppress corruption, upgrade their CBI EDD, and develop their economies. We hope they get the message.

WATCH FOR PROCEEDS OF CORRUPTION FLEEING HAITI THIS WEEK

 Rampant violence in Port-Au-Prince, and other cities in Haiti, due to the government's decision to remove subsidies on gasoline, diesel and kerosene, which will cause prices to rise as much as 51%, could bring down the current government. The combination of Venezuela's Petrocaribe's recent failure to distribute to the Caribbean countries, and US sanctions, which interfere with payments to Venezuela, has left Haitian consumers with prices that they simply cannot pay, resulting in popular revolt. Revolutions have begun for lesser reasons. The government's announcement, that it was reversing itself on the subsidies, had no effect upon the rioting.

Note well that corrupt Haitian leaders, and the Politically Exposed Persons (PEPs) who front for them in North American and European banks, may fear regime change, which reports from Haiti could occur within the next two weeks, and move their illicit holdings, to avoid subsequent exposures and seizure by a new government in Haiti. Unusual funds transfers, both into and out of international banks in the West, as well as unexplained cash movement within the US and Canada, should be closely examined, especially if the sender is a Haitian "businessman," who claims his wealth was earned in his native country.

 If you are not familiar with the state of the economy in Haiti, legitimate commerce is dwarfed by the underground movement of drug profits, and the proceeds of systemic corruption whicb drains the country dry, and discourages significant foreign investment, when prospective investors are solicited by powerful PEPs to pay bribes and kickbacks, just to do business in Haiti. The corruption has essentially turned Haiti into a failed state.

Therefore, examine in depth any major funds transfers, or attempts to transfer wealth, on the part of affluent Haitian nationals, or professionals acting on their behalf.