HOW WILL COMPLIANCE OFFICERS MEET THE CONTINUING AML/CFT CHALLENGES IN 2024?

From my perspective, having been, in turn, a bank attorney, career money launderer working in the tax havens, compliance officer assisting law enforcement and later the private sector, Financial Crime Consultant for World-Check, author, journalist and lecturer on money laundering, and senior consultant on advanced money laundering techniques, compliance directors face a daunting task ahead in 2024, if they truly want to lead effective compliance departments.

I see two mandatory requirements that most compliance departments are presently deficient in, and which must be addressed:

1. Updating all AML/CFT software platforms, to take advantage of the latest advances in programs, especially AI-empowered systems, that became publicly available in 2023. Damn those budgetary restrictions placed by bank management who are focused on delivering excess profits to shareholders. Those massive civil fines and penalties imposed by regulators, and getting a reputation among money launderers that your banks is an easy target, can add up to disaster on 2024. The laundrymen are aware of the new programs, too, and you had best acquire them to interdict their tricks in real-time, or face the consequences thereof.

2. The huge amount of new, and generally undertrained, frontline compliance staff, who are not up to speed in recognizing advanced money laundering tradecraft, is a wakeup call for your directors to immediately conduct advanced training now, to teach your people how laundrymen are deceiving them, through the use of advanced tradecraft. Do not skimp on training, and insure that your staff learn the techniques that are not taught in industry lectures and conferences, from those who have been there and done that.

Pay now or pay much more later, when the true costs of neglecting the acquisition of the latest AML platforms, and of conducting advanced training hit you where you are most vulnerable; in the realm of negative publicity when those shortcomings manifest themselves in compliance malpractice.

Kenneth Rijock, miamicomliance@gmail.com

FORMER ISRAELI INTELLIGENCE AGENCY LEADER SAYS HAMAS HAS FUNDS IN TURKISH BANKS, AS FIVE MONEY EXCHANGE HOUSES IN THE WEST BANK ARE CLOSED FOR TERRORIST FINANCING

A former senior research leader studying terrorist financing in the Mossad, Israel's intelligence agency, has stated in a public interview that Hamas has substantial funds in a number of banks in Turkey, which it could use to supports its  terrorist operations, even after a military defeat in Gaza. This claim may force compliance officers at financial institutions located in the European Union whose customers trade with Turkish companies to take a hard look at whether the terrorist financing risk levels are so high as to redline Turkey in international trade transactions. Turkey is showing no signs of reining in, or even banishing, Hamas terrorist operations launched from its territory, and openly supports Hamas.

Greatly increased scrutiny, by American law enforcement, in the aftermath of the Hamas invasion of Southern Israel, as part and parcel of US support of Israel's right to destroy Hamas as an act of self defense, could expose EU banks to major American civil fines and penalties, and even a bar to accessing the country's financial structure, which would operate as a financial death penalty for any bank so designated as a terrorist financier.

In other news, and adding to our recent coverage on how Hamas was able to move large amounts of israeli currency into the hands of its terrorist agents in the West Bank, five money exchange houses in the territory were closed by Israeli authorities for providing financial support to terrorism. The relationship of those shuttered companies to foreign financial institutions has not been made public, but there have been multiple instances of Hamas supporting terrorist activities from its safe havens within Turkey. Whether Country Risk for Turkey should be greatly increased as the result of these recent events should be a topic for compliance officers charged with risk management at their financial institutions.  

ARE LEBANESE LIVING IN AUSTRALIA PROVIDING FINANCIAL SUPPORT TO HEZBOLLAH?

 

Hezbollah flags upon the caskets of the Australian national and his visa-equipped brother

The death, in the frontier between Hezbollah-controlled South lebanon and Israel, of an Australian national claimed as one of its own by the sanctioned terrorist organizations raises questions about how much financial support, or fighters themselves, comes from Lebanese living in Australia. One Lebanese-Australian national and one Lebanese with a visa for Australia were killed in an Israeli response to a Hezbollah attack upon Northern Israel this week. Reportedly, they were obtaining a Lebanese bride for the Australian, to bring back wit him.

Perhaps the government in Sydney should investigate Hezbollah links to Australian citizens or residents. Compliance officers at Australian banks should forthwith check into remittances made into Lebanon, as well as Turkey, which supports Hezbollah's overseas operations. Any suspicious transactions should be immediately forwarded to AUSTRAC for further investigation into terrorist financing. 

The father of the deceased with the caskets.

After Hezbollah admitted that at least one of those who died was a Hezbollah agent, the Foreign Minister of Lebanon made this public statement: 

  “Hezbollah is a listed terrorist organization under Australian law. It’s an offense for any Australian to cooperate with, to support, let alone to fight with a listed terrorist organization like Hezbollah,” Dreyfus told reporters."

___________________________________________

NOTE: One of the caskets decorations indicates his designation as a Hezbollah "martyr." 

WHO IS SENDING TENS OF MILLIONS IN ISRAELI CURRENCY INTO THE WEST BANK FOR TERRORIST FINANCING?

 

This is a photo, taken on 26 December, of literally tens of million of NIS, Israeli currency, which was seized by the National Crime Unit from terrorist suspects in the West Bank, also known as Judea & Samaria. The question  persists, how are the nations which are terrorist financiers to Hamas and the PIJ able to acquire all this cash? Most likely it is NOT coming from the Gaza Strip, as physical smuggling would be impossible due to wartime conditions.

Therefore, we have to assume Iran and its allies is purchasing Shekels and somehow smuggling them into the West Bank. where would such a supply of this cash be easily obtained? Currency exchange houses in Turkey, or countries within the European Union, most likely, where it could be accumulated without raising suspicion. EU banks are another possibility; so are banks in Cyprus, a favored destination for Israeli businessman I once observed on a personal speaking trip on regional compliance issues, as well as a convenient aviation link. what about other jurisdictions where Israelis visit for tourism?

 Whatever the sources are, this is a wake-up call to plug that leak, lest it continue to facilitate terrorist financing to Hamas elements who can use it to purchase illegal arms, ammunition and explosives for West Bank terrorist operations. Are you listening, over there at Israel's Shin Bet and its National Bureau for Counter-Terrorist Financing?

FINAL RULE ON U.S. REGULATION ON BENEFICIAL OWNER INFORMATION FAILS TO UNDERSTAND HOW FINANCIAL CRIMINALS WORK

 

With all the hoopla regarding the Final Rule about the Beneficial Ownership Information (BOI),  it pays for compliance officers to read the fine print carefully, please:

"Implementation of BOI Access

• FinCEN will take a phased approach to providing access to the BO IT system from which authorized users may obtain BOI. The first stage will be a pilot program for a handful of key Federal agency users starting in 2024. The second stage will extend access to Treasury offices and certain Federal agencies engaged in law enforcement and national security activities that already have Memoranda of Understanding (MOUs) for access to BSA information. Subsequent stages will extend access to additional Federal agencies engaged in law enforcement, national security, and intelligence activities, as well as to State, local, and Tribal law enforcement partners; to intermediary Federal agencies in connection with foreign government requests; and finally, to financial institutions and their supervisors.
• Federal agencies engaged in national security, intelligence, and law enforcement activity; State, local, and Tribal law enforcement agencies; and Treasury personnel will be able to access and query the BO IT system directly using multiple search fields with results returned immediately. Foreign BOI recipients will have no access to the beneficial ownership IT system, as their requests will flow through intermediary Federal agencies. Financial institutions and their regulators will both have direct access to the BO IT system, though in more limited fashion than the aforementioned domestic government agency users."

1. Note well that there's a "phased approach" to access. We do not know when, in 2025 perhaps, banks will have access, Given that money laundering is a chess game in which regulators are only playing checkers, and are light-years behind the ability of laundrymen to respond to new challenges, adapting and innovating on the fly, you can expect workarounds will be in place long before the banks have access. I am aware of a few already in mind, although I cannot express them here in a public forum, I plan to detail them at all my private conferences and presentations in 2024 and later.

2. Note also that there are definite and finite limitation on bank access; strictly to due diligence and AML issues. NOT for any other, purely commercial, application, This opens the door wide for bank exposure if it uses the information for ANY OTHER reason. Lawyers who read this blog may recall the Wong Sun case, a US Supreme Court  decision that holds any evidence illegally obtained is tainted, as the "Fruit of the Poisonous Tree" and is inadmissible to prove guilt in a criminal case. Any good lawyer for money launderers could point to improper use, by a bank compliance department, or New Accounts, of BOI, and either use it to block the admission of evidence in a case, or better yet, sue the stuffing out of the bank for misconduct. since that might be classed as an intentional tort, D & O insurance may decline coverage, leaving the bank to defend itself.

3. Finally, where is provision for complex corporate schemes, such as a Delaware corporation, owned by a a partnership in the Isle of Man, which is itself owner by an BVI company? Why hasn't anyone fro the money laundering side been brought in to brainstorm on the issues?

Bottom line, BOI may be regarded as a godsend, but in truth ands in fact is just a paper tiger.

SINGAPOREAN VENTURE CAPITAL FIRM HAD ALL THE BELLS AND WHISTLES OF MONEY LAUNDERING

The players

A venture capital firm in Singapore had all the indicia (Red Flags) of money laundering: transfer of control to an opaque British Virgin Islands (BVI) corporation to hide beneficial ownership, Citizenship By Investment (CBI) passports from St. Kitts for the principal, and huge amounts of capital coming in from China, yet Singaporean law enforcement authorities and regulators completely ignored these warning signs. the result was a multi-billion dollar money laundering empire that moved and cleaned an obscene amount of money before it was exposed and interdicted, and illegal gambling and internet fraud revenue shown to be the source of all this "flight capital."

Singaporean media appears to have blamed the island nation's loose regulatory scheme on certain types of investment schemes, as the government focused on Singapore increasing its role as an international money center, competing with and rivalling Hong Kong, but must not lose our focus here on the root cause of the problem: venture capital funds as great candidates for money laundering operations.

whether we are talking about hedge funds, venture capital funds or some other type of investment fund, anything intentionally located offshore, even if its headquarters is in Connecticut, has the potential to be a money laundering operation, by definition. Who are the beneficial owners? Can you even confirm them with a degree of certainty? What about the managers abroad who bring in the business? These issues must be addressed, because otherwise cleaned-up dirty money may very well be driving their train. While the vast majority of venture capital funds are legitimate, check thoroughly any that happen to be your bank clients, to avoid any unhappy surprises later. 

FOCUS ON CORRUPTION AND SUPPORT OF TERRORISM BY UNITED NATIONS OFFICIALS AND STAFF IN GAZA COULD LEAD TO EXPOSURE ELSEWHERE

                       

The EU and the United States have a long history of ignoring it, but the recent focus on corruption at the United Nations, regarding Gaza, will most likely spill over into a close scrutiny of UN officials' misconduct, and even the facilitation of terrorist organizations elsewhere in the world. Israel recently advised that it will be considering visa requests from UN officials on an individual basis, after declining to admit a senior UN officer tasked with Gaza relief.

The UNRWA, which administers both refugee relief matters, as well as educational programs operated by the UN in Gaza, has been led by Hamas members, according to allegations in the Israeli press, which claims that those leaders have diverted UN assets and resources to Hamas for decades. One senior Palestinian hospital official has admitted being a longtime Hamas member, and stated that Hamas literally runs Gaza hospitals, which it uses to base its command and control facilities, and to protect its terrorist agents. Hamas used the hospital's electrical generators to power their underground facilities. The extent to which the UNRWA aided the growth of Hamas will most certainly be a subject on the table of the Western democracies who for the most part financially support it, especially the US and EU. UN audits have themselves exposed corruption, but no effective action was ever taken.

Inasmuch as Israel have advised that it will no longer facilitate the delivery of aid and supplies through its territory into Gaza after the current war ends, which to date has been in coordination with the UN, as international aid and charitable agencies, the future role of UN will come under the microscope. At the same time, corruption elsewhere among United Nations agencies are expected to be a major topic, which has been heretofore swept under the carpet, in the interest of international diplomatic peace, which now cannot be ignored. 

Rampant corruption, involving bribes and kickbacks among UN staff and its leadership involving aid projects, budgets for programmes in the developing world, and the promotion and retention of UN staff known to have been implicated in corruption during their careers, should all be on the table, especially given the American and British focus on FCPA and the UK Bribery Act 2010. The United Nations has gotten a free pass for far too long; it's time to take the gloves off regarding its systemic corruption, given the black eye it is getting in Gaza.

ISRAEL POSTS $400,000 REWARD FOR LEADER OF HAMAS TERRORIST ORGANIZATION YAHYA SINWAR

 

Here is the official Reward Poster: One Million NIS=USD$1,000,000

A BUSMAN'S HOLIDAY FOR LAUNDRYMEN

 

Holidays are strange for me, as I have spent some of them in places not seen by most people; on a battlefield, or locked down in a Federal Prison, or a county jail literally in the middle of a swamp. While those experiences give rise to some interesting stories, holidays spent as a active money launderer are definitely worth a close look on this blog.

First of all, laundrymen live (and die) by the rule that the best time to move dirty money ios when the best and most experienced compliance officers at a bank are off on holiday; you then only have to contend with lower level compliance staff, some of whom are inevitably undertrained, and will probably miss your artful advanced tradecraft. In some cases, all the senior compliance staff are off duty, which makes your dirty job easier to accomplish. I wonder why most banks continue to expose themselves this way.

The last business day before a national holiday is prime for moving the proceeds of crime; people, even those on duty, are often distracted or disinterested, or angry that they did not get  those days off to be with family. it all adds up to increased opportunities for a successful operation. I spent some of those holidays in remote offshore tax haven abroad, and I am sure you can guess what I was doing; Think about it.

Also, some smart money launderers combine business with pleasure on holidays, using trips abroad, ostensibly holiday travel, to quickly and covertly move money while at a resort that just happens to be in a hax haven. After all, even law enforcement investigating you or your narco-clients is busy taking off vacation time, lest they lose it through annual expiration of those precious free days, so you aren't going to be surveilled that week.

However, on a emotional note, holidays for laundrymen also are the time when they take stock of their escapes to date, from the long arm of the law, and wonder aloud whether the next Christman will be spent in some cold Federal Prison, far from their  sunny base of operations. Even to the successful money launderer, holidays are bittersweet, given their acceptance of the fact that, sooner or later,, they are going to get caught, usually through the actions of a client. It's not a happy time for those who are realists. There are no happy endings.

 

LOCAL DIRECTOR OF 980 SHELL COMPANIES RECEIVES ONLY FOUR WEEKS IN JAIL; DETERRENCE? WE THINK NOT.

 

The local Singaporean corporate service provider who ended up as the director of 980 foreign (Chinese-controlled) companies, many of whom are linked to the country's money laundering mului-billion dollar  (S$2.8bn) scandal, received a pitifully short four weeks in jail, plus a small fine. What's wrong with this picture? Apparently the island nation's laws are not tough enough to deter such willful blindness, through this nre case will of course result in tightening up the AML situation.

As a career money launderer in my dark past, I used Delaware corporation service firms every day to act as nominee directors, while my Delaware corporations registered vessels used for drug smuggling, with no ascertainable Beneficial owners. It appears the Chinese have learned that lesson well. The follow-up is that you then let the corporation be dissolved by the local equivalent of the Secretary of State for failure to file any directors' names. Nowhere are your criminal clients' names ever provided to regulators.

For those readers who wondered why I posted something from the Isle of Man, which in the bad old days might have had a director similarly situated, it's all good clean Xmas fun and laundryman misdirection; our readers quickly looked to scan the article, and if these was something criminal that we wanted you to miss and ignore, it served its purpose. Misdirection and Confusion to the Enemy is the aim of money launderers, and they usually succeed. Don't be fooled; Distraction is the order of the day.

WILL PROPOSED CYPRUS MARITIME HUMANITARIAN CORRIDOR TO GAZA RESULT IN FACILITATING TERRORIST FINANCING?

The laudatory proposal, put forth by the Ministry of Foreign Affairs of the Republic of Cyprus, to create a Maritime Humanitarian Corridor to supply the beleaguered civilian population of Gaza with food, water and the other items necessary for life, which is fully supported by the Government of the State of israel, could be the answer to the present humanitarian crisis, as well as a potential long-term solution. Certainly, something must be done, as Israel, in the aftermath of the barbaric conduct of Hamas' invasion, has advised that in the future it will not be sending gods and supplies into Gaza, for any purpose. breaking a;; commercial contact.

The Minister's recent Press Release spells out Cyprus' stated intent on the subject:

"Cyprus’ maritime corridor plan provides for a compact logistical hub. For the safe provision of a sustained flow of high-volume humanitarian assistance to the civilians in Gaza, through a dedicated one-way maritime corridor. For the now, for the medium-term, and for the long-term.

We are standing here in the Coordination Centre «Zenon» in Larnaca, which forms part of the integral facilities for Amalthea’s operationalization, which is based on the provision of a compact, trusted secure logistical hub.

Today, we had the opportunity to be briefed on the current operations and the level of preparations.  We have just visited the facilities here at the Coordination Centre and we will proceed to visit the facilities at the Larnaca port.

The aim is for humanitarian assistance for civilians in the Gaza Strip to be collected, stored, secured, and rigorously inspected before loading on a vessel – all here in Cyprus and, needless to say, the purpose is to complement and scale-up current routes."

While we certainly applaud the proposal, the Law of Unintended Consequences could possibly rear its ugly head. In plain English, how will Cyprus deal with what is obvious; that Hamas will use the pipeline for humanitarian aid to funnel not only cash, but items which will support its war effort, especially arms, ammunition and explosives, into Gaza, cleverly concealed and disguised within relief supplies?

Given the ingenious methods previously seen in smuggling bulk cash into Gaza, one must expect that there will be a constant flow of contraband, hidden within the supplies, including but not limited to money. Although Cypriot law enforcement, in conjunction with the anticipated Israeli inspectors, will be tasked with checking all shipments, the sheer expected volume will be a daunting task, and it can never be 100% effective.

As the result, some of the money and military supplies for Hamas will get through. Therefore, it will be up to Cyprus to interdict these terrorist-bound funds as they come into the country, which means a major increase in monitoring inbound commerce, in all its forms, whether that be visitors, international trade, and all other incoming traffic. whether Cyprus has the manpower, or national will, to conduct such inspections, is an open question, and it may result in the cancellation of the Maritime Humanitarian Corridor forthwith. 

We certainly hope that this proposed project can become a reality, to assist the people of Gaza, who are in desperate need of an aid pipeline, but it must be accompanied by a foolproof method of deterring terrorist financing of Hamas by a new route through Cyprus.

UNITED STATES RELEASES VENEZUELA'S BIGGEST MONEY LAUNDERER IN A PRISONER EXCHANGE FOR TEN DETAINED AMERICANS

ALEX NAIN SAAB MORAN, considered by most observers to be formerly the most powerful international money launderer in Venezuela, and who is closely linked to the Maduro government, has cheated American justice after he was released in an exchange for ten American wrongfully detained by Caracas. Saab faced what amounted to a possible sentence of life in prison in a massive money laundering indictment in South Florida, after he was extradited from Cape Verde, while traveling to Iran from Venezuela, which attempted to confer bogus diplomatic immunity upon him ex post facto, an effort rejected by American courts. 

While the fact that the United States was able to bring several American illegally held by the authoritarian government of Venezuela home is important, allowing one of the most dangerous global money launderers to go free, where he can continue to practice his dark profession abroad, moving narcotics profits and the proceeds of corruption for his clients, which include Venezuela's senior government leaders, sends the wrong message to individuals wanted for serious criminal offenses by the Department of Justice. Will other defendants in Federal custody engineer the kidnapping or detention of American citizens, to also have the equivalent of the proverbial Get out of Jail Free Card  so that America  must free them? 

Just one look at the present situation in the Israeli conflict in Gaza, and how the existence of innocent hostages figures in the conduct of the war speaks volumes about how dangerous it is to ransom one of the world's most dangerous money launderers for individuals who were, in essence, hostages put the idea into the heads of others who constitute a clear and present danger to the United States. Alex Saab Moran should be looking at a Life Sentence, not in being returned to his life of crime, cleaning criminal proceeds, all in US Dollars, and laughing at our system of criminal justice.  

U.S. UNSEALS TERRORISM INDICTMENT AGAINST SAMUEL EL REDA, MAJOR HEZBOLLAH LEADER WHO LED AMIA BOMBING IN BUENOS AIRES

 

The United States Attorney in New York (SDNY) has announced the unsealing of a major terrorism indictment against Hezbollah leader SAMUEL SALMAN EL REDA,  a Colombia-Lebanese national. He is charged with terrorism activities in Latin America, Asia and Lebanon. His charges are:

1. Provision of Material Support to a Terrorist Organization.

2. Conspiracy to Provide Material Support to a Terrorist Organization.

3. Aiding and Abetting in Military Training.

4. Conspiracy to receive Military Training.

If anyone requires a copy of the unsealed indictment, email me at: miamicompliance@gmail.com

HOW MONEY LAUNDERERS CREATE NEW TECHNIQUES TO CLEAN THE PROCEEDS OF CRIME

Yes, the urban legend is true, Mr. Compliance officer; money launderers stay up nights and weekends just to to outwit you and your staff. There job is simply to beat you. I did it for more than a decade. Let's take an inside look at the thought processes and analyze how laundrymen approach the creation of new methods of operation. You might learn something that will enable you to more efficiently ferret out novel and new money laundering tactics in progress.

First if all, understand that your laundryman opponent is most likely a lawyer, banker, accountant; that means  someone with familiarity with the financial world, most likely through hands-on professional experience. They know intimately how banks treat transactions, know how AML compliance programs  are administered, and most importantly, understand what makes a suspicious transaction. They take that fund of knowledge in with them when brainstorming over the birth of a new operational method of moving money undetected by compliance.

Often, a specific industry, business type or specific trade is targeted, because it is not known to have ever been the subject of attention, or have been a target, of financial criminals. It may have industry characteristics which do not lend itself to being abused by money launderers. Whatever the reason, laundrymen are drawn to industries and businesses that have always been low-risk, and no deserving of any attention by either compliance or law enforcement. They then adapt the business type to accept, an cleanse, the proceeds of crime, generally by modifying the operation to conceal dirty money placement.

Another trick of the trade is to learn as much as possible about what we commonly know and call trade secrets, which is often just inside information about how such a business operates successfully and at a profit. It may just be methods not commonly known in the business world outside that industry, such as payment quirks or strange internal policies quietly shared between like businesses, or actual confidential information about operational details that is intentionally withheld from the general public for profit reasons.

In any event, and irrespective of the precise reason why these internal facts are concealed, the money launderer seizes upon them, as twists them into a formula that would support the concealed placement of criminal proceeds, or facilitate its layering in some important, and covert, way. What I am saying is that laundrymen typically latch on to such a valuable bit of information, which will not be known to compliance officers, and cannot be extracted, to achieve his goal of a safe pipeline for his clients' money.

Therefore, the next time a junior compliance officer raises a question about transactions involving a small company designated as low-risk, strictly domestic, or some other label that means its is safe to ignore, do a deep dive, to rule out the possibility that he or she has stumbled upon an ongoing money laundering operation being pushed through a bank client whom you have previously discounted as low-risk, and disregarded during transaction monitoring sweeps. 

For further reading;

Advanced Money Laundering Tradecraft

ADVANCED MONEY LAUNDERING TRADECRAFT ( two hours)

 

DESCRIPTION: A survey of the obscure and esoteric advanced money laundering techniques currently or formerly employed by professional money launderers, together with the indicia or Red Flags by which each of these methods can be identified. The material, taken from the presenter's unique experience, first as a bank lawyer, then a decade as a practicing money launderer in Miami and the Caribbean tax havens. His experience is rounded out by thereafter  conducting investigations into financial crime during the past thirty years. He currently acts as a Financial Crime Consultant and Journalist on money laundering, where he covers the broad range of tradecraft on conventional as well as advanced levels.

The presentation, which is designed to aid the frontline compliance officer who is primarily engaged in Account Opening and Transaction Monitoring, uses examples and fact patterns from the experience of the presenter, and actual case histories extracted from court documents. It explains the thought processes and strategies that laundrymen use when creating new and novel techniques, which are often permutations and variations of existing methods, which are useful in the examination of unusual or unorthodox transactions that do not appear to fit conventional patterns of financial crime.

Due to the extensive amount of material delivered, and the complexity of a number of the techniques and methods that are covered, the lecture can be presented in two parts, to maximize the ability of attendees to understand, as well as absorb, the content.  

For further information: miamicompliance@gmail.com

________________________________

Kenneth Rijock's Financial Crime Blog                                                                   https://rijock.blogspot.com

The Laundry Man by Kenneth Rijock (Published by Penguin Random House UK) Available in English, Dutch, Polish, Hungarian, Spanish, Slovak and Chinese.

   

 

SUBHI FERWANA, PROMINENT HAMAS MSB TERRORIST FINANCIER, KILLED IN TARGETED ATTACK IN GAZA WAR

                      

Apparently, money launderers for HAMAS will not survive the ongoing war in Gaza. Israel has announced that SUBHI FERWANA, known to be one of the principal terrorist financiers for Hamas, has been killed in the Gaza border town of Rafah. Responsible for funneling tens of millions of dollars into the Specially Designated Global Terrorist organization, he was specifically targeted in an aerial attack, which also resulted in the death of his brother, believed to have also been involved in the business. 

The operation,  which has been described as a money services business, and as a virtual currency exchange that received funding through Iran, Qatar, Sudan, Turkey and Algeria, was engaged in evading the international financial system. Ferwana's company, named HAMSAT, was a target of Israel's intelligence community, and its National Bureau for Counter Terrorist Financing. Other than its identity, there has not been any further information publicly released regarding this MSB. 

ONE MILLION EUROS CASH, COURTESY YOUR FRIENDLY AMMAN BANKER, SEIZED BY IDF IN GAZA REFUGEE CAMP

That's right, €1,189,955 in cash, seized recently by the Israel Defense Force, in the supposedly poverty-stricken Jabalya Gaza refugee camp. It was found in the home of a senior Hamas leader. We see that the individual carefully retained the stamped bank receipts appended to each stack of notes, which obviously came from financial institutions in Amman. We must assume that, given the fact that found with the cache was a photograph of a member of the Royal Jordanian Army, whose uniforms ereflect their British military advisor heritage. We cannot confirm that the Hamas leader was himself a former Jordanian military, or if the photo was that of a cooperating individual in a terrorist financing operation.

Was all this cash foreign aid distributed by an agency of the European Union that was "diverted" to the use and benefit of a sanctioned global terrorist organization, or bribes and kickbacks delivered to a senior leader from an EU company, for the privilege of doing business in the Territories, as part of a corrupt arrangement, or even American aid to the Government of Jordan that was converted into Euros as part of terrorist financing? Unfortunately, we may never know, because the odds are the owner is either deceased, which is highly likely, or he fled south to hide somewhere under Khan Yunis, with the other Hamas leaders. 

I would, however, like to see those banded and stamped bank receipts, to identify the Jordanian financial institutions that facilitated the delivery of all this cash.  The dates are also important for investigative purposes, as they may supply hints regarding the actual reasons such a large amount of currency was distributed. Let's also identify the officer whose photograph was found with the money, including his rank, military occupation and unit he was assigned to, all to build a better profile of the events surrounding this million Euro-plus stash of cash.

What if you are you a compliance officer at an international bank that has a correspondent relationship with the bank subsequently identified as the one in Amman disbursing this money?  Do you cancel the relationship forthwith, and break all ties? and who was the officer in your bank who had the responsibility of servicing the Jordanian Bank? It's truth time, ladies and gentlemen. 

 

PAY ATTENTION TO THE PRESENCE OF SENIOR HAMAS LEADERS IN PAKISTAN IN THE CONTEXT OF TERRORIST FINANCING OPERATIONS

While the fact that the increasingly authoritarian Government of Turkey has given HAMAS safe haven to operate there, which increases the risk that Turkish banks are being used to funnel the proceeds of global fundraising into the treasury of that designated terrorist organization, news about a new Hamas presence in Pakistan, and warlike claims of its leaders at an Islamic conference there raises the spectre that a new terrorist financing pipeline is most likely operating from there. There was a warning last week from Qatari media that all the senior Hamas leadership had left that country, if you were paying attention to detail.

Two senior leaders of Hamas, who appeared at a conference in Pakistan, and made reference to Pakistani nuclear capability as being able to stop Israel's efforts to destroy Hamas' ability to commit war crimes and crimes against humanity, should be a wake-up call for compliance officers at international banks whose customers trade with Pakistani companies, for one must expect that new terrorist financing routes into Hamas coffers are being created through there, if they aren't already in existence.  That country's issues , when it comes to supporting sanctioned terrorist organizations, when it deems aiding and abetting them is in their best interests, are legion. Remember when US President George HW Bush gave them the blunt choice after 9/11, to be either friend or foe?

If you think that close monitoring of Pakistani banks from afar will rein them in, and prevent them from assisting Hamas, think again, especially when it comes to bulk cash, especially greenbacks, US Dollars, the favorite hard currency of that terrorist organization. We note that today's news from Gaza, but not appearing in Western media, is the item that the IDF seized a large amount of  cash, at the home of a senior Hamas leader, while searching for terrorist gunmen. How many American banks have new requests from Pakistani financial institutions for an increasing amount of greenbacks we wonder?

Therefore, while everyone is focusing upon Turkey as Hamas' choice for financial assistance, pay close attention to any incicia from Pakistan of transfers or other activities that might support or confirm that terrorist financing is being facilitated from that high-risk jurisdiction. 

UPDATE ON MIAMI BILLION DOLLAR VENEZUELA MONEY LAUNDERING CASE REMINDS US THAT THE U.S. POINTEDLY IGNORES THE FACT THAT MALTA REMANS A CENTER FOR MONEY LAUNDERING

A minor note in the financial crime news, that one of the dozen accused money launderers in the massive, billion dollar venezuelan money laundering case in Federal Court in the Southern District of Florida has had his case dismissed, after five years, reminds us of two things:

(1) The defendants are are either already convicted, or remain fugitives from American justice in Venezuela.

(2) The Republic of Malta remains a black hole for international money laundering, which the United States Department of  Justice has ignored, even when the is a nexus with American money laundering cases. One might think that there is an unofficial "hands-off" policy in Washington, given that even when there are Maltese links to American prosecutions, laundrymen there don't show up as co-defendants here.

Most legal observers, including this writer, believed that, once the present Democratic administration took office in 2021, that the overt and systemic money laundering in Malta would result in American money laundering prosecutions where such activities intersected our financial structure, specially specific cases pending in the Southern District of New York, but targeting Malta's money laundering operations failed to occur, even in such high-profile international cases as Iranian-owned Pilatus Bank, which had an American director, and a case in which Americans were involved in a major hospital acquisition scandal.

To date, with the exception of barring two former senior officials in the Maltese Labour Party from entering the United States, nothing of substance has emerged from American law enforcement agencies or the DOJ about the systemic money laundering regime and offshore center that exists in Malta. it remains a mystery why the present American administration seems afraid to take a bite out of Maltese organized crime, and its domestic political allies in power.

As the present government in Malta, which is merely a continuation of the corrupt previous one, in which the former prime minister only resigned after the then-prime minister was linked to the EU's only political assassination of an investigative journalist in recent memory, is allowed to continue to ignore international money laundering, and the United States for some reason, fails to act decisively against the country's money laundering banks and laundrymen, nothing will change. 

It is doubtful that even the eventual exposure of the terrorist financing cyber-network there that has been funding Hamas will result in a change in American policy towards Malta since even the insulting treatment given to the pugnacious Secretary of Defense visiting during the Trump Administration about military privileges failed to wake up America about Malta as the problem child of the EU. Don't expect to see any indictments about Maltese laundrymen at SDNY, as they continue to practice their dark profession with impunity, notwithstanding when it impacts the United States' financial structure.    

FINCEN SENIOR OFFICERS SHOULD INCLUDE LAWYERS WHO HAVE ACTUAL EXPERIENCE AS FRONTLINE COMPLIANCE DIRECTORS

                     

This week's news from the Financial Crimes Enforcement Network (FinCEN) includes the promotion f two senior officials there, who have been in acting roles, to the status of permanent positions. Both are attorneys with prior experience in that agency, or elsewhere in government, or both. Neither individual, nor the current FinCEN Director, have apparently ever served as Director of Compliance, at a major US bank, or anywhere else in a frontline role in the private sector as compliance officer; Check their resumes.

This, in my humble opinion, is a major  mistake in policy. Choosing lawyers who go from working in the US Attorney's Office somewhere, or from Treasury, to fill the most important slots at FinCEN means that there's nobody in command who has actual first-hand experience dealing with OFAC sanctions, enhanced due diligence, clients onboarding amd transaction monitoring, at any level.

FinCEN needs leaders who have been on the frontlines of AML/CFT, to offer a practical viewpoint, drawn from work experience, as a necessary perspective on enforcement, regulation, and simply understanding what it's like to work in the commercial sector with the obligations and responsibilities of regulatory compliance, under deadline pressures and within a business environment. While I always believe that only lawyers have the necessary educational background to fully understand the complexities of sanctions applications, those same lawyers need to have been in the real, financial, world to appreciate how such sanctions operate in the reality of banking compliance.

I am not advocating that everyone at FinCEN be a former director of compliance at a financial institution, only that some of the positions be filled with individuals with diverse experience, which includes private sector compliance. Remember also that people who fulfill the role of compliance director as a major US bank got there due to their own prior experience, whether it be as a former military intelligence officer, former law enforcement, or simply came up through the ranks over several years of hard and successful compliance work in a variety of positions. All this can only help FinCEN in its primary AML/CFT and sanctions control role in our financial structure. Diversify, please, FinCEN, drawing from the private financial sector, in addition to your current sources of leaders.

________________________________________

NOTE: I have always felt that FinCEN also needs former, reformed, financial criminals, especially ex-money launderers, on its staff, for a dose of reality from the other side, but that will, unfortunately, never happen. Only in the private financial sector do wise executives see the need for individuals who were formerly their adversaries to complement traditional AML/CFT compliance. US Govt is simply not that flexible, not since the Vietnam War, anyway.

  America's use of former Viet Cong who rallied over to the government side to use their experience against the North Vietnamese Army.

RAISE COUNTRY RISK ON HUNGARY

If you are a compliance officer at a financial institution in Europe who is responsible for assessing Country Risk, you should reexamine the level you have assigned for Hungary, after the country's leader vetoed €50bn in aid to Ukraine, and told his supporters on Hungarian media that he retained the option to later stop the Ukraine's entry as a member of the European union. In a meeting in Orban's absence, the EU has now opened membership eligibility to the Ukraine, as well as Moldova. 

Given this demonstration of Hungary's close relationship with Russia, which is under massive EU and US sanctions, the risk that Hungarian companies, with state approval, will increasingly seek to evade  existing sanctions, and due to Orban's authoritarian style of governing his country, expect increases in attempts by Hungary to conduct an end run around sanctions. Frankly, we cannot trust Orban not to do so, in a sign of support for Vladimir Putin and Russia.

 Therefore, make your own appraisal about increasing the amount  of Country Risk for Hungary from Low risk to Medium Risk, which means Enhanced due Diligence on all trade transactions of good that could be considered dual-use for the russian war effort.

BILLION DOLLAR FUGITIVE AND CBI PASSPORT HOLDER MEHUL CHOKSI IS FINANCING TERRORISM FROM ANTIGUA THROUGH THE UK

 

MEHUL CHOKSI, the "Jabba The Hutt of Financial Crime," who has cheated Indian justice in Antigua for years, thanks to his prized Citizenship by Investment (CBI/CIP) Antigua passport, and aided and abetted by both the corrupt Antiguan judiciary, as well as the country's senior government officials, is now reportedly financing a violent South Asia terrorist organization, according to widespread media coverage in his native India, where he is regarded as his nation's Most Wanted fraudster. 

Choksi reportedly appears be funding the activities of a terrorist organization that violently seeks the creation of KHALISTAN, as an independent and separate Sikh state through partition from Indian territory, through extreme means. The terrorist group has conducted assassinations and bombings since the nineteen eighties, giving it the label of HAMAS OF INDIA. The group's activities have for the most part escaped attention in North America, although an alleged Indian plot to murder a Sikh leader in Canada is now beginning to raise awareness here about that country's issues with this minority.

How does Choksi, who stole billions from a major Indian financial institution, show up as a terrorist financier? Simple; he has retained a lawyer in the United Kingdom as part of his large legal team fighting his extradition from Antigua to face the music in India, and he is reportedly grossly overpaying that attorney's fees, which is highly unusual, considering his legal issues are in Antigua, not the UK, and this lawyer is allegedly closely linked to the terrorist group. 

Khalistan symbol

Arrogantly using payments to a lawyer to launder terrorist financing payments has caused outrage within India, and again focuses our attention upon the ability of wealthy Citizenship By Investment passport holders in the East Caribbean to act with impunity, due to their undue influence within the five EC states that sell the lucrative travel documents to financial criminals, sanctions evaders, and nationals from extremely high risk jurisdictions, after which they exploit those passports globally, often at the expense of the Members of the European Union. 

Antigua's historic status as a de facto sanctuary from justice for its CBI passport purchasers continues to be ignored by the United States, which has totally failed to rein in the 5 East Caribbean CBI states since they first started issuing these licenses to commit international crimes in 1983, to anyone with a pile of US Dollars, Source of Funds and Source of Income be damned. Since the US invasion of Grenada during the Cold War, America has pretty much let the corrupt leaders in the region do whatever they wish, including corruption, authoritarian one-party rule, and facilitating money laundering in a grand scale. We wonder whether this terrorist financing scandal, which is damaging India, will cause Washington to wake up, regarding St. Kitts, Antigua, Dominica, St. Lucia and Grenada.  

 

 

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WHY THE USE OF ADVANCED MONEY LAUNDERING TECHNIQUES IS SUCCESSFUL MORE OFTEN THAN NOT

                    

There's a reason why the vast majority of money laundering activities are rarely, if ever, uncovered and discovered by bank compliance departments while in progress; Laundrymen, who know well the personal cost of failure (remember who their clients are; drug traffickers, etc.) employ what can only be described as advanced techniques, tradecraft that is on a level above what most compliance officers can recognize and suppress. They know that the garden-variety methods are not only well known to the compliance world, there are software programs specifically designed to ferret out such pedestrian techniques.

However, if they are anything, money launderers are all about innovation, to overcome whatever hurdles compliance trainings programs, and the software platforms they rely upon, can throw up against them.  They instinctively know to abandon tried-and-true mainstream conventional methods, which may have been successful in the past, but are now being regularly spotted during Transaction Monitoring.

So what do they do? To survive, and thrive, they step up their game to advanced money laundering methods, which either employ obscure tradecraft, or generally unknown as vehicles for cleaning the proceeds of crime, or actually feature something involving information that compliance officers cannot normally access.   

Some advanced techniques are not so mysterious; they are just artful permutations of something ordinary, but which have been rendered into new iterations not easily understood as money laundering typologies. For example, most compliance officers are familiar with typical trade-based money laundering methods, whereby the proceeds of crime are folded into legitimate international trade payments, in order to move the abroad, when payment is needed from North American sales of narcotics. TBML generally features a wide variety of trick used to push narco-profits into Latin America and the tax havens of the world. That's a prime example of traditional money laundering, allowing laundrymen to repatriate drug sales profits back to kingpins and traffickers, usually with a large degree of success, although there have been a number of interdictions, as the techniques are not a deep and dark secret.

Remember how we stated that some advanced techniques are nothing more than opaque improvements upon generic methods? Some laundrymen, who are charged solely with the Integration aspect of their illicit profession, take TBML and turn it inside out. Instead of using the technique to export funds with impunity, they set up pairs of bogus international manufacturing facilities, one onshore and one offshore. Their team creates plausible transactions showing exports of hi tec products, such as computer chips, the value of which cannot be ascertained unless they were actually examined by industry experts, using wildly inflated pricing showing them to be high-value products. They export these goods abroad, all properly documented and invoiced, although they are close to worthless in truth and in fact.

This ficticious cover allows them to bill their overseas "partner," who remits large sums to a company in the Continental United States. These payments, which compliance has no reason to suspect, are entered by the company, for accounting purposes, as net profits, and income taxes are duly paid. The amount that remains is the invested in purchasing that office building in a major American city or a fully leased shopping center in suburbia located on the East Coast. 

The entire transaction appears to be nothing more than a domestic US company diversifying itself with its lucrative corporate profits through a building purchase. Only if there was a mole planted inside the bogis manufacturing or export process would the entire scheme be exposed, and that's outside the scope of the compliance department at the bank for the corporation. The building is subsequently sold for a significant profit, and reinvested elsewhere in the legitimate economy.  My former  trafficking clients were involved in shopping center purchases in Canada, if you want a real example of this technique.

That is just one example of creative advanced money laundering; there many more. These techniques all need to see the light of day; Tomorrow I will explain how and when. (miamicompliance@gmail.com)

  

 

EVIDENCE INDICATES THAT HOSTAGES HELD IN GAZA ARE BEING EXECUTED

 

If you were wondering why the IDF is periodically reporting the death of specific Israeli hostages whom are known to still being held in captivity, they are being found within Gaza by soldiers conducting offensive operations. According to inside sources, the position and condition of these deceased hostages indicates that they did not die as the consequence of Israeli bombing activity, but due to their execution by terrorists. This has been confirmed by sources close to the Government of the State of Israel. 

NAZEM SAID AHMAD, LEBANESE MONEY LAUNDERER AND TERRORIST FINANCIER FOR HEZBOLLAH IN BEIRUT

 

NOTES FROM A CONVICTED MONEY LAUNDERER; EFFECTIVE COMPLIANCE STARTS WITH KNOWLEDGE OF THE BEST ADVANCED TECHNIQUES PLUS THE RED FLAGS OF EACH

If you read my article Advanced Money Laundering Techniques, as Taught by a Former Money Launderer

https://rijock.blogspot.com/2023/12/advanced-money-laundering-techniques-as.html

you know that I am currently laboring on a comprehensive virtual presentation, designed for compliance officers who do not have twenty years' of frontline experience, and who therefore have never been exposed to the advanced techniques and methods that laundrymen typically use to gain access to financial institutions without being recognized, identified and interdicted in real-time. I expect that it will be ready to present by January 2, 2024.

But there is an aspect of these advanced techniques that is just as important as the typologies themselves: The indicia, or Red Flags, of each method. Knowing how these tricks of the laundryman's toolkit are used are critical elements of effective compliance risk management, but there is an additional element of each technique that must also be part of your knowledge base: having a clear understanding of the Red Flags, or indicia, of each method, which will aid you in instantly identifying them as a particular type of tradecraft.

I have often found that compliance officers are aware of the textbook description of a specific advanced technique, but would not recognize it during transaction monitoring, because they are totally unaware of how it presents itself while in progress. What are the indicators that a specific method is being employed? 

This is, frankly, just as important as the technique itself, because money launderers are experts at presenting their transactions as legitimate through disinformation and misinformation, which to the untrained eye appear as normal. Applying the Red Flags of a specific technique, however, to a set of transactions often reveals that there something more under the table, a hidden agenda that deserves further inquiry. They are as important to know as the method itself, and must be taught alongside it during training.

One final note; For those who have requested a webinar, given the sensitivity of some of the content, and the risks of their ending up in the hands of financial criminals looking for "foolproof" techniques, My seminar must be limited to private presentations to financial institutions and financial service firms, where unauthorized recording can be prevented, and attendees identified. I well remember that, back in the 1990s, certain elements sought, unsuccessfully, to gain access to Money Laundering Alert's annual conferences. Fortunately, they were blocked. My presentation will be limited to the compliance community. miamicompliance@gmail.com

      

SOURCE SAYS PFLP HOLDS SEVERAL ISRAELI AND FOREIGN HOSTAGES, AND HAS MOVED THEM OUT OF GAZA AND INTO THE WEST BANK

The POPULAR FRONT FOR THE LIBERATION OF PALESTINE, more commonly known as the PFLP, one of the terrorist groups that operates in the Palestinian Territories, and a known participant in the War Crimes and Crimes Against Humanity that occurred on October 7, 2023, in the area of Israel adjacent to Gaza, took hostages from the civilian population on that date, and continues to hold them, in violation of  international law and the Geneva Convention. It is believed that HAMAS sought to take possession of the PFLP-held hostages who were female and minors, without success, and that is one of the reasons why the hostage exchange agreement broke down.

Reliable sources inside Israel have advised that not only does the PFLP continue to hold a number of hostages, but that they are no longer in captivity in Gaza, having been now moved into the West Bank, where the PFLP has long conducted terrorist operations. Precisely how, and under what circumstances, Israeli and foreign hostages were  transferred to the other Palestinian territory is not known, but existing underground tunnels, into Egypt and elsewhere, have been used for decades to import arms, ammunition, explosives, mortars and missiles, and other military hardware of all types, and we presume that one or more of those routes was employed. 

The logistics of their transport may seem improbable, but the fact that both Hamas and the PFLP have brought substantial amounts of military-grade small arms into the West Bank, where they have used them against Israel's police and IDF, would indicate that well-established covert avenues of transport exist. Tunnel networks inside the West Bank, operated by terrorists, have been reported in Israeli media since October 7. How extensive they are is not publicly known.

The dearth of press coverage of PFLP activities, including details of its role in action against the IDF, may indicate that for some reason, information about the terrorist organization has been classified. The consequences, within Israel, of public confirmation that there are hostages being held inside the West Bank could be serious for West Bank residents, a large percentage of whom have openly supported the Hamas terrorist attack upon Israel. Should any further information become available, we shall update this story forthwith.

     

ADVANCED MONEY LAUNDERING TECHNIQUES, AS TAUGHT BY A FORMER MONEY LAUNDERER

Dear Readers-

My recent article, YOUNGER COMPLIANCE OFFICERS MUST HAVE

THE TOOLS TO RECOGNIZE ADVANCED, OBSCURE AND

ESOTERIC MONEY LAUNDERING TECHNIQUES

(https://rijock.blogspot.com/2023/12/younger-compliance-officers-

must-have.html) identified what I know is one of the most import

challenges that compliance officers face in 2024: the lack of available,

reliable information on advanced money laundering tradecraft. To

that end, I am preparing a special live, virtual presentation, and will make it 

available on January 1, 2024, entitled

ADVANCED MONEY LAUNDERING TECHNIQUES, AS TAUGHT BY A FORMER

MONEY LAUNDERER

This presentation, which will be of one hour in duration, will reveal the advanced, 

obscure and esoteric money laundering techniques and methods presently in use,

explain how they are employed, and show through actual examples how they can be

recognized in real time.

 

Taken from current case studies, my resources abroad, law enforcement statements

 and disclosures, and detailed strictly from the perspective of the working money launderer,

 knowledge of these techniques is essential for the practising compliance officer, whether

 he or she is engaged in Account Open Due Diligence, Transaction Monitoring, or Ongoing 

Account Examination. Many of these techniques have never appeared in any training 

presentation or in print.

This lecture, which is designed to be conducted virtually via Microsoft Teams for the staff of any 

bank, nonbank financial institution, financial service provider or broker-dealer, is intended to

fill the present need for advanced tradecraft. It is based upon my 40 years of experience, as a

bank attorney in Miami, a career money launderer for more than a decade, a compliance officer, 

Financial Crime Consultant for World-Check, and daily exposure as a financial crime journalist

covering unfolding developments in the industry.

Details available on request. 

miamicompliance@gmail.com

KENNETH RIJOCK

Financial Crime Consultant

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The Laundry Man by Kenneth Rijock

Published by Penguin Press UK

Available through Amazon and other online booksellers and in electronic version.

Also available in Spanish, Dutch, Slovak, Hungarian & Polish; Chinese translation available 

for e-book.

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Kenneth Rijock's Financial Crime Blog

http://rijock.blogspot.com/