Monday, September 24, 2012

NOTE WELL THE SENTENCE IN CHINA FOR POLICE CHIEF TAKING A BRIBE

The trial


Buried in the Bo Xilai scandal is the 15 year sentence, meted out this week to Mr. Wang, the corrupt police chief who blew the whistle on the murder of a British businessman, notwithstanding what has been described as extraordinary cooperation with the authorities, Of the entire sentence, it is important to note that nine years of the fifteen was pronounced for taking bribes. China obviously is trying to send a blunt message to its civil servants: you engage in corruption at your peril.

I am certain that this little detail has not gone unnoticed in China. Therefore, corrupt Chinese PEPs seeking to deposit criminal proceeds in banks outside of China will go to great lengths to conceal their PEP status from you. Therefore, should all high net-worth Chinese nationals seeking to open an account with you, outside of China, be subject to Enhanced Due Diligence ? The answer is yes.




DID A MAJOR VENEZUELAN MONEY LAUNDERER RECEIVE TOTAL IMMUNITY FOR HIS COOPERATION AGAINST MIAMI BANK ?



Does crime pay ? A Venezuelan national who engaged in extensive money laundering, through a Miami bank, appears to have evaded indictment, by cooperating with the US law enforcement agency that is investigating the bank where he moved his money. I found out recently that he is opening still another new business in Florida.

The individual, who moved illicit funds for corrupt Venezuelan PEPs, and at least one listed Specially Designated Global Terrorist (SDGT) organisation, has not been charged with any offences, either in Federal or local state court in Miami-Dade County. it would appear that he has rendered what is known as Substantial Assistance to Federal law enforcement, which seems to be more interested in making the bank a target. The problem is, his level of culpability should have ruled out any grant of immunity. He orchestrated a sophisticated international  money laundering scheme, involving millions of dollars moving through a Miami-area bank owned by Venezuelan interests.



Was this immunity given to ultimately allow US law enforcement to charge the bank criminally ? We cannot say at this time, because those investigations customarily take years to complete, as an ironclad case is usually assembled before an indictment is handed down.

Meanwhile, the former money launderer is free to enjoy the fruits of his illicit labours. Was justice served ? I seriously doubt it. Additional information received, from a source in the Republic of Panama, indicates an additional investigation is in progress. It is reasonable to expect some indictments to come out of this.



IRAN SHIPPING ARMS TO SYRIA OVERLAND VIA IRAQ



All the statements this week, by the West, congratulating the Government of Iraq for refusing a Damascus-bound North Korean aircraft overflight privileges, ignores the fact that Iranian military transports have been using the same route for some time. Iraq has neither refused access to its airspace to Iran, nor required Iranian aircraft in transit to land and have their cargo inspected. Iran has no direct frontier with Syria, and chilly relations with Turkey of late do not allow access through that country's airspace.

Of course, even if it wanted to intercept those Iranian aircraft, its small air force of light aircraft is not capable of confronting anyone, as Iraq inexplicably refused the American offer of posting some of its air assets in the country after US combat troops departed last year.

The misplaced arrogance of its leadership is only matched by the systemic corruption of its elected officials, many of whom have been receiving substantial bribes and kickbacks, since taking office. Iraq currently has no fighter aircraft, nor will it, until it takes delivery of US-built equipment, a few years down the road. Its airspace is undefended.



What Iran can control, but does not, is the surface transport, via Iraqi highways, of arms and supplies traveling from Iran to Syria. Reliable reports state that such deliveries are helping to sustain Assad's military, in its ongoing battles with the Free Syrian Army. The United States is aware of this, and has seen fit to release the information to the media. Certainly, those convoys are being tracked on US spy satellites. Obviously, the Iraqi Government doesn't think that America has any leverage with it any more.



Perhaps the blunt threats, made recently by certain US congressmen, to cut US aid to Iraq, due to what can only be described as cooperation with Iran, might just get their attention. 

Sunday, September 23, 2012

WATCH FOR BANK CLIENTS DEALING WITH ANY OF THESE BLOCKED IRANIAN TRANSPORTS



The United States has released detailed information on 117 aircraft, known to be under the control of the Government of Iran, and presently or formerly involved in the transport of arms, Revolutionary Guard Corps soldiers, and supplies to the Assad regime in Syria. You are cautioned that Iran, which has resorted to fraud, deception, and sundry other criminal acts to hide the true ownership of its maritime fleet, will certainly employ similar deceptive tactics with regard to its aviation assets, to enable them to continue to supply Syria with arms and ammunition.

You do not want your bank named as a party to any bogus sales transactions, financing arrangements, or bona fide sales of OFAC-blocked aircraft that Iran deems too high profile to keep. Though the tail numbers (mainly EP, EX, F and UR) may be illegally modified, always remember that the Construction Number a/k/a Aircraft Manufacturer's Serial number, abbreviated S/N or C/N, cannot easily be changed.

Obtain the services of a competent consultant, with aviation experience. if you see any proposed transactions, involving A300, A310, A320, B707,P727, MD-82, B747, B747SP, IL76TD, or F-28 aircraft. If you require further assistance, send me email to: miamicompliance@gmail.com .



The list of aircraft, including last known operators, can be found here.

IRAN SEEKS TO ACQUIRE DOLLARS ABROAD



International sanctions levied against Iran have caused the government to announce that it is opening a hard currency trading centre, to facilitate the purchase of US Dollars and other major currencies. The Rial has been in free-fall against the dollar since the beginning of the year, and has lost a large portion of its value on the international market. The Central Bank of Iran, which will supervise the programme, will make access to hard currency more readily available. Dealing with the Central Bank, however, could subject foreign financial institutions, and other entities to international sanctions, and any bank that anticipates selling dollars to Iran should take a long, hard look at the possible consequences.

Central Bank logo


Additionally, there are multiple reports that shell corporations located in Ecuador, Venezuela, El Salvador and Panama are employed to conduct illicit currency transactions with Iran, to supply that government with dollars. The stripping away of information, indicating that Iran is the final beneficiary, is apparently the method being used to conceal the ultimate destination of the dollars. It is not known whether US  regulators and law enforcement agencies are aware of this activity, or whether it is under investigation, but given recent US actions against Iran sanctions violators, one must assume that they are painfully aware of it.



Bottom line, if a bank in Latin America is seeking to establish a profit centre, through sales of dollars to Iran, the potential risk could include multi-million dollar fines & penalties, loss of access to the US financial structure, loss of US branches, and loss of all correspondent relationships there. Such an action would probably bring down the bank, as it could not longer remain competitive, since its customers could no longer do business with US companies.

Additionally, terrorist financing indictments could be filed in the US, and the countries that allowed the activity to exist might be named as State Sponsors of Terrorism. This would have serious consequences for Country Risk.




Saturday, September 22, 2012

LEBANON'S PROPOSED NATIONAL DEFENCE STRATEGY COULD RESULT IN ANOTHER WAR



The Government of Lebanon has proposed a revised National Defence Strategy. Amongst other provisions, it calls for Hezbollah to retain its arms (in continued violation of the 2006 agreement), and authorises it to use them in defence of Lebanon, meaning invasion of its sovereign territory, until the Lebanese Army can take over those duties. The agreement seems to legitimise Hezbollah's militia, a disturbing sign, given the tension between its patron, Iran and the West, over the WMD and ballistic missile programmes.


1966 Lebanese military map, showing Shebaa farms inside Syria

In a more ominous provision, the strategy recites that Lebanese territory remains under Israeli control. This means that the Lebanese Government is adopting the Shebaa Farms issue, which is the primary pretext employed by Hezbollah, to allow it to continue to possess arms. The Shebaa Farms region, which is a 4.25 sq mi area within Syrian territory, but occupied by Israel since 1967, has been shown conclusively to be Syrian, yet it remains Hezbollah's "patriotic" excuse to expand its military. Lebanon has not even a colourable historical claim. This is how wars begin.

Should Lebanon push its bogus claim over the Shebaa Farms, Country Risk for that country will need to be adjusted, for Israel recently warned Lebanon that the entire country would be targeted if Hezbollah starts another war with Israel. This means that the Beirut financial centre could be damaged, with disastrous consequences.







TEXT OF STANDARD CHARTERED CONSENT ORDER PUBLISHED



Readers who wish to review the complete text of the nine page Consent Order between Standard Chartered Bank and New York State Division of Financial Services regulators can find it here*.


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*Consent Order under New York Banking Law § 44

US TO DELIST IRANIAN TERRORIST ORGANISATION



Reports from the US Department of State indicate that Secretary Hillary Clinton will remove the Mujahedin-e Khalq (MEK) from the list of designated terrorist organisations. The action is believed to take place on or before 1 October, when a Federal Court order* required her to either remove the MEK from the terrorist list, or re-designate it. The Secretary had delayed making a decision on the removal of the designation. The MEK had failed to move from Camp Ashraf, in Iraq, to a new camp near the Baghdad Airport, by 20 July, as a prerequisite to consideration of delisting. Reportedly,  most of the MEK followers have now relocated.



In light of the fact that the MEK, which many consider a cult, was responsible for the assassination of US military and government officials in Iran, during the 1970s, and that it does not promote democratic principles, removing the MEK terrorist designation is a major foreign policy mistake. Many highly-paid US politicians have supported the deletion of terrorist designation, but inasmuch as the MEK opposed Iran in the 1970-1980 Iran-Iraq War, it has no popular support in Iran, and removal will ultimately hurt the interests of democracy in the Middle East. It will not encourage regime change  in Iran, leave the MEK where it is, Madame Secretary.



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*Appeals Court orders Secretary Clinton to decide on MEK Terrorist Status

Friday, September 21, 2012

WILL COLOMBIA SEIZE THE FARC'S BILLIONS IN DRUG PROFITS ?



With peace talks on the horizon, the question persists: what will happen to the billions of dollars of narco-profits in the FARC's overseas bank accounts ? Founded in 1964, as the military arm of the Colombian Communist Party, the Armed Forces of Colombia, the FARC,  earns an estimated $1.1bn each year, through its purely capitalistic drug trafficking activities. If the FARC is demobilised, and its members accepted back into Colombian society, what about all that money ?

FARC narco-wealth is believed to have been deposited, and invested, far afield, in;

(1) Switzerland
(2) Norway
(3) Sweden
(4) Germany
(5) Costa Rica
(6) Panama



Panama is, by far, the jurisdiction where much of the FARC dirty money was shipped, and reportedly, still resides. Colombian sources. which include a major money launderer, state that a number of Panamanian corporations were formed, many by major law firms, bank accounts opened, and money artfully laundered, all in Panama City.

The question remains: will the Government of Colombia, after dismantling the FARC as a military force, pursue all the drug profits, banked outside the country ? Does it not, after all belong to the Colombian people ? Or will it be the United States that seizes the funds, based upon its listing of the FARC as a  Specially Designated Global Terrorist organisation ?


MONITOR IRAQ FOR COUNTRY RISK ADJUSTMENT



Strong statements, coming from senior officials in the United States, and directed at what appears to be a government in Iraq that is not listening, could result in a marked decrease in US aid and assistance there, which would seriously impact Country Risk. Add to that the failure of the central government of Iraq to work with an increasingly assertive Kurdistan Regional Government (KRG), and raising Country Risk for Iraq would seem to be the prudent step.

 Iraq has continued to allow Iranian aircraft, engaged in the delivery of munitions, and possibly IRGC agents, to Syria, overflying Iraqi airspace. Ostensibly "humanitarian" and nonlethal aid, Iraq does not require the aircraft to land for inspection. This is irritating the United States, and could result in an immediate decrease in US aid and assistance. The Iraqi economy could be affected.

Therefore, compliance officers should monitor the situation; if Iraq's noncompliance with US wishes in these arms shipments to Syria results in a diminution of US assistance, you should reassess your estimate of Country Risk for Iraq.


Thursday, September 20, 2012

BULK CASH SMUGGLING OPERATION INTO US FOILED



Law enforcement authorities in San Diego have uncovered a bulk cash smuggling operation literally "under construction," and arrested its manager for on money laundering conspiracy charges*. Ricardo Rosales-Rafael, an American citizen who lived in Mexicali, was charged with smuggling US Dollars, which were narcotics profits of Mexican traffickers, and setting up a retail store to launder the cash, through sales of 25-30 bikes.

The defendant when apprehended, was engaged in drilling a clandestine international tunnel, from Calexico, in the US to Mexico, inside a warehouse that he had leased, for $10,000 a month. the bike shop was a front, and the northern terminus of the unfinished tunnel, which was to be used to move drug cash into the United States.

Agents found a complete set of the drilling tools and equipment needed to complete the tunnel work. Rosales-Rafael was charged with laundering more than $340,000 through his local San Diego bank accounts, over a 9 month period. Fortunately, the scheme was discovered before the tunnel had been completed.


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*United States vs. Rosales-Rafael, Case No.: 11-cr-04302-W (SD CA).

THAI COURT DELAYS RULING ON VALIDITY OF VIKTOR BOUT'S EXTRADITION TO USA



The criminal court in Thailand, which was to have entered a ruling last Monday on the validity of the extradition of the Russian munitions trader, Viktor Bout, has announced that it will delay a decision until January 2013. Bout's defence counsel in Thailand has taken the position that his extradition to the United States violated Thai law.

Bout, who is presently serving a 25-year sentence in the United States, could be transferred to Russia to serve his sentence. Both countries are signatories to an international agreement that provides for that arrangement, and the high-ranking Russian officials have indicated that they intend to make application to the Attorney General of the United States. Public opinion in Russia believes that Bout was the victim of Entrapment by US law enforcement. Whether the United States will agree to his transfer is unknown, but a favourable ruling by the Thai Criminal Court could influence the decision.



Wednesday, September 19, 2012

PHILIPPINES RENAMES SOUTH CHINA SEA



The Government of the Philippines has formally renamed a portion of the South China Sea "The West Philippine Sea," and directed its cartographers to make the correction in all official maps of the country and surrounding waters.

The segment of the South China Sea so redesignated is that portion lying within the 200-nautical mile Exclusive Economic Zone (EEZ) of the Philippines, according to established international law.



China and Taiwan, who also claim territory within this region, have objected to this renaming; Singapore has announced that it will remain neutral. Whether this will result in increased tension between the Philippines and China, leading to further incidents,  we cannot say, but it may be grounds to increase Country Risk for the Philippines.


Tuesday, September 18, 2012

ANTIGUA DELAYS FURTHER EXTRADITING ITS FORMER REGULATOR TO THE UNITED STATES IN STANFORD CASE


The Government of Antigua continues to ignore its legal obligation to extradite its corrupt former Financial Services Regulatory Commission head, Leroy King, notwithstanding that he has exhausted all his legal remedies. It has been alleged that King received at least $500,000 in bribes, from master Ponzi schemer, R Allen Stanford, since convicted in a US District Court in Texas. That court has been seeking King for several years. Antigua should end its delaying tactics; justice delayed is justice denied.

Rumours abound about the extent of King's knowledge regarding who, in the Government of Antigua, received illegal payments from, or on behalf of, Stanford, whose Stanford International bank, headquartered there, sold non-existent certificates of deposit to American investors.



Could King's testimony bring down the government in Antigua ? We cannot say for sure, but it is, frankly, time for that country's leaders to send him to face justice in Texas. Antigua may need to clean house, but if it allows the country to move forward, and away from the long shadow of Mr. Stanford, let it happen.




COCAINE ARRIVING IN STYLE



If you ever had any notion that the South America-to-West Africa pipeline for narcotics is out of control, take a good look at this photograph. A Nigerian national, arriving from Brazil, attempted to smuggle in more than two kilograms of cocaine inside a cooked chicken dinner.