WAS PILATUS BANK CAPITALIZED WITH CRIMINAL PROCEEDS FROM VENEZUELA?

Pilatus Bank officers & directors

Although there are criminal proceedings pending against the defunct PILATUS BANK and its former money laundering reporting officer, anything involving the individuals who held directorships at the bank, which allegedly was a massive money laundering machine, appears to be off limits. Sooner or later, of course, the Statute of Limitation will act to remove the threat of indictment from the bank's senior leadership, but one item remains a mystery; how was the bank financed, meaning capitalized?

Many legal experts familiar with the case believe that the reports of cash being funnelled to Ali Sadr Hasheminejad, the owner and board chairman, came from Venezuela, and that those funds were the proceeds of crime, but details of such transfers, and evidence admissible in a court of law, has never surfaced. Such proof would certainly be welcomed by not just Malta, the defendant bi Ali Sadr's strange international arbitration, as well as American law enforcement, as it was alleged to be in dollars, which confers jurisdiction to US Courts.

Even more puzzling is the role played by two Turkish bankers, MUSTAFA CETINEL and EKMEL CLINGIR, who appear only in Pilatus' early years. We do know that an unidentified banker traveled to Venezuela, in connection with Pilatus funding, but thus far, his identity has never been publicly confirmed, though I have my suspicions.

There are so many unanswered questions about Pilatus Bank's illicit operation that should be answered, but given the free pass handed out to Ali Sadr, due to what was described as a Brady violation, we may never be able to secure the answers, leaving us with questions about whether he rendered Substantial Cooperation, and whether it was worth giving him that precious Get-out-of-Jail-Free card, and whether it occurred due to Undue Influence from upstairs at DOJ.

WHAT IS THE MOST CLEVER MONEY LAUNDERING TECHNIQUE?

When I was asked this question at a lecture this past week, I stated that it was probably International Product Diversion, in which illegally returning exported US goods sold at a deep discount abroad, are relabeled to show they are not about to expire, and sold them domestically to unsuspecting grocery chains, but on further reflection, it may really be Life Insurance Settlements.

Life Settlements, are high value insurance policies that are sold on the secondary market, and wereI have seen returns as high as 72% return on investment, have been a favourite investment of money launderers serving drug cartels. These million dollar policies, which are dumped when no longer serving the needs of the insured, due to the insanely high premiums, are snapped up by big investors such as German banks and Warren Buffet, but are also targets of criminals seeking to launder their illicit profits.

If you were wondering why the American insurance industry would not refuse to disburse substantial life insurance proceeds, upon the death of an insured, to a third party, especially a known trafficker, please understand that many of these policies are held by trusts. The launderer need only change the beneficiary of the trust after purchase. The insurance company pays the trust, and is ignorant of who the new trustee and beneficiary are.

While I have acted as a compliance officer for life settlement companies, there is no AML/CFT regulation of such entities; they are a black hole through which smart laundrymen can drive their clients' millions, ultimately receiving clean insurance company funds at the end. I have a number of articles further explaining the scheme on my blog.

DID PORTUGAL CANCEL ITS GOLDEN VISA PROGRAM BECAUSE OF THE CONNECTION TO SKYROCKETING MONEY LAUNDERING?

Two announcements recently made by the Government of Portugal have me asking whether the country's highly-successful Golden Visa program was a major contributor to an explosion of money laundering there. It is curious that the country abruptly cancelled its Golden Visa program, alleging that it pushed housing costs through the roof, at the same time it reported the statistics on suspicious activities, and seized assets, relating to money laundering and sanctions evasion.

Remember that successful money laundering in any jurisdiction always leads to higher prices, as individuals who have cleaned their proceeds of crime often pay higher than top dollar, to secure the best real estate, which is thereafter not available to legitimate buyers at a reasonable price. They also snap up many available properties, leaving only the less attractive ones in the marketplace.

So we ask the question: were laundered funds, which pushed up prices as well as decrease the supply of desirable real estate, also going into Golden Visa applications, which were approved? In this case, did economic passports cause money laundering?

CAN COMPLIANCE OFFICERS BE TRAINED TO RECOGNIZE ADVANCED MONEY LAUNDERING TECHNIQUES?

I was once tasked to teach the directors of a major Dominican Republic bank about money laundering methods. The bank had been a repeated victim of sophisticated laundrymen successfully depositing narco-profits, and there were well-founded fears of regulatory action. Rather than get up in front of them and detail the most dangerous and esoteric techniques, I chose a much more hands-on approach.

We put the bank's directors in a small room, and gave them a dozen fact patterns, such as the bank's compliance officers might experience daily, and report to them. They had only five short minutes to confer and decide upon a course of action. Some were new account profiles, but most were specific transactions. We pressured them, such as occurs in real life situations.

At the end of the exercise, I used each example to demonstrate specific techniques, and what was it about them that gave away the particular scheme. Much like the casebook method taught in law school, the program was designed to explain in practical terms how one identifies money laundering tricks of the trade. I put the directors on the spot to jointly brainstorm, and draw conclusions from facts; it works.

Therefore, it is humbly suggested that, rather than bore compliance officers with a monotonous lecture, which they will not remember use this hand-on method, so that when they actually see money laundering, they can identify, and hopefully, report it to senior staff in real-time.

WHY IS NOBODY TEACHING TRADECRAFT TO FRONTLINE COMPLIANCE OFFICERS ANYMORE ?

I continue to see that younger compliance officers, indeed even some compliance directors, do not have a working knowledge of the more esoteric and arcane techniques which experienced money launderers use on a daily basis. It's been a generation since the USA Patriot Act was passed, and I fear that the knowledge base that post-9/11 compliance officers, who did not have to be motivated to broaden their horizons through the study of relevant Federal decisions, so that when they saw an unusual pattern, they would recognize it as one that appeared in a major case in the past.

While money launderers are constantly fine-tuning their techniques, meaning they are ever so slightly changing some of the elements, to fool law enforcement, the advanced techniques remain as effective as they were in 2001. Learn them, and pass on your knowledge to your more junior staff, and insure that, every six months, you make an effort to catch up on all the new techniques that law enforcement has exposed, or which appear in Federal Court decisions.

If you cannot explain, and recite from memory, at least thirty money laundering methods, you are not fully trained in the AML/CFT field. They don't reach those techniques in the seminars; catch up with the money launderers' tricks, or have one go right over your head tomorrow. and two years later, a law enforcement agent will explain it to you when you must comply with a subpoena for your customer's records, after his arrest, having used your bank with impunity.

THE USE OF AI TO UNCOVER EVIDENCE OF CORRUPTION THAT VIOLATES THE FCPA AND THE UK BRIBERY ACT

Perhaps the most difficult evidence to expose in corruption cases are the cleverly-concealed payments made by vendors to obtain and retain business from government officials in the developing world. Those tricky, below-the-waterline bribes, which are artfully constructed by lawyers for major US and UK companies to defy conventional investigation, are extremely hard to find, because compliance officers have no idea where to look. Companies that will go to any lengths to get business from governmental officials task their attorneys with building an investigation-proof cover story, to insure that they will not be deciphered and found to be bribes and kickbacks given indirectly to get those lucrative contracts.

The maddening thing is that not only do the corrupters perpetrate those criminal acts, they often coach the recipients, senior government officials with authority over spending, on specifically how to act during and after the charade is conducted. In short, they tell the officials how deal with this illicit money, so that their actions do not unwittingly allow compliance to reach out and find the payments. This greatly reduces the chances of subsequent discovery.

That was the past; today, emerging technology affords the compliance officer a potent weapon to wield against those hidden payments, which can now be exposed, not through labor-intensive enhanced due diligence searches, but by employing programs that feature advanced artificial intelligence, which can find those elusive payments, even if they appear to be legitimate transactions totally unconnected to the matters under investigation. This means that what was out of reach before, now shows up in your search, because the platform you selected has a capability far beyond that of your old legacy toolbox. AI is going to show you where that dirty money went, how it was manipulated to conceal it from view, and who received it; count on it to succeed.

TERRORIST SAID TO BE NEW LEADER OF AL QAEDA HAS $10m REWARD POSTED FOR HIS CAPTURE

 

MALTA: THE LOW SPARK OF HIGH-HEELED BOYS

The Republic of Malta continues to be a major money laundering threat to all other members of the European Union, but EU leadership either cannot or will not take affirmative action to rein in the laundrymen who service corrupt PEPs, narcotics traffickers and senior government officials that are literally in bed with the Maltese Mafia, including the most senior national leaders.

There's no help coming from outside the EU either. Although the cashiered PILATUS BANK moved millions through the bank's UK branch, and there have been major FCPA violations under American law, neither the UK nor the USA will lift a finger to charge the many offenders.

For compliance officers, and given the fact that many of Malta's most prominent financial institutions and financial service firms are cooperating with financial criminals, their only option at this time is to unofficially all blacklist Maltese transactions when they are encountered, lest they expose themselves personally to risk of subsequent indictment abroad, and potential banishment from the industry if they approve transactions that are later tied to Maltese organized crime. There is no other option if you are operating a risk-based compliance program; Conduct yourselves accordingly.

SPAIN PUBLISHES ITS OWN LIST OF TAX HAVENS INVOLVED IN MONEY LAUNDERING OPERATIONS

 

We are circulating this in an overabundance of caution.While this list offers no surprises, you may now be subject to enhanced due diligence, or some other form of increased measures, if your bank is located in any of these jurisdictions. Did they just take all the present and former British and American territories, we wonder? 

There is no additional information, so govern yourself accordingly.

ANGUILLA

BAHRAIN

BARBADOS

BERMUDA

DOMINICA

FIJI

GIBRALTAR

GUAM

GUERNSEY

ISLE OF MAN

CAYMAN ISLANDS

FALKLAND IS.

(NORTHERN) MARIANA ISLANDS

SOLOMON IS.

TURKS AND CAICOS ISLANDS

BRITISH VIRGIN ISLANDS

US VIRGIN ISLANDS

JERSEY

PALAU

SAMOA

SEYCHELLES

TRINIDAD AND TOBAGO

VANUATU

WILL THE APPEALS COURT DISMISS ALEX SAAB MORAN'S APPEAL FOR LACK FOR JURISDICTION ?

Alex Saab Moran, in custody

Readers that are closely following the high-profile money laundering case, presently pending in US District Court in Miami, know that Saab's motion to dismiss the indictment due to his alleged diplomatic immunity was denied, and that then he took an immediate appeal to the Eleventh Circuit Court of Appeals.

The question has arisen as to whether the Court has jurisdiction to bring the appeal, as the order denying Saab's motion was what we call an interlocutory order, which is a non-final, interim order issued during the course of a case. Such orders are only appealable under a limited number of circumstances, and I cannot find a relevant statutory reason that would allow the 11th Circuit to take the case. The docket notes that a Judicial Question has been issued.

While the issue of what is a diplomat, and therefore, an individual immune from criminal under certain circumstances is an important question in light of the fact that corrupt Caribbean government officials, at the highest level, covertly sell diplomatic passports, for cash, to financial criminals, who later attempt to use them to avoid arrest. The accused Nigerian fugitive DIEZANI ALISON-MADUEKE, allegedly paid Dominica Prime Minister ROOSEVELT SKERRIT $2.2m for a diplomatic passport in London, which she thereafter unsuccessfully used to evade an arrest warrant in the UK. Such manipulation of diplomatic identity documents has to stop, and perhaps this case will aid in that.

It would be in best interests of justice if this case establishes a benchmark for bogus diplomatic passports, such as Saab Moran is attempting to employ to obtain immunity from prosecution. Saab's attorney must now file a memorandum of law on that issue of jurisdiction for the Court to enter a ruling.

INVESTIGATIVE RESEARCH: THE DISAPPEARANCE OF MEHUL CHOKSI BY KENNETH RIJOCK

 

ARTIFICIAL INTELLIGENCE GIVES ENHANCED DUE DILIGENCE A SHOT IN THE ARM

Many years ago, I was engaged by a consultancy to perform enhanced due diligence upon a certain individual from Turkey, who was interested in obtaining an economic citizenship in an undisclosed jurisdiction. The objective, of course, was to determine whether the target had anything in his background which might disqualify him for the passport, or worse, place the consultancy in any sort of danger, legal or otherwise.

EDD, using traditional sources and methods, is very labor-intensive, and even after accessing the literally dozens of programs and databases available to you, reaching out to your valued sources abroad, and calling in favors from former law enforcement or intelligence contacts, it is rarely conclusive in totally ruling out your target as a possible financial criminal, if he is from a high-risk region. You usually have a number of unresolved issues, and have to make a judgment call that does leave some stones unturned.

In the case I mentioned, the individual had some unconfirmed, vague association with significant transfers of gold, but I could never get confirmation of that particularly bothersome rumor, no matter how many sources I accessed. I ruefully gave the target a clean bill of health, with a caveat about one issue that I was unable to resolve to my satisfaction, plus my nagging suspicion about his name change.

You know where this is going, of course; fast forward several years, and my target surfaces as a major player in international sanctions evasion, arrested, in a classic way, upon arriving in Miami with his family, en route to Disney World. His final destination ended up being a pretrial jail in New York for Federal prisoners.

If I had been using a platform, such as is available today, featuring artificial intelligence, I would have gotten the confirmation that I needed to identify the target as a transnational sanctions evader for Iran, because my searches would have reached the remote and arcane data sources that, when assembled into a pattern as they were found, using the machine learning capability, would have turned my distant rumor into documented fact. AI can give EDD the teeth it needs to retrieve the answers that have eluded it in the past.