REZA ZARRAB: TWO PASSPORTS, TWO DIFFERENT NAMES

In order to further demonstrate the fact that compliance officers conducting Customer Identification Procedures on new accounts can no longer rely upon only name checks, we present the case of the oil-for-gold Iranian sanctions evader, Reza Zarrab, who, with his partners, scored billions of dollars for Iran in covert sales of sanctioned petroleum on the world market, in concert with Babak Zanjani and Alireza Monfared.

Zarrab, at the time of his arrest in Miami, had passports from several countries, including birth his native Iran, and Turkey, where he operated his illegal operation to turn gold into US Dollars. Take a look at his Iranian passport, above, and note that it bears his legal name in English. Now look below, at his Turkish passport, from the same period. his name appears there as Risa Sarraf. Remember that Zarrab's occupation was to supervise the illegal sale of sanctioned Iranian oil by his partners, and then to take the gold, which he had arranged to make available to purchasers, and convert it into dollars.

In one passport, he has a full beard, but in the other, he is clean shaven, which appears to a casual observer to be a complete different person. These identity documents reinforce the fact that name searches alone, by compliance, cannot be relied upon to conclusivelt prove identity; only through the proper use of facual recognition software platforms can this be accomplished with certainty.

Until and unless compliance officers universally adopt facial recognition software systems, criminals like Zarrab will beat them, every day of the week.

DOMINICA HAD PHOTO OF MONFARED, YET CHOSE TO PUT DRAWING ON HIS DIPLOMATIC PASSPORT TO CONFUSE FACIAL RECOGNITION SOFTWARE IDENTIFICATION

Our recent article, Is this Dominica Diplomatic Passport Image an effort to Defeat Facial Recognition Software ? showed how the Commonealth of Dominica had resorted to a sketch, or drawing, of the dodgy Iranian sanctions evader, Alireza Monfared, on his diplomatic passport, rather than a photograph, in an apparent attempt to foil facial recognition software platforms.

For those readers who might have thought Dominica used the drawing because they had no photograph on hand, take a close look at Monfared's CBI passport. Yes, he has two passports issued by Dominica, one CBI, and one diplomatic. Please note that the CBI passport features a photograph. Why didn't Dominica attach that photo to his diplomatic passport ? Because it intended to confuse and mislead any facial recognition software program that accessed Monfared's diplomatic passport, when he presented it, upon arrival abroad, or when such a program compared CCTV, newsreel  or other footage, to his passport image.

FCO POSITION PAPER INDICATES THAT THE UK WILL NOT BACK DOWN ON PUBLIC REGISTERS IN 2020

We have seen a number of articles in the media, detailing the statement of the Foreign and Commonwealth Office on the finality of its position on the December 31, 2020 deadline on the requirement of the establishment of Public Registers of Beneficial Ownership of corporations formed in the Overseas Territories. The Overseas Territories are disputing the right of the Crown, under the Constitution, to require those registers, which would render their currently opaque corporate entities transparent as to Beneficial Ownership.

 Readers who wish to view the original source material that was consulted may access the complete text of the FCO White Paper*, which was delivered to the House of Commons Foreign Affairs Select Committee recently, here:
Written Evidence from the Foreign and Commonwealth Office
You are directed to page 5, paragraph 25, of the document.

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*The document also provides a rare look at how the UK views its Overseas Territories, which will be of interest to those who are responsible for the assessment of Country Risk.

DID CBI CONSULTANCY ADMIT THAT ITS DUE DILIGENCE AND KNOW YOUR CUSTOMER PROCEDURES ARE DEFICIENT ?

If you have been following the recent spate of articles critical of international immigration consulting firms that process clients for Citizenship by Investment (CBI/CIP) passports, you have probably read the extensive article published recently in The Guardian. In response, Henley and Partners released a Statement, which the newspaper published in its entirety, on its website.

We direct your attention to this specific quote from the Statement, " Our corporate governance, due diligence and 'know your client' procedures match or exceed those of adjacent professional services such as law firms or banks."Henley and Partners Statement from Guardian website.

When the Statement refers to  "adjacent" (meaning Caribbean) law firms and banks for their benchmark for due diligence and 'know your client' it betrays a reliance upon entities that historically conduct substandard compliance policies and procedures that do not measure up to " Banking Best Practices" which are the rule in North America and the European Union.

The reason that major onshore financial institutions are engaged in De-Risking" of correspondent accounts of Caribbean banks is in large part due to inadequate due diligence and KYC. Candidly, US, Canadian and European banks have little faith in the compliance work product of Caribbean banks, and they have good reason to take that position. When foreign tax cheats, narcotics kingpins, fugitive fraudsters, international sanctions evaders, and other career criminals are freely accepted as clients by offshore bankers who see only dollar signs, and who are guilty of Willful Blindness when it comes to affluent clients.

As the local law firms, with the rare exception of some of the foreign firms, Caribbean lawyers are not very discerning when a dodgy, but rich, new client arrives from a foreign country. I know that from thirty years of personal experience, and I defy any lawyer from a tax haven jurisdiction to say otherwise.

Given the added complication of the OECD Blacklist on all five of the East Caribbean CBI states, which will further stigmatize those jurisdictions, as the FATF Non-Cooperative Countries and Territories List did in the past, Caribbean compliance policies will be held in even less esteem by international banks, and their compliance staff.

To sum up, CBI consultancies admittedly have set a very low bar for themselves, when it comes to effective due diligence and "Know your Customer" programs; govern yourselves accordingly. 

THE EUROPEAN UNION BLACKLISTS THE FIVE EAST CARIBBEAN CBI STATES AS HIGH-RISK

As we have repeatedly warned would eventually happen, the European Union, acting through the OECD, has identified the five East Caribbean states with CBI programs, as constituting high-risk schemes. The Blacklist, which experts have warned might occur due to multiple failure of the CBI states to address misuse of tax residence, and their cooperation in assisting in hiding assets offshore, to escape the Common Reporting Standard (CRS), could seriously affect foreign investment, tourism, and trade.

Listed jurisdictions please note:  Removal from the Blacklist may require several years of proven local reform before it is granted by the OECD, if we take into account the efforts that were needed for removal from the FATF NCCT Blacklist.

All the five East Caribbean CBI states are on the list, entitled Residence/Citizenship by Investment Schemes:

Antigua and Barbuda
Dominica
St Kitts & Nevis
Grenada 
St Lucia

 Whether the OECD designations will affect the assessment of Country Risk on these jurisdictions by compliance officers at major international banks is not known at this time, but negative consequences are to be expected. Country Risk levels, though an individual appraisal by individual compliance officers, are based upon several factors, which include the jurisdiction's presence or basence from sanctions lists, or other indicators of high risk.

Additionally, increased De-Risking, meaning the termination of additional correspondent banking relationships at financial institutions located in North America, and in the European Union, may occur, especially due to existing risk-based compliance policies and procedures. Some EC states may lose all their correspondent relationships at a specific country as the direct consequence of the OECD action. One should not underestimate the impact of this decision of the European Union upon the jurisdictions designated as high-risk. Unfortunately, all of them had ample warning, but chose to ignore the probable consequences of inaction.


 

IS THIS DOMINICA DIPLOMATIC PASSPORT IMAGE AN EFFORT TO DEFEAT FACIAL RECOGNITION SOFTWARE ?

 Take a close look at the image on this Commonwealth of Dominica diplomatic passport. You should recognize the face; it is Alireza Monfared, the suspected Iranian intelligence agent who, with Reza Zarrab, and Babak Zanjani, ran the multi-billion dollar Iran oil-for-gold sanctions scheme. He is currently being held, indefinitely, in a Tehran prison, facing the death penalty, after Iranian agents took him into custody in the Caribbean, on corruption charges.

Why is the image a drawing, instead of a photograph ? You can clearly see that his Iranian passport, which contains a photo, betrays the fact that the drawing is a little bit off from a true life image.

Now look at his son's Dominica CBI passport; even he has a photograph.

For these reasons, we must assume that Dominica assisted Monfared in an attempt to make his passport confusing to facial recognition software programs. Perhaps someone should tell the individuals in Roseau, at the Citizenship by Investment Unit (CIU) that facial recognition software can identity, and has been used specifically for, identifying images that appears in painted portrtaits , through the application of facial recognition algorithms.

In fact, facial recognition software has been used, successfully, to identify unknown subject in some of the world's great paintings and portraits. Many paintings, over the course of time, pass through many hands, and in the case of some, the names of subjects, as well as minor figures, are lost. Facial recognition software is now employed to identify unknown faces in portrait art.

Lorenzo de Medici

The next time some bright soul in the East Caribbean CBI states thinks that he can outwit facial recognition software platforms, through portraits, and color drawings, of dodgy CBI passport holders, he might want to reconsider.

Lorenzo de Medici (posthumous portrait)

TURKISH BANKER CONVICTED IN ZARRAB IRAN OIL SANCTIONS EVASION CASE FILES HIS BRIEF

Attorneys for Mehmet Hakan Atilla, convicted of assisting Reza Zarrab's oil sanctions evasion syndicate in illegally selling Iranian oil, have filed their initial brief. The appellant received a 32-month sentence after his conviction.

Cousel for Atilla has framed these issues on appeal:

(1) The trial court erred when it instructed the jury that it could convict Atilla of violating the International Emergency Economic Powers Act (IEEPA) if it found that he conspired to evade ort avoid the imposition of secondary sanctions.

(2) The appellant should be entitled to a Judgment of Acquittal, because the Government presented no evidence that he know the alleged scheme would involve US banks.

(3) The defendant should be acquitted because of the Court's  interpretation of IEEPA sanctions regulations.

(4) The Court abused its discretion by precluding the defense from introducing recorded jailhouse conversations of Zarrab.

Most Federal criminal appeals statistically are affirmed, save obvious reversible error, as the courts generally do not wish to disturb a jury verdict, which in this case was unanimous.

As for Zarrab, he was seen by journalists staying in a downtown New York City hotel, under an alias, and not in law enforcement custody. This is extraordinary considering his previous guilty plea to criminal charges, which bring a possible life sentence. Given the strict nature of post-conviction policies, he may be cooperating with the intelligence services, who are more flexible in how they treat cooperating individuals.

 He is known to be assisting the Office of Special Prosecutor in its ongoing investigations, but whether his assistance involves Russian interference in the US 2016 Election, or some other issue, is not known. Zarrab is known to have shipped large sums to Russia, one of which was seized by Turkish authorities, in the possession of Zarrab's driver.

UNITED KINGDOM WILL NOT ABOLISH THE £50 NOTE; SUCH AN ACTION WILL NOT IMPACT MONEY LAUNDERING

The first time that I attempted to purchase a ticket on the Heathrow Express, and learned that one cannot use a £50 note for that purpose, I realized that the fifty was not generally accepted in the UK for all purposes. Recently, government officials have decided against eliminating the fifty Pound note, in what I regard as a wise move, for such an action will not take a bite out of money laundering.

Yes, money launderers engaged in bulk cash smuggling, tax evaders, and those who engage in illicit business, use large denomination currency, but the £50, which is presently worth slightly less than $66, is not a favorite vehicle for that purpose. Frankly, it is too small a value. In Europe, the  €500 note is favored; outside the EU, it is the USD$100 bill that, due in part to its hard currency status, is preferred. In short, the removal of the fifty Pound note from circulation will not seriously suppress money laundering activities.

A relevant note; most international money laundering takes place using non-cash methods; wire transfers, trade-based money laundering, international product diversion, and real estate purchases and sales. Moving large amounts of value is simply too difficult a task, with elevated dangers of discovery and seizure. Laundrymen today choose methods that are lower risk than bulk cash smuggling. Therefore, we agree with the UK Government action, as the effect of eliminating a high value note would not effectively stop crime; it would just inconvenience consumers, forcing them to carry more notes, of lesser value, to transact legitimate business. 

DUTCH NATIONAL WITH DOMINICA CBI PASSPORT EXTRADITED TO FACE MONEY LAUNDERING CHARGES

A Dutch businessman who was known to be a wealthy resident of Dominica, and who held a Dominica Citizenship by Investment (CBI) passport, has been returned to the Netherlands, where he is said to face major money laundering charges in Europe. He is the latest dodgy foreign national who obtained a CBI passport in Dominica to have been subsequently arrested on serious criminal charges abroad.

Ronald Pieter Nolen was taken into custody by Dutch law enforcement authorities in Sint Maarten, Netherlands Antilles, and transferred to the Netherlands, where he reportedly has been accused of being a major money launderer. Nolen, who lived in Dominica, by virtue of his CBI passport, maintained an affluent lifestyle there for several years. He was known for throwing lavish parties in his home, attended by members of the ruling Labour Party, including the Prime Minister, Roosevelt Skerrit.

Is this a photograph of Ronald Pieter Nolen ?

These upscale celebrations are said, by those familiar with them, to be just like those hosted by another CBI passport holder, Alireza Monfared, the Iranian national now in custody in his native country, on charges he, together with partners that included Reza Zarrab and Babak Zanjani, stole billions of dollars in illegal oil sales profits. The circumstances of Monfared's arrest, by Iranian law enforcement agents in the Dominican Republic, are strangely similar to those of Nolen, who also was close to Dominica's most senior government officials, until he was removed from the country, after pressure from foreign law enforcement.

Dominica PM Roosevelt Skerrit & Alireza Monfared at dinner

 Nolen reportedly imported into Dominica as least fifty automobiles, many of which were luxury Mercedes Benz vehicles, which he gave as gifts to a number of prominent Dominicans. Automobiles, especially high value premium vehicles, are a well-known method of money launderers, who are seeking to clean dirty money; Hezbollah, for example was engaged in a massive operation to purchase cars in North America, and transport them abroad, for that purpose.

Nolen owned two Dominica shell companies, and used Dominica nationals as front men, to pose as the individuals in control; these companies were engaged in import operations, but whether they were a part of any money laundering scheme is not known. In fact, no details of Nolen's criminal case are not publicly available, and they appear to have been concealed by Dominica government officials, who fear public response to yet another arrest of a CBI passport holder.

One source stated that the name appearing upon Nolen's CBI passport is not his legal name,* but since Dominica is not transparent about public disclosure of the names of CBI passport holders, we are unable to confirm this information.

An individual with the same exact name is listed as being involved with corporations in Switzerland and we are investigating a number of leads, regarding details of Nolen's alleged money laundering acitivities, which will appear here when the research is completed. We gratefully acknowledge the contributions of our Dominica sources in assisting with this article.
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*Compliance officers have long known that neither East Caribbean CIP units, nor outside firms conducting due diligence, run applicant's photographs through facial recognition software programs, to confirm identities and legal names, and in truth and in fact, are complicit in allowing applicants to freely use aliases. There has never been a statement,  by any of the five East Caribbean states with CBI programs, that they employ facial recognition programs, notwithstanding the high-risk nature of most of the applicants, to confirm their identities.

PANAMA SAYS ALEX SAAB HAS AN ARREST WARRANT IN COLOMBIA, BUT ANTIGUA PROMOTES HIM

Prominent members of Panama's legal profession have stated that they have personal knowledge of the existence of an arrest warrant for Alex Saab Morán, the Colombian businessman wno is allegedly the source of kickbacks and bribes paid to many of Venezuela's senior government officials. The Government of Colombia this week arrested Saab's reputed accountant and auditor, and charged them with multiple felonies, including money laundering.

The Saab case has focused, once again, upon the sale for cash of bogus diplomatic pasports by corrupt East Caribbean officials to foreign nationals engaged in white collar crime, international sanctions evasion, narcotics trafficking, espionage, tax evasion and fraud. Saab has held a diplomatic passport from Antigua & Barbuda for several years, and the Antiguan government, rather than disavow him after the news about the arrests in Colombia leaked out, has chosen to ally itself with him, calling him the country's "Economic Envoy," though failing to disclose whether he ever performed any diplomatic duties on its behalf.

Will any of the officers at the Antiguan banks that work with Saab be charged with money laundering in the United States, due to the fact that the funds moved were largely US Dollars ? We cannot say, but we will be watching events unfold n the Saab case, and report bank on all developments as they occur. 

INDIVIDUALS PERFORMING REGULATOR-ORDERED LOOKBACKS SHOULD USE FACIAL RECOGNITION SOFTWARE PROGRAMS TO CONFIRM IDENTITIES

If you carefully read the $40m Consent Order issued by the New York State Department of Financial Services, against Dubai's Mashreqbank PSC, you know that a Compliance Consultant must now be engaged to perform, among other tasks, a Lookback for a six-month period in 2016. He or she must then submit a report on the Transaction Review to NYSDFS. The methodology for conducting the Transaction review must be submitted in advance, to the regulator, the the individual, who has been designated in the Consent Order as the "Lookback Consultant."

It is submitted since "The sole and exclusive objective of this review ... is to inform the Bank's remediation efforts by determining whether suspicious activity involving high risk customers, or transactions or transactions or possible money laundering at, by, and through the Branch, were properly identified and reported, in accordance with suspicious activity reporting regulations and  New York Law." Consent Order at 10-11, that the Lookback Consultant, to more effectively prove that proper reporting actions were taken, or alternatively to show that they did not occur, all the individuals whose accounts the Branch reported on SARs should have their identites verified using a facial recognition software (FRS) program. Additionally, any transactions that the consultant deems, after review, should have been the subject of a SAR, must include FRS checks on all individuals linked to those transactions.

The object of the use of an FRS program in a Lookback is to verify that the Bank properly identified their customer, counterparties, transferees, and any other party to high risk transactions that were reported on SARs. It also allows the consultant to verify identities, or aliases, in transactions that he or she considers unreported suspicious transactions, where the bank failed to catch it.

In essence, the use of FRS programs not only checks the accuracy of a bank's ability to conduct Customer Identification, it can also expose an operational money laundering network whose participants are employing clean aliases, so as not to give away their dodgy personal histories. They will either help clear a bank, or focus in on compliance failures. These results can only occur when an FRS program is employed. While some compliance officers may still consider them optional, the ability of an innovative financial criminal to achieve a new identity at will requires that you rule out such possible actions of bank customers.

 FRS programs be deployed whenever Enhanced Due Diligence procedures are necessary. One can no longer depend upon government-issued forms of identification to identify a client. In the Mashreqbank case, it may be the only thing that actually clears the bank's compliance staff; use FRS as often as you check a customer or client on commercial off-the-shelf databases, to avoid being  deceived by smart financial criminals. Let the Mashreqbank $40m fine speak for itself.

 

ANTIGUA'S FOREIGN MINISTRY SAYS ACCUSED COLOMBIAN MONEY LAUNDERER WITH A & B DIPLOMATIC PASSPORT IS ITS ECONOMIC ENVOY

Our recent article,  Colombia arrests Accountant and Auditor of Alex Saab Morán, has generated an immediate reply from the Foreign Ministry of Antigua and Barbuda. Saab, who several investigative journalists, both in Venezuela and abroad, have accused of laundering the proceeds of corruption, for and on behalf of senior Venezuelan government officials, has never provided any proof that the transactions at issue were legitimate. Antigua claims that Saab has denied all allegations, but reports state that he is no longer in his native Colombia, and currently is living somewhere in Europe. We are therefore unable to verify whether the ministry was ever able to contact him, and assume that the denial it issued on his behalf was an unauthorized statement that purported to have come from Saab, but was merely a press release, attempting to place a spin on the arrests. There are close ties between senior Antigua government officials, and the corrupt Venezuelan officials Saab reportedly assists.

 The ministry, through a spokesman, stated to Carribean media that Mr. Saab, who holds a diplomatic passport from Antigua, is an "Economic Envoy." Our research has failed to find that he ever attended any economic conferences on behalf of Antigua, or assisted, in any way, in any economic matter involving Antigua. Saab has never presented his diplomatic credentials, and has never been appointed, as a working diplomat, to any state or jurisdiction. His title, which appears to be void under international law, allows him to circumvent customs inspection upon arrival at many international airports in the developing world.

Therefore, his diplomatic passport fails to comply with the requirements of the Vienna Convention, to which Antigua is bound, by virtue of its membership in the United Nations. Some legal observers are wondering why Antigua has not, of yet, revoked Saab's Antigua diplomatic passport, but cite the fact that he has an extensive relationship with at least two financial institutions in the country, as the reason he, and his business, are welcomed there. He is just the latest in a long line of dodgy individuals who come to the attention of the authorities for the wrong reasons, and who hold Antigua diplomatic passports.

NEW YORK REGULATOR IMPOSES $40m FINE ON MASHREQBANK FOR AML FAILURES

The New York State Department of Financial Services has levied a civil penalty of forty million dollars ($40m) upon the Dubai-based Mashreqbank PSC for massive BSA/AML failures, KYC inadequacies, and issues regarding the timely filing of Suspicious Activity Reports (SARs). Both the bank's UAE headquarters, and its New York branch, are named in the Consent Order, which was executed on October 10, and released yesterday (10/11/18).

Readers who wish to review the order may access the complete text of the 20-page document here.

ARE YOU BANKING ANY DIRTY NICARAGUAN PEPS ?

Events in Nicaragua could cause corrupt government officials, or Politically Exposed Persons (PEPs) associated with them, to choose to move some of their criminal proceeds out of the country, and into bank accounts in North America, or in the European Union.

The Financial Crimes Enforcement Network (FinCEN) has issued an Advisory, warning US financial institutions to be alert to the probability that affluent Nicaraguan nationals, professing to be business owners, independently wealthy individuals, purchasing agents for Nicaraguan trading companies, or other seemingly legitimate occupations, may seek to place dirty money at, or through, their bank, broker-dealer, or non-bank financial institution.

You are urged to:

(1) Read this Advisory.
(2) Show your front line staff photographs of all senior Nicaraguan government officials.
(3) Run your facial recognition software program on ALL Nicaraguan nationals that seek to open new account relationships, or to make large deposits to, or wire transfers into, existing accounts. Corrupt Nicaraguan officials, or PEPs working for them, will have valid passports with clean aliases, and only facial recognition software will properly identify their true names.
(4) Use bank staff members of Nicaraguan extraction, if possible, for any major new clients from Latin America, as they will be able to spot Nicaraguan nationals posing as citizens of other nations, through their regional accents and use of Nicaraguan slang.
(5) Decline their business, and document and report all such actions to your legal counsel, and consider the filing of a Suspicious Activity Report (SAR) .

WHAT INTEREST DOES THE OFFICE OF SPECIAL COUNSEL HAVE WITH REZA ZARRAB'S IRAN SANCTIONS EVASION SYNDICATE AND THEIR DOMINICA PASSPORTS ?

To be sentenced in December: Michael Flynn

According to the latest reports, General Michael Flynn, who is cooperating with the Special Counsel's office in the Trump Campaign/Russia probe, is linked to Reza Zarrab, the ringleader of the billion dollar Iran oil-for-gold sanctions evasion syndicate. If you read my recent article on Zarrab, you know that he is no longer in custody, and was photographed at a trendy restaurant in New York. Flynn's consulting company, Flynn Intel Group, had a number of foreign governments, companies and political figures as clients.

Zarrab, whose partner, Alireza Monfared, was the holder of multiple passports purchased from the Commonwealth of Dominica, and whose other partners reputedly also hold Dominica diplomatic and/or CBI passports, as well as those from other Eastern Caribbean States, is, according to many reports, giving important information to the Office of Special Counsel, the extent of which has not been made public. Zarrab's driver was arrested, in Turkey, en route to Russia, with $150m in cash, but Zarrab's relationship, if any, to the Russian nationals who are either defendants, or Persons of Interest, in the Trump/Russia influence case have never been made public, probably due to the fact that there are multiple pending investigations, in a number of Federal jurisdictions.

Dominica PM Roosevelt Skerrit and Alireza Monfared

 Dominca has been deeply involved in providing material support to Zarrab's sanctions evasion operation: Dominica-flagged oil tankers were used to transport illicit Iranian oil. Monfared hid behind a bogus diplomatic passport, when operating Zarrab's oil sale scheme in Labuan, Malaysia's obscure offshore financial center. How this is connected to the Trump Russia probe was cannot say, but the fact that our sources disclosed, in 2017, that the Prime Minister of Dominica, Roosevelt Skerrit, who was a close associate of Alireza Monfared, and is believedf to be under criminal investigation in the united States, further connects Dominica to the Muller Investigation.

There are a large number of sealed filings in Zarrab's NYSD Federal criminal case. Whether they represent sealed indictments, due to the fact that those defendants are outside the United States, and therefore not yet in custody, is not known,  but one must also remember that the Special Investigator's Office has unsealed cases, from time to time, and we will have to wait, to see whether our suspicions will be confirmed. Has Zarrab given evidence that the Special Counsel will use to bring additional indictments ?