ISLAMIC REVOLUTIONARY GUARD CORPS FRONTMEN ARE INVESTING IN UK, CANADA AND USA

Our Iranian sources have confirmed that officials in the IRGC are using front companies to invest in the Western democracies, including but not limited to the UK, Canada and with several Members of the EU. They are using clean frontmen, and family members of the IRGC agents, as company directors, thereby keeping the names of sanctioned individuals from bankers, resulting in the unwitting approval of the placement of their funds by compliance departments.

By way of illustration, ESMAEIL REZAJOUI, an Iranian national who reportedly has bank accounts in the United Kingdom, allegedly at HSBC and Barclays, and fronts for several IRGC officials investing their money in the USA, is but one example of participants in this covert operation.

We are also aware that one of the world's largest accounting firms is opening Asset Protection Trusts in Canada for IRGC interests. Canadian law enforcement has recently begun a major investigation into Iranian investments, including those made by sanctioned Iranian individuals who are members of the IRGC.

WHILE BANK EXECUTIVES PONDER THE COST OF UPGRADING TO ADVANCED AI IN AML, LAW ENFORCEMENT IS ALREADY USING IT IN MONEY LAUNDERING INVESTIGATIONS

Bogdanov, Kazan, Trump

We all know how expensive it has become to fund your ever-expanding compliance departments; more staff, more programs, more training, more everything, so it is understandable that banks are reluctant to add AI-powered platforms to their existing toolbox of AML/CFT systems. That is a sad reality faced by financial institutions in 2023.

The problem is, if you don't upgrade, you risk the real possibility that law enforcement agencies, especially those that are Federal, who themselves are using AI and machine learning to extract evidence of money laundering, may uncover it at your bank, and you would have previously found it,and removed the threat early on, had you employed your own AI program.

We have been warning the financial community about the widespread use of AI by law enforcement since 2018. While I found the photograph attached to this article buried in social media, when investigating money laundering at Trump Ocean Club several years ago, I am sure that law enforcement found it long before I did, using AI-powered programs.

Unless you want one of those dreaded subpoenas dropped on your bank by law enforcement, and the negative media publicity that often comes with high-profile money laundering arrests, find the laundrymen first, using artificial intelligence platforms,before law enforcement comes knocking on your door. Your best defense is an AI offense.

HALKBANK FILES ITS REPLY BRIEF IN U.S. SUPREME COURT CASE

For those readers who have been closely following the Federal criminal case against the Turkish government-owned bank HALKBANK, bank counsel has filed its Reply Brief in the US Supreme Court case. Here are the issues the bank has framed in that filing, taken verbatim. The complete text of the brief is available on the US Supreme Court website. Visit https://www.supremecourt.gov/ and then go to the Docket page to access the case file.

(1) 18 U.S.C. § 3231 Does Not Extend to Foreign Sovereigns .

(2). Congress Has Not Granted Criminal Jurisdiction Over Foreign Sovereigns . 

(3) Halkbank Is a Sovereign Instrumentality by Any Metric .

(4) The FSIA Forecloses Criminal Jurisdiction .

(5) Section 1604 Bars Criminal Jurisdiction .

(6) The FSIA’s Exceptions Are Irrelevant in Criminal Cases .

(7) The Commercial-Activities Exception Does Not Apply Here Anyway .

ARTIFICIAL INTELLIGENCE PROGRAMS WITH MACHINE LEARNING CAPABILITY ARE NOW AN INTEGRAL PART OF BANKING BEST PRACTICES

All risk-based compliance programs, to be effective, must adopt banking best practices, Banks must benchmark their AML compliance against those of the world's leading financial institutions. They known that older and slower methods and platforms are not only more expensive in the long run, but they are less efficient. Both problems plague the financial system; ever-expanding compliance costs are becoming more expensive, and objectively speaking they often fail to identify and interdict, in real-time, financial crime, especially money laundering. Frankly speaking, they are not working, and they are costly to boot.

Enter AI with machine learning onto the compliance stage; such programs save costs and are far more effective than the legacy AMA systems which financial institutions have been saddled with in the past. Let;'s face it, the old programs simply fail time and again, and they are expensive. Statistically, more than nine out of ten ongoing money laundering operations are not uncovered by today's compliance departments. You only learns about it after the fact, when law enforcement drops that subpoena on you two years later, having made arrests when it has caught laundrymen through investigation.

AI has, like it or not, become an element of banking best practices, meaning that its adoption is not optional with any financial institution seeking to avoid regulatory action, and/or negative publicity when the shortcomings of their program results in media naming the bank as the conduit for money laundering, in a very public criminal case. Therefore, AI is not only mandatory, it can save your bank from being own the regulatory or media hot seat, by preventive action.

Having had the privilege for many years, of lecturing to Federal and state regulators, and interacting with them to learn about their challenges, I know that they often take a close look at precisely what programs the banks they audit are operating, are reassured when they see that advanced systems are in place, and raise the issue when they note such programs are not in use. I specifically observed that in connection with a program that I was involved with; clients were asked by auditors whether they were using it, which is food for thought. 

Therefore, not only is it compliance with financial services industry best practices, it is something that regulators are looking for when they conduct an examination. That, and the fact that AI-power AML platforms are effective, is enough to convince you to abandon your obsolete systems, and upgrade.To do anything less in 2023, when employing a risk-based compliance program that is required to be at the same level of other leading banks, is not an option.

   

 

WHAT DO YOU DO WHEN YOUR COMPLIANCE JOBS ARE ENDED BY A RAID, AND A MURDER?

It appears that there are a number of readers who were unhappy with being left hanging by my recollection yesterday, about how I became a compliance officer, notwithstanding that I was a former money launderer. Well, how left that role is far more curious than the manner in which I ended up in it.

I was working at my desk one day performing enhanced due diligence checks on a number of investors that had been named by the firm as potential high-risks, meaning that they came from countries with high levels of corruption, narcotics trafficking, and/or financial crime, when I heard a commanding voice right behind me say, " Sir, step away from your computer." I quickly turned around to see an armed, uniformed law enforcement officer standing directly behind me. The good news was that he was not holding a firearm on me, but the impact on me, of his bold statement that day, made from behind, I cannot minimize. I know what it's like to be arrested, remember.

I remember thinking, "WTF? I had paid my debt to society with almost two years of incarceration, and could not for the life of me think of why I was being targeted again. Thus was several years after my release, and I had religiously stayed on the straight and narrow path since then.What could possibly be the reason why I had an officer behind me, commanding me to shut down my work station and stand up?

To add to my confusion, I vaguely recognized the officer; wasn't he from US Customs, and hadn't he been involved in the original Caribbean money laundering investigation that ended up in Irish accountant Sean Michael Murphy's Roadtown BVI office back in the early 1980s, and uncovered the money laundering operation in the British Overseas Territory of Anguilla? This was beginning to look like a bad dream come to life.

But wait! As I looked to my right, down the hall, at the work stations of some of my coworkers, I noticed that all of them also had law enforcement standing behind them as well, barking orders. It wasn't just me, it was everybody. A wave of relief washed over me at that moment, because I had feared some old unfinished business had come back to haunt me, and spoil not only my day, but my next decade. 

We were all herded into the conference room, and a man in a business suit stepped up to the podium to speak. I recognized him as a former US Attorney for the Southern District of Florida; What's going on? He explained that he had been appointed as trustee of the company where I was working, and it was ceasing all operation forthwith; bottom line, we were all fired. Some of us would be rehired, but solely for winding down operations, and we were not to count on being brought on for any significant period of time. 

It turned out that four of the senior officers of the company had a closely-guarded secret. They were operating a sophisticated Ponzi scheme, inside a billion dollar investment firm. The owner would ultimately be sentenced to twenty years in Federal Prison, and the company's primary investment tool would be held by the Eleventh Circuit Court of Appeals to be a security, and subject to registration with the SEC, which had not been done.

I was out of a job, but was quickly hired by one of the firm's most successful salesmen, a man whose annual commissions exceeded a million dollars each year, as his personal compliance officer to screen his personal clients, which he had taken with him. I was immediately back as a compliance officer, working remotely, as he lived up in Fort Lauderdale by-the Sea, and I was in Miami.

Unfortunately, it was not to be, for my new boss had previously made a habit of taking certain Asian ladies from our old office with him on overseas trips, when we were with the firm, and somehow, his fiancé had figured out what was going on from a strange email that she had seen. The young lady had my boss purchase a large handgun for her, claiming that she was afraid for her safety, when he left her alone on those trips, and she used it on him one night, alleging to the police that he had attacked her. Eventually, she was charged and convicted, but that violent event abruptly ended my compliance career for the time being. Next stop: financial crime consultant. 

HOW A MONEY LAUNDERER BECAME A COMPLIANCE OFFICER

Someone asked me how I became a compliance officer, and I noticed that my autobiography, in the published version, doesn't over that portion of my life, and so to answer his question, I thought it best to pull out that section, which exists in my original handwritten manuscript, and which I am presently adapting to tell an uncensored version of my story. Here it is.

I was home one night, when I received a call from a banking lawyer that I had done a number of joint financial crime lectures with. He had an urgent problem; an overnight trip to Argentina had come up unexpectedly, and he had a previous commitment to teach a seminar on hedge fund money laundering early the next morning at a conference on Miami Beach. It is a subject of interest to me, and I agreed to fill in for him, and teach the class in his place.

After I finished, two people came up to see me; they were the CFO and director of compliance of a Florida company that sold investments in the insurance sector, and which was the largest of its kind in the world. They had a problem; one of their new clients was poised to invest $15m, and though he had been approved by the company's outside law firm, the smart owner wanted a second opinion. Would I conduct an enhanced due diligence investigation?

It sounded like a challenge, and I accepted after a meeting with the owner.The target of course passed a preliminary due diligence with flying colors, but I was tasked to pull out all the stops in an EDD, to rule out any possible chance that either the Source of Funds or Source of Wealth was an issue. Again, no red flags, but I was still concerned, because the client was a wealthy businessman from the Republic of Georgia.

One of the things I look at when conducting enhanced due diligence is what the target is doing when he for she is off duty, or outside their work, leisure or social worlds. What do they do they think we are not looking at them? This means photographs, images, which can capture them in unguarded, or incriminating fleeting moment. Perhaps sitting next to someone at a dinner that raises questions, or attending event where others not so acceptable are also seen. That's the beauty of photographs, especially those taken without the knowledge of the target.

I found a photograph online, taken at a distance, at the airport in Tbilisi (Tiflis in English) Georgia. The target was on the private aviation area, standing at the bottom of the stairs of an arriving business jet, for an obvious associate to appear. That person was one of Russia's powerful Oligarchs, one of his country's biggest robber barons. I eventually had my answer; the investor was a frontman for Russian organized crime, and I rejected the client, after which I accepted an offer to handle only high-risk affluent clients, and to come on board as a compliance officer. Even with my record, my ability to act as gatekeeper was needed to identify and interdict sophisticated transnational criminals trying to place investments.

A postcript; in the world of money laundering, I know that if you cannot get access to a financial services company through the front door, you always try the back door, or even the side door. The target later, I found out, cleverly placed the fifteen million dollars through the company's Bermuda subsidiary, which had its own separate compliance department, and which did not share information with the U.S. office. 

(I'd like to think I would still be there, but one day a bunch of uniformed Federal law enforcement agents showed up, but that's a story for another time.)

NEED A MALTA CBI LIST? HERE IS THE COMPLETE LIST OF ALL PASSPORTS ISSUED BY MALTA 2014-2022, ALPHABETICALLY EDITED AND CORRECTED

 

If you are a compliance officer at an EU or UK bank, seeking to find a Malta IIM ( Citizenship by investment) passport holder, and you accessed the official government Gazette list, you probably came away unhappy. That list appears to have been deliberately composed to deny you the information you require for an effective due diligence investigation.

For starters, it is neither alphabetical nor searchable; many of the spelling of names, specially first names are obvious uncorrected typographical errors, which may even be intentional. the list also includes individuals who have been naturalized through marriage or conventional pathways to citizenship, which results in a list of thousands of entries of non CBI passport holders, amongst those who got their passport through IIM. The list is just short of 14,000 entries; how can you find anything there in a list made confusing on purpose?

The link below is to an "unofficial"list, which has been alphabetised, with many typos corrected, by an editor who shall remain anonymous, lest certain Maltese government officials charge him with some sort of criminal act for undertaking this task. We thank him for his contribution to openness (Google Docs).

https://docs.google.com/spreadsheets/d/11EcfcCp8Pe8d83b5TBijG74ZF1jxz5Crk1tbks8lN9c/htmlview

WILL THE FIVE EAST CARIBBEAN STATES ADOPT AI-POWERED SYSTEMS TO CLEAN UP THEIR CITIZENSHIP BY INVESTMENT PROGRAMS?

Artificial intelligence platforms, employing machine learning capability, can have applications for compliance far beyond the typical new client onboarding use which we have discussed inn previous articles. I have my eye on an appropriate use which is surely needed: reforming the compliance disaster that is the Citizenship by Investment (CBI/CIP) passport sector, as operated by five East Caribbean states, St. Kitts & Nevis, Antigua & Barbuda, Dominica, Stl Lucia and Grenada.

Although 95% of the passport purchasers are merely citizens of countries where visas are required to enter the EU and UK, the balance are international white-collar criminals, sanctions evaders fraudsters, and more of the Usual Suspects. CBI compliance departments have approved many of them without any effective scrutiny, after which they take those passports to facilitate their criminal careers.

Let us suggest that AI-powered programs be acquired by those countries embarrassed by their negligence, revoke the identity documents of the offenders, using the new information gleaned by their new AI platforms. let's reform CBI once and for all. I know that the international CBI consultancies will object, but they don't have the best interests of the CBI states, as we all are aware.

One final note:engage outside US or Canada-based compliance firms for the work, to keep local Caribbean corruption out of the picture. Clean up CBI, before the EU and UK lose patience with the compliance malpractice, and cancel visa-free travel for these passports, please.

READ MALTA BANKING REGULATOR'S €310,217 CIVIL PENALTY FOR AML DEFICIENCIES AGAINST ECCM BANK PLC

UK SET TO DECLARE IRAN'S ISLAMIC REVOLUTIONARY GUARD CORPS A TERRORIST ORGANISATION; HOW WILL THIS AFFECT THE SECRET ACCOUNTS OF IRGC LEADERS AT HSBC UK?

The Government of the United Kingdom is planning on designating the Islamic Revolutionary Guard Corps (IRGC) a terrorist organisation. This decision reportedly comes after threats from Iran to the lives of British journalists, activists and government officials.

Such an action will have a direct effect upon what our Iranian sources assert are secret bank accounts, maintained in the UK, by corrupt leaders of the IRGC whose proper name is Army of the Guardians of the Islamic Revolution. Our information is that the accounts are maintained at HSBC UK.

Such accounts containing the proceeds of corruption, are said to be illegal under Iranian Law. Violations of this nature woulds subject the offenders, all high-ranking IRGC officials, to Corruption on Earth charges in Iran, an offense that carries with it a maximum Death Penalty upon conviction.

Personally, I'd like to know, as a compliance officer, how IRGC leaders passed HSBC compliance, and have been allowed to open, and maintain, what are said to be large accounts in the United Kingdom. Given the IRGC Source of Funds is often from criminal activity, including drug trafficking, and are emulated for terrorist financing, what will be the bank's exposure when a terrorist designation is enacted?

ARTIFICIAL INTELLIGENCE CAN SUPPLY CRITICAL INFORMATION NEEDED FOR EFFECTIVE ENHANCED DUE DILIGENCE INVESTIGATIONS

Readers who have heard me lecture about my decade as a money launderer know that I subsequently used those experiences when working as a compliance officer using enhanced due diligence techniques to investigate high-risk foreign nationals who sought to make multi-million dollar investments with a company located in the United States.

The tools I employed included the legacy systems currently used by the vast majority of compliance officers, but I found that, in many cases, they were insufficient, and at times even ineffective, in problem solving. 

In one case the prospective client was himself a financial services professional, for Uruguay, investing, or so he claimed, for his own account. As you know, Uruguay has a long history as a destination for "flight capital" from countries such as Argentina, much of which constitutes the Proceeds of Crime. Was he acting on behalf of a criminal client? 

I found that there was a singular lack of useful information available regarding my target, using conventional EDD sources and methods, which I deemed unacceptable, forcing me to institute time-consuming manual searches of data sources not included even in what are said to be comprehensive AML resources. Traditional sources had him coming up clean, but I considered them insufficient for this specific case, given that data from his country of origin is minimal.

A tedious trial-and-error search of the archives of world's largest newspapers, querying their files for information that presently does not even exist in today's negative news platforms, turned up an article, for years ago, in a Sydney newspaper, regarding the target's representation of a fugitive Mexican narcotics kingpin. Armed with that piece of intelligence, and based upon my follow-up research, I was able to properly act as gatekeeper and bar the door to the individual. Had I had then possessed access to platforms powered by Artificial Intelligence, I would have located that information in a flash, not several hours later.

AI can make the critical difference between success and failure, resulting in Account Relationship staff onboarding a client, who never should have been accepted. Pairing AI with machine learning and critical analysis is a game-changer for compliance, and one that is widely recognized, the current situation, which clearly fails to timely identify money launderers, will tip back in favor of compliance. Make it happen, people.

DOES YOUR AI PLATFORM COMPLY WITH THE WOLFSBERG PRINCIPLES FOR RESPONSIBLE AI/ML?

1. Legitimate Purpose: FIs’ programmes to combat financial crimes are anchored in regulatory requirements, and a commitment to help safeguard the integrity of the financial system, while reaching fair and effective outcomes. Responsible use of advanced technologies such as AI/ML, and the volume and type of data necessary for them to be effective, requires FIs to understand and guard against the potential for misuse or misrepresentation of data, and any bias that may affect the results of the AI/ML application. A key consideration for FIs implementing AI/ML is how to integrate an assessment of ethical and operational risks into their risk governance approach. 
2.Proportionate Use: FIs should ensure that, in their development and use of AI/ML solutions for financial crimes compliance, they are balancing the benefits of use with appropriate management of the risks that may arise from these technologies. Additionally, the severity of potential financial crimes risk should be appropriately assessed against any AI/ML solutions’ margin for error. FIs should implement a programme that validates the use and configuration of AI/ML regularly, which will help ensure that the use of data is proportionate to the legitimate, and intended, financial crimes compliance purpose.
3.Design and Technical Expertise: FIs should carefully control the technology they rely on and understand the implications, limitations, and consequences of its use to avoid ineffective financial crime risk management. Teams involved in the creation, monitoring, and control of AI/ML should be composed of staff with the appropriate skills and diverse experiences needed to identify bias in the results. Design of AI/ML systems should be driven by a clear definition of the intended outcomes and ensure that results can be adequately explained or proven given the data inputs. 
4. Accountability and Oversight: FIs are responsible for their use of AI/ML, including for decisions that rely on AI/ML analysis, regardless of whether the AI/ML systems are developed in-house or sourced externally. FIs should train staff on the appropriate use of these technologies and consider oversight of their design and technical teams by persons with specific responsibility for the ethical use of data in AI/ML, which may be through existing risk or data management frameworks. 
5.Openness and Transparency: FIs should be open and transparent about their use of AI/ML, consistent with legal and regulatory requirements. However, care should be taken to ensure that this transparency does not facilitate evasion of the industry’s financial crime capabilities, or breach reporting confidentiality requirements and/or other data protection obligations inadvertently. 

MONICA ELFRIEDE WITT, AMERICAN, FORMER USAF, WANTED FOR ESPIONAGE

 

1000 SURVEILLANCE VIDEOS? BVI'S ARROGANT EX-PREMIER ANDREW FAHIE, FACING A LONG PRISON SENTENCE, HAD BETTER TAKE A PLEA

It appears that, after its latest production of Discovery , the US Attorney's Office in Miami noted that there are more than one thousand surveillance videos of the primary defendant, disgraced and defrocked ex-Premier ANDREW FAHIE. When taken with the audio surveillance, the evidence against him seems to be nothing short of overwhelming, making a guilty verdict highly likely. What's Fahie waiting for? If he wants any of the three counts dismissed, he should serious consider entering into a plea agreement.

When he was initially taken into custody, literally cught red-handed accepting a huge bribe to allow narcotics to safely be stored in the British Virgin Islands, and to transit into North America, Fahie reportedly made sounds as if he was goin g to cooperate forthwith, and name & shame a number of senior government officials who also worked with drug kingpins, most notably the leaders of Antigua & Barbuda. He then appeared to have had second thoughts, and his reward was a superseding indictment, adding a RICO charge. Didn't he get the obvious message?

The case is not scheduled for trial until July 17, 2023, but the longer he forces the Government to prepare the case, the less benefit, and mitigation of the ultimate outcome he is likely to receive. Fahie has an outstanding defense attorney; is it that he is not listening to her advice?

__________________________________________________

Research Note: US vs. Andrew Fahie et al, case No,: 1-22-cr-20191 (SDFL).