TRADECRAFT 101 PART NINETEEN: HOW MONEY LAUNDERERS DEAL WITH IDENTITY VERIFICATION ISSUES

                                   

One of the most important, and least examined, aspects of the money laundering trade is how laundrymen deal with the identity verification procedures conducted by compliance officer on new clients at account opening. It is not a routine topic to money launderers, for they often must tweak or disguise not only their own identities, meaning various aspects of the profile that they present to New Accounts staff at international banks, laundrymen often are called upon to construct or alter their criminal clients' identities, to prevent their exposure as career criminals, which generally not only results in compliance gatekeepers, or customs & immigrations officers preventing them from achieving their goals, but becoming in danger of investigation or arrest as well. Therefore, laundrymen are extremely careful when going about their identity verification countermeasures.

The focus is on:

(1) OCCUPATION OR PROFESSION: Laundrymen who work for, or themselves are, Politically Exposed Persons, or PEPs, individuals in government, military, government-owned companies, charitable organizations, or other field where they have ready access to institutional funds, are subject to constant monitoring, and increased scrutiny. Laundrymen in those circumstances construct bogus occupations showing them as private, non-PEP, businessmen. They go so far as to create shell companies, build websites, even rent brick-and-mortar facilities temporarily, to stand up to customer due diligence. of course, they have well-prepared documentation "proving" that bogus identity and occupation. A general from a third-world country who is laundering government funds earmarked for defense use, but stolen, does not want to be exposed, nor does the money launderer assisting him.

(2) IDENTITY DOCUMENTS: We have extensively covered the use of Citizenship by Investment (CBI) passports purchased through cooperating countries as a method of deception. When supported by sufficient backup documents they often serve their criminal clients and laundrymen extremely well. The underground purchase, in countries prone to systemic corruption, of legitimate passports and driver's licenses, for cash, to be used one time only and them discarded, is an alternate mean of deceiving compliance officers. Another is to obtain a legitimate passport under and alias or an altered name. A wide variety of identity documents are available in the developing world, or in non-democratic countries, where government officials supplement their meager incomes through passport and ID card sales. Of course, money launderers labor hard to support those bogus identities through Internet postings, creating a trail for due diligence queries to follow. 

(3) IDENTITY THEFT: In some cases, laundrymen who are known to law enforcement or the financial sector may be forced to assume the identity of a legitimate individual to escape detection and exposure. Though such actions are not preferred, circumstances may dictate such action. In that case, legitimate identification under the stolen identity is acquired through corrupt means, but its use is temporary, due to the distinct possibility that the individual who identity has been appropriated will learn of the scheme, or information inconsistent with the bogus personna becomes available.

As we often remind our readers, money launderers are only limited by their imagination. There are other tricks not appropriate for revealing here in a public forum, which are employed each and every day, with great success. Compliance officers needs to be painfully aware that, when it comes to identity, things are seldom what they seem, in the money launderer's world.

REPORT: ADVANCED MONEY LAUNDERING TECHNIQUES ARE THE PRIMARY CONCERNS OF AML PROFESSIONALS

                             

If you happened to see the articles today about the survey entitled The State of Global Anti-Money Laundering Compliance Report 2023, you would have seen its conclusions about the biggest threat in the AML ecosystem: "It found that 46% of AML professionals are concerned about increasingly sophisticated money laundering techniques..." What this means is that advanced and evolving methods and tactics, as a principal component of money laundering activities, are neither being identified nor interdicted in real-time, and this continued migration, by laundrymen, to arcane and esoteric strategies that they refine and improve upon, is consistently beating your frontline compliance staff each and every business day. Also, AI won't usually catch evolving techniques that it hasn't seen before.

We have been focusing of late upon the mandatory nature of training in money laundering tradecraft, with regular retraining to match the evolving nature of the activity. Frontline compliance officers must not only learn about the advanced techniques in current use, they must also be aware of the more obscure and unusual ones, as well as have the mental flexibility to recognize traditional techniques that have been tweaked or modified, making them difficult to easily recognize, but which still retain certain indicia to be identified. Remember, in the world of the money launderer, the only limitations they have is their imagination; compliance officers must also be versatile and flexible in their perspective, so that they can  ferret out laundering activity when they see it, so matter how artfully it is disguised.

Take a good, hard look at your current training program? Who is teaching it? What experience do they have, and what don't they have, concerning the subject matter. Who is attending" How often are you offering it? Is it effective, given the parameters specified above?

In order to consistently catch money launderers in the act, compliance officers must have: (1) a thorough grounding in the advanced techniques, (2) a complete understanding of how laundrymen thnk, which makes them vulnerable to identification, and (3) continual updates on what money launderers are doing now, and tomorrow, in the legitimate financial marketplace, to keep up with the times. If your training program doesn't have these features, you have already lost the contest. Govern yourselves accordingly, compliance directors.

 

FORMER MILITARY ARE A VALUABLE ASSET IN ANY COMPLIANCE DEPARTMENT

We have made no secret of our preference for attorneys as compliance directors; the benefits of a legal education, as well as their development of issue perception make them effective leaders, which is essential in any compliance department. The fact that many large financial institutions have lawyers at the helm of their compliance divisions would seem to confirm that many bank executives share my vision.

Now, as to who makes the best frontline compliance officer remains an open debate, but as problem solving ability under time constraints is one of the qualifications I believe most critical, let me suggest that there is a specific category of applicants which compliance departments should always consider when seeking to expand their staff: individuals who are former military. You probably know of a few compliance officers with that background, and this might be a good time to consider why they are consistently successful in our chosen field.

1.TRAINING: The military, whether it be military intelligence, military police, or other branches, extensively schools its members in investigative techniques, awareness of potential resources, networking with others in the field, and a host of other subjects, in depth, all of which give them a perspective on approach to tasks that one rarely sees in the civilian field, other than in experienced compliance officers, Your civilian applicants generally have no equivalent experience. Service schools are often several months in length, and demand results from their students. 

2. DISCIPLINE: Rather than"check the box," the military approach to problem solving is mission-oriented, not clock punching. The military trains its people to stick to their tasks until they have been accomplished, and not to render excuses for the inability to succeed. Former military have had this can-do attitude instilled in them over a period of their service, which  has created work habits which will serve them in good stead in the civilian sector. Call it self-discipline if you must.

3. ATTITUDE: Spend a couple of years aways from your comfort zone, in a faraway location, under sometimes difficult and stressful conditions, and individuals in the military develop positive, no-nonsense attitudes about work that are instilled in them as a culture, which they bring to the civilian workplace. They also become ideal team members, as they understand the concept through working together to achieve goals, and have gone the extra mile, including after hours, to get the job done. 

Therefore, when you see that an applicant for an entry-level compliance position is former military, regard that as a valuable quality as important as prior experience in the financial field, for this individual brings to the job attributes that you want in a compliance officer. They can get the job done.

 

WAS MALTA'S TOP MONEY LAUNDERING PROSECUTOR, KARL MUSCAT, GIVEN A FATAL DOSE OF POISONED COCAINE?

Our recent article* about the one year anniversary of the highly suspicious death of the senior prosecutor of money laundering cases in the Republic of Malta, KARL MUSCAT, which has spawned coverage of the matter in Maltese media, still asks the question: how did this prosecutor from the Attorney General's office come to die at such a young age, and whilst in apparently good health?

The total lack of any significant investigation of his death speaks volumes about the circumstances. Muscat was reportedly a casual or recreational user of cocaine, which one can probably say about many attorneys practising law in Malta, as that seems to be an occupational hazard in that profession, in a Malta awash in cocaine. In today's news, two Italians and an Albanian were arrested with ten kilograms of the illegal substance, which was worth substantially more than more than one million Euros. Cocaine is readily available in Malta, and its abuse is widespread.

Had a serious investigation been conducted a year ago, it would have been possible to determine whether attorney Muscat unwittingly consumed tained (poisoned) cocaine, and that this was the true cause of his untimely death. His prominent role in the investigation and prosecution of prominent individuals for corruption, including but not limited to politicians and elected officials close to disgraced former Maltese PM JOSEPH MUSCAT, raises the distinct possibility that the attorney consumed drugs laced with a toxic substance, to delay the cases to which he was assigned. Given the suspicious death of British investigative reporter BARRY RANDALL in Montenegro, acting upon information he received from Daphne Caruana Galizia, we can rule nothing out, regarding how far corrupt forces in Malta will go to defeat justice.

Whilst a medical investigation into the circumstances of Karl Muscat's death is most likely out of the question, the police could still unravel the mystery, and explore whether they can identify any guilty parties. His family, and indeed all of Malta, deserves no less.    

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*One Year after the Suspicious Death of Malta's Money Laundering Prosecutor, we are Reminded of the British Journalist Murdered after meeting with Daphne (August 6, 2023). 

DANGEROUS SITUATION IN LEBANON REQUIRES INCREASED VIGILANCE ABROAD FOR TERRORIST FINANCING CONTAINED IN FUNDS TRANSFERS

Chaos appears to be the order of the day in Lebanon this month, and I am not referring just to the pathetic economic situation. A number of terrorist organizations are on the move, and you can bet that there will be, or already is, increased terrorist financing in progress, to supply their needs. Compliance officers at international banks who customers typically send funds to lebanese financial institutions, or NBFIs, should be on alert for new and unusual money laundering tricks of the trade, in efforts to fund their activities.

What's happening inside Lebanon? Nothing good to report:

(1) Hezbollah, which dominates every aspect of Lebanese life, and has a huge standing army forever poised to attack Israel, has been taking small actions at the frontier to taunt its neighbor to the south. Given that the Islamic Republic of Iran basically funds all of Hezbollah's military budget, expect some imaginative terrorist financing from third countries. Any incident could precipitate another war with Israel.

(2) The recent Hezbollah incident, where a truck loaded with ammunition overturned in an area populated by a Lebanese group that is opposed to the specially designated terrorist organization, and violence involving fatalities ensued, things already tense have heated up. The ineffective Lebanese Army had to act as a referee between the feuding parties, to keep the peace. 

(3)An internal armed conflict , between rival Palestinian groups, within the confines of a refugee camp, indicating a power struggle between factions allied with Gaza-based Hamas, and the Palestinian Authority's military "wing," confirms that these terrorist organizations are competing for political, as well as military, power among Palestinians.

(4) Public announcements, from prominent Israeli military leaders, already apprehensive over Hezbollah's estimated trove of 150,000 missiles and offensive weapons, reminding lebanon that any new war with Hezbollah will result in the total destruction of Lebanese infrastructure, which includes the brick-and-mortar downtown Beirut banking sector. The effect of that upon not only the country's economy, but upon a major wartime increase in terrorist financing from abroad, will be immense. Iran will pull out all the stops to support its ally, and at increased risk to the world's banks, who will be in the middle of it all.

Therefore, any and all transfers into Lebanon, even those which have been deemed legitimate in the past, must now be subject to serious scrutiny. Terrorist financiers have been known to co-opt normal financial pipelines, through the payment of large bribes, and by the delivery of physical threats from their clients, to take over normal routes. Everything is on the table, and enhanced due diligence is the minimum level of compliance that you must consider, for risk management purposes. 

Frankly, some banks may choose to redline (prohibit) most transactions, and your executives would be justified should they do so, even in the face of the country's humanitarian needs, given the dire financial situation of a large portion of its urban population. It's a tough call I agree, but Country Risk regarding Lebanon is at its highest level in recent memory; Conduct yourselves accordingly.

   

DUTCH BANK CITED FOR AML/CFT VIOLATIONS BY REGULATORS

 

                                               ( From de Volksbank public announcement)

Based on a supervisory review, De Nederlandsche Bank (DNB) concluded that de Volksbank has not sufficiently identified and assessed its risks of money laundering and terrorist financing • DNB concluded that de Volksbank is in violation of the Anti-Money Laundering and Anti-terrorism Financing Act (Wwft) and imposed an instruction to improve our Systematic Integrity Risk Analysis by 1 April 2024 • DNB also announced its intention to start a procedure for imposing an administrative fine de Volksbank N.V. – Press release d.d. 11 August 2023. 

Statement of Martijn Gribnau, Chair of the Executive Committee of de Volksbank “In the first half of 2023,...We regret that we were unable to fulfill all our gatekeeper responsibilities with regard to customer integrity and that we are at this moment in violation of certain legal requirements of the Anti-Money Laundering and Anti-terrorism Financing Act. We are fully committed to remedy the shortcomings within the timeframe imposed by DNB. Continuous improvement of our operations is a key enabler of creating the impact we want to make and will remain a key focus in the periods ahead. Consequently, our operating expenses will remain at elevated levels in the foreseeable future, partially offsetting the positive impact of higher market interest rates on our total income... 

PREFERENTIAL TREATMENT IN U.S. FOR CORRUPT FIFA LEADER JEFFREY WEBB DENIES JUSTICE IN HIS TWO CAYMAN ISLANDS CASES

Senior FIFA leader JEFFREY WEBB, almost nine years after he was arrested in football's massive bribery & kickback scandal, has had his August sentencing postponed for yet another six months. Webb, who has lived under house arrest since he led guilty several years ago, continued to live a life of opulence, instead of serving a prison sentence, for racketeering, fraud and money laundering, like several other FIFA defendants. Fourteen times, his sentencing date has been cancelled and rescheduled, which surely must be some sort of record for an inordinate delay in meting out justice to one of the principal bad actors in one of history's biggest sports scandals. what's wrong with this picture? 

A known cooperator, who rendered what is known as Substantial Assistance to the US Department of Justice in the prosecution of other FIFA defendants, cannot at this late date still be rendering testimony and evidence at this late date, so why has he receive such extraordinary preferential treatment?  Rumours about his ultimate fate have him receiving a sentence of Time Served for his extensive cooperation, which means no prison time whatsoever, which would be a travesty of justice, and not serve as a deterrent for others tempted to engage in similar conduct in the marketplace.

The real injustice, however, is that fact that he faces two significant pending criminal cases in the Cayman Islands, and this extensive delay in resolving his US case has resulted in no extradition to Grand Cayman. meanwhile, his co-defendants in those cases have long ago gone to trial and are serving sentences for their misconduct, but Webb has not only evaded accountability there to date, but there are real fears that the US will not extradite him after sentencing. He must have a guardian angel somewhere in the Department of Justice.

While the cooperation of major players in significant Federal cases is often the order of business, and often results in not only additional indictments, but in guilty pleas, as new defendants fear long sentences in they chose to go to trial, given probable testimony against them, giving out extremely favourable results to cooperators, when they deserve far more serious sentences, sends the wrong message. The public rarely sees defendants receive short sentences, or in this case probably none at all, long after the publicity of their convictions. This happens very quietly, and oversight appears to be non-existent. Other cases, such as the unusually large sentence reduction handed out to Swiss banker MATTHIAS KRULL, who cooperated against several Venezuelan co-defendants, demonstrate a DOJ policy that essentially gives some defendants a pass, which many observers find improper. Krull also was allowed to stay out of prison for years.

 Whether Jeffrey Webb will ultimately escape accountability for his two Cayman Islands cases remains an open question, as is the distinct possibility that he will skate on his US case. Unfortunately, we will no have to wait until March 2024 to learn about his fate.   

 

TRADECRAFT 101 PART EIGHTEEN: THE USE OF PSYOPS IN MONEY LAUNDERING TO CONFUSE COMPLIANCE OFFICERS INVOLVED IN TRANSACTION MONITORING

As a young soldier in Vietnam during American's fifteen-year war, one of my duties was to actively participate in the US Army's Psyops, or Psychological Operations program against our enemy, the Viet Cong. Flying as the sole passenger on board a small, unarmed light observation helicopter (LOH or 'loach"), it was my job as loadmaster to drop leaflets over enemy-held jungle. The documents offered substantial cash rewards to the VC, provided that they bring with them their personal weapons, and surrender to the Vietnamese authorities. The payments were, in essence, a bribe, a major incentive to the enemy to leave the field of battle and receive a cash dividend. I also broadcast that information on huge onboard loudspeakers during document drops. I am lucky to be here today, and not splattered all over a remote tropical jungle somewhere.

These were referred to as Psyops operations specifically designed to confuse and weaken our opponents, and to interfere with their activities. Later, as a practising money launderer working in the Caribbean offshore financial centres a/k/a tax havens, I used similar tactics to throw confusion amidst the onshore compliance officers tasked with identifying, and potentially interdicting, transactions which could possibly be laundering actions. 

I knew that it is vitally important to create what appeared to be the operations of legitimate businesses, led and owned by affluent individuals who were engaged in a number of activities which one might expect the to be involved in, and I used client participation in such front actions to give the impression to compliance officers that they were merely observing transactions of normal, law-abiding clients, and not drug traffickers clothing their criminal activities, and money laundering activities, as totally clean events.

Some of the conduct that I advised clients to engage in included:

1. Forming, and operating, small legitimate businesses, to give the banks the impression that they were nothing more than normal people seeking to earn a profit. It didn't matter of the companies never were profitable; these front businesses, which were never used for either laundering or payments for criminal activities, existed solely to provide compliance officers with a reason that these clients went to work each day, and used their banking relationships regularly.

2. Giving the clients sufficient public profiles, so that they were regarded as normal bank customers; having them support local sports teams, make charitable donations, show up at public community events, and participate in them. In short, to give their banks, and bankers, the impression that these clients were low risk typical customers. Make the clients appear to be the same as the compliance officers who were engaged in transaction monitoring, so that they were known as low risk when a single transaction which might be suspicious was encountered. Make small but regular political contributions; develop relationships with local leaders, further establishing the clients as vital members of the community.

3. Avoid any distinct and recognizable pattern in funds transfers that were actually laundering operations; mixing up the transfers as purchases for phantom goods, payments for employees and commissions for independent contractors, loan payments, deposits, and any possible type of payment imaginable, which might be interpreted by compliance as most likely legitimate. Because, when the totality of the client's seemingly normal activities was taken into account, the compliance department would decline to issue a SAR, judging a specific transaction to be legal, and made in the ordinary course of business, as validated by the front activities and bogus profile were had constructed for their business and as individuals.

Obviously, the whole thing was a smokescreen for their criminal conduct, and the money laundering which was used to handle the proceeds of their true, illicit activities. The question is: how much of it served to persuade compliance officers, when making a judgment call on a transaction or irregular string or pattern of transactions, that all was well, and they should be disregarded, whilst moving on to other matters? Think Confusion to the Enemy.

ANDREW FAHIE'S CO-DEFENDANT SEEKS TO AVOID PRISON AS A ZERO-POINT OFFENDER; UNINTENDED CONSEQUENCES?

( From a summary of the USSG Amendments)

The New Adjustment for Zero-Point Offenders

The newly created U.S.S.G. § 4C1.1 provides a 2-point offense level reduction for certain zero-point offenders.  The defendant must meet all of the following criteria to qualify for the 2-level reduction:

1. the defendant has not received any criminal history points;
2. the defendant has not received an adjustment for terrorism (covered by § 3A1.4);
3. the defendant did not use violence or credible threats of violence in connection with the offense;
4. the offense did not result in death or serious bodily injury;
5. the offense of conviction is not a sex offense;
6. the defendant did not personally cause substantial financial hardship (to be determined independently of the application of § 2B1.1(b)(c));
7. the defendant did not possess, receive, purchase, transport, transfer, sell, or otherwise dispose of a firearm or other dangerous weapon (or induce another participant to do so) in connection with the offense;
8. the offense of conviction is not an offense involving individual rights (covered by § 2H1.1);
9. the defendant did not receive an adjustment under § 3A1.1 (hate crime motivation or vulnerable victim) or § 3A1.5 (serious human rights offense); and,
10. the defendant did not receive an adjustment under § 3B1.1 (aggravating role) and was not engaged in a continuing criminal enterprise.

Implications for Sentencing

Relatedly, the Sentencing Commission amended § 5C1.1 application note 4 to advise that a sentence other than imprisonment is “generally appropriate” if a person is in Zone A or B of the sentencing table and gets a § 4C1.1 reduction.  It also advises that a departure, including a sentence of non-imprisonment, may be appropriate for a person in any sentencing zone if the qualify for § 4C1.1 and the guidelines range overstates the gravity of the offense.

KADEEM MAYNARD, one of the co-defendants of former BVI Premier ANDREW FAHIE, and who was arrested in Fahie's high-profile SDFL money laundering and cocaine trafficking case, and who entered a guilty plea in the case, is seeking a non-custodial sentence, relying upon the new provision in the US Sentencing Guidelines that actually allows the Court to allow qualifying first offenders to avoid Federal Prison, even in serious cases. As you can see above, the new regulation USSG 4C1.1 not only provides for a reduction in the offense level, it allows a sentencing judge to impose a sentence of "non-imprisonment," meaning Home Confinement (house arrest), or even Probation. 

Here's where the Law of Unintended Consequences comes in. Maynard, a native British Virgin Islander who allegedly originated the criminal conspiracy that ensnared not only the disgraced former BVI leader Fahie, but his mother, the head of the local port authority. He is an alleged drug trafficker who owns a boat and "has access to a private aircraft." Whether he is a career criminal is not confirmed, but treating him as a Zero-Point offender, which was designed for law-abiding individuals who may have made a mistake in judgment, and run afoul of Federal criminal law, was certainly not the intention of the US Sentencing Commission, when it created 4C1.1 to aid first offenders. 

Give him  a custodial sentence, and the opportunity to later receive a Rule 35 Sentence Reduction after he testifies against Fahie, who as the leader of the British Virgin Islands, and who openly stated that he had been involved in narcotics matters previously, should receive a substantial sentence after conviction, to deter other Caribbean leaders who consider aiding narcotics traffickers.

Furthermore, it appears that this new amendment does not even take effect until November 1. Does he even qualify? Maynard could avoid not only the 10-year minimum mandatory and even life, sentence, but prison altogether. We hope that the sentencing judge will disregard this get-out-of-jail-card that the defendant seeks to play, when he is sentenced on August 21, 2023, and impose an appropriate sentence. After all, it was Maynard that initiated this case.

RAMPANT CORRUPTION PUSHES THE GOVERNMENT OF MALTA TOWARDS INSOLVENCY, RAISING COUNTRY RISK

Alarm bells are being raised this week, after it was revealed that the national debt of the Republic of Malta has risen to €9.2bn, and is increasing at such a rapid rate that it is predicted to hit the ten billion Euro mark in 2024. Fueled by systemic corruption, no-show government jobs being handed out to the children of Labour Party leaders, but who are unqualified for the offices given to them, consulting fees and personal services contracts used to line the pockets of loyal party members, dozens of public contracts approved at rates higher than the norm, and a runaway budget swollen by nepotism and corrupt conduct, fiscal disaster appears to be imminent. The debt is rising by €2m a day, according to reliable reports. 

By way of illustration, the cost of weekly debt service is about to reach €4m. Under the current Labour government of PM Robert Abela, the debt has increased by €3.5bn. Given the present decreases in foreign investment, and tax revenues, insolvency, the failure to meet debts as they come due, is a real possibility. Given the current domination of the political scene by the Labour Party, which deploys a number of illicit financial incentives to insure that voters remain loyal to them, irrespective of the economic reality the country is facing, a change in government is unlikely for the near future, which is extremely disturbing. Young Maltese are choosing to leave their country of birth in record numbers not seen since the 1970s, in part due to their perception of corruption and its likely effects upon their future.

Compliance officers who are responsible for assessing and calculating Country Risk should examine all the factors they assemble in their computation of risk, and make an educated decision on increasing Country Risk to an extremely elevated level. 

MALTESE LEADER ALSO UNDER MONEY LAUNDERING INVESTIGATION IN DUBAI BY DFSA

Daniel Farrugia & Rosianne Cutajar

Senior Maltese politician and Member of her country's Parliament, ROSIANNE CUTAJAR, whom we  revealed yesterday was being investigated for money laundering and corruption by her country Financial Crimes Unit, reportedly has other, even more serious, legal problems. Our sources indicate that she is also under investigation by the Dubai Financial Services Authority (DFSA), also on suspicion of money laundering. Information on ongoing criminal investigations is typically restricted, but we received this information from an established and credible source in Malta.

Cutajar allegedly has been using an account in someone else's name to hide bribes and kickbacks; allegedly, she is using an account controlled by LINO FARRUGIA, her lover's father, most likely that of one of his dodgy shell companies. Then senior Farrugia owns a luxurious apartment in the Dubai Marina reportedly worth millions of dollars. We have serious doubts that Cutajar has declared these cash deposits to Malta's tax authorities.

One of our Labour Party sources advises that Prime Minister ROBERT ABELA is closely monitoring the Maltese Financial Crimes Cutajar investigation, which he has access through by close associates posted there, and used that information to remove her from the Labour Party; she now sits as a independent Member.

Some observers are asking whether Cutajar is charged in the UAE will serve as a test of the effectiveness of the DFSA when dealing with high-profile corrupt PEPs, (Politically Exposed Persons),  especially when the target is a prominent individual who makes large cash deposits that greatly exceed her known assets and salaries. Many Maltese politicians linked to corruption frequently visit Dubai, and are suspected hiding the proceeds of crime there, but none have been known to have been charged with financial crimes in the Emirates. 

THE VITAL IMPORTANCE OF MONEY LAUNDERING TRADECRAFT IN RAISING THE AWARENESS OF FRONTLINE COMPLIANCE OFFICERS

Compliance officers responsible for transaction monitoring see advanced and esoteric money laundering techniques in operation every day, but most of them are, unfortunately, unrecognized for what they are, and the transfers are allowed to proceed without interdiction or suppression. That is because, for some strange reason, actual money laundering tradecraft is generally not taught in AML/CFT training programs. While the use of AML software to identify suspicious transactions is more or less universal, those platforms often do not catch the unusual or obscure techniques that are next-generation methods, which are far and above what the programs are designed to spot.

The best chance that a bank has to nail the money launderers who are operating within its accounts is a knowledgeable compliance officer who has a well-rounded technical knowledge of money laundering tradecraft, supported by substantial experience on the job, and who can readily identify all the items in the  money launderer's toolbox when he or she sees it. The best compliance officers carry around all those methods in their knowledge base, and apply that information to the transactions they are examining subconsciously. They constantly compare the known techniques, which each have specific characteristics one must watch for, to the transfers that they observe, in real-time, giving further scrutiny to those which could possibly be a specific laundering act. Furthermore, they think like a money launderer does, in terms of practical solutions from the perspective of actual operations, not just bland diagrams and lists of possible methods.

In my humble opinion, the reason that compliance directors fail to give their frontline staff a comprehensive education in tradecraft is their own lack of total and complete familiarity with the subject, but supervisors must themselves have this skillset, in order to teach it to subordinates. Far too many compliance leaders don't have that complete knowledge of obscure techniques, not ever having been exposed to it when they themselves were in the line of fire. Some are duly promoted, due to seniority and time in grade, and reach senior positions without acquiring that expertise.

Compliance directors who have reviewed my ongoing series Money Laundering Tradecraft 101*, and are not already aware of those techniques, should understand that they have gaps in their mandatory knowledge base, and take steps to address it, because if they don't know about these methods, it is certain that their frontline staff is also lacking from a training standpoint.You can't catch the laundrymen in the act if you don't know how they work.

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* Note: All seventeen installments can be found on my blog. (More are in preparation):

Kenneth Rijock's Financial Crime Blog

https://rijock.blogspot.com

 

MALTESE LEADER ROSIANNE CUTAJAR NAMED AS UNDER CRIMINAL INVESTIGATION FOR SUSPECTED MONEY LAUNDERING IN DUBAI, UAE

Rosianne Cutajar by COSIMO

The controversial Maltese politician, and senior member of her country's Parliament, ROSIANNE CUTAJAR, has been named in reports  in local media as being under investigation, by the police Financial Crimes Unit, for bulk cash smuggling and money laundering in Dubai, United Arab Emirates. A frequent subject of corruption allegations in the media, including on this blog, Cutajar's political standing amongst voters has repeatedly taken a hit after repeated news of her criminal misconduct, involving her receipt of what are obvious bribes and kickbacks, has surfaced on the country's major media, which is more or less censored by the ruling Labour Party (PL). Her relationship with local businessman YORGEN FENECH, charged in the assassination of investigative reporter Daphne Caruana Galizia, which included allegedly corrupt acts on her part, has made her the poster girl for corruption in Malta.

The information in the public sphere includes details or Cutajar's multiple trips to Dubai, bringing with her paper bags containing cash far in excess of her reported income and assets, and depositing them into bank accounts there, which was disclosed this week, may finally bring an end to her political career, notwithstanding her possible indictment in Malta for financial crime. Repeatedly accused of arrogance in her conduct, and of being in complete disregard of Malta's strict moral principles, these new accusations come at a time when the popularity of the country's ruling Labour Party has descended to a new low.

Of course, the fact that she successfully and illegally moved cash from Malta, and into Dubai, makes one wonder where customs authorities were during all these trips, and could be regarded as critical of Dubai law enforcement, and its bankers, as she is a PEP, Politically Exposed Person, whose activities must be closely monitored.Whether Cutajar will be charged in Malta, where corruption often trumps law enforcement, and whether she has fallen out of favour with PL, resulting in the very public disclosure of this money laundering investigation, remains an open question, but we will be watching.

TRADECRAFT 101 PART SEVENTEEN: WHAT GOES UP DOESN'T NECESSARILY COME DOWN IN MONEY LAUNDERING TRAVEL OPERATIONS

 

We note that a number of British Virgin Islanders have been denied entry into the United States of late; their ESTA applications are being turned down, because, according to American records, they were still present there, from their previous visits. Apparently, their departure home, by ferry, from nearby USVI was never placed of record, using the UK passports they employed to enter the US. They must have used BVI identity cards to come home. This reminds us of one of the laundryman's bag of tricks you need to be aware of: switching identity documents in midstream.

Many money launderers work tirelessly to confuse any potential law enforcement investigation of their travels, for obvious reasons. They actively create broken travel trails, so that investigators later attempting to put the puzzle pieces together hit a dead end, time after time. One of the the tricks is to leave on a laundering trip, using one form of national identity, and return on one from another jurisdiction, which may have a slightly different spelling of one's name, date of birth or other varying information. The economic passport (Citizenship by Investment or CBI passport) is often employed by financial criminals who cannot present the passport from their native country, which is high-risk, sanctioned, or otherwise not a good idea to have on record when engaged in criminal activity.

Even if you hail from a low-risk country, to reduce the risk of eventual arrest and incarceration for what you are engaged in on that trip, it is prudent for laundrymen to find ways to present different proof of identity when arriving at customs and immigration, or even when departing, to make travel tracing extremely difficult, or even impossible. Thuis of course means planning ahead, and perhaps breaking a few laws in the process, but laundrymen weigh this against the potential 20-year penalty in the US for money laundering, and acquire multiple identities, often under aliases, complete with bogus  local drivers' licenses, and yes even utility bills, to fool compliance officers opening accounts abroad for new clients.

Back when Americans could transit the Caribbean with a birth certificate, yours truly used a US passport to leave the Continental US, and my birth certificate to return. That way, my passport did not have dozens of arrival stamps from Customs at MIA, and US birth certificate holders were waved through, without being entered on any computer. That has now changed, but when moving around abroad, I still employed different forms of identity. when I was eventually indicted, there was a paragraph alleging that I once spent several weeks living in Anguilla, BWI, while in truth and in fact, I had exited the island the same day I entered it, without leaving any paper trail whatsoever. No wonder most laundrymen evade arrest for years.

BTW present day; if you are an American compliance officer handling CIP duties for foreign bank clients at account opening, know this. If the client comes from a country where he can use ESTA to enter the US, and you have an opportunity to look at his passport, presented to you so you can photocopy the primary pages, make sure he does NOT have a new US visa, because that means he was not qualified under ESTA, and had to gain entry the old fashioned way. He may have a criminal record somewhere, as criminal history is disqualifying for ESTA approval. Check him out.

ONE YEAR AFTER THE SUSPICIOUS DEATH OF MALTA'S MONEY LAUNDERING PROSECUTOR, WE ARE REMINDED OF THE BRITISH JOURNALIST MURDERED AFTER MEETING WITH DAPHNE

 

Malta's Money Laundering Martyr by COSIMO

Remember KARL MUSCAT, the money laundering prosecutor in Malta's Attorney General's office? He died a year ago, under circumstances that we can only describe as suspicious. Official Cause of Death was heart failure, highly unusual for a man in his early forties, and in good health. Strange how he was handling a number of major active money laundering cases, all involving individuals who were either part of, or closely linked to, the corrupt administration of now-cashiered disgraced former Prime Minister JOSEPH MUSCAT. Though no foul play was said to be found, modern technology is capable of killing victims without leaving a trace of the method employed, and many legal observers have charged that a governmental cover-up took place, and believe that Joseph Muscat was involved, remotely orchestrating what they now insist was murder most foul.

The sad story of Karl Muscat's demise reminds us that there was another homicide linked to JM, closely connected to Daphne Caruana Galizia, but not her case, and news of which has been effectively censored in Malta, and artfully kept from its voters. It is the poisoning death of the British investigative journalist BARRY RANDALL, the then-editor of Caribbean News Now, and online publication that specialized in exposing corruption in jurisdictions that sold economic passports. 

Barry Randall

Mr. Randall, who met with Daphne while she was alive, and reportedly received important confidential information from her, which he chose not to share with his staff. Sometime after her untimely death, he communicated with an unknown individual in Montenegro, and traveled there, for what he hinted to his associates would be an extremely important story that he was not willing to share.

The British journalist literally disappeared for a time after his arrival, only to surface days later, seemingly severely agitated, in London, anxious to return to the United States, where he managed his online newspaper. He appeared unwell upon his arrival, his health went immediately into decline, and he eventually passed away. The recent sentencing of a Maltese career criminal, who was found upon arrival in the country to be in possession of Polonium, a radioactive poison known to be used successfully by Russian intelligence, around the time Mr. Randall went to Montenegro, may have been a coincidence, but was it? 

One final note; not long after publishing an article about the mystery surrounding Barry Randall's untimely illness and death, your truly was invited to travel to Montenegro, reportedly to obtain a smashing story. Of course I declined; you see, I knew Barry Randall from our mutual interest in Citizenship by Investment (CBI/CIP) passport programs, whether they be in the Caribbean or in Malta. I did not want to also end up as a statistic.

Finally, let's address Joseph Muscat's central role in all these homicides, whether they be Daphne, Karl Muscat or Barry Randall, JMs fingerprints are all over them, acting remotely. His resignation from office, in disgrace, based upon public pressure, due to his prior knowledge of the conspiracy to assassinate Daphne, and his leadership of the criminal racketeering operation that runs Malta, makes him fully responsible for the other two murders we have discussed above. Whether justice will ever be served in Malta for these crimes remains an open question, but who is guilty cannot be debated; Joseph Muscat is fully accountable.