ARE YOU BANKING FORMER INTERNAL SECURITY AGENTS ?

A scandal in Miami; local Cuban exiles have revealed that a large number of former security agents, from the Communist regime in Cuba have become residents of the United States, after concealing their dark pasts, including Communist Party membership,  which is generally a bar to immigration.

The individuals who have been identified were formerly:

(1) Officers of State Security, which is the division of the Cuban Interior Ministry that conducts political repression.

(2)Judges: the Cuban system does not follow the Rule of Law, and convictions are politically motivated.

(3)Police officers: beatings and other physical abuse are widespread, and directed at dissidents.

(4) Prison officials; conditions at most of Cuba's prisons are horrid, including physical and mental abuse.

(5) Members of the Committee for the Defence of the Revolution; they spy upon the civilian population and report dissidents and opposition to the regime, generally resulting in long prison terms for the targets.

Most of these former Cuban officials were members of the Communist Party, but they conveniently failed to disclose this important detail when applying for residency in the United States, which renders their application fraudulent. The US has no method of verifying their prior employment in Cuba. Unfortunately, Cuba will not take them back, if their residency is revoked, which leaves them in limbo, but still in the United States.

Why is this story relevant to compliance ? Some of these "immigrants" have been involved (and convicted) of espionage, or of supplying the Castro regime with information on the Cuban expat community. Did they use your bank to transfer funds to other Cuban agents ? Did Cuba send money to them, and thereby evade OFAC sanctions ? Will media disclosure of the fact that these despicable individual bank with you cause reputation damage with your customer base ?

These are valid questions; compliance officers in countries other than the United States should also note well that banking former officials, torturers or other officers who practice brutal tactics in totalitarian states can be high-risk when they are unmasked, including war criminals, and those guilty of Crimes against Humanity, or Crimes against the State.

Always learn about your client's past, when he or she comes from a country where abuse of the civilian population is, or was, a common event. Remember the media frenzy that occurs when war criminals are found to be living quietly in the United States.  

REPORT ON HEZBOLLAH AND IRAN IN LATIN AMERICA

Readers who are following unfolding developments in Mexico regarding the activities of Iran and Hezbollah, should read the latest report by the US Congress Committee on Homeland Security. It is titled A Line in the Sand: Countering Crime, Violence and Terror at the Southwest Border. You can access it here. 

NY COURT OF APPEALS HOLDS THAT FOREIGN BANK CAN BE SUED IN US FOR HEZBOLLAH TERRORIST ACTS

The New York Court of Appeals, answering a Certified Question from the US Second Circuit Court of Appeals, has held that, under New York law,  the repeated use of a correspondent account, by a foreign bank, that facilitated terrorist actions of Hezbolllah, is sufficient to confer personal jurisdiction, under New York's long-arm** statute.

The case*, which involves claims by, or on behalf of, American, Canadian and Israeli nationals injured and killed in Hezbollah attacks upon Israel, against Lebanese Canadian Bank (LCB), which is now part of Société Générale Lebanon, was brought in US District Court in New York. LCB allegedly wired funds for the Shaheed Foundation, the reputed financial arms of Hizbollah, which were payments to the next of kin of suicide bombers.

N.Y.S. Court of Appeals

Upon appeal to the 2nd Circuit, the Court perceived the issue as:

    Whether a foreign bank's maintenance and use of a correspondent banking account
     in New York, to conduct wire transfers on behalf of a foreign client, is sufficient under
     New York's long-arm statute, to make it amenable to personal jurisdiction in New York,
     to defend against claims asserted by victims of terrorist attacks committed abroad.

The New York court, in its opinion, held:

(1) LCBs repeated use of its correspondent accounts at American Express Bank to transfer US Dollars to Shahid, provided money to Hezbollah to carry out terrorist violence.

(2) That there was an "Articulable Nexus" or "Substantial Relationship" necessary for the purposes of personal jurisdiction. You can read the complete text of the decision here.

The case will now proceed in the Federal  court system.
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*Yaakov Licci vs. Lebanese Canadian Bank, et al, Case No.: 10-1306-cv(2nd Cir.),

BUS PASSENGER ARRESTED AT BORDER WITH $100,000

Bulk cash smugglers continue to attempt to move cash into Mexico, notwithstanding that they cannot deposit their greenbacks there anymore. Customs & Border Protection officers arrested Nereida Moreno-Izaguirre*, a bus passenger. at the Hidalgo-Reynosa International Crossing, when she attempted to smuggle $100,186 into Mexico. The money was secreted in her luggage, handbag, and on her person.

Moreno admitted that she received $200 for every $10,000 that she smuggled out of the United States. A Mexican national who is a lawful permanent resident of America, bond was denied to her by the Magistrate.
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* Case No.: 12-mj-02475 (SD TX).

FARC DECLARE UNILATERAL CEASE-FIRE IN COLOMBIA

The head FARC negotiator in the ongoing Havana peace talks with the Government of Colombia, Ivan Marquez, has declared that the FARC will observe a unilateral cease-fire for the next two months, and refrain from any military action, sabotage of industrial sites, or kidnapping activities until 20 January. The Colombian Defence Minister, Juan Carlos Pinzon, has advised that Colombian security forces will continue to pursue FARC members, since they have committed crimes under Colombian law, as it is their duty.

Bankers in North America, and in the countries of the European Union, should bear in mind that, if a comprehensive peace treaty is signed, that FARC narco-profits would have to be brought back from overseas bank accounts, or transferred to the Government of Colombia.

You might imagine that, like KGB officers did when the Soviet Union collapsed, some FARC officials will choose to take the money and run. This means major withdrawals in accounts whose beneficial owners are the FARC. You may want to alert your staff to watch for any significant capital movement, during the next two months, from accounts where the individuals who control those accounts speak Spanish, punctuated by Colombian slang phrases.

This is not to say that all legitimate Colombian businessmen are fronting for the FARC, but should you see any suspicious transactions, it will be prudent to : (1) investigate the transaction thoroughly, and (2) have outside bank counsel assist you, as notification to a law enforcement agency may be in the cards.  

WERE ROCKET LAUNCHERS SHIPPED INTO PANAMA DESTINED FOR IRAN ?

An unfolding scandal in Panama this week; the Director-General of The Panamanian National Customs Authority, Gloria Moreno de López, resigned, and her resignation was accepted by President Martinelli. It appears that one of the reasons for her resignation was the merger of her department with that of the Ministry of Security, which has been reportedly involved in participation in a number of corrupt activities.

Here is what appears to be the major reason: Customs is being improperly pressured, by certain government officials, to ignore specific containers coming into the country, and there is the well-grounded fear that this well increase further after the merger. One of these "special" containers was opened for inspection recently, and it reportedly contained rocket launchers, of unknown origin and destination. Since Panama has no standing army, and the vastly expanded border security force is not facing any known armed force, other than small FARC units in Darién Province, which are avoiding contact, it must be assumed that these weapons represent a small fraction of larger arms shipments.

Gloria Moreno de López

Taking into account the fact that there is a huge amount of illicit trade between Panama and Iran being conducted covertly, by Venezuelan nationals employing Panamanian corporations*, the question arises: where are these weapons being deployed ? Assuming that Iran is giving the orders, is it Syria, Egypt or Sudan (and destined for Hamas or Hezbollah) or into Iran itself ? Unfortunately, no answers are available, but Panama needs to shut down this arms pipeline, irrespective of whoever the end user is.
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*Venezuelans using 700 Panamanian Companies to evade Sanctions on Iran

FORMER UBS MANAGING DIRECTOR ARRESTED FOR MONEY LAUNDERING AND ASSISTING IN TAX EVASION

French authorities have opened a criminal investigation, and filed criminal charges against Patrick de Fayet, the former Managing Director for UBS France SA. Fayet is suspected of money laundering, and of assisting high net-worth French nationals to conceal their assets and evade income taxes. Two other former UBS staff had reportedly already been charged in the case.

Fayet allegedly formed foundations in Liechtenstein for French clients, and thereafter opened accounts at UBS in the names of those entities, without disclosing the names of the beneficial owners, who were evading taxes. He reportedly used straw men to pose as foundation officers and staff. He is also believed to have assisted wealthy German nationals to evade a new taxation programme.

UBS has declined to respond to the charges, stating that it does not comment on former employees. Fayet reportedly was associated with a number of Swiss bankers who have been charged in the United States with aiding and abetting American taxpayers in concealing their assets abroad.

With its status already tarnished by US regulators, for admitting to helping American evade taxes, and secrete assets, UBS does not need an additional black eye, which this arrest will certainly cost it. Will other UBS staffers also be charged with money laundering ? Stay tuned to find out.

SUDAN IMPLICATED IN IRANIAN MISSILE DELIVERIES TO HAMAS

Reports surfacing this week confirmed that the Government of Sudan authorised Iran to ship missiles, including some that were 20 ft long, into the country, and thereafter to transport them overland to Egypt, from where they were shipped covertly into the Palestinian Territory of Gaza, for the use by Hamas in its terror campaign against Israel.

There have been a number of attacks, against Sudanese targets, in recent months, which are believed to have been directed by Israel against Iranian weapons being manufactured and stockpiled in Sudan, for transfer to Hamas.

Compliance officers at international financial institutions whose clients trade with Sudan should take this information into account when adjusting Country Risk on Sudan, particularly if their bank has any major financial exposure to Sudanese entities, governmental or private. You should look to minimise any new exposure on the part of the bank, and advise good clients accordingly about increased risk.


 The United States may sanction additional companies, or government agencies, in Sudan, after the public disclosure of Sudanese complicity in missile deliveries to Hamas. Payment for debts owed to US entities or individuals will be blocked, if sanctions are placed upon Sudanese clients of your bank customers.

DOJ AND SEC JOINTLY PUBLISH FCPA GUIDANCE

The US Department of Justice and the Securities & Exchange Commission have jointly published A Resource Guide to the US Foreign Corruption Practices Act. You can access this document here.

INVESTORS SUE STANFORD'S LAW FIRMS FOR $7bn PUNITIVE DAMAGES

If you represent a Ponzi schemer, you are at risk when his house of cards comes tumbling down, whether you knew what he was doing, or not. The Stanford Investors Committee, and the Receiver, Ralph Janvey, have filed a $7bn civil suit against two prominent American law firms. The firms, Greenberg Traurig LLP, and Hunton & Williams LLP, and a former Greenberg attorney, have been named in a class action suit filed in Texas*.

The suit, which alleges that the lawyers aided and abetted in the fraud, claims that Stanford could not have accomplished his $7bn fraud without the assistance of skilled lawyers. In addition to the $7bn Punitive damage claim, plaintiffs are seeking the estimated $10m that the firms earned in fees from Stanford's companies. As the case progresses, we shall be whether the evidence will support their claims. Should the plaintiffs obtain a punitive damage award, it could potentially jeopardise the existence of one or both firms, large as they are, but the plaintiffs will first have to prove that line between zealous advocacy, and knowingly facilitating a fraud, was crossed.

Stanford: Ponzi schemer extraordinaire

 Stanford is appealing his conviction and 110-year sentence. Questions still remain as to exactly how he was able to perpetrate a massive Ponzi scheme, and evade regulators, until 2009, without detection. This case could supply some of the answers.

Suarez & Stanford

There is one individual defendant, former Greenberg lawyer Yolanda Suarez; she left the firm years ago to become Stanford's Chief of Staff and General Counsel. The firm itself was formerly Outside General Counsel. When the Greenberg partner whom was the primary lawyer for Stanford moved to another firm, a large portion of the Stanford work followed.

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*The Official Stanford Investors Committee et al vs. Greenberg Traurig LLP et al, Case No.: 12-cv-04641-L (ND TX).

IRAQ RELEASES HEZBOLLAH LEADER WANTED FOR EXECUTIONS OF US SOLDIERS

The Government of Iraq continues to move closer to the regime in Iran, and its proxies. This week, Iraq released Ali Musa Daqduq, a senior Hezbollah terrorist whom the United States wanted extradited for war crimes. He has been accused of being the leader of the insurgent group that ambushed, kidnapped, tortured and executed several US Army soldiers in Karbala in 2007. Iraq had previously refused to allow his extradition to the United States, claiming that there was insufficient evidence to convict him. There was reportedly pressure from Iran to release him; Hezbollah serves as a proxy force for the Iranian regime.

Daqduq's unit, which wore US military uniforms, spoke English, and carried American-made weapons,  the purpose of which was to deceive US troops when entering a military compound. An attorney for Musa in Iraq has stated that his client has returned to Lebanon.

It is suggested that, when you calculate the risk levels, when your bank clients trade with Iraq, you factor in this case. Iraqi cooperation with Hezbollah should now be taken as fact, and given that the organisation is a Specially Designated Global Terrorist (SDGT) group, any financial transactions with Iraqi entities could possibly be with Hezbollah as as end user of your clients' goods;  can your clients prove otherwise ?

US Soldiers tortured and executed by Musa's unit 

You can also assume that the Government of the United States will intensify its law enforcement and regulatory scrutiny of international trade transactions between American and Iraqi companies. Compliance officers,  govern yourselves accordingly. 

LAWYER ARRESTED IN $600m MONEY LAUNDERING CASE WAS A US GOVERNMENT INFORMANT

At a bond hearing in El Paso, concerning Texas attorney Marco Antonio Delgado's* efforts to obtain pre-trial release on money laundering charges, the government offered evidence that the defendant was a Confidential Informant for ICE, whilst he attempted to move $600m of Milenio Cartel drug profits.

An HSI agent, with the agency's Financial Operations Strike Force, testified that Delgado was a government informant at the same time he was engaged in a massive money laundering operation. One wonders why his activities were so poorly monitored by US agents, that he could execute a $600m money laundering plan for the Milenio Cartel. Who was his handler ? And who authorised him to travel to Cuba, where he could not possibly be supervised ? These questions and more deserve the truth, but in the dark world of confidential informants, it is seldom disclosed by law enforcement agencies.

Whilst the precise details of Delgado's Substantial Assistance to the United States remain unknown,  the Court declined to allow him to bond out, citing his extensive network of foreign contacts, and that he faced a long term in Federal Prison if convicted. Delgado's attorney has indicated that he intends to appeal.
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*El Paso Lawyer who Laundered Cartel Profits Arrested

PANAMA IGNORES MASSIVE HEZBOLLAH MONEY LAUNDERING

Hezbollah Venezuela continues to actively launder its narcotics trafficking proceeds through a major Panamanian financial institution, which facilitates the movement of millions of dollars of its cocaine profits. Sadly, the story is well known to many of the country's government and financial leaders. Though a small unit, numbering less than 100 cadre, Hezbollah Venezuela* regularly and continuously smuggles bulk cash into Panamanian airports, and into the bank. Remember the $25m that was seized upon arrival a while back ? Didn't you wonder whose money it was ?

Once it has arrived in Panama, the drug cash is deposited in a bank whose ownership is linked through family ties to a senior government leader. Hezbollah has a small, but extremely effective, contingent in Panama, who facilitate the onward movement. Ultimately, most of the illicit profits are transferred to Beirut, and provide financial support for Hezbollah, a Specially Designated Global Terrorist (SDGT) group.

Formed only a few years ago, and seemingly undercapitalised, it has quickly outgrown its original location, and plans to move into a multi-million dollar skyscraper for its new headquarters. It would appear that providing financial support to terrorist organisations pays well; ask the owners.

Why isn't the Government of Panama closing down this bank ? It would mean a regulatory agency would be shutting down a relative's business, and obviously, this does not happen in the Republic of Panama.

A final question: why, in the face of overwhelming proof, has the bank not been sanctioned by the Latin American team  at OFAC ? Is somebody asleep in Washington ? The leader of Hezbollah Venezuela is OFAC-sanctioned.
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*Sometimes known as Hezbollah Latin America.

ACCUSED LAWYER-LAUNDRYMAN DENIED BAIL IN TEXAS

A United States Magistrate Judge has denied bail to prominent El Paso attorney Marco Delgado, who was recently charged* in connection with allegations that he is a money launderer for the Mexican Milenio Cartel. Did the Court find that he was a danger to the community or a flight risk or both ?

Law enforcement testimony apparently established that there was strong evidence of guilt. Delgado took possession of two duffel bags containing $1m, that previously was seized from a cash courier by law enforcement in Atlanta, and who later cooperated in the investigation. There was also testimony that Delgado had accounts in Switzerland and the Turks & Caicos Islands, and that he had traveled to Cuba.

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*El Paso Lawyer who Laundered Cartel Profits Arrested

WATCH CONFLICT IN MIDDLE EAST CAREFULLY

The ongoing violence that has broken out between the Israeli Defence Forces (IDF), and the dominant  terrorist groups in Gaza, Hezbollah and the Palestinian Islamic Jihad, could expand into a full-blown conflict, which will definitely affect Country Risk in the region. Egypt in particular, could become embroiled in the situation, due to its new government, which is dominated by the anti-Israel Muslim Brotherhood. Egypt has already recalled its ambassador.

If your bank has a substantial number of clients engaged in trade with the countries of the Middle East, or your bank has significant financial exposure, you would be well to monitor the situation.