FACING EXTRADITION TO US, VIKTOR BOUT'S MONEY LAUNDERER SEEKS BOND IN AUSTRALIA

The Melbourne, Australia attorneys for fugitive Richard Ammar Chichakli, the Syrian-American CPA who was convicted arms trafficker Viktor Bout's CFO/money launderer, have stated that they intend to seek bond at his upcoming extradition hearing, which will take place on 5 February. Chichakli, who fled the United States in 2005, is wanted on several Federal charges, including money laundering, in connection with unlawful efforts to purchase aircraft, in violation of sanctions.

Chichakli, who was reportedly arrested under the name Jehad Al-Mustafa,  has also been known to use the alias Robert Cunning. He was identified when he applied for employment as a Protective Service Officer (PSO) in Australia. A PSO functions as an armed police officer, and handles security duties.

Chichakli's lawyers have disclosed that their client suffers from Gulf War Syndrome, and should be released on bond, which is a rare occurrence when the defendant has been a fugitive from justice, though it can be granted for bona fide medical reasons. Chichalki served in the US Army, but he has never divulged that he has Gulf War Syndrome, a mysterious disease contracted by soldiers who served in the First Gulf War in the early 1990s. Symptoms include fatigue, memory loss, headaches, and a peeling red skin condition; The cause has never been determined.

He has never publicly complained of Gulf War Syndrome, and functioned in the State of Texas as a certified Public Accountant, claiming that he had over 500 clients, over a period of several years. He also worked in the the Middle East with Bout. How could he function in the 40° C. temperatures of the UAE ? Unless he has documented his disease in the past with the Veterans Administration, his claim sounds fabricated.

Viktor Bout, who is his co-defendant in the case, cannot be tried, because he was not extradited from Thailand for this case. The case is pending in the US District Court for the Southern District of New York, in Manhattan, and Extradition* is deemed likely.
___________________________________________________________________________

*Perhaps Mr. Chichakli can shed some light upon Viktor Bout's long affiliation with the Central Intelligence Agency, occurring at the same time he was shipping arms and ammunition to conflict zones in Africa. It has been claimed that the real reason he is imprisoned with hardcore Muslim terrorists, in a maximum security, communications-free penitentiary, is to prevent him from going public with his story.



   

ARE BEARER SHARES IN PANAMA NOW AN ENDANGERED SPECIES ?

Reports indicate that the Government of the Republic of Panama, unhappy with the large amount of pubilicity given to financial fraud cases found to be linked to the abuse of bearer shares, will soon pass legislation that will require that the names of Beneficial Owners of shares of corporate stock be registered with a regulatory agency. In essence, true bearer shares, where the (unregistered) physical owner of the shares is the owner of all company assets, will cease to exist. This will, of course, require legislative action.

Many American and Canadian expats, living in Panama, have been the victims of fraudsters who covertly transfer ownership of corporations to themselves, thereby acquiring ownership of real estate held in corporate names. We have covered this problem in detail in our widely-read article entitled:
Bearer Shares Fraudsters fleece Foreigners in Panama .

Whilst there are a number of technical issues to be dealt with, we welcome Panama's new efforts to close the door on one of its major corporate loopholes, provided that effective and universal registration is implemented.

Compliance officers should be aware that, when the appropriate legislation is close to passage, you may see large-scale "capital flight" of illicit funds, where clients who do not want their names to appear in any government records will move their liquid assets out of the banks. The reason: the identities of Beneficial Owners would probably be shared with US law enforcement agencies, as well as regulatory bodies.

CONVICTED MADOFF CHIEF COMPLIANCE OFFICER GETS A DELAY IN INCARCERATION TO ATTEND $100,000 PARTY

Peter Madoff and his mansion

Peter Madoff, the Chief Compliance officer at Bernard Madoff's investment firm, which was a massive Ponzi scheme, won a delay in his January reporting date to Federal Prison, to attend a religious ceremony, which was followed by an opulent family party reportedly costing up to $100,000 . The defendant will now commence serving his ten-year sentence on 6 February.

Many of Bernard Madoff's New York victims,  who have lost everything they invested with Madoff, expressed outrage, at both the Court's decision to delay Peter Madoff's prison date, and the family's arrogance for holding an extravagant event, in light of the massive losses the victims sustained.

Peter and Bernie, and Peter's vintage Aston-Martin

As a compliance professional, I wonder whether the sentence meted out to Peter Madoff, who was admittedly complicit in concealing the truth about the Ponzi scheme, was sufficient. Do we not hold compliance officers to a higher standard ? Whilst he testified at Bernie's trial, he may be called upon in the future to testify against others, and he could quietly receive a sentence reduction to merely five years, which would allow him to be released after serving only 51 months. Is that really sufficient, when weighed against the millions of dollars that he "earned" due to the Ponzi scheme ? I doubt it.; Bernie got a well-deserved 150 years.

IDENTIFYING THE RED FLAGS OF FRAUDSTERS

Readers who are interested in profiling potential fraudsters should visit John Bossi's blog, which you can access below*.He primarily provides advice for consumers, but the blog also features a checklist of red flags that investors, as well as their bankers, should be aware of when dealing with so-called "financial advisers," who are, in truth and in fact, fraudsters.
_________________________________________________________________________
*http://debtisverybadforyourhealth.blogspot.com/

WHY A FEDERAL JUDGE REFUSED TO RELEASE A LAWYER ACCUSED OF MONEY LAUNDERING

Attorney Delgado

I have noticed that a large number of readers reviewing the articles on the prominent El Paso attorney, Marco Antonio Delgado, have noted that both a Federal Magistrate and a Federal Judge have refused to allow him to be released on bond. Delgado is charged with money laundering* for a Mexican drug cartel, and some are puzzled as to why he cannot bond out prior to trial. A lawyer who cannot get bond in his own case ?

I agree that, under most circumstances attorneys, as themselves officers of the court, should be granted bond. After all, they are duly licensed, and that license is subject to revocation, should they engage in unlawful flight to avoid prosecution. I was quickly granted a nominal bond in my own money laundering case, and I was charged with RICO.

In this case, however, the US Attorney pointed out that Delgado:

(1) Had taken over one hundred trips to Mexico, during the period 2006-2012.
(2) Had taken eleven trips to Mexico in 2012.
(3) Had traveled to Switzerland, and the Turks & Caicos Islands, both offshore financial centres.
(4) Had received a wire transfer for $500,000 from a Swiss bank.

In short, the Court found that there was no combination of precautions that could be taken that would ensure his appearance at all hearings. The fact that he told a Confidential Informant that he would flee to the Turks & Caicos Islands, if necessary, probably convinced the Court that Pretrial Detention was mandated in this case; Risk of flight was just too high.

________________________________________________________________________
* United States vs. Delgado, Case No.: 12-cr-02106 (WD TX).

FARC OFFERS A JOINT CEASEFIRE TO COLOMBIA

Hot on the heels of the expiration yesterday, of its unilateral ceasefire in Colombia, the FARC has asked the Government of Colombia to agree to a mutual ceasefire, where both sides refrain from hostilities. Given that the last ceasefire observed by both sides in their ongoing conflict allowed the FARC to rearm, the chances that Colombia will agree are close to none.

We recently wrote* about a major FARC arms seizure in Ecuador, which confirmed that the the global terrorist organisation is actively acquiring weapons and ammunition, under the cover of its peace talks, and unilateral ceasefire. Additionally, there have been a number of violations by the FARC, an indication that internal discipline is lacking, whether that be of a political nature, or a lack of control over powerful factions. The FARC characterised some of them as "self-defence" actions, though I hardly see the distinction.

I also know that FARC bulk cash smuggling and money laundering of its narco-profits did NOT cease during the purported ceasefire. No wonder the Government of Colombia has declined to participate
______________________________________________________________
* The FARC rearms during Peace Talks

SYRIAN ORGANISED CRIME DOMINATES PANAMANIAN FINANCE

I am often asked why there are few money laundering prosecutions in the Republic of Panama. In truth and in fact, criminal investigations are periodically opened, examining suspected money laundering at Panama's banks, but those cases are generally closed, with a finding of no criminal conduct or regulatory violation, even when the evidence overwhelmingly indicates otherwise. Do you want to know why ?

The reason is the powerful influence of deeply-entrenched Syrian organised crime elements in Panama. A number of Syrian families who emigrated to Panama decades ago are now firmly in control of several financial institutions, and other businesses. Their family members can be found embedded in all the government ministries, including the regulatory and financial agencies, where they can frustrate investigations, and otherwise influence government operations, should they choose. Relationships amongst the various families, both business and personal, have resulted in the joinder of these groups, in a form of economic interdependence that has allowed some of them to profit from crime and corruption in Panama. This criminal element has become so powerful that they can, through a combination of influence, corruption and connections, manipulate the civil and criminal justice system, to achieve their organisation's financial ends.

These connections have allowed Syrian-controlled financial institutions in Panama to accept criminal profits, without fear that regulatory or law enforcement action will be taken against them by the government. Sometimes known as the Syrian Mafia, with affiliated families working together, they have been freely laundering criminal proceeds in Panama, through their local banks, and are reportedly in the process of purchasing a major Panama City bank that is up for sale.

These groups have no fear of local law enforcement, for obvious reasons; it is their banks that launder Hezbollah narco-profits, and move them to Beirut, it is their controlled banks that facilitate client transactions with Iran. There have actually been cases where they welcome an investigation, knowing that it will be resolved in their favour, and banks that were targets did then point to the dismissal of the investigation as evidence of a clean bank, when the opposite was indeed true.

 If the United States is serious of assisting Panama to clean itself up, it needs to start with the Syrian-owned financial institutions involved in money laundering and other financial crimes.

If you are a compliance officer at an international bank located in the Western Hemisphere,  it is humbly suggested that you learn:

(1) The names of all the Panamanian banks, that are directly or indirectly owned and controlled by Syrian organised crime groups; There are quite a few.
(2) The most common (and the most unusual) Syrian surnames. Can you tell if the Panamanian client, regulator or law enforcement official you deal with is of Syrian extraction, with the potential to have a hidden agenda of his own ? This is neither profiling nor racism, just effective enhanced due diligence. The given names are also often a clue as to Syrian background.
(3) The names of the big companies engaged in the construction trade in Panama that are owned or controlled by Syrian organised crime elements.

This is a global crime problem; North America, Europe and Asia are all locations for affiliated Syrian organised crime groups, many of whom deal with the Panama contingent. Perhaps the United States might want to step up to the plate, and put these money-laundering banks in Panama out of business, by denying their banks access to the American correspondent banking system, and charging the officers and directors with money laundering, and seeking their extradition.

WAR DRUMS ON THE EAST CHINA SEA RAISES COUNTRY RISK UNECESSARILY

China may be dead wrong in its adventures in the South China Sea, and I have been drawing your attention to it for several months, for it only serves to raise Country Risk on its neighbors. On the other hand, its moves in the East China Sea are historically correct regarding adjacent islands that are obviously Chinese territory, but "administered" by Japan, with US approval.

Doesn't anyone remember that Japan gave up all its foreign territorial claims after the Second World War ? The Senkaku Islands are not part of the Home Islands of Japan, or its island dependencies. They are actually islands that Japan conveniently received from US occupiers after America vacated them, at the height of the Cold War, when it was politically impossible to cede any territory to Communist China. China should have received the islands back, as Japan does not even have a colourable claim.

Now that both China and Japan have sent fighter aircraft over the islands recently, tensions are elevated. A new right-wing government in Japan is pushing nationalism, just as China is. Unless someone dials down the rhetoric, Country Risk on both countries will increase to alarming levels.

FARC CEASE-FIRE ENDS TOMORROW

The unilateral cease-fire declared by the Revolutionary Armed Forces of Colombia, the FARC, expires tomorrow, 20 January, and FARC leaders have declared that military actions will commence at that time. The FARC, and negotiators from the Government of Colombia, are engaged in the second round of peace talks, in Havana.

Though no formal press releases have appeared, rumours abound that the two parties are far apart on any meaningful agreement. The President of Colombia has stated that talks will terminate at the end of 2013, if progress has not been made. There are fears that the FARC, as a negotiating tool, will return its usual kidnappings, destruction of energy facilities, and ambushes of Colombian Army troops in the field.

The million dollar question, from the financial community, is the disposition of the FARCs multi-million dollar a year narcotics trafficking empire,  its overseas bank accounts, and its covert global investments. Whether the Communist FARC leadership will personally seize FARC bank accounts in offshore financial centres, or meekly surrender them to Colombian officials, is a major issue for yours truly, for recent a Colombian report claims five million were either killed, injured or missing, due to FARC attacks on Colombia's civilians and military. FARC drug profits could be used for victim compensation.

In the unlikely event that a peace treaty is announced, you should immediately alert your staff to be looking for any large funds transfers, from accounts that have been quite inactive in recent years, for it is certain that some of the more capitalist members of the FARC may decide to take the money and run.
(1) Distrust any Power of Attorney presented to drain an account, reputedly signed by the officer who is a signatory, and insist on only the authorised signatory, irrespective of any evidence laid before you by an attorney-in-fact.
(2) Other red flags are: the urgency of the request, any attempts to bribe you, and the use of less-than-elegant Colombian slang by the bearer of the documents, who may be accompanied by a local attorney, but whose bearing leave no doubt as to who is in charge.

Can you stop fleeing FARC drug profits from leaving the accounts as your bank, where they have quietly remained unnoticed ? I hope so.

NEW US LAW TARGETS IRAN SANCTIONS EVADERS AND TERRORIST ORGANISATIONS IN LATIN AMERICA

On 28 December, the President of the United States signed into law the Countering Iran in the Western Hemisphere Act of 2012, which directs that a comprehensive study, and report, on the activities of Iran, and its terrorist proxies, be submitted to the US Congress within six months. The underlying purpose was stated thus:

" It shall be the policy of the United States to use a comprehensive government-wide strategy to counter Iran's growing hostile presence and activity in the Western Hemisphere by working together with United States allies and partners in the region to mutually deter threats to United States interests by the Government of Iran, the Iranian Islamic Revolutionary Guard Corps (IRGC), the IRGCs Qods Force, and Hezbollah."*

Actions to be taken shall include:

(1) One of the immediate results of the policies being implemented by the Act will be an increase in intelligence-gathering, and US law enforcement, in Latin America, involving " A plan to address any efforts by foreign persons, entities and governments in the region to assist Iran in evading United States and international sanctions,"  and

(2)  "To support United States efforts to designate persons and entities in the Western hemisphere for proliferation activities and terrorist activities relating to Iran, including affiliates of the IRGC, its Qods Force, and Hezbollah, under applicable law, including the International Emergency Economic Powers Act. **"

The practical effect: You can expect that Iran sanctions evasion activities in the Western Hemisphere, especially Latin America, but also the Caribbean and Canada, will be targeted by American law enforcement agencies, and intelligence services. Clients of your bank that are engaged in sanctions evasion, facilitation of terrorist financing, and providing material support to either Iran or its terrorist proxies, will have a greater chance of identification, and interdiction through arrest.

This means that risk levels have now increased for any of your Western Hemisphere clients who:

(A) Trade with entities located in the Middle East and Asia, when the destination country is a known transshipment point to Iran, or a known jurisdiction for Iran sanctions evasion.

(B) Are Venezuelan nationals, using Panamanian corporations, and engaged in international trade transactions. Panamanian government officials have thus far identified over seven hundred of such companies suspected of trading illegally with Iran.

(C) Are Iranian expats engaged in high-volume international trade.

It may be prudent to exit such high-risk clients, lest their illegal operations be exposed, and you incur not just fines & penalties, but major adverse publicity in the media, as a result. We call that reputation damage, and it is to avoided at all costs, lest you experience major client flight.
__________________________________________________________________________
* HR 3783; Section 3, Statement of Policy.
** Section 5 (b)(6)(B).

MEXICAN BULK CASH SMUGGLING CREW GET 30 YEARS FOR MONEY LAUNDERING IN NICARAGUA

A Nicaraguan judge has sentenced the eighteen bulk cash couriers who attempted to smuggle $9.2 in cash into the country, whilst posing as journalists and technical crew for the Mexican television network Televisa, to eighteen years in prison, and ordered them to pay a fine equal to the amount of cash seized at the frontier with Honduras.*

The convictions, for money laundering an drug trafficking, which are reportedly the maximum penalty that the Court could impose, will, according to defence attorneys, be appealed, on the grounds  that there was no evidence introduced at trial linking the seized cash to narcotics. Prosecutors alleged that the funds, which they say were en route to Costa Rica, were payment for drugs sold.

The well-prepared cover stories of the defendants, who were traveling in bogus Televisa vans, and wearing  company logos on their clothing, fell apart during extended questioning regarding their purported mission, reporting on a Nicaraguan drug trafficking trial in Managua. The ringleader of the crew was a thirty year old woman, Raqual Alatorre Correa, who gave inconsistent answers to investigators, who later found the cash, concealed in the vehicles.

Televisa has emphatically denied any involvement, and the purported signature of a senior Televisa officer, which appeared on documents found in the vehicles, has been sent to Mexico for authentication. None of the defendants were Televisa employees.

Such an elaborate facade as the defendants employed would indicate the planners of this bulk cash smuggling venture operate on a very sophisticated level, and that this seizure is but one of a number of well-planned and executed money laundering actions, which operate using legitimate covers not easily exposed. That may well be why the judge threw the proverbial book at the defendants. Just how many prior operations has they successfully run through Nicaragua in the past ? The prosecutors asked for 28 to 30 years, and they got it. Will such harsh sentences deter subsequent bulk cash smugglers moving through Central America, and force them to choose alternate routes or methods of transport ? We cannot say, but we will continue to report on all major bulk cash smuggling cases.

______________________________________________________________________
If you are not familiar with this case, it is suggested that you review my previous articles:
Bulk Cash Smugglers posed as journalists en route to cover Money Laundering trial
Bulk Cash Smugglers Posing as Journalists had Regular Pipeline
"Televisa" Bulk Cash Smugglers found guilty

WATCH THOSE CLIENT ACCENTS AND SLANG CAREFULLY

The news today is the sentencing, in US District Court in Miami, of several individuals who committed immigration fraud. They fabricated what appeared to be valid Cuban Birth Certificates, and sold them to undocumented immigrants from Latin America, so that that could take advantage of the liberal US policy on Cuban refugees who arrive in America, the so-called "dry-foot" rule. The defendants had a number of blank birth certificate forms that they employed in the fraud.

The most telling point was in the details. The fraudsters, who reportedly earned $500,000 selling these documents, cautioned the undocumented aliens using the counterfeit documents to refrain from small-talk with the immigration agents, and to fabricate a story about how they, as "Cuban refugees," arrived in the United States.

Why no casual conversation ? Because sophisticated speakers of Spanish know the difference between  Cuban and a Mexican slang and vocabulary. Cubans who have grown up under the communist regime use specific terms and slang unique to the island. Immigrants speaking Spanish learnt on other Latin American countries use other terms.

Therefore, when you, as a banker, get a new, purportedly high-net worth customer from Latin America or Spain, always make sure that one of your staff, from their professed country of origin, or nationality, is in close proximity, to overhear their conversation with your officers, or even speak directly to them. He or she will known immediately if the new client is posing as a national from the country listed on their passport, or is something else entirely.

 Dropping a term only in common use, perhaps a unique profane word, either gets a reaction, which is a means of authentication, or not. For instance, the English name for a certain tropical fruit is, in Cuban slang, part of the female anatomy.  A non-Cuban would not know that.

KYA, or Know Your Accents, is a good method of foiling financial criminals who want to show that they come from a non-drug producing or non-tax haven jurisdiction. The slang you throw at them will trip them up, every time.

BE ALERT FOR UNDERGROUND BRANCHES OF INTERNATIONAL BANKS

I see that a Swiss private bank is having problems this week with a "colourful" customer of questionable background. That brings to mind the fact that this bank has been operating what I can only describe an a "underground" branch, meaning a covert facility, in a country where it has neither properly registered, nor pays taxes. An underground branch very quietly accepts deposits, and finds a way to spirit them into one of the bank's legitimate branches, or its headquarters, either through local banks, and also through some bulk cash smuggling. Its existence is a closely guarded secret.

The way that I personally verified its operation, after a number of senior Venezuelan military officers were seen repeatedly carrying briefcases into the company, an import-export firm, and taking nothing out, was to engage the services of a old friend. I supplied him with  the name of a prominent narcotics trafficker as a "reference", and he called up the company. The general manager at first was uncooperative, but once the caller dropped the name I had given to him, the gentleman's tone changed, and he offered to meet the caller at the bank's Geneva headquarters to discuss a relationship of mutual benefit.

We had a big case here in Miami a few years back, where one of our local financial institutions was caught accepting cash at a covert Bogotá branch that was unknown to either regulators, or the public at large. Suspected narcotics profits were accepted there, and couriered to the United States for deposit.

Since, by their very nature, such operations are illegal, it is generally difficult to ascertain their location, but a few helpful hints might assist you in identifying one banking with you:

(1) Does the customer, who obviously runs a cash-intensive business, now have a greatly increased volume of deposits, inconsistent with its historical background of deposits ?

(2) Are there new staff members making the deposits ?

(3) When you visit the client at its principal place of business, are there a large number of new staff
members not known to you ?

(4) Does the client now wire funds to known offshore financial centres, when that was not the case in the past, and are these payments inconsistent with the client's core business ?

Of course, these guidelines also could apply to any business conducting money laundering operations, as I am sure you must know. 

THE FARC REARMS DURING PEACE TALKS

Seized FARC firearms

If you were hoping that the Revolutionary Armed Forces of Colombia, the FARC, were going to make peace with the Government of Colombia, in the peace talks currently in progress, it is not looking good. A senior general in the Ecuadorian Army has reported that he has seized large quantities of arms and ammunition from the FARC, which it has acquired during its so-called unilateral cease-fire. Ecuador also seized  1200 units of what was described as bars of explosive, which probably means C-4. Is this the act of an organisation that is seeking to make peace ?

Of course, a senior FARC leader has denied the seized evidence displayed by Ecuador. Please note that the cease-fire expires on 20 January, and the FARC has bluntly said that it reserves the right of self-defence. Of course, its definition of self-defence might not be the same as yours and mine,

MORE ON VENEZUELA'S EXPORT OF URANIUM TO IRAN

Uranium

My article on the illegal export of Uranium from Venezuela has appeared on the popular website known as Money Jihad, and since there were questions raised there, I have responded there. If you are interested in that subject, and wish to read my reply, you can find it here. Immediately after my article, click on "1 comment," to read my response.