NEW HAMAS-HEZBOLLAH COOPERATION RAISES RISK OF A THIRD LEBANON WAR

Information confirming that there is a new program of tactical cooperation between Hezbollah and Hamas, which could easily result in a Third Lebanon War with Israel. The reported arrangement, which provides that Palestinian terrorists affiliated with Hamas will train with Hezbollah, as well as learn rocket and missile technology, in Hezbollah-controlled territory in South Lebanon, is extremely disturbing.

This tactical assistance will result in groups of radical Palestinian fighters being based near the frontier with Israel, and give Hamas the opportunity to open a new front against Israel, without exposing itself directly to IDF retaliation. I doubt whether Hamas' beleaguered leadership will be able resist an opportunity to tweak Israel from what they view as a safe haven. Trouble is, any Hamas attacks against Northern Israel will more or less automatically reault in retaliation, which could easily further escalate into a theater-wide conflict with Hezbollah. 

Israel's senior government figures have long warned that any future conflict involving Hamas-controlled Lebanon will result in the immediate destruction of Lebanese infrastructure, and since Israel has air superiority, I fear that downtown Beirut, including Lebanon's precious banking center, will be on the top of the list.

Given Israel's recent attacks on Iranian military installations in Syria, you can expect any Palestinian fscilities in South Lebanon to get more of the same treatment, if there are even small attacks across the border, so a Third Lebanon War may well be inevitable; if you asssume so, then any pending transactions with Lebanese banks, importers or traders, or any exension of credit or investment would be out of the question. Will 2018 be the year that Lebanon is forced back into war ? We canot say, but we will be watching.

US STATE DEPARTMENT ORDERS RICARDO MARTINELLI EXTRADITED TO PANAMA

The President of the Republic of Panama, Juan Carlos Varela, has advised that his office has received a letter from the US State Department confirming that the agency has approved the extradition of the fugitive former Panamanian president, Ricardo Martinelli. Martinelli recently advised that he has dismissed his pending appeal of a Federal judge's order mandating extradition. He is presently in custody, in a Federal pretrial detention facility.

News media from Panama has indicated that government sources believe Martinelli will be swiftly extradited within the next few days. He faces charges of embezzlement of millions of dollars from government accounts, and operating an electronic surveilance program that illegally spied upon an extimated 150 Panamanians. Under existing extradition laws, he can only be tried for those two cases, although he also has approximately twenty other criminal cases pending against him.

PASSPORT SALES AND MONEY LAUNDERING CONTINUE IN DOMINICA, AMIDST A PUBLIC HEALTH NIGHTMARE

While corrupt politicans in Dominica are raking in cash, hand over fist, the rest of country's impoverished population is literally dying, in a public health crisis that is the worst in the Western Hemisphere, and it has nothing to do with either the last hurricane, or the previous tropical storm. If you are living in Dominica, you have an excellent chance of an early death from cancer, as the present government blissfully ignores the individuals who elected them into office.

On June 3, 2018, The Journal of the American Medical Association Oncology published the results of its global cancer study, under the auspices of the University of Washington. The study, which covers 195 countries, found that Dominica has the third-highest death by cancer rate in the world, specifically 203.1 per 100,000 of population. Only Mongolia and Zimbabwe have higher rates.

Dominica leads in prostate cancer deaths, with 54.9 deaths per 100,000 of population. The global average is 6.1 . It also leads in Multiple Myeloma, which is cancer of the plasma cells, with 5.9 deaths per 100,000 , where the global average is but 1.5.

These findings cannot be atrtributed to Hurriane Maria, as they are statistics from the year 2016. They are indicative of neglect of domestic health services over a prolonged period of time, while Dominica's cash flow, from its lucrative CBI passport sales program, was diverted from supporting public health needs, and much of which cannot be accounted for.

In April of 2018, the Dominica Nursing Association placed blame squarely upon the government for nurses leaving the profession in droves, because of poor pay and working conditions. Even though there is severe chronic unemployment in Dominica, in May the government announced that twenty Cuban nationals would be imported, to address the nursing shortage, according to Dominica news Online.

Some observers have compared rthe Commonwealth of Dominica to the Republic of Haiti, where corrupt kleptocrats skim off all the country's wealth, leaving their countrymen destitute and unemployed, and living in a failed state, but these statistics actually show that a resident of Dominica will most likely pass away before a citizen of Haiti. That sad fact is totally ignored by Dominica's corrupt officials, who can visit the best doctors that Swiotzerland has to offer, while they visit their fat Swiss bank accounts.

















 

READ FCA FINAL NOTICE ON CANARA BANK UK BRANCH DETAILING AML FAILURES

While many compliace officers have already read the media reports about the civil fine and penalty imposed upon the UK branch of India's Canara Bank, for rampant AML shortcomings, you will only understand the situation, where the FCA detailed the failures, by reading the 44-page report. From the placement of compliance officers from India who did not fully understand UK compliance, to the utter failure to control PEPs, the bank's management failed to reform its program, even after the regulator pointed them out, years earlier.

More damaging than the equivalent of a million dollar fine (in Sterling) is the FCA ban on the bank accepting any new customers for an extended period of time.

You can review the complete text of the Final Notice here.

CONSTITUTIONAL CHALLENGE BY BVI WILL FURTHER DAMAGE ITS BRAND AS AN OFFSHORE COMPANY PROVIDER

 
 The news this week is that the British Virgin Islands, reeling from the impact of its upcoming obligation of total corporate transparency, due to an Act of Parliament becoming effective in 2020, has engaged a prominent expert in constitutional law, to contest the legitimacy of the new law in court. Whether there are legal grounds to make such an argument, in defying the UK Government, in what many will surely consider a purely dilatory action, without merit, will not endear the BVI to the compliance officers at financial institutions in North America, and may indeed render BVI companies, which are the bulk of the local govetnment's source of income, completely unacceptable to hold assets abroad.

While many European financial institutions may continue to accept clients' active BVI companies,  compliance offices in the US & Canada, already smarting over their inability to conclusively identify the beneficial owners of such corporations, may just blacklist them altogether, due to the fact that there is total resistance to transparency. Let us also not forget that FinCEN, which could publish an Alert, warning US banks away from BVI companies, as account holders, sellers of assets, trustees, guarantors, and in all other categories where foreign corporations could be employed in transactional matters, because potential money laundering or financial crime threats of beneficial owners could be shielded from view.

If the British Virgin Islands want to retain the pedigree and legitimacy of the Crown, so that it can hawk the lucrative sale of BVI companies to Chinese tax evaders, corrupt PEPs, and other scoundrels, it needs to agree to transparency, and post a public corporate register forthwith. If not, then we must recognize that its true goal is to perpetuate opacity in corporate ownership. and redline BVI companies as high-risk, for all compliance purposes.

CORRUPT DOMINICA OFFICIALS TRY TO CONCEAL THEIR DODGY CBI CLIENTS' TRUE NATIONALITY FROM COMPLIANCE OFFICERS

When a compliance officer examines a passport presented by an individual seeking to initiate a relationship with his bank, should the prospective customer's country be one of those engaged in the sale of economic citizenships, through a Citizenship by Investment program, also known as CBI or CIP, he knows to immediatelty examine the place of birth of the passport holder. Should the birthplace be outside the country where he claims citizenship, compliance knows to initiate enhanced due diligence, for absent the remote possibilitty that the holder is a naturalized citizen, the odds are that he is holding a CBI passport, which substantially increases the level of risk in accepting the individual as a customer.

Now, however, we have learned that corrupt officials in the Commonwealth of Dominica are selling not only CBI passports, but birth certificates that falsely attest that the holder was actually born in Dominica. This tactic means that compliance officers can no longer be assured that they are dealing with a genuine Dominica national, making the birthplace inquiry moot. CBI passport purchasers are also getting drivers' licenses, and other secondary identification, to back up their spurious birth certificate and passport; Do not accept this fraud.

As the result, we must, regretfully, advise that, hereafter ALL individuals who present passports from the Commonwealth of Dominica must be subject to enhanced due diligence procedures, prior to account opening, with no exceptions. If this proves to be too costly, or too time-consuming, you are advised to blacklist all nationals from that country, and decline to open new accounts for any Dominica national, as the risk is simply too great that you will be banking a career criminal, corrupt foreign government official or PEP, or terrorist financier. 

ANTIGUA TO HOLD ANTI-CORRUPTION MARCH FOR JUSTICE THURSDAY

Asot Michael

The residents of Antigua will make a non-partisan United March for Justice on Thursday, to peacefully protest their government's continuing failure to investigate several major corruption scandels that have shaken the country to its core. Two of those involve the disgraced MP Asot Michael, who was cashiered as Minister of Investments after evidence of his partcipation in soliciting million dollars bribes from foreign investors surfaced, and who is also the principal suspect in the disappearance of two hundred Antigua passports, in another scandel.

Michael has refused to surrender his seat in Parliament, notwithstanding a groundswell of public anger at his gross avarice. The third issue involves charges of conspiracy to sell Antigua passports, and charges are pending against the fired Assistant Superintendent of Police, and others named and unknown.

The Government's apologist, the Prime Minister's Chief of Staff Lionel Hurst, has openly and disrespectfully discouraged Antiguans from attending, rudely calling the march pointless, as well as irrelevant, due to the poor showing of the Opposition parties in the recent national elections. However, the memories of widespread election fraud, through the illegal purchase of votes, and the resulting anger of the people of Antigua after they learned about it, and who assert that the election was fixed, due to rampant corruption, should insure a large turnout at the march.

Additionally, a number of real estate projects, where the foreign investors were never adequately vetted, and who later turned out to be the criminal element, has also infuriated Antiguans, who have called for fundamental reform of the due diligence process.

Participants are being asked to wear white, to demonstrate that they are not turning out on behalf of, or to garner votes for, any political party, and some are calling the event the "White March." There are calls for the march to begin at 3:00 PM. Calls by other government officials to avoid the march are being ignored.

A RUSSIAN IN DOMINICA GOVERNMENT ! SAY IT AIN'T SO, FRANCINE

His name is Omar Murtuzaliev; he is the Vice President of the Russian Wrestling Federation and a close personal friend of Vladimir Putin. The press has described him as one of the Russian Oligarchs, businessmen who rapidly accumulated wealth in the years after the dissolution of the Soviet Union, when privatization of vast government assets was allegedly sold for peanuts, making many billionaires overnight.

What does this have to do with Dominica, you ask ? Murtuzaliev was the Trade Attache for the Commonwealth of Dominica, based at the High Commission in London,  between 2012 and 2014 when Francine Baron, the present Minister of Foreign Affairs, was the High Commissioner. He even listed his nationality and residence as Dominica, though he is known to reside in the Principality of Monaco. Why does a Russian national, who lives elsewhere, become Trade Attache for Dominica in London, and how can he discharge his "trade attache'"duties ?  How much trade did he actually facilitate during his term as attache, anyway ?

It seems his son, Timur Murtuzaliev, who is a British national, resides in the UK. Omar's Dominican passport gives him visa-free entry to Great Britain. Both Timur and Omar are directors of the Tiko Foundation, a tax-exempt charity, listed as delinquent in its financial filings, and formerly known as the Red Lodge Trust, formed the same year that Francine Baron was appointed High Commissioner in London, 2012. Connect the dots, please. If the UK Government makes it difficult for Russians to get visas, try a Dominica passport, my Russian friends; it is the Nature Island, and a Commonwealth member.

Since Minister Baron departed London for Roseau, her Second Secretary at the High Commission, Janet Charles, has been designated Acting High Commissioner, while curiously still retaining her portfolio as Second Secretary, and not being promoted to Commissioner. the London rumor mill has Minister Baron still giving all the orders at the High Commission.

A final note; it was Minister Baron who signed the bilateral Dominica-Russia agreement at Sochi. How much influence does Russia have in Dominica Government ?

WHY UK PARLIAMENT DID NOT EXTEND PUBLIC CORPORATE REGISTRY TO CHANNEL ISLANDS AND ISLE OF MAN

The British Overseas Territories, who are now, due to an Act of Parliament, required to publish public corporate registers of beneficial owners of companies by December 31, 2020, have indicated that they are extremely unhappy that new law, the Sanctions and Anti-Money laundering Bill, was not extended to the Channel Islands, and the Isle of Man. It is appropriate to discuss the possible reasons why this deliberate act of omission occurred.

First of all, the Channel Islands, which are comprised of the Bailiwicks of Jersey and Guernsey, and the Isle of Man, are neither Overseas Territories of the United Kingdom, nor part of the UK itself, nor sovereign states. They are what are referred to as Crown Dependencies, a unique status that defies precise definition. Left over, literally, from the days when the English monarch held extensive lands in France, they are akin to personal possessions of the Crown.

Second, there is a significant legal difference of opinion as to whether Parliament has the power to legislate any internal ( i.e. non-foreign affairs or defense) matter, as that right appears to have lapsed, due to disuse. Acts of the UK Parliament do not generally apply to the Crown Dependencies, and some legal authorities, including those in the Channel Islands, maintain that any prior rights have expired, through failure to exercise them. Definitely an interesting issue of law to debate.

Finally, the Crown Dependencies have a long history of compliance with banking best practices, in the fields of AML and CFT, and candidly, the corporate service firms located there are far more rigidly regulated than their cousins in the British Overseas Territories, whose total dependence upon such revenues dominates the local governmental budgets. Universal acceptance of clients, without thoroughly vetting them prior to creating corporate entities for them, is the rule in the Caribbean Territories, but not in the Crown Dependencies.

I can understand why the Overseas Territories feel that the Crown Dependencies should have been included in the public registry law, but for one or more of the above reasons, Parliament properly concluded that they should be left out.

US ATTORNEY APPEALS DENIAL OF $200m FORFEITURE ORDER AGAINST WAKED MONEY LAUNDERING ORGANIZATION KINGPIN

The US Attorney's Office in the Southern District of Florida has filed a notice of appeal from a court order denying it a criminal forfeiture judgment against Nidal Waked Hatum, a principal leader of of Panama's Waked Money Laundering Organization. The defendant, in his plea agreeement,* in which he pled to money laundering conspiracy, agreed to a forfeiture, but the sentencing judge denied it, "based upon the unique circumstances of this case," and found the requested amount "excessive."

 We are talking about a $200,852,000 judgment, which is twice the undisputed amount of funds involved in the laundering conspiracy, against one of the leaders of one of Central America's oldest, and largest, money laundering organizations, one which has operated in the Republic of Panama for years with impunity, and with immunity from prosecution by the corrupt local authorities.

Though we do not yet have the benefit of the Brief of Appellant, previous filings in the case, during which prosecutors sought to reverse the order, provide a preview of what they intend to assert on appeal. These are verbatim quotes from the pleadings:

1. Criminal Forfeiture is mandatory under the circumstances, and is pursuant to Federal Law.
2. The Court exceeded its authority by refusing to impose a forfeiture order against Waked.
3. The Court's reasons for refusing to order forfeiture are clearly erroneus.
4. The fact that Waked no longer possessed the funds involved in the money laundering conspiracy does not preclude forfeiture of an equivalent amount.
5. A forfeiture amount cannot be reduced or eliminated based upon a defendant's restitution order, or compensation to victims.
6. The Court's order ignored Congress' interest in vindicating the public interest in the integrity of the financial systems of the United States.
7. The United States' requested $200,852,000 is not Constitutionally excessive.
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* We express no opinion regarding the propriety of his short two year sentence, and the special provision in his Plea Agreement, which excused him from testifying against anyone. After serving his sentence, Waked was deported from the United States. He obviously rendered Substantial Assistance to US law enforcement in some form, but the details will most likely remain hidden from public view.

ELEVENTH CIRCUIT DISMISSES RICARDO MARTINELLI'S APPEAL ON HIS MOTION FOR VOLUNTARY DISMISSAL

For readers who have been following the extradition case of fugitive former Panamanian president Ricardo Martinelli, who recently declared that he was abandoning his appeal, to allow the US Secretary of State to order him extradited to his native Panama, a copy of the Entry of Dsmissal appears above.

UK GIVES MONEY LAUNDERERS A TWO AND A HALF YEAR GIFT

If you glossed over the effective date the UK House of Commons designated as the deadline for British Overseas Territories to implement public registers of corporate ownership, it is Decermber 31, 2020, which is two and a half years from now. What's wrong with this picture ?

Giving the world's money launderers thirty months to plans, and execute, the placement, layering and integration of the billions (perhaps trillions) of dollars in dirty capital that presently are owned by corporations anonymously organized in the British Overseas Territories, particularly the BVI, and the Cayman Islands, is a gift whose significance must have been completely overlooked by the drafters of the Amendment to the UK Sanctions and Anti-Money Laundering Bill.

We are aware that there were elements in UK Government who were staunchly opposed to the public register requirement, some for the reason that the financial world has not yet implemented such reforms, others fearing that the elimination of corporate secrecy will be the death knell of the Caribbean tax havens that are British Overseas Territories.

Nevertheless, the Panama Papers and the Paradise Papers caused a groundswell of public pressure for corporate transparency, and Parliament rightly has moved in that direction, notwithstanding substantial pushback from powerful segments of the financial services community.

Your mandate now is to be alert for substantial transfers of funds, coming from a low-risk jurisdiction, but in truth and in fact, having originally begun their journey from one of the soon-to-be transparent British Overseas Territories. Money launderers have all the time in the world to slowly, but efficiently, move that dirty money into European Union or North American investments, but, armed with the knowledge that it came from somewhere opaque should give compliance officers an edge in identifying the funds.  

WILL LEBANON BECOME EMBROILED IN THE GOLAN HEIGHTS ISSUES ?

We have noted that the United States Government is planning to recognize Israel's annexation of the Golan Heights, which it captured in a war of self-defense in 1967, and extended sovereignty to it in 1981. Precisely what this will do to Country Risk for Lebanon is a major cause for concern among compliance officers at international banks whose customers have clients in Lebanon, and conduct extensive trade with them, principally exports.

For those readers who weren't paying attention when you studied Middle East history, the Golan was historically always a part of biblical Israel; dozens of synagogues were discovered when the area was excavated after 1967. Also remember that the Sykes-Picot treaty was originally giving the Golan to the British Mandate of Palestin, but the Brits swapped it to the French, in exchange for the oil field around Mosul in iraq, which was also in the British sphere of influence. There's no bona fide Syrian claim to the Golan that trumps that of Israel.  

Israel has long asserted that, should Hezbollah choose to engage it in a Third Lebanon War, that it intends to extend the battlefield to the entire country, especially including attacks on infrastructure, due to the reality that Hezbollah now controls Lebanon, both politically and as a military force. Hezbollah claims the Sheb'aa Farms region, which is a portion of the Golan Heights, not in Lebanon, that it maintains a bogus claims upon, as a pretext for war.

So, if American recognition of the de facto Israeli annexation of the Golan Heights precipitates a new Hezbollah-Israel war. we trust that you have red out earlier articles, and drastically mimimized your cleints' financial exposure to both Lebanon's importers, and its banks, for if the missiles fly from the south of Lebanon into Israel, you can expect the Beirut banking center to be among the casualties, when israel retaliates. Whether the US recognition of the Golan Heights as a part of Israel causes that to occur is right now, anybody's guess; be alert.

THE LAW OF UNINTENDED CONSEQUENCES CONTINUES TO IMPACT THE PEOPLE OF ANTIGUA

Yesterday, after Antiguans learned that Canada has granted visa-free entry to the citizens of the United Arab Emirates (UAE), they vented their anger and frustration on local radio. In June 27, 2017, Canada revoked visa-free admission for nationals of Antigua & Barbuda, and notwithstanding repeated diplomatic efforts to lift the visa requirement, Canada has failed to do so.

The granting of visa-free privileges to the UAE further agitated Antiguans, for it has reminded them that their country's CBI passport program has been therefore deemed high-risk by Canada, noting that each individual with any type of passport be thoroughly screened, which requires that they be vetted, which most experts know can only be accomplished through a visa program.

Although the official 2017 announcement, made by Immigratation, Refugees and Citizenship Canada, did not speficy the grounds for the visa action, the obvious case was the widespread conclusion that the Antigua Citizenship by Investment (CBI) program had failed to properly and adequately conduct Enhanced Due Diligence upon its applicants, with the result being that unsuitable, and even dangerous, criminal elements had obtained CBI passports, which they then used for illicit purposes.

Antiguans were reminded of the continued deficiencies in their CBI  program this week, wheh they saw the UAE granted privileges that they previously enjoyed. Some observers claim that applications for Antigua's CBI program have declined as mich as 95%, after Canada announced its decision.

The Law of Unintended Consequences, whereby actions originally deemed favorable spawn negative results not previously contemplated, applies here. Antigua's lawmakers should have been advised, by their legal counsel, that the failure to create, and maintain, a robust Enhanced Due Diligence program on all applications, could make Antigua an international pariah, for the purposes of Anti-money Laundering compliance and visa-free international entry purposes.

 Legal counsel at the time the CBI program was created was, according to reliable Antiguan sources, Anthony Astaphan. Why did he not warn the government of the possibility that there would be major international problems if Antigua improperly passed out passports ? We cannot say, but perhaps Antiguans might want to ask the Senior Counsel that question.

Unless an effective program of Enhanced Due Diligence is implemented, to properly approve all CBI applicants, and a historical look-back performed, to weed out all unsatisfactory existing passport holders, Antigua may have to wait a very long time for visa-free travel to Canada.

ST KITTS TAKES FIRST TENTATIVE STEPS TOWARDS REFORM

Progressive elements in the Federation of St. Christopher & Nevis have taken the first steps towards moving St. Kitts into a positive direction, in order to eliminate some old and unwanted issues that still interfere with the country's forward movement, due to fundamental problems in the Citizenship by Investment (CIU) program.

Kittitians are still smarting over the 2014 FinCEN Advisory, targeting their nation, due to the CIU [CBI] and diplomatic passport money laundering & financial crime threats that the US Treasury stated they pose to the American financial indistry, as well as Canada's impostion of visa requirements, after an Iranian national, with a SKN diplomatic passport, sought to enter the country. Neither of these two major restrictions have been lifted, notwithstanding repeated direct diplomatic appeals to the United States and Canada.

Reformers within St Kitts, seeing that the old government approach has failed, now are openly interested in not only elevating future vetting of all CBI applicants, to the level of Enhanced Due Diligence, in order to remove those restrictions, but they believe that conducting historical look-backs upon all holders of CBI and diplomatic passports must be conducted, in order to remove the joint stigma of the FinCEN Advisory, and Canadian visa requiements.

Readers who have been told, by present CBI management, that the vetting process is effective and adequate need only look at the misadventures of a number of the foreign passport holders, including some who are literally hiding out in St Kitts, to avoid criminal prosecution elsewhere. We have previously detailed some of those unsavory characters in this blog, but Kittitians know of many others; they have just chosen to ignore that painful fact, until now.

The St Kitts fallout from Antigua's horrific Asot Michael scandal has motivated some to seek reform as a means of repairing the country's poor international image among North American bankers, who still remember that OFAC-sanctioned criminals at one time operated in St Kitts with impunity, under previous governments. It is now high time to upgrade the CBI program, and to reexamine all its passport holders with a critical eye, so that American compliance officers remove the country from their personal high-risk category, and Canada will open its friendly doors once again.