Kenneth Rijock

Kenneth Rijock

Wednesday, February 22, 2017

MARTINELLI'S MONEY LAUNDERING LAWYER SURRENDERS IN MEXICO, FLOWN TO PANAMA TO FACE THE MUSIC



Not only is the Anti-Corruption Prosecutor's Office in Panama seeking, through an INTERPOL Red Notice, the two grown sons of fugitive former president, Ricardo Martinelli, for their role in receiving, and hiding at least $6m in bribes from Odebrecht, it is also looking for Martinelli's money laundering assciates, who assisted the sons in acquiring the illicit wealth, and then secreting the money in Swiss accounts, and this week they got their hands on one.

Panamanian attorney Evelyn Vargas Reynaga, who also had a Red Notice filed against her, surrendered to law enforcement in Mexico City this week, and was flown to Panama, where she was taken into custody, on suspicion of money laundering. The total estimated amount of bribe & kickback money, paid by Odebrecht, to "qualify" for lucrative government contracts, continues to increase, as the investigations uncover additional recipients, and more bribes were now known to be paid to those whose illegal conduct is already known.

Where exactly are Martinelli's two sons ? They did submit, in a court proceeding in Panama, affidavits notarized in Miami, but whether the brothers were actually in Florida is not known, and Panamanians are not known for strictly complying with the law, when it comes to notary publics, as the massive amount of notary fraud in Panama can attest. Some say Miami, but other say they were denied entry. They were last seen in Spain, but have moved on after they were named as targets.

The United States, which has sustained a bit of a black eye, for letting the guilty ex-dictator publicly  gorge himself in Miami, still shows no signs of processing his extradition to Panama, and may now find itself not receiving all the favors American law enforcement regularly seeks in Panama City.


EU PARLIAMENT DEMANDS ANSWERS FROM SPAIN ON ILLEGAL DETENTION OF INNOCENT MONEY LAUNDERING TARGETS

Two attorneys, who are Deputies in the European Parliament, have demanded that Spanish prosecutors, and the country's judiciary, answer for what they deem to be human rights violations. The Deputies, Jean-Luc Shaffhauser and Georgios Epitideios, want the unjustly imprisoned Spanish-Russian businessman, Vladimir Kokorev, and his wife and son, released forthwith. The Kokorevs were arrested in Panama, not for criminal charges, but on material witness warrants in a money laundering investigation, and have spent the last 18 months in custody, though no money laundering charges have been filed against anyone. The court seems to be acting illegally, without any checks and balances from the government.

Court observers have long maintained that the Kokorev investigation is an attack upon the leadership of Equatorial Guinea, whose rulers have chosen to give their lucrative oil drilling business to American, rather than Spanish, companies, EG was a former colony of Spain, and it discovered oil after independence. Wealthy Spanish firms still covet that petroleum business, and are seeking to remove EG president Obiang, who was involved in maritime business with Dr. Kokorev, an expat Russian academic with expertise in Africa, and whose cooperation is being demanded, for purely political reasons.

Canary Islands prosecutors are reportedly holding Kokorev, in what amounts to cruel and unusual punishment, under Spartan conditions, threatening to charge him with money laundering, notwithstanding that he was previously cleared in Spain, and that the Statute of Limitations has probably run, as the transactions named occurred fifteen years ago. They are obviously seeking to have Kokorev implicate President Obiang, to facilitate his removal, and subsequent installation of EG expats who will sign  favorable contracts with Spanish companies.

Consider this case the next time you must access the risks of doing business in Spain.

  

MIAMI JUDGE RESCHEDULES WAKED MONEY LAUNDERING TRIAL FOR OCTOBER



The US District Judge presiding over the Miami money laundering trial of Nidal Ahmed Waked Hatum, the Colombian-Panamanian businessman accused of moving huge sums of Mexican & Colombian drug profits through his large number of legitimate Panama city companies, for October 30, 2017. Defense counsel had requested additional time to file pretrial motions, and reset the trial date, in what promises to be a case involving the movement of the proceeds of crime into a complex web of front companies, many of whom are well-known to Panamanian consumers, and who reportedly employ 3000 people. The US Attorney's Office did not oppose the defense motions.




WORLD BANK WHITE PAPER ON DE-RISKING AND CORRESPONDENT BANKS OFFERS A DIFFERENT PERSPECTIVE


It is always good to get alternative, or even opposing, views, on any major compliance issue, and the World Bank's White Paper Stakeholder Dialogue on De-Risking offers a somewhat divergent opinion on the problem correspondent banks are experiencing, when their relationships with onshore mainstream correspondents are terminated, for what are described as risk-based reasons.

The White Paper, which adopts the FATF position, that what is referred to as 'de-risking" is really an avoidance of the issue, by the big banks, rather than seeking a valid solution, recommends that foreign correspondent banks share customer information, to reduce risk, and minimize onshore bank insecurity over lack of knowledge about the correspondent's customers. it takes the position that de-risking is an excuse, and objects to the use of the term on principle, and states that solutions are available.

The troublesome issue of "nesting," where a bank which has had its correspondent accounts closed, uses the facilities of one who still has theirs, is recognized, which does demonstrate that the World Bank, while acting as an advocate for the needs of the foreign correspondent, recognizes that clear and present dangers do exist.


I am attaching a link to the Findings and Recommendations, which are instructive, but many of the recommendations are admittedly difficult or expensive to implement, or would require cooperation, on either a private, or governmental, level, to the extent that is not feasible, on a timely basis. The White Paper's recommendation, regarding the sharing of client information, meaning t he implementation of Know your Customer's Customers, or KYCC, is in line with the conclusions I have previously advanced on this blog. KYCC may be the only effective, and possible, solution, and though its has been recognized for several years by the compliance industry, there has been a lot of foot dragging. with the widespread global closure of correspondent accounts, it is time for KYCC to become banking best practices.

Readers wishing to access the White Paper, may access the complete text here.

Tuesday, February 21, 2017

WILL NEW VENEZUELAN INVESTMENT IN DOMINICA REALLY BE LAUNDERED IRANIAN MONEY ?

The PM and Venezuela's president
                                                   
The love affair, that Dominica's Prime Minister, the beleaguered Roosevelt Skerrit, is having with the Bolivarian Republic of Venezuela, will not end well for the Commonwealth of Dominica. Given that the latest estimates now, for the first time, place Venezuela below Haiti, as the poorest country in the Western Hemisphere, and that US Dollars have become rare as hen's teeth, unless they are criminal profits, or Iranian capital, one must expect that all of the promised "investment funding" sent to Dominica from Venezuela will neither be clean, nor free of strings.

Remember, scores of Venezuelan nationals, from senior military officers, to the Vice President himself, are on the OFAC sanctions list, known in Latin America as the Clinton List, because it was created during the administration of Bill Clinton. This means that Dominican businessmen who accept funding from Venezuela may later learn that the source of the funds transferred to them may be tainted, land them on the OFAC sanctions list, or cause them to be banned from entering the US as visitors.

The money may also be laundered narco-profits, which could land unwitting Dominican recipients in a 200-person Federal indictment, filed somewhere in the US, as co-conspirators in some vast cocaine smuggling enterprise. Not a happy outcome, to be sure.

Iranian capital, though cleverly disguised as Venezuelan, might just place Dominica front and center in a future American-Iranian conflict, economic rather than military, as the US seeks to reduce the influence of its global adversaries in the Caribbean Basin. While Gunboat Diplomacy is a vestige from America's past, there are far more subtle ways for the United States to keep foreign influence out of the Western Hemisphere. The Monroe Doctrine is far from dead; Ask Grenada and the Republic of Panama.

If Dominica accepts suspect investment from Venezuela, the risk of future OFAC sanctions problems, even potential exposure to US criminal charges, serves to further increase Country Risk. We trust that cooler heads will prevail, and Venezuelan, or Iranian, dollars will not find their way into Dominica. Remember, Iran is regarded as a State Sponsor of Terrorism, and no matter how much greed the Skerrit government possesses, how can it take money from a radical islamic dictatorship, which treats its people, especially minorities, worse than Nazi Germany ?

Monday, February 20, 2017

TO MINIMIZE RISK, BANKS MUST IMPOSE KYCC UPON THEIR CORRESPONDENTS, OR SHED THEM


The risk-based compliance programs that North American banks have implemented, to suppress money laundering and terrorist financing, can only succeed if they extend effective risk reduction to their correspondent banks. This means Know your Customer's Customer, or KYCC, is not longer an option, if banks are to retain their correspondents.

Correspondent often have compliance shortcomings for various reasons, including but not limited to:
(1)  The constantly increasing cost of new AML/CFT technology
(2)  Budgetary constraints that make it impossible to engage sufficient fully trained & experienced compliance staff, and a functional financial intelligence unit
(3) A lack of sufficient recurrent in-country compliance training.
(4)  Developing nations' local economies, which operate at a level that fails to sustain sustain successful profit margins for an excessive number of local and regional banks
(5)  Strong competition from local branches or affiliates of international banks

there are also many other contributing factors. Banking best practices, at the level practiced by North American banks, is thus the rare exception, rather than the rule. The problems are often more severe in countries in the developing world.

The sole acceptable solution is to require that your correspondents enable you to have full & complete access to their clients' information, that they close accounts for customers who your inquiry finds present an unacceptable level of risk, or are on sanctions, and that legitimate customers who subsequently engage in conduct that is not acceptable, are also asked to leave the bank.

This is not all bad news for the correspondent banks, because by working with their onshore banks, they insure that their prized relationship will not be terminated, for risk-related reasons. To understand the reverse of the problem, that experienced by your correspondents, read my recent article, How Caribbean Banks can keep their Correspondents by utilizing KYCC Technology  .

 With KYCC, both the onshore bank, and the overseas correspondent, can retain their valued relationship.
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For further information, or for questions about this article: miamicompliance@gmail.com




CARIBBEAN CRUISE LINES CONCERNED ABOUT DIPLOMATIC PASSPORT SCANDAL, MAY GIVE DOMINICA A WIDE BERTH


Many of the world's major cruise lines have their headquarters here in Miami, especially those for whom travel to the Caribbean represent a major portion of their business operations. I am monitoring all Internet traffic to blog articles dealing with the diplomatic passport crisis in Dominica, and I am seeing, for the first time, visits to those stories, from cruise lines serving the East Caribbean. I have never seen specific attention paid to any of my articles about the Caribbean, by this industry, and this indicates a new focus on Dominica's current situation.

If you understand that cruise lines, like most large corporation, follow risk-based guidelines, and have been known to delete travel destinations, without prior notice, when weather, crime, political unrest, or any other number of negative events, raise risk levels, this is cause for concern, as cruise visits bring much-needed tourist dollars, follow-up visits by tourists who are intrigued by what they see, and provide a shot in the arm to local economies.

Pictures of individuals setting fires, and causing vandalism to downtown stores did appear in some global media, which certainly hurt tourism, and the most disturbing aspect of that violence is the allegation that the persons causing the damage were employed by the Prime Minister's Labour Party, to precipitate a crisis, requiring police intervention. That allegation was was received from two different sources, and it later appeared in the media. I expect such tactics in a Latin American dictatorship, not in an East Caribbean democracy. In any even, we  will soon see if Dominica is deemed too unsettled for cruise line tourists.

Behind the vandalism ??