Kenneth Rijock

Kenneth Rijock

Monday, April 24, 2017

THIS WEEK'S PANAMANIAN BETTING POOL: WHAT DAY WILL MOSSACK AND FONSECA FLEE THE COUNTRY ?




The hottest bet around Panama city these days involves picking the day when Jurgen Mossack and Ramón Fonseca, the senior partners of the law firm whose stolen files became known as the Panama Papers, flee the country to avoid prosecution for money laundering. Apparently, most Panamanians are busy counting the days when the duo leaves town for good, to collect upon their bets.

Why have two obviously guilty lawyers have been let out of jail, only to permit them to run ? Perhaps they have far too much incriminating evidence against not only the Martinelli cabinet, but also the present, Varela, government. Perhaps justice will be denied, again, to protect "flight capital" of dubious origins, which many Panamanians regard as the lifeblood of their country's opaque economy.

Where will they go, Miami ?  If so, they can pal around with former Panamanian President Ricardo Martinelli, who seems to have cheated justice, thanks to some hidden American sponsor, most likely a law enforcement agency. If I see them with Rama Vyasulu, of Rosemont Financial "Permuta" fame, I will try to take a photo.

Sunday, April 23, 2017

DOMINICA'S TARGETING OF WEALTHY CHINESE FOR ITS ECONOMIC PASSPORT PROGRAM IS HIGH RISK FOR THE WORLD'S BANKS

Dominica PM Skerrit with officials from Chinese investment firm

If you have been following the ongoing controversy involving the Citizenship by Investment, or economic passport, program, of the Commonwealth of Dominica, you may have seen that the country's Prime Minister, Roosevelt Skerrit, recently traveled to China. While there, Skerrit, according to media releases, met with a prominent Shanghai-based firm that specializes in high net-worth Chinese. The joint press releases discussed creating Chinese investment in Dominica.

What is not mentioned is the new focus Dominica has placed on securing Chinese investors for its economic passport program. In fact, Dominica participated in the 2017 International Migration Summit in Shanghai, which just concluded on April 21, 2017.

Here's the problem: Chinese names must be converted into roman letters, for the purposes of passports from English-speaking countries, and the complex issues involved allow criminal elements, governmental officials, and even potential terrorists, to artfully conceal their true identities. there are several important issues, all of which could bar a compliance officer, at an international bank, from learning the applicant's true identity, at account opening, exposing the bank to increased risk of money laundering, or terrorist financing.

China has an embassy in Dominica much larger than it needs

 (1) The romanization of a Chinese name, to a Western name, offers a career criminal, or other undesirable applicant for a Dominican passport, an opportunity to create a totally new identity, whether by altering the spelling, deleting one or more letters, adding a Western name, and moving the given name to middle name status (which is common), effectively rendering any enhanced due diligence ineffective at best, and a total waste of time, at worst.

(2) Unlike in the West, mainland Chinese also may have acquired additional complete names. These are not just nicknames,  though many exist, but are classified as official "school names,'  so-called courtesy name, and even pseudonyms, all of which complicate the due diligence process.

Affluent Chinese are intent upon moving their wealth outside China
 Add the name issue to the fact that Chinese face significant legal obstacles to moving their wealth offshore, to tax evasion schemes, to efforts of Chinese Politically Exposed Persons (PEPs) to send the proceeds of bribes and kickbacks out of the reach of Chinese authorities, and you have a potentially large  class of "investors" who believe that they must obscure their identities to the West.

Of course, the appointment of agents, without any professional qualifications, or oversight by government, who are the only avenue available to applicants, complicates the matter further, Look at this notice, posted by the CBI unit for Dominica. It is practically offering to obtain identity documents for his clients' applications, which guarantees that the names offered will not be the true names of the clients.

If I am a compliance officer. at a North American or European bank, and run the name of a "Chinese Dominican" passport holder, through my due diligence resources,  his or her real identity, whether it be criminal or not, PEP or not, most likely will not be discovered. If you contend that the original Chinese name should also be checked, exactly how many international banks have Mandarin-fluent compliance officers, and where are they to obtain competent information on Chinese nationals, when the Peoples' Republic controls the media?

Chinese and Dominican flags

Operating a risk-based compliance program means that, should you encounter any passport holder, who was not born in his "adopted" Caribbean country, which happens to award economic citizenship, you must institute enhanced due diligence. If the individual is Chinese, you may have no choice but to decline the account, lest you open a relationship with an individual whom you later learn poses a clear and present danger to the bank.      

Saturday, April 22, 2017

OFAC PUBLISHES FAQ ON FILING A PETITION FOR REMOVAL FROM AN OFAC LIST



If you were wondering how SDNs get off the OFAC list, the Office of Foreign Assets Control does have a page with Frequently Asked Questions about the procedure. You can assess it here.

APPEALS COURT IN PANAMA GRANTS BOND TO MOSSACK AND FONSECA


 A Panamanian magistrate, sitting in the Second Court of Justice, in an appellate capacity, has overturned the initial ruling of the Seventeenth Criminal Court, and granted bond to Mossack and Fonseca senior partners Jurgen Mossack and Ramón Fonseca. The Court found that preventive detention, whereby the partners were incarcerated during the ongoing criminal investigation, was not proportional to the charges of money laundering, and set bond in the amount of $500,000 each.

Whether this is a serious error in judgment will become apparent as the money laundering case against them develops. The trial judge originally denied them bond, due to two major concerns:

(1) That they would flee Panama, to avoid prosecution. The massive amount of evidence against them appears to weigh heavily in favor of ultimate conviction, and if they flee the jurisdiction, they may never face justice.
(2) That they would continue to destroy evidence. While they were under investigation, Mossack staff members shredded firm records, and quietly stored the remains in a private residence, in an obvious attempt to commit Spoliation of Evidence; Panamanian law enforcement subsequently located the house.

MF partner Edison Teano, who is also incarcerated, was ordered released on $70,000 bond. He is listed as an executive at Mossack Fonseca . Aside from the attorney who admits that she was the manager at the law firm's Brazil office, no other Mossack attorney, or staff member, have been arrested to date, though many of the attorneys have since relocated to other firms in Panama City. Some of the lawyers who reportedly committed money laundering acts, for their clients, have deleted from their resumés any mention of the Mossack firm as their last plasce of employment, and they may have taken some MF clients with them.

Friday, April 21, 2017

COURT ORDERS EXTRADITION OF LEROY KING IN STANFORD PONZI SCHEME



In a ruling that many legal observers thought would never come, the High Court of Justice, of the Eastern Caribbean Supreme Court, has held that Leroy King, the former chief financial regulator for Antigua & Barbuda, shall be extradited to the United States. King was indicted in Texas, in the notorious Allen Stanford/Stanford International Bank Ponzi scheme, in 2009, and extradition proceedings have been knocking around the Antiguan court system since 2010, much to the chagrin of Allen Stanford's victims, as well as, I am sure, the US Department of Justice.

Although a Warrant of Extradition was executed in 2012, counsel for King has, through multiple dilatory acts, appeals and Habeus Corpus filings, managed to delay justice, but the Court, in a 71-page decision, discussed, at length, and ultimately disposed of, all the arguments advanced by counsel for Mr. King, holding that none of them barred his immediate extradition.

This ruling will go a long way towards reassuring observers that the rule of law is alive and well in Antigua & Barbuda. Readers who wish to review the complete text may access it here.
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* In the Matter of Leroy King, Claimant -and-the Attorney General and Minister of Foreign Affairs,
Antigua & Barbuda Claim No. ANUHCV 2012/0220 (ECSC).

THE SALE OF PASSPORT BLANKS IS NOT A RARE EVENT



Our article detailing statements made by reliable sources in Dominica, to the effect that a very large quantity of blank, official passports were sold, by senior members of the country's present government, and have now shown up in the Middle East, seems to have struck a nerve, but the underground movement of passports is a sad story often repeated in the developing world, where corrupt officials often take cash to sell out their national identity documents. Articles seeking to deny the truth of the Dominica story conveniently ignore the fact that the country is hopelessly mired in corruption at the highest level, and that such events, and worse, are unfortunately a regular occurrence.

When the United States military conducted offensive operations in Afghanistan, after the events of 9/11, soldiers battling the Taliban recovered dozens of blank passports, from the Republic of Haiti, during a raid. Precisely how a terrorist organization acquired those documents has never been released to the media, though a Palestinian businessman visiting Port au Prince shortly before the attack on the World Trade Center was believed to have purchased them.

In an era where the new variety of machine-readable passports are the rule, rather than the exception, the possession of such identity documents, when properly encoded, gives financial criminals, or terrorist financiers, a seemingly irrefutable piece of identification, which make the illicit transfer of passports more dangerous today than it was in the past.

Thursday, April 20, 2017

DETAILS EMERGE OF REZA ZARRAB'S NEW ATTORNEYS' EFFORTS TO ACHIEVE A POLITICAL SOLUTION IN HIS IRAN SANCTIONS EVASION CASE



Affidavits filed, by former US Attorney Rudolph Giuliani, and former Federal Judge and Attorney General of the United States Michael Mukasey, indicate how these two new attorneys for Reza Zarrab sought to obtain a resolution of their client's serious Federal criminal charges through what they referred to as a "state-to-state," or political, solution.

Although these pleadings are available to the public, through a review of the court file, The cover letter, to US District Judge Richard Berman, states that "all materials being submitted UNDER SEAL and for IN CAMERA review." It is unknown why they were not so sealed; this District Court has specific procedural requirements, when a party desires to have a document filed under seal, and if they are not strictly followed, the Clerk of Court will fail to seal them.

Giuliani's Affidavit explains his role in the case:

"... I have been retained to provide advice, and to consult, although not to appear in court, with respect to Mr. Zarrab's defense of the charges in this case. These services have focused principally, although not exclusively, on an effort to determine whether this case can be resolved as part of some agreement between the United States and Turkey, that will promote the national security interests of the United States, and redound to the benefit of Mr. Zarrab."

The Affidavit later states that senior officials on both countries "remain receptive to pursuing the possibility of an agreement that could promote the security of the United States, and resolve the issues in this case.

Mukasey's Affidavit tracks some of the same exact language as Giuliani's;

"... services have focused principally, through not exclusively, on an effort to determine whether this case can be resolved as part of some agreement between the United States and Turkey, that will promote the national security interests of the United States, and redound to the benefit of Mr. Zarrab."

These affidavits were submitted as part of a proceeding to determine whether the fact that both lawyers' firms represent a number of the American banks that are designated by the Government as victims of Zarrab's Iran sanctions violation actions.

The fact that Zarrab has taken the extraordinary step of seeking a political, or "national security" solution to his situation, rather than rely upon his dream team of defense attorneys, who are among the best in the Eastern United States, indicates that he most likely fears the outcome of a trial. If, however, Giuliani and Mukasey fail to achieve an end run around the justice system, through some sort of agreement with the senior leaders of Turkey, that would result in his release, he may be forced to choose between a plea, which would most likely involve his testimony against additional defendants, and a very long prison sentence.

It is fair to assume that the other conspirators, all of whom were affiliated with the Zarrab-Zanjani-Monfared Iran sanctions evasion syndicate, directly or indirectly, are paying close attention to the proceedings.