Anti Money Laundering Blog

On November 23, 2007, President of Colombia Alvaro Uribe’s office informed in a statement that the Colombian government authorized the extradition of 10 people to the US for trial on drug and money-laundering charges.

According to the statement, drug-trafficking charges will be faced in Florida by Fernando Jose Ramirez Munive, Maria Catalina Perez Ochoa, Jose Jaime Calderon Gomez, Jorge Mario de Jesus Fernandez Borge and Eduard Claret Martinez Romero. Both Luis Gilberto Baez Briceno and Daniel Alonso Vanegas Zamora will face money laundering charges in New York. California waits for the extradition of John Jairo Orozco. Fernando Zapata Bermudez will be accused by a federal court in the District of Columbia, while Pedro Luis Duque – by a court in New York state.

It should be noted that since the conservative Uribe took his position in August 2002 Colombia has extradited more than 600 people on drug charges. Most of them went to the US, and the extraditions have provided Bogota with USD 5 billion (mostly in military aid) over the last 7 years.

The Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), an international financial action task force which started in 2006, has stated that affirmative action is needed to fight economic crimes in the region.

On November 14-15, the GIABA 2007 Open House was held in Abuja. The theme of the Open House was “Preventing money laundering, terrorist financing and drug trafficking in West Africa: A collective responsibility”.

The Director General of GIABA, Dr. Abdullahi Shehu, claimed that governments are to sensitize their citizens on the threats to the economies, financial and political systems in West Africa that can be caused by money laundering.

Dr. Shehu said that GIABA must not allow West Africa to be used by criminals and therefore decisive action is needed not to let economy destroy or become vulnerable.

He said that GIABA was important at the highest echelon of governments as it assisted them to eradicate money laundering the region.

Guyana’s President Bharrat Jagdeo claimed that the US and other large nations are unfairly forcing Caribbean countries to fight money laundering, while these countries themselves are failing to enforce similar regulations at home.

When speaking before the Caribbean Association of Indigenous Banks on November 12, President Jagdeo urged regional officials to criticize the double-standards that are imposed against Caribbean countries as their offshore banking industries have been considered money-laundering hotspots because of their banking secrecy laws for a long time.

Jagdeo also said that Caribbean countries must not place “undue burdens” on their economies in order just to satisfy requirements which the countries recommending them do not satisfy themselves.

It should be noted that Jagdeo and other regional leaders have long claimed thate large-scale money laundering takes place in such large economies as the US and the UK, however, only small nations face the threat of sanctions for the illegal practice.

Daniel Glaser, US deputy assistant treasury secretary for financial crimes, said not only the US, but the UN, the Paris-based Financial Action Task Force, and countries across the world recognise that anti-money laundering measures are key to maintaining global security.

According to Caribbean leaders, local offshore banking regulations have been tightened since the FATF put 5 new jurisdictions on a tax-haven blacklist in 2000. These were the Cayman Islands, the Bahamas,  St Vincent and the Grenadines, St Kitts and Nevis, and Dominica.

It has been discussed that money laundering and tax evasion, if not one and the same,  are closely linked.

In October, the Organisation for Economic Cooperation and Development (OECD) published 2 new reports that outlined the progress made in the organisation’s campaign against tax evasion.

The report entitled “Improving Access to Bank Information for Tax Purposes – the 2007 Progress Report” provides the description of developments in OECD countries and 6 other countries – China, the Russian Federation, South Africa,  Argentina, Chile and India. These development regard access for tax authorities to bank information.

The 2nd report is named “Tax Co-operation: Towards a Level Playing Field – 2007 Assessment by the Global Forum on Taxation”. It offers the comparison of the legal frameworks for international tax co-operation of 82 OECD and non-OECD economies.

According to the OECD, “many financial centres, both onshore and offshore, are making progress in improving transparency and international co-operation to counter offshore tax evasion, but some still fall short of international standards that have been developed over the last seven years.”

Paolo Ciocca, chair of the OECD’s Committee on Fiscal Affairs and co-chair of the Global Forum, commented that no country can address the issue of harmful tax practices on its own as this is a global challenge requiring a global response. OECD aims to achieve it in co-operation with partner financial centres.

It has already been described that in the middle of June 2006, Jacob Arabov, better known as Jacob the Jeweler or King of Bling, was arrested for violating federal drug laws and money laundering of USD 270 million.

A 41-year old Uzbek immigrant Arabov is New York City jeweler who designs products under his brand, JACOB & Co. and sells diamonds, posh watches and other baubles to many celebrities including Madonna, Sir Elton John, David Beckham, Bono, Justin Timberlake, Britney Spears, famous hip hop stars, etc.

On October 31, 2007, Gerald McKelvey, a spokesman for Arabov, revealed that the celebrity jeweller plans to offer a guilty plea in a deal with prosecutors over a federal money laundering case.

According to McKelvey, Arabov was to plead guilty at a hearing in Detroit to two counts of making false statements to investigators and is expected to face between 37 and 52 months behind bars. In exchange, prosecutors are expected to drop money laundering charges.

Singapore has introduced new measures aimed to detect money laundering and terrorism financing. From November 1, 2007, to carry or post cash or negotiable instruments of more than USD 20 650 (equivalent in any currency) in or out of Singapore, one has to submit a report to immigration authorities.

According to police statement, this measure is aimed at detecting and monitoring the movements of currency or bearer negotiable instruments by cash couriers who support money laundering or terrorism financing activities. The police noted that this is not a currency control measure.

In September, a deputy finance minister, Tharman Shanmugaratnam, said that Singapore intended to raise the maximum fine for money laundering and terrorism financing 10-fold.

Singapore is trying to become a key private banking and asset management centre in Asia, however, in 2004 the jurisdiction was included into a US State Department list as a centre of “primary concern” for money laundering, therefore the above-mentioned measures are important for the country.

It also is worth mentioning here that, according to the Bank of International Settlements, Singapore is the 5th biggest currency trading centre in the world and the 2nd biggest in Asia after Tokyo.

According to the Global Anti-Money Laundering survey conducted by KPMG, fighting money laundering is getting more difficult for banks because of the increasing complexity of the financial markets. The cost of fighting money laundering has risen dramatically all over the world as banks have become increasingly involved in the struggle against criminal activities.

The Global AML survey was conducted by KPMG among 224 leading banks from 55 countries. The list of banks included 25% of the top 250 banks.

The 1st survey issued in 2004, while this one is its update. The new findings show that banks’ spending on anti-money laundering has significantly increased – by an average of 58% over the last 3 years.

Also, according to KPMG, senior management is getting increasingly involved in anti-money laundering. 71% of banks said that directors at the highest level are taking part in the implementation of anti-money laundering policies. 85% of banks have a global anti-money laundering policy. Nevertheless, more banks suggest that governmental and international regulation is to be more effectively targeted and better focused to better combat money laundering.

As many as 97% of banks agree that they are dependent on the vigilance of staff to monitor and identify suspicious activity. 1/3 banks indicated that they lack satisfaction with the effectiveness of transactions monitoring systems they are currently using.

KPMG revealed the following positive fact – greater spending and training has led to an increase in the number of suspicious activity reports being generated within more than 70% of the banks surveyed. Banks are also making more effort in identifying Politically Exposed Persons who may be involved in money laundering.

According to the findings of the survey, at least 7 out of 10 banks carry out due diligence procedures on Politically Exposed Persons, which is a substantial increase from the worrying 45% in 2004.

It should be noted that the KPMG Report highlights the incremental risks caused by EU enlargement as most of the 10+2 countries recently joining the European Union did not have strict anti-money laundering processes in place, and they are not up to date with the standards required by the Third Money Laundering Directive.

On November 27, 2007, IPSA International Inc., an international independent risk advisory firm providing investigative and consulting services in the areas of Anti-Money Laundering (AML), Due Diligence, Asset Location and Recovery, Fraud and Intellectual Property, announced that William Goss has joined the company as a Director of Anti Money Laundering Consulting Services for the New York office.

Mr. Goss will deal with direct growth strategies for IPSA’s AML practice area as well as will manage anti-money laundering engagements and other risk mitigation projects in the region.
 
William Goss has more than 25 years of experience in the investigative industry. He has held numerous senior level management and sales positions that included Charter Officer and Director of Sales for Regulatory Data Corp (RDC), a Know Your Customer and Enhanced Due Diligence database company formed by 20 of the world’s largest financial institutions. Before he joined IPSA International, Goss operated his boutique anti-money laundering and bank secrecy act consulting firm that served global financial institutions.

Mr. Goss is an industry expert who has spoken for New York State Department of Labor and hedge fund conferences on such issues as Enhanced Due Diligence Investigations and the Fair Credit Reporting Act.