Archive for March, 2010

Bahrain’s Minister held for Money Laundering

Tuesday, March 23rd, 2010

For the 1st time since Bahrain got its independence in 1971, a Minister has been arrested on charges of money laundering.

Following months of investigations and close monitoring, the Minister was arrested in Manama on March 18.

According to some sources close to the investigation, the alleged money laundering operations exceeded 12 million Bahraini dinars. The Minister faces charges of money laundering operations in Bahrain and abroad.

Wachovia Bank will pay USD 160 million for Money Laundering

Sunday, March 21st, 2010

According to the US Department of Justice, Wachovia Bank, which was purchased by Wells Fargo & Co., agreed to settle a money laundering case with USD 160 million.

Wachovia made a statement claiming that it had spent USD 42 million in upgrades to its security system in order to “strengthen its ability to guard against unlawful use of its system by wrongdoers.”

The US Department of Justice said that Wachovia had “admitted failure to identify, detect, and report suspicious transactions in third-party payment processor accounts.” About USD 420 billion in transfers went through Wachovia Bank without adequate money laundering detection systems in place. According to prosecutors, billions of USD transferred from Mexican money exchange houses were used for buying planes for drug traffickers.

Federal attorney Jeffrey Sloman said, “Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations by laundering at least $110 million in drug proceeds. Corporate citizens, no matter how big or powerful, must be held accountable for their actions.”

The Bank agreed to pay USD 110 million to the US Justice Department and USD 50 million to the US Treasury.

Guatemala court authorizes ex-president’s extradition to US

Friday, March 19th, 2010

The criminal court of Guatemala authorized the extradition of Guatemalan ex-president Alfonso Portillo to the United States. In the US, Portillo will face money laundering charges. The Fifth Sentencing Court’s decision said: “This court finds the US government’s extradition request against Alfonso Portillo, accused of crimes of conspiracy to engage in money laundering, will go ahead”.

The former president has been held at a high security facility in Guatemala that houses some of the most notorious criminals like drug dealers and kidnappers.

Following the US extradition request for charges dating back to his 2000-2004 presidency, Portillo was arrested in January.

Having lost immunity from prosecution for alleged corruption during his administration, Portillo fled to Mexico in 2005. In October 2008, he was extradited from Mexico to Guatemala. Guatemala has accused the ex-president of authorizing USD 15 million in transfers to Guatemala’s Defense Department, where some officials allegedly took part of the money.

AML Conference admits that Money Launderers go high-tech

Wednesday, March 17th, 2010

On March 15-17, 2010, the 15th Annual International Anti-Money Laundering Conference was held in Hollywood.

US Law enforcement officials who spoke at the event admitted that it was not easy to keep up with the changes in money laundering these days. This is because criminal organizations are early adopting new technologies. Mobile phones, prepaid cards, and online games are often used to illicit money over international borders.

For example, criminal gangs are increasingly using stored-value cards in order to move cash. These cards look and act like ATM or credit cards and they can be used all over the world. However, they require no bank account and can be activated online.

The legislation requires banks to report suspicious activity. Also, it requires those who enter the country to declare cash in excess of USD 10 000. But the cards are unregulated. Duncan Levin, an assistant U.S. attorney in New York, said: “We have made it very difficult for bad guys to walk into a bank with USD 200 000 in cash in a bag. But if you can transfer that money onto a card, you are staying a step ahead of us.”

A supervisory special agent with the U.S. Department of Homeland Security, Deborah Morrisey, recently busted the money laundering arm of a Colombian drug cartel with operations in Miami. She said that, during 9 months, the criminal group moved more than USD 4 million using stored-value cards and operated undetected until discovered by an undercover investigator. She also said that concerns are growing about mobile phones that can be used as virtual bank accounts. For example, Apple’s iPhone allows users to transfer money between 2 PayPal accounts by bumping the handsets together.

IMF assists African Countries in fighting Money Laundering and Terrorist Financing in the Gold and Diamond Sectors

Friday, March 12th, 2010

The International Monetary Fund (IMF) is providing held to 16 African countries to step up their fight against money-laundering and against using their lucrative gold and diamond industries for funding terrorism.

To reach this goal, the IMF offers technical assistance programs and seminars that are aimed to help African countries address institutional weaknesses. It should be noted that, in the last few years, a number of reports have raised concerns about the links between the trade in precious minerals and illicit financial flows, corruption, drug trafficking, arms smuggling and terrorist financing.

The work of the Monetary Fund is financed in large part through a multi-donor topical trust fund on Anti-Money Laundering and Combating the Financing of Terrorism (the AML/CFT TTF) launched in May 2009 contributions from the United Kingdom, Switzerland, France, Luxembourg, the Netherlands, Norway, Qatar, Saudi Arabia, South Korea, and Kuwait.

As the 1st stage of the technical assistance, representatives from 6 French-speaking African countries are taking part in a 5-day workshop held in Tunis. The workshop is jointly organized by the African Development Bank and the IMF’s Legal Department. Another workshop will be held in Tunis in June for representatives of a group of English-speaking African countries.

As the 2nd phase of the assistance, participating countries will draw up national AML/CFT strategies with support from Fund-backed experts. Continued efforts to curb money laundering and terrorist financing will be supported by IMF staff through long-term technical assistance programs.

According to the IMF’s data, Africa produces an estimated USD 19 billion in gold per year and USD 6 billion in diamonds. But an unknown amount is laundered or siphoned each year for criminal purposes. All countries that participate in the project either produce or trade in precious metals or stones, mainly gold and diamonds.

OECD to list tax offences as money laundering

Tuesday, March 2nd, 2010

The Organisation for Economic Cooperation and Development (OECD) is planning to list tax offences as a form of money laundering.

This move could influence the position of Switzerland. If tax offences were classified as money laundering, lawyers, tax advisors, accountants and bankers engaged in such offences would get up to 3 years in prison. Also, banking secrecy law would not be acting as currently.

It should be noted that Switzerland came under pressure from the OECD in 2009, when it placed Switzerland on its “grey list” of tax havens for not being cooperative enough. To go off this list, a series of accords on sharing tax information had to be negotiated.