AML/CFT MONTHLY 2016 NEWSLETTER

7/26/2019 AML/CFT MONTHLY 2016 NEWSLETTER

1/31

AML/CFT MONTHLY 2016 NEWSLETTER

BY

Allan rAMLALLBUSINESS ALPHA SOLUTIONS Februar 1! 2016

http://www.businessalphasolutions.com/

HSBC Snaps Ties With Islamic

Relief Over 'Terror' Fears

http://www.itimes.co.!"/hsc#snaps#ties#islamic#relief#over#terror#fears#$%&%(%

)an!ar* +, (-$. B* 0amoni 1hosh.International Times

HSBC has snappe2 an"in0 ties with 34's

lar0est 0overnment#f!n2e2 5!slim charit*,Islamic Relief, over alle0e2 fears of terror

f!n2in0. Although the bank has halted

services for other Muslim groups in the

past, the affected charity is one of the

most high-profile ones with operations in

over 40 countries.

Islamic Relief receives millions of po!n2sfrom the 6epartment for International

6evelopment. It e7presse2 s!rprise at the

an"'s 2ecision, !t sai2 that other partners

are helpin0 it maintain ai2 s!pplies in

co!ntries where it operates. The charit*

a22e2 that no other an" or financial

instit!tion ha2 with2rawn facilities.

Foreign anks in !potlight

Amid ".!. Fight Against

#e$bollah

http://lo0s.ws8.com/ris"an2compliance/(-$/-$/-+/f

orei0n#an"s#in#spotli0ht#ami2#!#s#fi0ht#a0ainst#

he9ollah/

)an!ar* +, (-$. B* Sam!el R!enfel2.

Wall Street )o!rnal

As it puts the s%uee$eon #e$bollah, the

".!. is borrowing from the sanctionstoolkit it used against &ran, barring banks

from touching the group's funds under

threat of being blocked from the ".!.

financial system.

A new law gives the ".!. the power to

impose sanctions on foreign financial

1
http://www.businessalphasolutions.com/http://www.ibtimes.co.uk/hsbc-snaps-ties-islamic-relief-over-terror-fears-1535825http://www.ibtimes.co.uk/hsbc-snaps-ties-islamic-relief-over-terror-fears-1535825http://www.islamic-relief.org.uk/news/islamic-relief-acts-to-overcome-hsbc-setback/http://blogs.wsj.com/riskandcompliance/2016/01/04/foreign-banks-in-spotlight-amid-u-s-fight-against-hezbollah/http://blogs.wsj.com/riskandcompliance/2016/01/04/foreign-banks-in-spotlight-amid-u-s-fight-against-hezbollah/http://blogs.wsj.com/riskandcompliance/2016/01/04/foreign-banks-in-spotlight-amid-u-s-fight-against-hezbollah/http://www.wsj.com/articles/u-s-intensifies-bid-to-defund-hezbollah-1450312498http://www.ibtimes.co.uk/hsbc-snaps-ties-islamic-relief-over-terror-fears-1535825http://www.ibtimes.co.uk/hsbc-snaps-ties-islamic-relief-over-terror-fears-1535825http://www.islamic-relief.org.uk/news/islamic-relief-acts-to-overcome-hsbc-setback/http://blogs.wsj.com/riskandcompliance/2016/01/04/foreign-banks-in-spotlight-amid-u-s-fight-against-hezbollah/http://blogs.wsj.com/riskandcompliance/2016/01/04/foreign-banks-in-spotlight-amid-u-s-fight-against-hezbollah/http://blogs.wsj.com/riskandcompliance/2016/01/04/foreign-banks-in-spotlight-amid-u-s-fight-against-hezbollah/http://www.wsj.com/articles/u-s-intensifies-bid-to-defund-hezbollah-1450312498http://www.businessalphasolutions.com/


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institutions that facilitate transactions, or

money laundering, on behalf of #e$bollahor its agents. (he law will force those

banks to screen for any individuals and

entities linked to #e$bollah but the

challenge will be identifying them, given#e$bollah's use of front companies.

(he #e$bollah &nternational Financing)revention Act of *0+wassigned into

lawlast month by )resident arack

bama. The White Ho!se, at the time,tr!mpete2 its si0nin0of the ill into law,sa*in0 it wor"s with Con0ress to ma7imi9ethe tools availale to !s to thwartHe9ollah;s networ" at ever* t!rn,< an2 thatthe law will tar0et the 0ro!p;s financials!pport infrastr!ct!re.C Ban", sai2 there are

plent* of reso!rces for criminals to tap intos!ch as creatin0 fa"e pa* st!s, fa"e!sinesses an2 fa"e referencesto allowthem to fra!2!lentl* otain le0itimatean"in0 an2 financial services. (hat alsomeans a higher level of diligence needs tobe done when deciding whether an

application is real or a fraud, she said,

citing as an e7ample how a real personseeking a legitimate mortgage may come

under additional scrutiny because they

were a victim of a breach.

>ow when I p!ll a cre2it report, is some ofthat noise from reaches 0oin0 to show !pon the reportG How 2o I "now if some ofthese iss!es were ca!se2 * a 2ata reachG banks for

!chahin, )etrobras

perations? 3eport

http?@@www.reuters.com@article@us-bra$il-

corruption-banks-id"!H:80")*49*0+0+++

1anuary ++, *0+. 3eporting by !ilvio

:ascione. 3euters

Bra9il's fe2eral ta7 a!thorit* an2 prosec!tors

are investi0atin0 $& forei0n an2 local an"s

for possile financial crimes interme2iatin0

loans to Bra9ilian en0ineerin0 con0lomerate

1r!po Schahin, newspaper O ?sta2o 2e S.

@a!lo reporte2 on 5on2a*.

The an"s !n2er investi0ation incl!2e ItaQ

BB # the investment#an"in0 !nit of Ita!

3nianco Hol2in0 S, # Banco Bra2escoS, Banco Santan2er S, HSBC Hol2in0s

@lc, 6e!tsche Ban" 1, Banco otorantim

S an2 other smaller Bra9ilian instit!tions,

?sta2o reporte2, citin0 a ta7 office

2oc!ment.

(he authorities are investigating whether

the banks could be accused of money

laundering for being originators,

underwriters or managers of loans to

!chahin. !chahin is currently under

investigation by ra$ilian authorities for

potential fraudulent operations that

prosecutors allege benefited the ruling

DorkersI )arty through state-run oil firm

)etroleo rasileiro !A.

In a statement, ItaQ BB sai2 that it

participate2 alon0si2e the other an"s in

1r!po Schahin's 2et restr!ct!rin0 process

in (--, which incl!2e2 a transaction

ac"e2 * receivales from @etroras. The

operation was in f!ll compliance with the

law an2 mar"et re0!lations, the statement

sai2, a22in0 that ItaQ BB will collaorate

with a!thorities.

Bra2esco's press office sai2 it co!l2 not

comment on operations or positions of its

clients eca!se of an" secrec* r!les. HSBC

sai2 it 2i2 not receive an* official

information ao!t ein0 !n2er investi0ation.

HSBC a22e2 that it alwa*s collaorates with

a!thorities when re!este2. 6e!tsche Ban"

2ecline2 to comment.

Representatives at Bra9il's fe2eral

prosec!tors' office an2 other an"s !n2er

investi0ation 2i2 not imme2iatel* respon2 to

re!ests for comment. Other an"s name2 in

%
http://www.reuters.com/article/us-brazil-corruption-banks-idUSKCN0UP24Y20160111http://www.reuters.com/article/us-brazil-corruption-banks-idUSKCN0UP24Y20160111http://www.reuters.com/article/us-brazil-corruption-banks-idUSKCN0UP24Y20160111http://www.reuters.com/article/us-brazil-corruption-banks-idUSKCN0UP24Y20160111


8/31

the ?sta2o report are Banco Bons!cesso S

ABO>S6.3=, Banco Fira S

AB>FI.3=, Banco BC Brasil S,

BicBanco S ABICB.3=, Banco @ine S,

Banco Tric!r* S an2 Banco R!ral S.

@rosec!tors sa* the en0ineerin0 ranch of

the 1r!po Schahin, Schahin ?n0enharia,

was awar2e2 a contract to operate a 2rill

ship for @etroras in e7chan0e for the an"

cancelin0 loan repa*ments for )ose Carlos

B!mlai, a frien2 of former presi2ent =!i9

Inacio =!la 2a Silva.

B!mlai was arreste2 on >ov. (% an2 char0e2

with loan fra!2 on 6ec. $+.

6o9ens of e7ec!tives from Bra9il's top

constr!ction an2 en0ineerin0 firms have

een char0e2 with rier* an2 mone*

la!n2erin0, an2 ao!t %- politicians areein0 investi0ate2 for receivin0 "ic"ac"s

off @etroras contracts.

Feds :rack own on !ecret

3eal Jstate eals in Miami-

ade and 8ew 9ork

http://www.miamiheral2.com/news/!siness/real#estate#news/article%++%-M%.html

)an!ar* $&, (-$. B* >icholas >ehamas.5iami Heral2

Federal authorities on Dednesday

announced a temporary anti-money-

laundering crackdown on pricey homes

bought secretly with cash in Miami-ade

:ounty and 8ew 9ork.

(he new policy will re%uire title insurance

companies to identify the true owners of

shell companies that pay


9/31

(he ".!. Financial :rimes Jnforcement

8etwork KFin:J8L issued the so-calledgeographic targeting order,/ which will

remain in effect from March +. to Aug. *.

&f the policy uncovers serious evidence of

money laundering, it could be e7tendedacross the country.

We are foc!sin0 on the ris" that criminalsfrom aro!n2 the worl2 are 0oin0 to la!n2ertheir 2irt* mone* thro!0h resi2ential realestate in the 3.S,< FinC?> 2irector )enniferShas"* Calver* sai2 in a phone interview.O!r estimation is that M percent of homesaro!n2 the nation are p!rchase2 with amort0a0e, an2 o!r re0!lations alrea2* covermort0a0e provi2ers. Dhat we don't havecovered are the all-cash purchases and

that's what we're trying to address./

:alvery said the feds determined Miamihas become a mecca for money

laundering.

We tr* to e as 2ata#2riven as we can an2we went where the facts le2 !s in terms of!n2erstan2in0 the prolem,< she sai2. Wehave seen instances of criminals la!n2erin0

2irt* mone* thro!0h l!7!r* real estate in5iami. as o!r memersimplement this or2er to help prevent mone*la!n2erin0 schemes an2 the ille0al p!rchaseof real estate in the 3nite2 States,< 5ichelle4orsmo, the 0ro!p;s C?O, sai2 in astatement.

Title ins!rers are involve2 in nearl* all realestate closin0s.

!ecret sales

?*e#poppin0 home sales to secret !*ershave ro!0ht national attention to 5iami;sreal estate mar"et.

On 5on2a* the !*er of a L+M million 4e*Bisca*ne mansion was reveale2 to e an!ntraceale 6elaware shell compan*. =ast

month, a secret tr!st spent L$.% millionona l!7e 5iami Beach home. Co!ntr* recor2s2on;t show mort0a0es ein0 recor2e2 oneither 2eal, meanin0 the !*ers ma* havepai2 cash.

Fe2eral a0encies have tar0ete2 So!thFlori2a for special attention in the past. The

area is "nown as a hotspot for mone*la!n2erin0.

Over the s!mmer FinC?> sai2 that chec"#cashin0 stores in 5iami#6a2e an2 Browar2

wo!l2 nee2 to recor2 more informationao!t c!stomers cashin0 ta7 ref!n2s of morethan L$,---. The two co!nties have thehi0hest rates of i2entit* theft an2 ta7#ref!n2fra!2 in the co!ntr*.

In pril, 3.S. Immi0ration an2 C!stoms?nforcement or2ere2M-- electronic e7port!sinesses in 5iami#6a2e, man* of them in6oral, to file reports to the fe2eral0overnment ever* time the* receive morethan L&,---. The fe2s s!specte2 2r!0 an2other illicit mone* ma* have een flowin0thro!0h the companies.

".!. targets money laundering

in all-cash home sales in

Miami, Manhattan

http://www.re!ters.com/article/!s#!sa#

corr!ption#realestate#

i23S4C>-3R(=5(-$-$$&

)an!ar* $&, (-$. Re!ters

(he "nited !tates is hunting down

international criminals who laundermoney through real estate deals, with the

(reasury epartment ordering title

insurance companies to report the

identities of people paying cash for high-

end properties in Miami and Manhattan.

10
http://www.miamiherald.com/news/business/real-estate-news/article54270630.htmlhttp://www.miamiherald.com/news/business/real-estate-news/article52104905.htmlhttp://www.miamiherald.com/news/business/real-estate-news/article52104905.htmlhttp://www.miamiherald.com/news/local/crime/article27166837.htmlhttp://www.miamiherald.com/news/local/crime/article27166837.htmlhttp://www.miamiherald.com/news/business/article19274046.htmlhttp://www.reuters.com/article/us-usa-corruption-realestate-idUSKCN0UR2LM20160113http://www.reuters.com/article/us-usa-corruption-realestate-idUSKCN0UR2LM20160113http://www.reuters.com/article/us-usa-corruption-realestate-idUSKCN0UR2LM20160113http://www.miamiherald.com/news/business/real-estate-news/article54270630.htmlhttp://www.miamiherald.com/news/business/real-estate-news/article52104905.htmlhttp://www.miamiherald.com/news/local/crime/article27166837.htmlhttp://www.miamiherald.com/news/local/crime/article27166837.htmlhttp://www.miamiherald.com/news/business/article19274046.htmlhttp://www.reuters.com/article/us-usa-corruption-realestate-idUSKCN0UR2LM20160113http://www.reuters.com/article/us-usa-corruption-realestate-idUSKCN0UR2LM20160113http://www.reuters.com/article/us-usa-corruption-realestate-idUSKCN0UR2LM20160113


11/31

(he Financial :rimes Jnforcement

8etwork, an arm of the ".!. (reasury,

said on Dednesday it is concerned that

individuals buy residential real estate in

cash through shell companies to hide their

assets and veil their identities.

De are seeking to understand the risk

that corrupt foreign officials, or

transnational criminals, may be using

premium ".!. real estate to secretly invest

millions in dirty money,/ Fin:J8

irector 1ennifer !hasky :alvery said in

a statement.

FinC?> has iss!e2 r!les aime2 at

preventin0 la!n2erin0 thro!0h the mort0a0e

mar"et, !t cash p!rchases present a more

comple7 0ap that we see" to a22ress,

Calver* a22e2.

(itle insurers will have to disclose buyer

identities in deals of at least


12/31

In >ovemer (-$%, the most recent month

for which 2ata is availale, $M percent of the

(,%% all#cash p!rchases of sin0le famil*

homes an2 con2os went to !*ers with an

==C in the name, accor2in0 to the ho!sin0

2ata compan* Realt*Trac, in2icatin0 the*

were p!rchase2 * companies. lto0ether, a

thir2 of home p!rchases in the 3nite2 States

since (-$$ were all#cash.

Meanwhile, there were about


13/31

settle their transactions while in the

country.

@rime 5inister an2 5inister of Finance6ean Barrow tol2 8o!rnalists this wee" that

there is Xno 2o!t at all that we are

asol!tel* facin0 what is an e7istential

threat an2 I am 2etermine2as are the

in2ivi2!al an"s in this co!ntr*to ens!re

that we 2o ever*thin0 that we possil* can

an2 that we contin!e to 0o at this thin0 from

ever* conceivale an0le !ntil we can fin2 a

lastin0 sol!tion.o. $%#C#-$%$, (-$ W= $-M+-

6. 5inn. 6ec. $, (-$+P the OpinionP.

Among other things, the court KiL

affirmed that a compliance officer

responsible for the development and

oversight of an anti-money laundering

KAM6L program may be held liable for

the !A violations of his or her employer

and KiiL reserved 5udgment as to whether

the proposal to bar Mr. #aider fromservice to any ".!. financial institution is

a punitive sanction sub5ect to the statute

of limitation or a prophylactic measure

that is not so limited.

For a more f!lsome acco!nt of the

0overnment;s alle0ations, please see aprevio!s Si2le* 3p2ate, FinC?> See"s

Civil 5one* @enalt* an2 In8!nction 0ainst

Former Chief Compliance Officer of

5one*1ram,< availale, here. riefly, the

".!. Attorney for the !outhern istrict of

8ew 9ork on behalf of the "nited !tates

Financial :rimes Jnforcement 8etwork

KFin:J8L filed a complaint against Mr.

#aider on ecember +G, *0+4, alleging

that Mr. #aider was personally liable for

2$
http://www.sidley.com/news/2016-01-29_banking_and_financial_services_updatehttp://www.sidley.com/news/2016-01-29_banking_and_financial_services_updatehttp://www.sidley.com/news/2016-01-29_banking_and_financial_services_updatehttp://www.sidley.com/news/2016-01-29_banking_and_financial_services_update


26/31

Money2ram's failure to implement an

effective AM6 compliance program and

properly file suspicious activity reports

K!A3sL, in each case during the period

from *00 to *00G, as re%uired under the

!A.+ Fin:J8 is seeking a *+KaLK+L, which provides?

A domestic financial institution or

nonfinancial trade or business, and a

partner, director,

26


27/31

officer, or employee of a domestic

financial institution or nonfinancial trade

or business, willfully violating this

subchapter or a regulation prescribed or

order issued under this subchapter

Ke7cept sections >+4 and >+ of this title

or a regulation prescribed under sections

>+4 and >+L ... is liable to the "nited

!tates 2overnment for a civil penalty...

(he court said?

!ection >*+KaLK+L's e7plicit reference to

partnerOsP, directorOsP, officerOsP, and

employeeOsP/ demonstrates :ongress'

intent to sub5ect individuals to liability in

connection with a violation of any

provision of the !A or its regulations,

e7cluding the specifically e7cepted

provisions. ... ecause V >+GKhL is not

listed as one of those e7ceptions, the plain

language of the statute provides that a

civil penalty may be imposed on

corporate officers and employees like

#aider, who was responsible for designing

and overseeing Money2ram's AM6

program.

Opinion at #M. ccor2in0l*, the co!rt

2enie2 5r. Hai2er;s motion on this 0ro!n2.

*. The L$ million assessment wass!fficientl* partic!lari9e2 in the complaint.

The co!rt treate2 5r. Hai2er;s challen0e to

the assessment amo!nt as a challen0e to the

s!fficienc* of the complaint an2 hel2 that

the L$ million penalt* is ampl* s!pporte2

* the alle0ations !n2erl*in0 the SR

violations alone.< Opinion at M. n e7act

2etermination of the proper amo!nt wo!l2

e premat!re< at the 2ismissal sta0e. I2. at

M#.

&. The co!rt 2eferre2 its 2etermination of

which stat!te of limitations, if an*, applie2

to the in8!nctive reme2* so!0ht * the

0overnment.

The co!rt 2ecline2 to a22ress 5r. Hai2er;s

claim that a five#*ear limitations perio2

applie2 to ar the in8!nction per ( 3.S.C. ^

(+( five#*ear perio2 for an action, s!it or

procee2in0 for the enforcement of an* civil

fine, penalt*, or forfeit!re, pec!niar* or

otherwise


28/31

in!ir* into whether the in8!nction is

p!nitive an2 th!s within the stat!te or, as the

0overnment ar0!e2, proph*lactic. Opinion at

.

+. The co!rt 2ecline2 to revisit the or2er of

the @enns*lvania 2istrict co!rt 0rantin0

FinC?> access to 0ran2 8!r* materials.

The co!rt re8ecte2 5r. Hai2er;s ar0!ment

that FinC?>;s access to 0ran2 8!r* materials

from the 0overnment;s investi0ation into

5one*1ram was improper !n2er $ 3.S.C.

^ &&((. The co!rt reasone2 that the final

or2er of the @enns*lvania 2istrict co!rt

0rantin0 access specificall* reco0ni9e2

FinC?>;s nee2 to 2isclose 0ran2 8!r*

information to attorne*s assi0ne2 to a2vise

an2 represent FinC?> in Aan* civil

in8!nctive an2 penalt* matter in the

So!thern 6istrict of >ew Vor", an2 to ma"e

s!ch f!rther 2isclos!res as ma* event!all*

e necessar* in an* a2ministrative

procee2in0 or civil liti0ation commence2

!n2er Athe BS.< Opinion at (#&. The co!rt

2ecline2 to vacate an or2er of another

fe2eral 2istrict co!rt.< Opinion at $-.

%. 5r. Hai2er;s 2!e process ri0hts have not

een implicate2 eca!se he has not *et

s!ffere2 a 2eprivation of a liert* or

propert* interest.

The co!rt re8ecte2 5r. Hai2er;s ar0!ment

that his 2!e process ri0hts !n2er the Fifth

an2 Fo!rteenth men2ments were violate2

* an ins!fficient preassessment process,

FinC?>;s fail!re to 2isclose certain

materials, alle0e2 ias on the part of

FinC?> 2irector Shas"* Calvar* or

FinC?>;s alle0e2 lea" of confi2ential

information. The co!rt 2etermine2 that 5r.

Hai2er ha2 not s!ffere2 a 2eprivation of a

propert* or liert* interest:

Altho!0h Hai2er;s propert* interests are

!ltimatel* at sta"e, the !n2erl*in0

a2ministrative process 2i2 not 2eprive him

of s!ch interests. Rather, the assessment

proce2!re is merel* the first step in the

process. The BS e7pressl* a!thori9es

FinC?> to assess a civil penalt* an2 then

commence a civil action to recover that

penalt*. ... In2ee2, the 0overnment

ac"nowle20es that it m!st await 8!20ment

from this co!rt efore it ma* collect the

2&


29/31

assessment. ... =i"ewise, the 0overnment;s

re!este2 in8!nction is not incl!2e2 in the

assessment an2 m!st e impose2 * the

co!rt. s a res!lt, to 2ate, Hai2er has not *et

een 2eprive2 of his propert* interests.

Opinion at $(. The co!rt note2 that 5r.

Hai2er wo!l2 have the opport!nit* to

en0a0e in 2iscover*, e7plore the

0overnment;s case an2 raise an* availale

2efenses. Opinion at $(.(

fter a22ressin0, or 2eferrin0 2ecision with

respect to, each of 5r. Hai2er;s ar0!ments

as 2escrie2 aove, the co!rt 2enie2 in its

entiret* 5r. Hai2er;s motion to 2ismiss.

Opinion at $&. The parties have een

or2ere2 to appear for a pretrial conference to

2isc!ss settlement an2 @retrial matters.

$ The case was transferre2 to the 6istrict of

5innesota p!rs!ant to ( 3.S.C. ^ $+-+aP

on 5arch $M, (-$%.

( The co!rt reserve2 r!lin0 on the level of

2eference to which FinC?>;s fact#fin2in0

was entitle2: It ma* e that altho!0h the

iss!e of Hai2er;s liailit* is reviewe2 2e

novo, the amo!nt of the assessment is

reviewe2 for an a!se of 2iscretion. The

co!rt 2eclines to 2eci2e that iss!e at this

time, nor 2oes it 2etermine whether

application of a!se#of#2iscretion stan2ar2

implicates Hai2er;s ri0ht to 2!e process.

Documents

AML/CFT MONTHLY 2016 NEWSLETTER