AML/CFT MONTHLY 2016 NEWSLETTER

BY
Allan rAMLALL
BUSINESS ALPHA SOLUTIONS

February 1, 2016

http://www.businessalphasolutions.com/

HSBC Snaps Ties With Islamic

Relief Over 'Terror' Fears

added that no other bank or financial

institution had withdrawn facilities.

http://www.ibtimes.co.uk/hsbc-snaps-ties-islamicrelief-over-terror-fears-1535825

January 4, 2016. By Agamoni Ghosh.

International Times
HSBC has snapped banking ties with UK's

Foreign Banks in Spotlight

Amid U.S. Fight Against
Hezbollah

largest government-funded Muslim charity,

Islamic Relief, over alleged fears of terror

http://blogs.wsj.com/riskandcompliance/2016/01/04/f

funding. Although the bank has halted

oreign-banks-in-spotlight-amid-u-s-fight-against-

services for other Muslim groups in the

hezbollah/

past, the affected charity is one of the

most high-profile ones with operations in
over 40 countries.
Islamic Relief receives millions of pounds
from the Department for International
Development. It expressed surprise at the
bank's decision, but said that other partners
are helping it maintain aid supplies in
countries where it operates. The charity
1

January 4, 2016. By Samuel Rubenfeld.

Wall Street Journal
As it puts the squeeze on Hezbollah, the
U.S. is borrowing from the sanctions
toolkit it used against Iran, barring banks
from touching the groups funds under
threat of being blocked from the U.S.
financial system.
A new law gives the U.S. the power to
impose sanctions on foreign financial

institutions that facilitate transactions, or

money laundering, on behalf of Hezbollah
or its agents. The law will force those
banks to screen for any individuals and
entities linked to Hezbollah but the
challenge will be identifying them, given
Hezbollahs use of front companies.
The Hezbollah International Financing
Prevention Act of 2015 was signed into
law last month by President Barack
Obama. The White House, at the time,
trumpeted its signing of the bill into law,
saying it works with Congress to maximize
the tools available to us to thwart
Hezbollahs network at every turn, and that
the law will target the groups financial
support infrastructure.

Still, banks will have to do the work to avoid

Hezbollah, given the potential penalties of
failing to do so.
If youve made the decision to be a part of
the U.S. financial system, youre going to do
what you need to do to get in line with this,
said Zachary Brez, a partner with the law
firm Ropes & Gray.
This comes as Hezbollah is reportedly in the
middle of a financial crisis. The group is
already under several rounds of U.S.
sanctions and is listed as a foreign terror
organization by the U.S. State Department.

Banks will have to heighten the

prioritization of their Hezbollah-related due
diligence, said Matthew Levitt, a former
Treasury Department official now at the
Washington Institute for Near East Policy
who wrote a book about Hezbollahs global
footprint.

The law is modeled on 2010 legislation that

significantly tightened the U.S. sanctions
regime on Iran. The Comprehensive Iran
Sanctions, Accountability, and Divestment
Act of 2010, known as CISADA, gave the
U.S. the authority to impose sanctions on
foreign banks for handling certain
transactions with sanctioned Iranian entities,
including its banks already under U.S.
sanctions.

If they want to continue doing business in

or through the U.S., [foreign banks] need to
ensure they provide no financial services to
a designated Hezbollah entity, said Mr.
Levitt.

It quickly became a defining element in

the U.S. sanctions regime against Iran, wrote
Juan Zarate, a former Treasury official in his
2013 book on the departments use of
financial warfare.

But finding those entities may require some

digging. U.S. officials have said repeatedly
over the years, when imposing sanctions,
that Hezbollah frequently does business
through operatives who run fronts.

Congress was making explicit the same

calculus that had been at play all along
throughout the financial constriction
campaign: If you want to do business in the
U.S., you must stop doing business with
Iran, he wrote.

Hezbollah relies heavily on front

companies, said a U.S. State Department
spokeswoman, when the U.S. imposed
sanctions in July 2014 on Stars Group
Holding, which the U.S. had alleged
helped Hezbollah procure sophisticated
military equipment, including materials
for aerial drones.

Treasury keeps a blacklist, known as the

Part 561 List, of the banks sanctioned under
CISADA. Three banks are currently on the
list, including Chinas Bank of Kunlun Co.,
which Treasury alleged in 2012 had
provided hundreds of millions of dollars
worth of financial services, including

holding accounts, making transfers and

paying letters of credit, for more than six
blacklisted Iranian banks. Beijing, at the
time, slammed the U.S. decision,
saying U.S. sanctions against Chinese
financial institutions badly violate rules
governing international relations and hurt
Chinas interests.
U.S. authorities will use the new law against
Hezbollah to also continue what has an
already been an increased pace of sanctions
designations targeting the groups illicit
activity, said Mr. Levitt. It gets stronger with
each newly designated entity linked to the
group, he said, noting that U.S. actions, such
as the one against Stars Group Holding,
arent small matters.
These arent low-hanging fruit; theyre key
nodes in Hezbollahs illicit food chain, said
Mr. Levitt.
Hezbollahs leader, for his part, took offense
to the new law, devoting part of a memorial
speech for a militant killed by Israel to slam
the U.S. legislation.
Its open confrontation, he was quoted as
saying, addressing Israel, the U.S. and their
allies. We wont retreat, forgive or
surrender.

Three Big Risk Issues for

Banks in 2016
http://blogs.wsj.com/riskandcompliance/2015/12/30/t
hree-big-risk-issues-for-banks-in-2016/?
mod=djemRiskCompliance

December 30, 2015. By Ben Dipietro.

Wall Street Journal
3

We asked banking experts to name some of

the major risk issues they see for the year
ahead. Heres what they said.
Synthetic identities
Trying to keep pace with the growing
sophistication of cybercriminals means
understanding the ways hackers are not
just stealing peoples personal
information but then taking that
information and reassembling it to create
completely new identities to allow them to
obtain mortgages and conduct other
fraudulent transactions, said Thomas
Brown, senior vice president of financial
services at Lexis-Nexis Risk Solutions. A
synthetic identity is just a made-up
identity, a fabricated ID that then
requires additional steps to create the
appearance its real, said Mr. Brown. It
requires great scrutiny to make sure it is
truly authentic.
Sonya Andreassen-Henderson, vice
president of the mortgage investigative
services group at PNC Bank, said there are
plenty of resources for criminals to tap into
such as creating fake pay stubs, fake
businesses and fake referencesto allow
them to fraudulently obtain legitimate
banking and financial services. That also
means a higher level of diligence needs to
be done when deciding whether an
application is real or a fraud, she said,
citing as an example how a real person
seeking a legitimate mortgage may come
under additional scrutiny because they
were a victim of a breach.
Now when I pull a credit report, is some of
that noise from breaches going to show up
on the report? How do I know if some of
these issues were caused by a data breach?
Ms. Andreassen-Henderson asked. How do
I get back to the truth for this borrower in a

way that allows me to make a good credit

decision? The validity and accuracy of some
of these documents is being eroded through
some of the technological and cyber-related
changes going on.
The challenges are exacerbated, said Ms.
Andreassen-Henderson, as the number of
transactions being done face to face declines
and the number being processed
electronically grows. In addition to
synthetic and other fake IDs, the use of
spoofing technology and voice-altering
apps adds complexity to the task of
determining whether someone is who they
say they are, she said. Not to mention
email compromises. You may think a
customer is emailing you but fraudsters
may have intercepted the communication
and are responding back to you with new
wire transfer instructions, she said. Its
becoming more challenging to achieve a
level of authentication.
Banks will need to make sure they have
employees with the skill sets necessary to
help them better analyze data to
determine who is a legitimate customer
and who isnt, said Ms. AndreassenHenderson. That means finding people with
a good mix of human intelligence and
technological aptitude, as banks cant just
rely on technology to flag potentially
fraudulent transactions. There is an
important place for human beings to help to
identify things that may be fraud or
misrepresentation, she said. We need to
think about how fraudsters are thinking
about this, where is the gap, where are the
weaknesses in how we use technology?
Country De-Risking
Another issue to watch for, said Mr.
Brown, is the impact de-risking rules will
have on banks and their desire to conduct
4

business in countries where they may

decide the potential headaches arent
worth the revenue potential. One of the
topics being discussed in Latin America is
the concern of being excluded from the U.S.
and the broader financial sector because of
the perceptions of risk around the Mexican
financial sector, he said. its not just
industry segments that may be exposed to
de-risking but potentially entire
countries.
Worries about de-riskings impact dovetail
into transparency, another area Mr. Brown
expects to see changes in 2016. The
answer to risk is understanding it, he
said, and that means getting banks to
understand fully with whom they are
doing business. Its a central theme
understanding your customers, knowing
who the bad guys are, knowing more about
everyone so you can be confident about who
you are doing business with, said Mr.
Brown. This occupied a lot of time in 2015
and is only going to intensify in 2016.
Terrorism Finance
The push to combat terrorism financing
will continue into 2016, said Mr. Brown,
and that means making more effective use
of the data banks have and working more
closely with compliance departments to
flag information to identify so-called
heightened risk individuals. Also,
compliance staff need to stay on top of
how regulators are interpreting rules
because even if regulations dont change
the accepted standard for what it means
to be compliant increases every year, he
said.

OFAC Issues Cyber Regulations

http://blogs.wsj.com/riskandcompliance/2015/12/31/
ofac-issues-cyber-regulations/?
mod=djemRiskCompliance

December 31, 2015. By Samuel Rubenfeld.

Wall Street Journal
The U.S. Treasurys Office of Foreign
Assets Control on Thursday published
regulations implementing an April
executive order issued by President
Barack Obama that targets foreign
nations and people who participate in
cyberattacks against U.S. citizens,
companies or government agencies.
Publication of implementing regulations,
according to a Treasury spokeswoman, is a
necessary and routine administrative
measure for all sanctions programs after the
issuance of an executive order or the
passage of a Congressional statute. They
dont expand the sanctions authorized by the
order, and they arent new sanctions, the
spokeswoman said.
These new regulations contain only those
provisions deemed essential to administer
the executive order and are being published
in abbreviated form at this time for the
purpose of providing initial guidance to the
public, she said.

Crdit Agricole Agrees to Pay

Penalty of $99 Million to U.S.
Department of Justice
Penalty stems from 2013 agreement on
conduct of banks operating in
Switzerland toward U.S. taxpayers

http://www.wsj.com/articles/credit-agricole-greesto-pay-penalty-of-99-million-to-u-s-departmentof-justice-1451575210?mod=djemRiskCompliance

December 31, 2015. By Inti Landauro.

Wall Street Journal
PARISThe Swiss unit of French bank
Crdit Agricole SA CRARY -0.51 % on
Thursday said it has agreed to pay a $99
million penalty to the U.S. Department of
Justice as part of a nonprosecution
agreement over its conduct toward U.S.
taxpayers.
The penalty stems from an agreement sealed
between Switzerland and the U.S. in August
2013 that allowed the U.S. government to
investigate the business conduct of Swiss
banks toward U.S. taxpayers who hadnt met
all of their tax obligations in the U.S.
Under the agreement, the U.S. cracked down
on Swiss banks it suspected of helping
American taxpayers conceal income from
the U.S. authorities. Last year, the U.S.
government sent documents to banks
requiring them to hand over data on hidden
American accounts in exchange for
nonprosecution agreements.

Crdit Agricole said it never intended to

develop the business of supplying financial
services to U.S. taxpayers who didnt
declare accounts to the U.S. tax authorities.
However, the bank said it couldnt rule out
the possibility that some customers may not
in the past have informed the bank of their
status as U.S. persons or entirely fulfilled
their tax obligations.
Crdit Agricole said the penalty was covered
by its reserves and would have no impact on
its 2015 balance sheet.
The French bank said it would cooperate
fully with the U.S. authorities.A number of
banks operating in Switzerland have come
under U.S. Justice Department investigation
following the 2013 agreement.
In May of last year, Zurich-based Credit
Suisse Group AG CS -0.96 % settled its
own U.S. probe by pleading guilty to aiding
American tax evasion, and agreeing to pay
$2.6 billion.
Separately, Crdit Agricole in October
agreed to pay $787 million to resolve U.S.
allegations it handled illegal transactions
involving Iran, Sudan, Myanmar and Cuba.

Belizean Arrested for Money

Laundering in Honduras

http://www.reporter.bz/crime/belizean-arrestedfor-money-laundering-in-honduras/

January 8, 2016. By Linda Fernandez.

The Reporter
A Belizean businessman has been arrested
for money laundering in Honduras,
according to a publication in that country.
Honduran newspaper, Diario La Prensa
publicized the arrest of Henry August
Tabony, 65, who was apprehended at the
Juan Manuel Glvez de Roatn International
airport in Isla de la Bahia, Honduras and
charged him with criminal offenses of
money laundering.
According to Honduran anti-money
laundering legislation, anyone travelling
with more than US $10,000 in cash is
obliged to make a declaration, which
Tabony failed to do. Tabony was caught
with 69 $100 notes, 17 $10 notes, 34 $50
notes and 368 $20 notes all in US
currency, totaling $16,490.
Tabony was reportedly caught at the flight
inspection departure hall and was
immediately transferred to the Honduran
Police Investigations Department (DPI). He
will be transferred to the Ministry of Public
Prosecution of Honduras to be charged for
the criminal offense of money laundering,
which the country considers a threat to its
economy.
Honduras has struggled to shake its
reputation as a money laundering haven.
In October 2015, a high profile case
indicated the country was taking money
laundering seriously

when an affluent Honduran businessman

and politician, Yani Rosenthal, was
indicted by United States authorities for
the crime.

The authorities are investigating whether

the banks could be accused of money
laundering for being originators,
underwriters or managers of loans to

Brazil probes 13 banks for

Schahin. Schahin is currently under

Schahin, Petrobras

potential fraudulent operations that

Operations: Report

investigation by Brazilian authorities for

prosecutors allege benefited the ruling
Workers' Party through state-run oil firm
Petroleo Brasileiro SA.

http://www.reuters.com/article/us-brazilcorruption-banks-idUSKCN0UP24Y20160111

In a statement, Ita BBA said that it

participated alongside the other banks in
Grupo Schahin's debt restructuring process
in 2009, which included a transaction

January 11, 2016. Reporting by Silvio

backed by receivables from Petrobras. The

operation was in full compliance with the

Cascione. Reuters

law and market regulations, the statement

said, adding that Ita BBA will collaborate

Brazil's federal tax authority and prosecutors

with authorities.

are investigating 13 foreign and local banks

for possible financial crimes intermediating

Bradesco's press office said it could not

loans to Brazilian engineering conglomerate

comment on operations or positions of its

Grupo Schahin, newspaper O Estado de S.

clients because of bank secrecy rules. HSBC

Paulo reported on Monday.

said it did not receive any official

information about being under investigation.

The banks under investigation include Ita

HSBC added that it always collaborates with

BBA - the investment-banking unit of Itau

authorities when requested. Deutsche Bank

Unibanco Holding SA, - Banco Bradesco

declined to comment.

SA, Banco Santander SA, HSBC Holdings

Plc, Deutsche Bank AG, Banco Votorantim

Representatives at Brazil's federal

SA and other smaller Brazilian institutions,

prosecutors' office and other banks under

Estado reported, citing a tax office

investigation did not immediately respond to

document.

requests for comment. Other banks named in

the Estado report are Banco Bonsucesso SA

[BONSD.UL], Banco Fibra SA
[BANFI.UL], Banco ABC Brasil SA,
BicBanco SA [BICBA.UL], Banco Pine SA,
Banco Tricury SA and Banco Rural SA.
Prosecutors say the engineering branch of
the Grupo Schahin, Schahin Engenharia,
was awarded a contract to operate a drill
ship for Petrobras in exchange for the bank
canceling loan repayments for Jose Carlos
Bumlai, a friend of former president Luiz
Inacio Lula da Silva.
Bumlai was arrested on Nov. 25 and charged
with loan fraud on Dec. 14.
Dozens of executives from Brazil's top
construction and engineering firms have
been charged with bribery and money
laundering, and about 50 politicians are
being investigated for receiving kickbacks
off Petrobras contracts.

Feds Crack Down on Secret

Real Estate Deals in MiamiDade and New York
http://www.miamiherald.com/news/business/real-estatenews/article54450795.html

January 13, 2016. By Nicholas Nehamas.

Miami Herald

Federal authorities on Wednesday

announced a temporary anti-moneylaundering crackdown on pricey homes
bought secretly with cash in Miami-Dade
County and New York.
The new policy will require title insurance
companies to identify the true owners of
shell companies that pay $1 million or
more in cash for homes in Miami-Dade
and $3 million or more for homes in New
York City. Insurers will then have to
report the names of the buyers to the U.S.
Treasury Department.
The move reflects concerns that dirty
money from abroad is helping fuel the
local residential real estate boom. Wealthy
buyers in South Florida often use a
network of domestic and offshore
companies to prevent their names
becoming public. Using a limited liability
company to buy property also offers
owners legal benefits such as liability
protection and tax breaks.
South Florida real estate brokers expressed
concerns that the crackdown could have a
chilling effect on the luxury market.
Multi-million cash home sales represent a
big business locally.
In Miami-Dade, buyers paid cash for more
than 1,150 homes priced at $1 million or
more last year, according to EWM Realty
International. That means cash deals
accounted for 60 percent of home sales
valued at more than $1 million.

The U.S. Financial Crimes Enforcement

Network (FinCEN) issued the so-called
geographic targeting order, which will
remain in effect from March 1. to Aug. 27.
If the policy uncovers serious evidence of
money laundering, it could be extended
across the country.
We are focusing on the risk that criminals
from around the world are going to launder
their dirty money through residential real
estate in the U.S, FinCEN director Jennifer
Shasky Calvery said in a phone interview.
Our estimation is that 78 percent of homes
around the nation are purchased with a
mortgage, and our regulations already cover
mortgage providers. What we dont have
covered are the all-cash purchases and
thats what were trying to address.
Calvery said the feds determined Miami
has become a mecca for money
laundering.
We try to be as data-driven as we can and
we went where the facts led us in terms of
understanding the problem, she said. We
have seen instances of criminals laundering
dirty money through luxury real estate in
Miami.
Accused Spanish drug lord lvaro Lpez
Tardn was sentenced to 150 years in prison
two years ago for laundering millions of
dollars through waterfront South Florida
condos and exotic cars.
Under the new rules, title insurance
companies will now have to investigate
who is behind the shell companies that
spend big on Miami real estate. That
information must be reported to federal
authorities so they can investigate the
buyers for possible money laundering.
Buyers identities will not be revealed to
the public.
9

Market slowdown?
Ron Shuffield, CEO of EWM, said
legitimate buyers might still be wary of
handing their names over to the government.
There are going to be some people who
have nothing to hide, no criminal activity,
but who value their privacy, Shuffield said.
Actors and athletes and politicians who
dont want the whole world potentially
camping out on their front step.
Developers of new condo towers rely on
cash buyers, many of them from Latin
America and Europe.
The new rules are in some sense bringing
banking compliance regulations into real
estate. Banks must perform due diligence on
clients moving money into the U.S. in order
to ensure that theyre not connected to
terrorism, drug smuggling, corruption or
other crimes.
This is the regulatory world of today, said
Alan Lips, an accountant at Gerson Preston.
More information, more disclosure...
bringing in the title insurance companies is
kind of a second step in the process of
making sure the money is clean and
legitimate.
Lips said even law-abiding buyers have
reasons to remain private.
You see a lot of safety concerns with
people from Brazil or Argentina, for
example, he said. They dont want people
from their home country to go and look on
the Internet and see that they paid a lot of
money for a house and become a target for
kidnapping.
Foreign buyers will also be nervous about
the prospect of Treasury officials contacting
their governments, said Jeffrey Rubinger, an
attorney at Bilzin Sumberg who specializes

in international tax law. Information sharing

could expose them to more tax liabilities.

area is known as a hotspot for money

laundering.

From a tax perspective alone, this is

definitely going to scare people, Rubinger
said. Then you have the worries about
losing anonymity.

Over the summer FinCEN said that checkcashing stores in Miami-Dade and Broward
would need to record more information
about customers cashing tax refunds of more
than $1,000. The two counties have the
highest rates of identity theft and tax-refund
fraud in the country.

While the rules apply to corporations,

limited liability companies, partnerships
and other similar business entities used
to buy luxury real estate, they do not
affect trusts, according to the federal
order, providing a possible loophole.
The American Land Title Association, which
represents title insurance companies, said it
had worked with Treasury on the rules and
supported them.
ALTA looks forward to continuing our
work with FinCEN as our members
implement this order to help prevent money
laundering schemes and the illegal purchase
of real estate in the United States, Michelle
Korsmo, the groups CEO, said in a
statement.
Title insurers are involved in nearly all real
estate closings.
Secret sales
Eye-popping home sales to secret buyers
have brought national attention to Miamis
real estate market.
On Monday the buyer of a $47 million Key
Biscayne mansion was revealed to be an
untraceable Delaware shell company. Last
month, a secret trust spent $19.5 million on
a luxe Miami Beach home. Country records
dont show mortgages being recorded on
either deal, meaning the buyers may have
paid cash.
Federal agencies have targeted South
Florida for special attention in the past. The
10

In April, U.S. Immigration and Customs

Enforcement ordered 700 electronic export
businesses in Miami-Dade, many of them in
Doral, to file reports to the federal
government every time they receive more
than $3,000. The feds suspected drug and
other illicit money may have been flowing
through the companies.

U.S. targets money laundering

in all-cash home sales in
Miami, Manhattan
http://www.reuters.com/article/us-usacorruption-realestateidUSKCN0UR2LM20160113
January 13, 2016. Reuters
The United States is hunting down
international criminals who launder
money through real estate deals, with the
Treasury Department ordering title
insurance companies to report the
identities of people paying cash for highend properties in Miami and Manhattan.

The Financial Crimes Enforcement

charge at Homeland Security Investigations

Network, an arm of the U.S. Treasury,

in Miami.

said on Wednesday it is concerned that

individuals buy residential real estate in

Money trails linked to drug trafficking,

cash through shell companies to hide their

foreign corruption and other criminal

assets and veil their identities.

activity often lead to luxury real estate

properties, but when agents try to

"We are seeking to understand the risk

determine the true, or "beneficial"

that corrupt foreign officials, or

owners, they find only documents listing

transnational criminals, may be using

shell companies, many of which in turn

premium U.S. real estate to secretly invest

are owned by other shell companies,

millions in dirty money, FinCEN

Tobon said.

Director Jennifer Shasky Calvery said in

a statement.

"It is a part of every single significant

investigation that we have ongoing right

FinCEN has issued rules aimed at

now," he added.

preventing laundering through the mortgage

market, but "cash purchases present a more

But the threshold for reporting cash

complex gap that we seek to address,"

purchases is so low in the two markets that it

Calvery added.

will include many mainstream buyers, said

Terrence Oved, lawyer with Manhattan real

Title insurers will have to disclose buyer

estate and commercial litigation firm Oved

identities in deals of at least $1 million in

& Oved LLP.

Miami and at least $3 million for

Manhattan, the Miami Herald reported.

"Youre going to get a lot of small fish

FinCEN did not answer Reuters' requests

caught up in this net," he said.

for details.
The temporary orders begin on March 1
Research conducted by the Homeland

and last 180 days, and Oved expects a

Security officials suggests that the majority

surge in deals to be completed March.

of real estate purchases of at least $1 million

Buyers may turn to other major

in Florida's Miami-Dade and Broward

metropolitan markets such as Los

counties are made through shell companies,

Angeles, as well, he added.

said John Tobon, deputy special agent in

11

In November 2015, the most recent month

for which data is available, 17 percent of the
82,595 all-cash purchases of single family
homes and condos went to buyers with an
"LLC" in the name, according to the housing
data company RealtyTrac, indicating they

Belize Seeks Urgent U.S

Intervention to Avert Banking
Crisis
http://amandala.com.bz/news/belize-seeks-urgentintervention-avert-banking-crisis/

were purchased by companies. Altogether, a

January 16, 2016. By Adele Ramos.

third of home purchases in the United States

Amandala

since 2011 were all-cash.

Meanwhile, there were about $104 billion

BELIZE CITY, Thurs. Jan. 14, 2016

in transactions involving foreign investors

Belizes

in the U.S. real estate market between

grappling with the domino effects of the

April 2014 and March 2015. More than

half the buyers in those deals were from
China, Canada, India, Mexico, and the

banking

sector

has

been

decision taken by Bank of America and

Commerzebank, two leading banks, to

United Kingdom, and the majority of

sever correspondent banking relations

transactions involving overseas buyers

with both offshore and domestic banks in

were in cash, said Deborah Friedman,

Belize.

who works in the FBI's money laundering

intelligence unit, in September.

Immediately, Belize banks had to find

alternate arrangements to ensure that

Those purchases were concentrated in

Florida, Texas, Arizona and California, she
said.

trade would not suddenly come to a

screeching halt, but even those alternate
arrangements now seem to be threatened,

The Patriot Act of 2001 required the

Treasury to either issue rules on anti-money
laundering controls and reporting of
suspicious activity by real estate

and latest information to the press is that

credit card settlements could be in
jeopardy, which would not just affect

professionals or grant an exemption. The

Belizeans conducting purchases at home

exemption has been in place now for more

and abroad, but also tourists trying to

than a decade.

12

settle their transactions while in the

April and had to put in place alternative

country.

arrangements to serve customers, Belizeans

were told that the impact only extended to

Prime Minister and Minister of Finance

Dean Barrow told journalists this week that
there is no doubt at all that we are
absolutely facing what is an existential

transactions such as wire transfers, but that

credit card settlements were not threatened.
But less than a year later, things have
apparently changed.

threat; and I am determinedas are the

individual banks in this countryto ensure

The wave of cutoffs of correspondent

that we do everything that we possibly can

banking relations first began among the

and that we continue to go at this thing from

offshore banks in Belize, which have all

every conceivable angle until we can find a

been impacted, and then it made its way

lasting solution.

into the domestic banking sector, and

particularly

He said that he has met with the US

Ambassador to Belize to discuss the issue
and through Belizes Ambassador to the US

the

local

banks

with

international banking enterprises, with

Belize Bank International being the first
to take a hit.

he has been trying to arrange meetings with

officials from the US State Department, the

Those banks have since worked out alternate

US Treasury, and the regulatory agencies

correspondent banking relations with banks

the US Office of the Controller of Currency

outside the US or with smaller community

and

banks in the US, but even those banks,

the

Federal

Deposit

Insurance

Corporation (FDIC). He plans to also seek

fearing

interventions from the World Bank and the

authorities, are trying to shed their newly

International Monetary Fund (IMF).

established relationships.

When Belize Bank, the countrys largest

Barrow told the media this week that

domestic

correspondent

in the case of credit card settlements, its

banking relations with Bank of America last

a community bank that had agreed to do

13

bank,

lost

its

repercussions

brought

by

US

that for Belize Bank and for Heritage

president had expressed his willingness to

[Bank], after the correspondent banking

try and have the US help Belize find a

relationship was cut off by Bank of

solution, but so far, nothing has happened.

America. That bank has now indicated

that by the middle of next month, it is
looking to discontinue even that sort of
less comprehensive relationship; so even
the question of the credit card settlements

This is a problem that the international

policy makers such as the US, the EU, the
the

World

Bank

are

slow

to

acknowledge and act on; thus like us, a lot

of other countries have visited Washington
to spread awareness and seek an expeditious
resolution,

Central

going to step up the official effort to try to

get some kind of progress out of US
regulators, out of the US public sector and
out of the US tier one banks.

is now in some jeopardy.

IMF,

Barrow said that, government now is

Bank

Governor,

Glenford Ysaguirre, told Amandala today.

It is potentially a crisis. In fact I dont want
to overstate things but if we dont find a
solution one way or another it is going to be
a huge crisis, Barrow told the media this
week, when he announced his intent to visit

After losing Bank of America, three of

those banks were able to make arrangements
with a smaller US bank to handle the net
settlement of their credit card activities with
Visa, Master Card and other electronic
payment companies, Ysaguirre explained.
For example, our local banks are affiliates
of these credit card companies and are thus
authorized to issue credit cards to their
customers and offer point of sale (pos)
services to merchants to accept credit card
payments under the Visa and Master Card
logo.

Washington to discuss the situation with key

However, they must maintain an account in

officials there.

the US to receive their net inflows or settle

Barrow said that when he raised the issue

with US President Barack Obama, the
14

the net outflows, whatever the case may be,

with Visa or MC. It is these three banks that

the PM referred to that may lose those credit

our banks had only [Bank of America] the

card settlement accounts, Ysaguirre further

impact has been pronounced for us. But, I

stated.

can say that money transfer businesses in the

Caribbeanwhich is a larger part of their

Ysaguirre told us that the Central Bank of

Belize (CBB) is doing its best to work with

economy than oursare just as hard hit by

de-risking.

and assist banks in Belize to cope with the

situation.

Barrow, who is chairing CARICOM from

January to June 2016, said that the question

We have some options we are exploring to

mitigate further impact if necessary, but I do
not wish to discuss them at this juncture, he
indicated.
The

Governor

of

correspondent

banking

relationships

would feature very prominently on the

agenda for the Heads of Government
meeting due to be held in Placencia, Stann

assured

that,

The

Creek, Belize, next month.

Government, the CBB and the Belizean

A United States person that has a financial

banking community are working assiduously

interest in or signature authority over foreign

and very proactively to address this issue on

financial accounts must file an FBAR if the

all frontspolitically, diplomatically and

aggregate value of the foreign financial

operationally.

accounts exceeds $10,000 at any time during

the calendar year.

While it has been said that Belize is the

hardest hit, Ysaguirre told us, Just last
week, I received information from a
CARICOM colleague that said [that]

FDIC Proposes Risk Assessment

Rule for Small Banks
http://morningconsult.com/alert/fdic-proposes-new-riskassessment-rule-for-small-banks/

Barclays London intends to sever ties

with all Jamaica.
He added that, Perhaps, due to the size of
our market [in Belize] and because most of
15

January 21, 2016. By Ryan Rainey.

Morning Consult
The Federal Deposit Insurance Corp.
on Thursday issued a notice of
proposed rulemaking to apply new

risk assessment standards to small

banks with assets totaling less than
$10 billion.
The proposed rule would apply a
brokered deposit ratio rather than a
core deposit ratio as the means of
calculating the risk assessment for
each small bank. Doing so would
update the data and revise the
methodology that the FDIC uses to
determine risk-based assessments for
these institutions to better reflect
risks and to help ensure that banks
that take on greater risks pay more
for deposit insurance than their less
risky counterparts, the agency
said today.
The FDIC initially proposed the rule in
June, and updated the proposal in
response to industry comments on the
calculation of asset growth and the
treatment of reciprocal deposits and
Federal Home Loan Bank advances,
the agency said.

held in major multi-national banks which

prosecutors believe passed through a
network of companies in Africa that are
allegedly tied to Hezbollah, the Shia
militant organization and political party
in Lebanon.

The legal action reinforced long-running

efforts by the United States to dry up
sources of funding for Hezbollah, a
participant in Syrias civil war that American
officials also blame for a string of deadly
terrorist attacks stretching back to the 1980s.

Though it contained no formal allegations of

wrongdoing against any bank, the complaint
filed in a Washington federal court called
attention to internal anti-money laundering
practices at HSBC, Deutsche Bank and

Via U.S Accounts, Feds Pursue

Hezbollahs Alleged African
Cash

Wells Fargo as well as the North Carolina-

https://100r.org/2016/01/via-accountsfeds-pursue-hezbollahs-alleged-africancash/

The movement of the funds violated federal

based lender Branch Banking & Trust.

trade sanctions and money laundering

statutes, according to the Justice
Department.

January 29, 2016. By Douglas Gillison.

100 Reporters
Prosecutors say Kassim Tajideen, a 60-yearThe U.S. Justice Department this month
moved to confiscate roughly $1.2 million
16

old Lebanese businessman, came forward to

claim the funds. The Treasury Department

customer risk and prevent money

has placed Tajideen on a sanctions list of

laundering. The wholesale banking group

global terrorists, identifying him as an

provides services to large clients such as

important Hezbollah fundraiser along with

companies and governments.

members of his family.

The Obama and Bush administrations have
Lawyers for Tajideen told 100Reporters that

made money laundering and sanctions

he denies any link to terrorism, and said they

violations mainstays of a broader crackdown

had not been notified of the Justice

on terrorism, aimed at choking sources of

Departments forfeiture actions this month.

financing since the Sept. 11, 2011 attacks on

the United States.

Banks are required to check whether their

clients are suspected terrorists and report

In the court papers filed this month,

any suspicious banking activity to the U.S.

prosecutors said that a North Carolina

government. As money from the drug war

exporter of frozen meat, identified only as

and sanctioned organizations has coursed

Company A, sent nearly seven million

through the international financial system,

pounds of goods to Angola for delivery to

HSBC, Wells Fargo and Deutsche Bank

Sicam Ltd., a company owned by Kassim

have in recent years all faced legal and

Tajideen, between December 2013 and June

regulatory action in the United States and

2015.

Europe.
In return, International Cross Trade
Wells Fargo, the worlds largest bank by

Company, a separate Tajideen company in

market value, agreed to a Treasury

the United Arab Emirates, wired $460,800

Department consent order as recently as

from UAE banks to Company As account at

November. Regulators rebuked the bank

Branch Banking & Trust, or BB&T,

for a failure to remedy previously-

allegedly in violation of federal statutes on

identified problems involving measures

money laundering and trade sanctions.

by its wholesale banking group to assess

17

Cynthia Williams, a spokeswoman for

In court papers, the Justice Departments

BB&T, said her bank was examining the

efforts to win the forfeiture of the funds

matter and had no further comment.

were supported by the sworn statement of a

Drug Enforcement Administration task force

As you know, BB&T is not a party to this

agent, suggesting that the forfeiture case is

suit and we were unaware of it until your

connected to a federal investigation into

email yesterday, she wrote.

suspected drug trafficking.

After receiving the payments from Tajideen,

Spokesmen for the DEA and Justice

Company A then transferred the money to

Department declined to comment, but

Wells Fargo, where it was seized in June,

American officials have long accused

according to prosecutors.

Hezbollah of trading in South American

cocaine, specifically linking them to the

Richele Messick, a spokeswoman for Wells

Colombian drug trade and the

Fargo, said the bank did not violate any

Revolutionary Armed Forces of

regulations or laws in the Tajideen forfeiture

Colombia, or FARC.

case.
According to European and UN officials
We have already made significant

cited by The New York Times, Hezbollah

enhancements in our compliance program

and sympathetic Lebanese migrs helped

and continue to dedicate considerable

Colombian traffickers meet rising demand

resources to this area, she said by email.

for drugs in Europe and the Middle East by

moving cocaine from South America to

We have strong processes in place but are

West Africa, Syria and Lebanon. A

prohibited from sharing what we do to

Hezbollah strategist quoted in the article

detect and monitor both by the law and to

denied narco-trafficking.

preserve the effectiveness of those

processes.

The court documents say Tajideen also

moved $600,000 from accounts in Angola to

18

banks in Germany, South Africa and Brazil

Tajideen family entities will have been

between 2009 and 2010, but these funds

familiar to HSBC compliance officials.

were frozen by Deutsche Bank compliance

HSBC had already paid a fine of $32,400 in

officials as they transited correspondent

2013 after failing to catch $40,166 in

accounts in the United States and were later

transfers between 2010 and 2011 tied to

seized.

Husayn Tajideen, another of Kassim

Tajideens brothers.

A Deutsche Bank spokeswoman declined to

comment.

The bank in 2012 reached a watershed $1.9

billion settlement with US authorities for

Correspondent banking allows banks to

deliberately banking the proceeds of drug

transfer funds internationally by

cartels and moving money for sanctions-

maintaining accounts at foreign banks so

barred countries.

that depositors may make payments in

foreign currencies. Such transactions can

According to a leaked report from an outside

present a high risk of money laundering if

monitor cited by Bloomberg, internal

senders and recipients are not properly

auditors in 2014 questioned HSBCs

identified by the bank.

decision to continue doing business with

banks with potential ties to terrorism,

During similar correspondent account

including a Saudi bank that had once wired

transfers through the United States between

funds to two hijackers involved in the

2012 and 2014, compliance officials at

attacks of September 2001.

HSBC seized more than $100,000 in

Tajideen funds moving from accounts in

The Justice Department reported last year

France and Gambia and intended for

that the outside monitor the former

recipients in Switzerland, China and

prosecutor Michael G. Cherkasky had

Thailand, according to prosecutors.

found that in 2014 senior managers dealings

with auditors had been marked by

19

combativeness [] and a basic lack of

captured the men who were civilian

cooperativeness.

contractors flying surveillance over FARC

territory when their plane crashed in

Nevertheless, Rob Sherman, an HSBC

2003. Janis and another crew member were

spokesman, told 100Reporters that the

immediately executed, while Howes,

Justice Department had found that the bank

Stansell and Gonsalves were held captive

had made material progress toward

until their rescue in 2008.

improving its compliance efforts.

When collecting damages from the FARC
We remain firmly committed to putting in

which has few U.S. assets to seize if any

place a robust AML and sanctions

proved difficult, lawyers for the men

compliance program, and are making steady

went after funds held by alleged FARC

progress toward that objective and

associates, moving to seize assets held by

appreciate the monitors ongoing work, he

the Tajideen brothers and their companies.

wrote in an email, using the industry

Since Hezbollah had profited from

acronym for anti-money laundering.

distributing FARC cocaine and laundering

the proceeds, the lawyers argued, FARC

Last year, Kassim Tajideens alleged ties to

victims could collect Hezbollah-linked

Hezbollah drew him into the middle of

funds.

federal lawsuits filed by former FARC

kidnapping victims.

The matter remains pending before a federal

judge in New York. However, in an affidavit

A federal court in 2010 awarded $318

in the FARC case, Kassim Tajideen denied

million in damages to the family of Thomas

all of the plaintiffs allegations and said he

Janis, an American pilot, and to Keith

was fighting the Treasury Departments

Stansell, Marc Gonsalves and Thomas

designation of him as a terrorist.

Howes. FARC forces

Any business connections to his brother Ali,
the alleged Hezbollah commander, had in
20

fact been limited to a matter of corporate

culturally dissimilar, and politically

formality, he said. I am unequivocally

unrelated organization such as the FARC.

opposed to terrorism and other acts of

political violence, Tajideen said. I am

David Bowker, an attorney for Tajideen, said

unequivocally opposed to narcotics

the Justice Department had yet to notify him

trafficking and related criminal enterprises.

of its latest action.

Tajideen said he had no connection to

As you may know, we do not believe there

Hezbollah and had worked to avoid any

is any basis to designate Mr. Tajideen and,

unnecessary entanglements with the

accordingly, we have been contesting

organization despite the challenges of

OFACs designation of him for many years,

doing so while conducting business in

he said in an email.

Lebanon.

Tajideens attorneys at the powerhouse firm

WilmerHale have also sought to undermine
claims that Hezbollah and the FARC are

Former directors of Banco

Privado Portugus accused of
fraud, breach of trust and
money laundering

truly in cahoots.
http://www.algarvedailynews.com/news/784
Ibrahim Warde, a Tufts University business
professor and paid expert for the Tajideen
legal team, submitted a sworn statement
saying he believed any business dealings
between FARC and Hezbollah were at most

0-former-directors-of-banco-privadoportugues-accused-of-fraud-breach-of-trustand-money-laundering
January 29, 2016. Algarve Daily News

indirect and tangential.

Portugal's Public Ministry finally has
If Hezbollah is a tool of any entity, he said,

charged six defendants, including four

it is the Islamic Republic of Iran, not a

former directors Banco Privado

comparatively minor, geographically distant,

Portugus (BPP), of qualified tax fraud,

21

abuse of trust and money laundering,

It is not yet clear why the State also is not

crimes allegedly committed between 2003

chasing the 30 million that was

and 2008.

'misappropriated.'

According to the District Attorney General

Some of the defendants already have made

for Lisbon, the case which started in 2009

voluntary payments in the course of the

involves Jo Rendeiro (the banks former

investigation in the hope of receiving

president) and former directors Paul

leniency. During the investigation, accounts

Guichard, Salvador Fezas Vital and

were seized containing 12 million.

Fernando Lima, among others.

BPP, founded by Joo Rendeiro, is in
In the case for the prosecution, the amount

liquidation.

of income unreported by the defendants in

their tax returns was almost 16.5 million,
relating to the years 2003 to 2008.

On 24 July 2009, Paulo Guichard and

Salvador Fezas Vital, two former board
committee members of BPP were suspended

As for the crime of breach of trust, the

by Banco de Portugal, and joined Joo

investigators claim that almost 30 million

Rendeiro in the BPP case, to be indicted for

was 'misappropriated' by the defendants, in

falsifying accounts, tax crimes and money

other words, it was stolen by those in charge

laundering.

of depositiors' money for their personal use.

On 15 April 2010, the Banco de Portugal,
The State is after civil damages for the tax

"after verifying the impossibility of

due on the income received and not

recapitalization

declared by the defendants, including

interest, all of which comes to nearly 10
million.

22

and recovery efforts of this institution",

January 29, 2016. By Marion Ali. The

ordered the liquidation of Banco Privado

Reporter

Portugus.
Prime Minister Dean Barrow left Belize
On 11 October 2010, the Polcia Judiciria

on Monday for Washington, D.C., where

conducted searches at the homes of former

he is leading a technical team from Belize

officials of the BPP under the scope of an

in discussions with senior officials of the

investigation into suspected money

US Federal Government and US banking

laundering and fraud.

monitoring systems over the de-risking

situation affecting financial institutions in

On 11 February 2013, Joo Rendeiro, Fezas

the region.

Vital and Paul Guichard, former members of

the board committee were charged by the

Financial Secretary, Joseph Waight; the

Public Ministry with fraud, in a matter of a

Governor of the Central Bank, Glenford

Collective investment scheme that damaged

Ysaguirre; Belizes Ambassador to the US,

hundreds of clients for an estimated 41

Patrick Andrews and Advisor to the PM and

million euros.

one of the architects of the renegotiated

Super Bond, Ambassador Mark Espat

In May 2015, assets from Joo Rendeiro

accompanied Barrow on the trip.

were seized to pay a 4.7 million fine from

the Bank of Portugal.

PM Leads Technical Team to

Washington to Negotiate Derisking Measures
http://www.reporter.bz/business/pm-leadstechnical-team-to-washington-to-negotiatede-risking-measures/
23

During Fridays House meeting, Area

Representative for Caribbean Shores,
Kareem Musa, raised the issue of the current
banking woes, saying that a number of his
constituents are concerned of the state of
banking affairs for Belize. Musa urged the
government to take a serious look at the
problems our banks are facing, and the

consequences we face as a result of de-

or quicker than we can sneeze, Barrow

risking.

said.

In response, Barrow informed that he and

The Prime Minister went on to explain that

his team already had meetings scheduled to

the banks cutting off smaller ones would be

discuss the matter. He said while he cannot

paying more to discharge their regulatory

guarantee a successful outcome, his

requirements than they would make from

government will do all it can until they find

Belize, so they are ending the relationships.

a solution to the problem.

All this is against the backdrop and in the
Barrow told reporters following the

context of the authorities in the States and

House meeting that, the official line from

globally being concerned about money-

the banks, such as Bank of America, and

laundering, financing of terrorism and that

others, is that the regulatory burden that

sort of thing. I just dont want for the kind of

US authorities have imposed on them

connection be made with that larger

does not make it cost-effective to continue

background scenario and the particular

doing business with smaller economies.

actions that have been made with respect to

Belize, so that somebody can run off with

I believe for the last full year that Bank of

America was the correspondent bank for the
Belize Bank, the total value of that

the idea that there is a special anti-money

laundering or terrorism financing problem
with our jurisdiction, Barrow said.

relationship simply makes it not costeffective to continue to do business in our

He added that there is not, as far he can

small jurisdictions. The total value of that

determine, any particular problem with

relationship to Bank of America might have

the financial structures in Belize; nor

been like US $6 million. Thats the kind of

have those structures given rise to the de-

money that Bank of America makes in a

risking measures.

minute
24

Deputy Prime Minister, Gaspar Vega will act

Haider, No. 15-CV-01518, 2016 WL 107940

as Prime Minister until Barrow returns home

(D. Minn. Dec. 18, 2014) (the Opinion).

on Sunday, January 31st.

Among other things, the court (i)

affirmed that a compliance officer
responsible for the development and

U.S. District Court Denies

Motion to Dismiss FinCEN
Complaint Against Former Chief
Compliance Officer of
MoneyGram

oversight of an anti-money laundering

(AML) program may be held liable for
the BSA violations of his or her employer
and (ii) reserved judgment as to whether
the proposal to bar Mr. Haider from
service to any U.S. financial institution is

http://www.sidley.com/news/2016-01-

a punitive sanction subject to the statute

29_banking_and_financial_services_update

of limitation or a prophylactic measure

that is not so limited.

January 29,2016. Sidley

For a more fulsome account of the
On January 8, the United States District
Court for the District of Minnesota
denied the motion of defendant Thomas
E. Haider to dismiss the federal
governments complaint seeking to hold
Mr. Haider personally liable for violations
of the Bank Secrecy Act and its
implementing regulations (collectively, the
BSA) by MoneyGram International, Inc.
(MoneyGram) during his tenure there as
chief compliance officer. Order Denying
Motion to Dismiss, U.S. Dept of Treasury v.
25

governments allegations, please see a

previous Sidley Update, FinCEN Seeks
Civil Money Penalty and Injunction Against
Former Chief Compliance Officer of
MoneyGram, available, here. Briefly, the
U.S. Attorney for the Southern District of
New York on behalf of the United States
Financial Crimes Enforcement Network
(FinCEN) filed a complaint against Mr.
Haider on December 18, 2014, alleging
that Mr. Haider was personally liable for

MoneyGrams failure to implement an

3.The injunctive relief sought is time-barred.

effective AML compliance program and

properly file suspicious activity reports
(SARs), in each case during the period
from 2007 to 2008, as required under the
BSA.1 FinCEN is seeking a $1 million
civil monetary penalty against Mr. Haider

4.FinCENs access to the grand jury

materials underlying its complaint was
improper.
5.The assessment and injunction violate Mr.
Haiders constitutional due process rights.

and to enjoin Mr. Haider from

participating in the conduct of any U.S.

The courts response to each argument

financial institution.

and its reasoning are discussed in turn

below.

This case is significant because it is

uncommon for FinCEN to sue a money

1. Individual compliance officers such as

services business compliance officer

Mr. Haider may be held liable for the

personally for the AML failures of his

failure of a financial institution to

employer.

maintain an effective AML policy.

Mr. Haiders motion to dismiss is based on

The court rejected Mr. Haiders argument

five principal arguments:

that liability for failure to implement an

AML program extends only to institutions

1. An individual officer of a financial

institution may not be held personally
liable for the institutions failure to
implement an effective AML policy.
2. The complaint does not sufficiently
particularize the bases for the amount
assessed.

26

under 31 U.S.C. 5318(h)(1) (each

financial institution shall establish [AML]
programs). The court looked to 31 U.S.C.
5321(a)(1), which provides:
A domestic financial institution or
nonfinancial trade or business, and a
partner, director,

officer, or employee of a domestic

Opinion at 6-7. Accordingly, the court

financial institution or nonfinancial trade

denied Mr. Haiders motion on this ground.

or business, willfully violating this

subchapter or a regulation prescribed or
order issued under this subchapter
(except sections 5314 and 5315 of this title
or a regulation prescribed under sections
5314 and 5315) ... is liable to the United
States Government for a civil penalty...
The court said:

2. The $1 million assessment was

sufficiently particularized in the complaint.
The court treated Mr. Haiders challenge to
the assessment amount as a challenge to the
sufficiency of the complaint and held that
the $1 million penalty is amply supported
by the allegations underlying the SAR
violations alone. Opinion at 7. An exact

Section 5321(a)(1)s explicit reference to

determination of the proper amount would

partner[s], director[s], officer[s], and

be premature at the dismissal stage. Id. at

employee[s] demonstrates Congress

7-8.

intent to subject individuals to liability in

connection with a violation of any
provision of the BSA or its regulations,
excluding the specifically excepted
provisions. ... Because 5318(h) is not
listed as one of those exceptions, the plain
language of the statute provides that a
civil penalty may be imposed on
corporate officers and employees like
Haider, who was responsible for designing
and overseeing MoneyGrams AML
program.

3. The court deferred its determination of

which statute of limitations, if any, applied
to the injunctive remedy sought by the
government.
The court declined to address Mr. Haiders
claim that a five-year limitations period
applied to bar the injunction per 28 U.S.C.
2462 (five-year period for an action, suit or
proceeding for the enforcement of any civil
fine, penalty, or forfeiture, pecuniary or
otherwise). It reasoned that such a
determination would require a factual

27

inquiry into whether the injunction is

5. Mr. Haiders due process rights have not

punitive and thus within the statute or, as the

been implicated because he has not yet

government argued, prophylactic. Opinion at

suffered a deprivation of a liberty or

9.

property interest.

4. The court declined to revisit the order of

The court rejected Mr. Haiders argument

the Pennsylvania district court granting

that his due process rights under the Fifth

FinCEN access to grand jury materials.

and Fourteenth Amendments were violated

by an insufficient preassessment process,

The court rejected Mr. Haiders argument

that FinCENs access to grand jury materials
from the governments investigation into
MoneyGram was improper under 18 U.S.C.
3322. The court reasoned that the final
order of the Pennsylvania district court
granting access specifically recognized

FinCENs failure to disclose certain

materials, alleged bias on the part of
FinCEN director Shasky Calvary or
FinCENs alleged leak of confidential
information. The court determined that Mr.
Haider had not suffered a deprivation of a
property or liberty interest:

FinCENs need to disclose grand jury

information to attorneys assigned to advise

[A]lthough Haiders property interests are

and represent FinCEN in [any] civil

ultimately at stake, the underlying

injunctive and penalty matter in the

administrative process did not deprive him

Southern District of New York, and to make

of such interests. Rather, the assessment

such further disclosures as may eventually

procedure is merely the first step in the

be necessary in any administrative

process. The BSA expressly authorizes

proceeding or civil litigation commenced

FinCEN to assess a civil penalty and then

under [the BSA]. Opinion at 2-3. The court

commence a civil action to recover that

declined to vacate an order of another

penalty. ... Indeed, the government

federal district court. Opinion at 10.

acknowledges that it must await judgment

from this court before it may collect the

28

assessment. ... Likewise, the governments

reviewed for an abuse of discretion. The

requested injunction is not included in the

court declines to decide that issue at this

assessment and must be imposed by the

time, nor does it determine whether

court. As a result, to date, Haider has not yet

application of abuse-of-discretion standard

been deprived of his property interests.

implicates Haiders right to due process.

Opinion at 12 n.5.

Opinion at 12. The court noted that Mr.

Haider would have the opportunity to
engage in discovery, explore the
governments case and raise any available
defenses. Opinion at 12.2
After addressing, or deferring decision with
respect to, each of Mr. Haiders arguments
as described above, the court denied in its
entirety Mr. Haiders motion to dismiss.
Opinion at 13. The parties have been
ordered to appear for a pretrial conference to
discuss settlement and Pretrial matters.
1 The case was transferred to the District of
Minnesota pursuant to 28 U.S.C. 1404(a)
on March 17, 2015.
2 The court reserved ruling on the level of
deference to which FinCENs fact-finding
was entitled: It may be that although the
issue of Haiders liability is reviewed de
novo, the amount of the assessment is
29

U.S. Suit Vs Freeport

Over Indonesia Scandal
Shows International
Risk
http://blogs.wsj.com/riskandcompliance/20
16/01/29/u-s-suit-vs-freeport-overindonesia-scandal-shows-internationalrisk/

January 29, 2016. By Stephen Dockery.

Wall Street Journal
A lawsuit filed against FreeportMcMoRan Inc.FCX +4.07% in the wake of
a corruption scandal involving the mining
giants subsidiary in Indonesia underlines
the broad risks from a trend of rising anticorruption enforcement around the world.
Indonesia was roiled by a corruption scandal
at the end of last year that led to the
resignation of the countrys speaker of its
House of Representatives. resignation
came during an inquiry into the
speakers alleged attempt to extort company
shares from Phoenix-based minerals
miner Freeport-McMoRan in return for an
extension of an operation agreement, and as

the country attempted to boost the

profile of its graft-fighting agency.
The former speaker, Setya Novanto, has
denied wrongdoing.
The case represents another example of
corporate risk involved with the
growing web of international corruption
enforcement as government agencies across
the globe are getting resources and political
cover to crack down on bribery. Non-U.S.
enforcement actions exceeded those by the
U.S. for in 2014 and doubled since 2012.
The lawsuit filed in U.S. District Court in
Arizona Tuesday alleges the company
appointed a former government official
who was inexperienced in mining as head
of its Indonesia unit, and he was then
recorded discussing the alleged
corruption with the former speaker.
The suit, backed by plaintiff
firm Pomerantz, claims the company was
subsequently in violation of the Foreign
Corrupt Practices Act. It provides little detail
on the alleged FCPA breach and Pomerantz
declined to comment for this story.
Freeports public statements were
materially false and misleading at
all relevant times, the lawsuit said, citing
falling stock values as evidence for damages
suffered by owners of Freeport stock.
Freeports stock has been hit hard by weak
commodities prices, while analysts have
also focused on its debt burden, accumulated
through multiple acquisitions.
The company declined to comment on the
lawsuit but said it maintains an anti30

corruption program.Freeport-McMoRan
and its Indonesian affiliate PTFI have and
maintain an anti-corruption program that is
designed to prevent, detect and remediate
FCPA/anti-corruption risks and to comply
with applicable laws. We also have
disclosure policies that are designed to
promote compliance with our disclosure
obligations, spokesman Eric Kinneberg
said.
The FCPA is enforced jointly by the
Securities and Exchange Commission and
U.S. Department of Justice. The SEC
declined comment on whether any
investigation of Freeport is underway. The
Justice Department said As a matter of
policy, we generally neither confirm nor
deny whether a matter is under
investigation.
Class and shareholder lawsuits involving
FCPA claims, particularly those not
involving a public U.S. investigation, are
frequently unsuccessful.

TOPICS OF
DISCUSSION
I.

II.
III.

What is the name of the law in the

United States which targets the
Hezbollah financial support
structure?
What is synthetic identity?
Does FinCENs new geographic
targeting order on anti-money
laundering in the real estate market
affect limited liability companies?

IV.

V.

31

What are the names of the two U.S

regulatory institutions which
enforces FCPA.
What reasoning has Bank of
America given for closing the
correspondent bank accounts for
banks in Belize?

VI.

VII.

What were the two accusations

which FinCEN made against Mr.
Haider, the former compliance
officer of Money Gram?
What is significant about FinCENs
actions against Money Gram?