International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Thursday, July 18, 2019

U.S. Extradites Former Colombian Minister of Agriculture Convicted of Embezzlement and Illegal Government Contracting

The United States today extradited Andres Felipe Arias Leiva, who served as Colombia’s Minister of Agriculture and Rural Development from 2005 to 2009, to face a prison sentence in that country based on a 2014 conviction by the Supreme Court of Colombia for two offenses committed while Arias served in public office.

Assistant Attorney General Brian A. Benczkowski of the U.S. Department of Justice’s Criminal Division and U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida made the announcement.

“Andres Arias’s extradition is a testament to the United States’ commitment to our extradition treaty obligations and the strength of our law enforcement partnership with Colombia,” said Assistant Attorney General Benczkowski.  “I thank the team from the Office of International Affairs and the U.S. Attorney’s Office for the Southern District of Florida for their tireless, years-long efforts to ensure that Arias serves his prison sentence in Colombia.”

“Assistant U.S. Attorneys for the Southern District of Florida, alongside attorneys for the Department’s Office of International Affairs, have worked hard to ensure that former Colombian government official Andres Arias would be extradited back to his home country to serve a sentence imposed by that nation’s highest court,” said U.S. Attorney Fajardo Orshan.  “We are grateful to the dedication of Assistant U.S. Attorney Robert J. Emery and Associate Director Christopher J. Smith and Trial Attorney Rebecca A. Haciski of the Criminal Division’s Office of International Affairs of the U.S. Department of Justice for their work in making this possible. Our Office is committed to upholding the rule of law and ensuring that justice is appropriately carried out for all parties.”

Arias, a citizen of Colombia who entered the United States in 2014 and was residing in Weston, Florida, was convicted on July 16, 2014, by the Criminal Cassation Division of the Supreme Court of Colombia on two offenses, Embezzlement for Third Parties, in violation of Article 397 of the Colombian Criminal Code, and Conclusion of Contract Without Fulfilling Legal Requirements, in violation of Article 410 of the same code.  Arias was present and represented by counsel at his trial in Colombia, and following his conviction, the Colombian court sentenced him to serve 209 months in prison.  As detailed in the 193-page decision issued by the Supreme Court of Colombia, Arias’s criminal conduct related to the diversion of funds within the Colombian government’s Argo Ingreso Seguro program, which he was responsible for implementing during his term as Minister of Agriculture and Rural Development, a cabinet-level position in Colombia’s executive branch, from 2005 to 2009.  

The United States acted on a request for Arias’s extradition submitted by the Republic of Colombia, which Arias vigorously contested in both the Southern District of Florida and the U.S. Court of Appeals for the Eleventh Circuit.  On Sept. 28, 2017, a U.S. magistrate judge in the Southern District of Florida ruled that Arias could be extradited to Colombia to serve the sentence based on his conviction.  Arias then filed a petition for a writ of habeas corpus, which the district court for the Southern District of Florida denied on Oct. 5, 2018.  Arias appealed that decision to the Eleventh Circuit.  Following extensive briefing and argument, the litigation culminated on July 8, 2019, when the court of appeals rejected Arias’s arguments against extradition.  Consistent with the views of the U.S. Department of State and 40 years of extradition practice between the United States and Colombia, the court of appeals affirmed that the extradition treaty between the two countries remains in full force and effect.

Following a thorough review of Arias’s case, the Department of State issued a warrant ordering Arias’s surrender to Colombian authorities.  Today, the U.S. Marshals Service executed that warrant, transported Arias to Colombia, and delivered him to the custody of Colombian authorities.  Arias’s extradition is now complete.

July 18, 2019 in AML | Permalink | Comments (0)

Texas Judge Convicted of Bribery and Obstruction

A Texas state district judge has been convicted of bribery and obstruction, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Ryan K. Patrick for the Southern District of Texas.

Following a six-day trial, Rodolfo “Rudy” Delgado, 65, of Edinburg, Texas, was convicted of one count of Conspiracy; three counts of Federal Program Bribery; three counts of Travel Act Bribery and one count of Obstruction of Justice.  Delgado was originally charged in January 2018 by complaint, and then indicted in February 2018.  The grand jury issued three superseding indictments. 

“Corrupt judges can harm a community’s confidence in our judicial system,” said Assistant Attorney General Benczkowski.  “Today’s verdict takes an important step toward restoring that confidence, and affirms that no one – especially not a judge – is above the law.”

“The bribery of a judge may be the worst break of the publics’ trust in government,” said U.S. Attorney Patrick.  “Rudy Delgado used his position to enrich himself.  He didn’t just tip the scales of justice, he knocked it over with a wad of cash and didn’t look back.  Delgado’s actions unfairly tarnish all his former colleagues.”

Delgado is currently a justice in the Thirteenth Court of Appeals for the State of Texas.  He was previously the presiding judge for the 93rd District Court for the State of Texas, which has jurisdiction over Texas criminal and civil cases located within Hidalgo County.  As a district judge, Delgado conspired with an attorney from January 2008 to November 2016 to accept bribes in exchange for favorable judicial consideration on criminal cases pending in his courtroom. 

As part of an investigation conducted by the FBI, Delgado also accepted bribes on three separate occasions in exchange for agreeing to release three of the attorney’s clients on bond in cases pending before his court.  The first two bribes totaled approximately $520 in cash and the third bribe, which occurred in January 2018, totaled approximately $5,500 in cash.  After Delgado learned of the FBI’s investigation, he also attempted to obstruct justice by contacting the attorney and providing a false story about the payments.

July 18, 2019 in AML | Permalink | Comments (0)

Wednesday, July 17, 2019

Justice Department Obtains $1.4 Billion from Reckitt Benckiser Group in Largest Recovery in a Case Concerning an Opioid Drug in United States History

Global consumer goods conglomerate Reckitt Benckiser Group plc (RB Group) has agreed to pay $1.4 billion to resolve its potential criminal and civil liability related to a federal investigation of the marketing of the opioid addiction treatment drug Suboxone. The resolution – the largest recovery by the United States in a case concerning an opioid drug – includes the forfeiture of proceeds totaling $647 million, civil settlements with the federal government and the states totaling $700 million, and an administrative resolution with the Federal Trade Commission for $50 million.

Suboxone is a drug product approved for use by recovering opioid addicts to avoid or reduce withdrawal symptoms while they undergo treatment. Suboxone and its active ingredient, buprenorphine, are powerful and addictive opioids. 

“The opioid epidemic continues to be a serious crisis for our nation, and I’m proud of the work the Department of Justice and our partners are doing to address this epidemic,” said Principal Deputy Associate Attorney General Claire Murray.

 “We are confronting the deadliest drug crisis in our nation’s history. Opioid withdrawal is difficult, painful, and sometimes dangerous; people struggling to overcome addiction face challenges that can often seem insurmountable,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Drug manufacturers marketing products to help opioid addicts are expected to do so honestly and responsibly.”

Resolution of the Criminal Investigation

Until December 2014, RB Group’s wholly owned subsidiary, Indivior Inc. (then known as Reckitt Benckiser Pharmaceuticals Inc.) marketed and sold Suboxone throughout the United States. In December 2014, RB Group spun off Indivior Inc., and the two companies are no longer affiliated. On April 9, a federal grand jury sitting in Abingdon, Virginia, indicted Indivior for allegedly engaging in an illicit nationwide scheme to increase prescriptions of Suboxone. The United States’ criminal trial against Indivior is scheduled to begin on May 11, 2020, in the United States District Court in Abingdon, Virginia. Indivior is presumed innocent until proven guilty.

To resolve its potential criminal liability stemming from the conduct alleged in the indictment of Indivior, RB Group has executed a non-prosecution agreement that requires the company to forfeit $647 million of proceeds it received from Indivior and not to manufacture, market, or sell Schedule I, II, or III controlled substances in the United States for three years. In addition, RB Group has agreed to cooperate fully with all investigations and prosecutions by the Department of Justice related, in any way, to Suboxone.

“Today’s announcement demonstrates that this office will work tirelessly to address all facets of the opioid epidemic,” First Assistant United States Attorney Daniel P. Bubar of the Western District of Virginia said. “This historic resolution is the product of a continued partnership with the Virginia Medicaid Fraud Control Unit, FDA, HHS, and the U.S. Postal Service.”

“This is a landmark moment in our fight to hold drug companies responsible for their role in the opioid crisis,” said Virginia Attorney General Mark Herring. “We will not allow anyone to put profits over people, or to exacerbate or exploit the opioid crisis for their own benefit. The Virginia Medicaid Fraud Control Unit’s expertise, capacity, and diligent investigation, combined with strong relationships with local, state, and federal partners, helped make this resolution possible.”

“Opioid addiction and abuse is an immense public health crisis and taking steps to address it is one the FDA’s highest priorities,” said Acting FDA Commissioner Ned Sharpless, M.D. “Providing misleading information about product benefits puts the public at risk. We also are particularly concerned with schemes to game the drug approval process to prevent generic competition for important medicines. The FDA, including criminal investigators in our Office of Regulatory Affairs and the lawyers in our Office of Chief Counsel, will continue to work with the Department of Justice to investigate and hold accountable those who devise and participate in schemes to the detriment of the public health.”

“The U.S. Postal Service spends billions of dollars per year in workers compensation-related costs, most of which are legitimate,” said Kenneth Cleevely, Special Agent in Charge of the Eastern Field Office for the U.S. Postal Service Office of Inspector General. “However, when medical providers or companies choose to flout the rules and profit illegally, special agents with the USPS OIG will work with our law enforcement partners to hold them responsible. To report fraud or other criminal activity involving the Postal Service, contact our special agents at or 888-USPS-OIG.”

According to the indictment, Indivior—including during the time when it was a subsidiary of RB Group—promoted the film version of Suboxone (Suboxone Film) to physicians, pharmacists, Medicaid administrators, and others across the country as less-divertible and less-abusable and safer around children, families, and communities than other buprenorphine drugs, even though such claims have never been established.

The indictment further alleges that Indivior touted its “Here to Help” internet and telephone program as a resource for opioid-addicted patients. Instead, however, Indivior used the program, in part, to connect patients to doctors it knew were prescribing Suboxone and other opioids to more patients than allowed by federal law, at high doses, and in a careless and clinically unwarranted manner.

The indictment also alleges that, to further its scheme, Indivior announced a “discontinuance” of its tablet form of Suboxone based on supposed “concerns regarding pediatric exposure” to tablets, despite Indivior executives’ knowledge that the primary reason for the discontinuance was to delay the Food and Drug Administration’s approval of generic tablet forms of the drug.

The indictment alleges Indivior’s scheme was highly successful, fraudulently converting thousands of opioid-addicted patients over to Suboxone Film and causing state Medicaid programs to expand and maintain coverage of Suboxone Film at substantial cost to the government.

The Civil Settlement

Under the civil settlement, RB Group has agreed to pay a total of $700 million to resolve claims that the marketing of Suboxone caused false claims to be submitted to government health care programs. The $700 million settlement amount includes $500 million to the federal government and up to $200 million to states that opt to participate in the agreement. The claims settled by the civil agreement are allegations only and there has been no determination of liability.

The civil settlement addresses allegations by the United States that, from 2010 through 2014, RB Group directly or through its subsidiaries knowingly: (a) promoted the sale and use of Suboxone to physicians who were writing prescriptions without any counseling or psychosocial support and for uses that were unsafe, ineffective, and medically unnecessary and that were often diverted for uses that lacked a legitimate medical purpose; (b) promoted the sale or use of Suboxone Film to physicians and state Medicaid agencies using false and misleading claims that Suboxone Film was less susceptible to diversion and abuse than other buprenorphine products and that Suboxone Film was less susceptible to accidental pediatric exposure than tablets; and (c) submitted a petition to the Food and Drug Administration on Sept. 25, 2012, claiming that Suboxone Tablet had been discontinued “due to safety concerns” about the tablet formulation of the drug and took other steps to delay the entry of generic competition for Suboxone in order to improperly control pricing of Suboxone, including pricing to federal healthcare programs.

“With the nation continuing to battle the opioid crisis, the availability of quality addiction treatment options is critical. When treatment medications are used, it is essential they be prescribed carefully, legally, and based on accurate information, to protect the health and safety of patients in federal healthcare programs,” said Gary L. Cantrell, Deputy Inspector General for Investigations at the U.S. Department of Health and Human Services. “Along with our federal and state law enforcement partners we will continue working to protect these vulnerable beneficiaries.”

“Opioid manufacturers – like all drug manufacturers – have a duty to market their products both truthfully and safely,” said Craig Carpenito, U.S. Attorney for New Jersey. “Opioid manufacturers have an additional and critically important duty to maintain effective controls to prevent their highly dangerous products from being abused and diverted.”

“The opioid crisis has caused devastation throughout the country, including in the lives of Federal employees, annuitants, and their families,” said Thomas W. South, Deputy Assistant Inspector General for Investigations for the Office of Personnel Management. “The OPM OIG is committed to working with the Department of Justice and our other law enforcement partners to combat this epidemic. As always, patient safety is our number one priority.”

The civil settlement resolves the claims against RB Group in six lawsuits pending in federal court in the Western District of Virginia and the District of New Jersey under the qui tam, or whistleblower provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery.

FTC Resolution

Under a separate agreement with the Federal Trade Commission (FTC), RB Group has agreed to pay $50 million to resolve claims that it engaged in unfair methods of competition in violation of the Federal Trade Commission Act, 15 U.S.C. § 53(b). The FTC is filing a complaint in the United States District Court for the Western District of Virginia alleging anticompetitive activities by RB Group designed to impede competition from generic equivalents of Suboxone. RB Group no longer manufactures or markets drug products. As part of a consent decree, RB Group agreed that it would notify the FTC if it began marketing drug products in the United States. RB Group further agreed that if it filed a Citizen Petition with the FDA in connection with a drug product, it would simultaneously disclose to both the FDA and the FTC all studies and data relevant to that Citizen Petition. RB Group further agreed not to withdraw a drug from the market or otherwise disadvantage a drug after obtaining approval to market another drug containing the same active ingredient.

“Buprenorphine products are approved for use in the treatment of Americans struggling to overcome opioid addiction, and, in the middle of the nation’s opioid crisis, RB Group allegedly sought to deny those consumers a lower-cost generic alternative to maintain its lucrative monopoly on the branded drug,” said Gail Levine, a Deputy Director of the FTC’s Bureau of Competition.

A Multilateral Effort

The criminal resolution with RB Group was handled by the U.S. Attorney’s Office for the Western District of Virginia and the Department of Justice’s Consumer Protection Branch based on an investigation by the Virginia Attorney General’s Medicaid Fraud Control Unit; FDA - Office of Criminal Investigation; United States Postal Service – Office of Inspector General; and Department of Health and Human Services - Office of Inspector General. The civil settlement was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Virginia, and the U.S. Attorney’s Office for the District of New Jersey. Assistance was provided by representatives of the HHS Office of Counsel to the Inspector General; the HHS Office of the General Counsel, CMS Division; FDA’s Office of Chief Counsel; the U.S. Department of Agriculture Office of the General Counsel; the National Association of Medicaid Fraud Control Units; the Defense Criminal Investigative Service; the Office of Personnel Management - Office of Inspector General; the Department of Veterans’ Affairs Office of Inspector General; the Department of Labor - Office of Inspector General; and TRICARE Program Integrity.

July 17, 2019 in AML | Permalink | Comments (0)

Tuesday, July 16, 2019

Substance Abuse Treatment Center Owner Pleads Guilty to $57 Million Money Laundering Conspiracy in Connection with Hospital Pass-Through Billing Scheme

The owner of a Jacksonville, Florida-area substance abuse treatment center pleaded guilty today for his role in a $57 million money laundering conspiracy associated with a pass-through billing scheme involving laboratory testing services.

Kyle Ryan Marcotte, 36, of Jacksonville Beach, Florida, pleaded guilty before U.S. Magistrate Judge Joel Toomey of the Middle District of Florida to a one-count information charging him with conspiracy to commit money laundering.  As part of his guilty plea, Marcotte agreed to a forfeiture judgment of $10,220,281.42.  Sentencing before U.S. District Judge Timothy Corrigan of the Middle District of Florida has not yet been scheduled.

According to admissions made as part of his guilty plea, Marcotte was the owner of a substance abuse treatment facility in Jacksonville Beach, Florida.  In approximately 2015, Marcotte entered into an arrangement with a laboratory owner to send urine samples for the facility’s patients to the owner’s lab for urine drug testing (UDT), in exchange for receiving 40 percent of the insurance reimbursements.  The lab owner, in turn, arranged with the managers of Campbellton–Graceville Hospital (CGH) and Regional General Hospital Williston (RGH), rural hospitals in Florida, to have the testing billed to private insurers through CGH and RGH and reimbursed at favorable rates under the hospitals’ in-network contracts with insurers.  Marcotte also admitted that he brokered deals with other substance abuse treatment centers to have their UDTs billed through CGH and RGH in exchange for Marcotte receiving 10 percent of the insurance reimbursements, while the other substance abuse facilities would receive 30 percent of the insurance reimbursements.

The lab owner subsequently acquired Chestatee Hospital, in Dahlonega, Georgia, and other rural hospitals.  Marcotte admitted that he continued to supply samples from his substance abuse treatment facility and continued to broker deals with other substance abuse treatment centers to have UDTs tested at the lab and billed to insurers through Chestatee and the other hospitals, all in exchange for a percentage of the insurance reimbursements.  The reimbursements were transmitted from the hospitals to the lab, which then transmitted them to two companies Marcotte controlled, North Florida Labs and KTL Labs using financial transactions and bank accounts that Marcotte had established to facilitate the payments.  Marcotte arranged to transfer a portion of the reimbursements from KTL Labs as kickbacks to the individuals and companies that controlled the substance abuse treatment centers in order to further the fraudulent scheme.  Marcotte also transferred a portion of the reimbursements to himself and to purchase real estate and items of real property, he admitted.

Marcotte caused $50 million in payments to be made from KTL Labs’ bank accounts to at least 88 companies and individuals associated with substance abuse treatment centers that supplied urine samples for testing.  The total amount of money that was part of the money laundering  scheme was $57.3 million, Marcotte admitted.

July 16, 2019 in AML | Permalink | Comments (0)

Saturday, July 13, 2019

South Florida Resident Sentenced to 30 Years for $100 Million International Fraud Scheme that Led to the Collapse of One of Puerto Rico’s Largest Banks

A Key Biscayne, Florida, resident and the former CEO and Chairman, Jack Kachkar, 56, of a now-bankrupt multinational pharmaceutical company was sentenced to 30 years in prison followed by five years of supervised release yesterday for his role his role in a $100 million scheme to defraud Westernbank of Puerto Rico (Westernbank). The losses triggered a series of events leading to Westernbank’s insolvency and ultimate collapse.

According to evidence presented at trial, from 2005 to 2007, Kachkar served as chairman and CEO of Inyx Inc., a publicly traded multinational pharmaceutical manufacturing company.  Beginning in early 2005, Kachkar caused Westernbank to enter into a series of loan agreements in exchange for a security interest in the assets of Inyx and its subsidiaries.  Under the loan agreements, Westernbank agreed to advance money based on Inyx’s customer invoices from “actual and bona fide” sales to Inyx customers, the evidence showed.

The trial evidence showed that Kachkar orchestrated a scheme to defraud Westernbank by causing numerous Inyx employees to make tens of millions of dollars worth of fake customer invoices purportedly payable by customers in the United Kingdom, Sweden and elsewhere.  Kachkar caused these invoices to be presented to Westernbank as valid invoices.  Kachkar made false and fraudulent representations to Westernbank executives about purported and imminent repayments from lenders in the United Kingdom, Norway, Libya and elsewhere in order to lull Westernbank into continuing to lend money to Inyx, the evidence showed.  In fact, these lenders had not agreed to repay Westernbank’s loan.  Kachkar made false and fraudulent representations to Westernbank executives that he had additional collateral, including purported mines in Mexico and Canada worth hundreds of millions of dollars, to induce Westernbank to lend additional funds, the evidence showed.  In fact, this additional collateral was worth barely a fraction of that represented by Kachkar.

During the course of the scheme, Kachkar caused Westernbank to lend approximately $142 million, primarily based on false and fraudulent customer invoices.  The evidence showed that the defendant diverted tens of millions of dollars for his own personal benefit, including for the purchase of, among other things, a private jet, luxury homes in Key Biscayne and Brickell, Miami, luxury cars, luxury hotel stays, and extravagant jewelry and clothing expenditures.

In or around June 2007, Westernbank declared the loan in default and ultimately suffered losses exceeding $100 million on the Inyx loans.  According to trial evidence, these losses later triggered a series of events leading to Westernbank’s insolvency and ultimate collapse.  At the time of its collapse, Westernbank had approximately 1,500 employees and was one of the largest banks in Puerto Rico.

This case was investigated by the FDIC-OIG, IRS-CI, HSI and FBI.

July 13, 2019 in AML | Permalink | Comments (0)

CFTC Announces $2 Million Award to Joint Whistleblowers

The Commodity Futures Trading Commission (CFTC) announced today an award of approximately $2 million to two model whistleblowers who provided the agency with significant information that prompted the CFTC to open an investigation. 

The CFTC found numerous violations of the Commodity Exchange Act (CEA) that were directly based on information from the whistleblowers. The multiple interviews and numerous documents the whistleblowers provided were highly informative and formed the basis of the CFTC’s investigation. The whistleblowers also reported the same information to another organization, which conducted a separate investigation and shared its findings with the CFTC. Those findings significantly assisted the CFTC in building its case. The award will be divided evenly between the whistleblowers because they jointly submitted the tip and award application to the CFTC.          

“This award demonstrates how whistleblowers can play an integral role in our investigations and be rewarded for their significant contributions,” said Christopher Ehrman, Director of the CFTC’s Whistleblower Office. “It often takes integrity and courage to report specific, timely, and credible information about misconduct, and such information enhances our ability to police the markets.”

Since establishing the Whistleblower Program, the CFTC has awarded more than $90 million to whistleblowers, while CFTC actions associated with those awards have resulted in sanctions orders totaling more than $730 million.  The largest single award was approximately $30 million paid to one whistleblower.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the CFTC’s Whistleblower Program.  Whistleblower awards can range from 10 to 30 percent of the money collected in actions where the amount of sanctions ordered exceeds $1 million. The CFTC pays all whistleblower awards out of the CFTC’s Customer Protection Fund, established by Congress and financed entirely through sanctions paid to the CFTC by violators of the CEA. The CFTC does not take or withhold any money from victims to fund the program.

The Whistleblower Program provides all whistleblowers with confidentiality protections regardless of whether the CFTC ultimately issues awards.  The CFTC will not disclose any information which could reasonably be expected to reveal a whistleblower’s identity, except in limited circumstances such as when disclosure is required in connection with a public proceeding.  Consistent with this confidentiality requirement, the CFTC will not disclose the name of the enforcement action in which the whistleblower provided information, the award percentage granted to the whistleblower, and the exact dollar amount of the award granted. 

The Whistleblower Program also provides whistleblowers with anti-retaliation protections.  A person may not take any action to impede an individual from communicating directly with the CFTC’s staff about a possible violation of the CEA, including by enforcing, or threatening to enforce, a confidentiality agreement or pre-dispute arbitration agreement regarding such communications.

July 13, 2019 in AML | Permalink | Comments (0)

Thursday, July 11, 2019

EU Adopts Regulation on Foreign Direct Investments

Skadden Law Form reports and analyzes here: On March 19, 2019, the European Union adopted a regulation for the screening of foreign direct investments into the EU (the Regulation).1 The Regulation sets forth national security factors that EU member states (Member States) and the EU Commission (the Commission) may consider when assessing foreign direct investments by non-EU investors. The Regulation entered into force on April 10, 2019, and will have direct effect in Member States from October 11, 2020.


The Regulation covers only investments by non-EU investors in the EU and does not extend to intra-European foreign investment flows. The Regulation broadly defines foreign direct investment as:

“an investment of any kind by a foreign investor that aims to establish or maintain lasting and direct links between the foreign investor and the entrepreneur to whom or the undertaking to which the capital is made available in order to carry out an economic activity in a Member State, including investments that enable effective participation in the management or control of a company carrying out an economic activity.”

Each Member State is responsible for establishing the appropriate criteria, through national legislation, for transactions that may qualify as foreign direct investments pursuant to their national law (e.g., acquisition of control, ownership thresholds, influence on sensitive activities or industries, etc.).

Read the full Skadden Law Form reports and analyzes here

July 11, 2019 in AML, Financial Regulation | Permalink | Comments (0)

Tuesday, July 9, 2019

Beyond Hollywood, Part II: AML Priorities and Best Practices

The world of money laundering is a fast-paced and ever evolving as we learned on the last episode of FINRA Unscripted. That can make it difficult for a financial firm to develop and maintain a robust anti-money laundering program.

But maintaining a strong program is essential, making AML a perennial priority for FINRA’s examination staff. A robust AML program will not only safeguard the investing public and our financial markets, but it will also protect a firm’s reputation.  

On this episode of FINRA Unscripted, we are joined once again by Blake Snyder and Jason Foye of FINRA’s AML Investigative Unit to discuss current priorities and best practices when it comes to anti-money laundering regulation. 


Resources mentioned in this episode:

2019 FINRA Priorities Letter

FINRA CDD Rule Requirements

July 9, 2019 in AML | Permalink | Comments (0)

Monday, July 8, 2019

Beyond Hollywood: Money Laundering in the Securities Industry

When three hapless employees inadvertently embezzle a bunch of cash in the movie “Office Space,” they decide the best way to cover it up is to launder it. But the thing is, they don’t even really know what money laundering is and they learned that even the dictionary couldn’t fill them in.

If you want to understand what money laundering is, and more specifically, the efforts brokerage firms must take to prevent and detect it, stay tuned. We have something better than the dictionary: we have Blake Snyder and Jason Foye, two members of FINRA’s Anti-Money Laundering Investigative Unit.

On this episode of FINRA Unscripted, Blake and Jason explain what money laundering is, how it looks different in the securities industry, how that makes regulation different for the securities industry, what FINRA’s Anti-Money Laundering Investigative Unit does and more.


July 8, 2019 in AML | Permalink | Comments (0)

Sunday, July 7, 2019

Treasury Sanctions Officials of the Illegitimate Maduro Regime Involved in Rampant Corruption

Treasury continues to target corrupt public sector officials undermining public services

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated two Maduro regime officials who continue to engage in significant corruption and fraud to the detriment of the people of Venezuela.  Persistent countrywide blackouts are the latest and worst in a long history of electricity outages, stemming from years of massive corruption, neglect, and mismanagement of Venezuela’s electricity infrastructure by the illegitimate Maduro regime.  The lack of electricity limits the Venezuelan people’s access to basic goods, services, and potable water supplies, and exacerbates the already precarious health care system, in which the majority of hospitals already lack reliable water and power and are experiencing shortages of medicine and medical supplies. 

“The people of Venezuela entrusted their public officials to provide fundamental civic services, like water and electricity.  The illegitimate Maduro regime exploits the public trust by plundering Venezuelan assets, enriching themselves, and watching idly as basic public systems needlessly and catastrophically fail,” said Treasury Secretary Steven T. Mnuchin.  “Treasury will continue to target officials who exacerbate corruption at the expense of the Venezuelan people and knowingly fail to provide basic public services.”

Today’s action targets the former minister of Electric Power and President of the National Electric Corporation (CORPOELEC), Luis Alfredo Motta Dominguez (Motta), and the Deputy Minister of Finance, Investments, and Strategic Alliances for the Ministry of Electric Power, Eustiquio Jose Lugo Gomez (Lugo), pursuant to Executive Order (E.O.) 13692.  Rather than use their official positions to serve the Venezuelan people, Motta and Lugo illegally enriched themselves and contributed to the electricity crisis. 

Pursuant to an investigation undertaken by the United States Attorney’s Office for the Southern District of Florida, the Justice Department’s Criminal Division and the Drug Enforcement Administration in Miami, as a part of a criminal complaint in March 2019, senior CORPOELEC officials were identified as having previously received bribes, since at least 2016, from two Venezuelan businessmen in exchange for awarding contracts for expensive equipment to maintain Venezuelan electrical infrastructure.  Some of the equipment received as a part of these contracts was incompatible with the Venezuelan electrical system, rendering them useless and contributing to the ongoing deterioration of the electrical system.  Despite those incompatibilities, officials from CORPOELEC listed these contracts as delivered and processed in full.  As corruption ran rampant through CORPOELEC, senior officials continued to exacerbate the ongoing mismanagement intertwined in the Venezuelan electrical infrastructure and ignored their responsibility to the Venezuelan people. 

The following two individuals are being designated today pursuant to Executive Order 13692, as amended, as current or former officials of the Government of Venezuela:

  • Luis Alfredo Motta Dominguez is the former Minister of Electric Power as well as President of the National Electric Corporation (CORPOELEC), both positions he had held since 2015.  Maduro removed Motta from these positions in March 2019.  Additionally, Motta is a Major General of the Bolivarian National Guard and previously served as the head of Strategic Integral Development Region (REDI) Central. 
  • Eustiquio Jose Lugo Gomez is the Deputy Minister of Finance, Investment, and Strategic Alliances for the Ministry of Electric Power.  Additionally, Lugo is a Brigadier General and was formerly appointed to the Operations Directorate of the Anti-Drug Command of the General Command of the Bolivarian National Guard. 

As a result of today’s action, all property and interests in property of these individuals, and of any entities that are owned, directly or indirectly, 50 percent or more by such individuals, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.  OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.

Also today, the United States Attorney’s Office for the Southern District of Florida and the Justice Department’s Criminal Division indicted Motta and Lugo for their alleged roles in laundering the proceeds of violations of the Foreign Corrupt Practices Act (FCPA) and Venezuelan anti-bribery law in connection with their alleged receipt of bribes to award CORPOELEC business to U.S.-based companies.  Additional information about today’s action.

U.S. sanctions need not be permanent; sanctions are intended to bring about a positive change of behavior.  For example, on May 7, 2019, OFAC removed sanctions imposed on former high-ranking Venezuelan intelligence official Manuel Ricardo Cristopher Figuera after his public break with Maduro.  The United States continues to make clear that the removal of sanctions is available for persons designated under E.O. 13692 or E.O. 13850, both as amended, who take concrete and meaningful actions to restore democratic order, refuse to take part in human rights abuses, speak out against abuses committed by the illegitimate Maduro regime, or combat corruption in Venezuela.

For information about the methods that Venezuelan senior political figures, their associates, and front persons use to move and hide corrupt proceeds, including how they try to exploit the U.S. financial system and real estate market, please refer to Treasury’s Financial Crimes Enforcement Network (FinCEN) advisories FIN-2019-A002, “Updated Advisory on Widespread Public Corruption in Venezuela,” FIN-2017-A006, “Advisory to Financial Institutions and Real Estate Firms and Professionals” and FIN-2018-A003, “Advisory on Human Rights Abuses Enabled by Corrupt Senior Foreign Political Figures and their Financial Facilitators.”

Identifying information related to action.

July 7, 2019 in AML | Permalink | Comments (0)

Tuesday, July 2, 2019

TechnipFMC Plc Agrees to Pay Over $296 Million in Global Penalties to Resolve Brazil and Iraq Bribes

TechnipFMC plc (TFMC), a publicly traded company in the United States and a global provider of oil and gas services, and its wholly-owned U.S. subsidiary, Technip USA, Inc. (Technip USA), have agreed to pay a combined total criminal fine of more than $296 million to resolve foreign bribery charges with authorities in the United States and Brazil.  TFMC is the product of a 2017 merger between two predecessor companies, Technip S.A. (Technip) and FMC Technologies, Inc. (FMC).  The charges arose out of two independent bribery schemes:  a scheme by Technip to pay bribes to Brazilian officials and a scheme by FMC to pay bribes to officials in Iraq.  Technip USA and Technip’s former consultant pleaded guilty today in connection with the resolution.  In 2010, Technip entered into a $240 million resolution with the Department over bribes paid in Nigeria.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue of the Eastern District of New York, Assistant Director Robert Johnson of the FBI’s Criminal Investigative Divison and Acting Special Agent in Charge Charles A. Dayoub of the FBI’s Washington Field Office Criminal Division made the announcement.

“Today’s resolution takes aim at the scourge of bribery, but does so in a fair and evenhanded way,” said Assistant Attorney General Benczkowski.  “It is a testament to the strength and effectiveness of international coordination in the fight against corruption, but also an acknowledgment that the Department is fully committed to reaching fair and just resolutions with companies that fully cooperate and remediate.”

 “Today’s resolutions are the result of a continuing multinational effort to hold accountable corporations and individuals who seek to win business through corrupt payments to foreign officials, and who attempt to use the U.S. financial system to carry out those crimes,” said U.S. Attorney Donoghue.  “We will continue to prioritize identifying and bringing to justice those who would corrupt the legitimate functions of government for personal financial gain.”

“Today’s charges demonstrate not only the capabilities of the FBI personnel who investigate international corruption, but the successful results of strong partnerships in the international community,” said Assistant Director Johnson.  “In attempting to cheat the system, Technip violated the FCPA. Through the collaboration and dedicated efforts of the FBI and our foreign partners, Technip is being held accountable for perpetrating illegal schemes and justice is served.”

“This case shows the FBI will continue to work tirelessly to hold those accountable who treat corruption and bribery as a common business practice,” said Acting Special Agent in Charge Dayoub.  “Today's agreement is the culmination of the hard work of the FBI and Department of Justice and our international partners.”

 TFMC entered into a deferred prosecution agreement with the Department in connection with a criminal information filed today in the Eastern District of New York charging the company with two counts of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA).  In addition, Technip USA pleaded guilty and was sentenced on a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA.  Pursuant to its agreement with the Department, TechnipFMC will pay a total criminal fine of over $296 million, including a $500,000 criminal fine paid by Technip USA.  As part of the deferred prosecution agreement, TechnipFMC committed to implementing rigorous internal controls and to cooperate fully with the Department’s ongoing investigation.

In connection with the scheme to bribe Brazilian officials, Technip’s former consultant also pleaded guilty in the Eastern District of New York to a one-count criminal information charging him with conspiracy to violate the FCPA.  He is awaiting sentencing.

All three cases are assigned to U.S. District Judge Kiyo A. Matsumoto of the Eastern District of New York. 

In related proceedings, the company settled with the Advogado-Geral da União (AGU), the Controladoria-Geral da União (CGU) and the Ministério Público Federal (MPF) in Brazil over bribes paid in Brazil.  The United States will credit the amount the company pays to the Brazilian authorities under their respective agreements, with TechnipFMC paying Brazil approximately $214 million in penalties.  

According to admissions and court documents, beginning in at least 2003 and continuing until at least 2013, Technip conspired with others, including Singapore-based Keppel Offshore & Marine Ltd. (KOM) and their former consultant, to violate the FCPA by making more than $69 million in corrupt payments and “commission payments” to the consultant, companies associated with the consultant and others, who passed along portions of these payments as bribes to Brazialin government officials who were employees at the Brazilian state-owned oil company, Petrobras, in order to secure improper business advantages and obtaining and retaining business with Petrobas for Technip, Technip USA and Joint Venture.  In addition, Technip made more than $6 million in corrupt payments to the Workers’ Party in Brazil and Workers’ party officials in furtherance of the bribery scheme.

The admissions and court documents also establish that beginning by at least 2008 and continuing until at least 2013, FMC conspired to violate the FCPA by paying bribes to at least seven government officials in Iraq, including officials at the Ministry of Oil, the South Oil Company and the Missan Oil Company, through a Monaco-based intermediary company in order to win secure improper business advantages and to influence those foreign officials to obtain and retain business for FMC Technologies in Iraq.

In the resolutions with the Department, TFMC received credit for its substantial cooperation with the Department’s investigation and for taking extensive remedial measures.  For example, the company separated from or took disciplinary action against former and current employees in relation to the misconduct described in the statement of facts to which it admitted as part of the resolution; made changes to its business operations in Brazil to no longer participate in the type of work where the misconduct at issue arose; required that certain employees and third parties undergo additional compliance training; and made specific enhancements to the company’s internal controls and compliance program.  Accordingly, the criminal fine reflects a 25 percent reduction off the applicable U.S. Sentencing Guidelines fine for the company’s full cooperation and remediation.

In a related enforcement action, in December of 2017, KOM and its U.S. subsidiary, Keppel Offshore & Marine USA, Inc., agreed to pay a combined total criminal fine of more than $422 million to resolve charges with authorities in the United States, Brazil and Singapore on related conduct.  A former senior member of KOM’s legal department also pleaded guilty and is awaiting sentencing.

The governments of Australia, Brazil, France, Guernsey, Italy, Monaco and the United Kingdom provided significant assistance in this matter, as did the Criminal Division’s Office of International Affairs.

The Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at

July 2, 2019 in AML | Permalink | Comments (0)

Monday, July 1, 2019

Outcomes of the FATF Plenary of June 2019

U.S. Secretary of the Treasury Steven T. Mnuchin delivered the closing remarks to the Plenary, highlighting the critical role of the FATF, the importance of the new global standards agreed by FATF this week to protect virtual assets from abuse by money launderers, terrorist financiers, and other illicit actors; action on Iran; and agreement to strengthen the standards to counter the financing of the proliferation of WMD.

During three days of meetings, delegates discussed the following issues, including FATF initiatives under the U.S. Presidency of the FATF:

1. Major Strategic Initiatives

  • Mitigating risks from virtual asset activities, including a public statement and a risk-approach guidance on virtual assets and virtual asset service providers.
  • Launching a Strategic Review to analyse the progress made on effective implementation of AML/CFT measures, review the FATF/FSRB assessment processes, and identify drivers of positive change.
  • FATF’s current action to combat terrorist financing, including a statement on FATF Actions to identify ISIL, Al-Qaeda and Affiliates Financing and the adoption of guidance for jurisdictions on assessing terrorist financing risk.
  • FATF’s efforts to strengthen its standards on Countering the Financing of Proliferation

2. Mutual Evaluations and Follow-Up Reviews, and Compliance

  • Discussion of the mutual evaluation reports of Greece and Hong Kong, China
  • Discussion of follow-up reports for the mutual evaluation of Iceland, in which the country achieved technical compliance re-ratings
  • Issuing a statement on Brazil’s progress in addressing the deficiencies identified in its mutual evaluation report
  • Identifying jurisdictions with strategic anti-money laundering and countering the financing of terrorism (AML/CFT) deficiencies:
    • Jurisdiction no longer subject to monitoring: Serbia
    • New jurisdiction subject to monitoring: Panama
    • Monitoring Iran’s actions to address deficiencies in its AML/CFT system

3. Other Initiatives

  • Adoption of a report to the G20 Leaders
  • Approval of three Risk-Based Approach Guidance papers:
    • Lawyers
    • Accountants
    • Trust and Company Service Providers (TCSPs)

4. Welcoming the Kingdom of Saudi Arabia as a new member to the FATF

5. Discussion of the FATF priorities under the Chinese Presidency

1. Major Strategic Initiatives

Mitigating the money laundering and terrorist financing risks of virtual assets.

This Plenary, the FATF delivered on its commitment to member governments and the G20, as well as the private sector, to develop and clarify the FATF’s requirement with respect to virtual asset activities and virtual asset service providers. In October 2018, in response to the increasing use of virtual assets for money laundering and terrorist financing, the FATF amended Recommendation 15 and the glossary to clarify to which businesses and activities the FATF requirements apply in the case of virtual assets. Following a public consultation on the measures applicable to virtual asset transfers, the FATF has now finalised the Interpretive Note to Recommendation 15 which sets out in detail the application of the FATF Standards and binding measures for the regulation and supervision of virtual asset activities and service providers. The FATF also finalised guidance to further assist countries and providers in complying with their AML/CFT obligations and guidance for operational authorities to support the effective investigation and confiscation of virtual assets misused for money laundering or terrorist financing.

Risk-based Approach Guidance on Virtual Assets and Virtual Asset Service Providers

The FATF adopted updated guidance that clarifies the application of the risk-based approach to implementing the FATF Recommendations in the context of virtual assets. The guidance benefitted from dialogue with the private sector, including the sector itself. It includes examples of national approaches to regulating and supervising virtual asset activities and service providers to prevent their misuse for money laundering and terrorist financing. 

The FATF is now working on revising its methodology to assess how countries have implemented the FATF’s new requirement for the October 2019 Plenary. During the next 12 months, the FATF will closely monitor the actions that countries are taking and will continue to engage the private sector on its efforts to enhance compliance with the FATF standards.

Strategic Review

With a new, open-ended, mandate, the FATF moves into a new phase.  As the FATF continues to lead global action against money laundering, the financing of terrorism and proliferation, it must ensure that its work is timely, targeted and effective.  With the support from the G20, the FATF Plenary agreed to launch a strategic review of its own processes.  This review will analyse the progress made on effective implementation of AML/CFT measures, review the FATF/FSRB assessment processes, and identify drivers of positive change. 

FATF’s current action to combat terrorist financing

Combatting the financing of terrorism has remained a priority for the FATF under the U.S. Presidency. Acts of terrorism, whether perpetrated by groups such as ISIL and Al Qaeda, or terrorist groups with other extremist views, continue to pose a threat to our society. Since the February 2019 Plenary there have been a number of serious terrorist attacks. The United Nations recognised the FATF as the global standard-setter to combat terrorist financing when it adopted UN Security Council Resolution 2462(2019). This resolution, focused solely on countering terrorist financing, has embedded the need to implement the FATF Standards for combatting terrorist financing into international law. 

During this Plenary meeting, delegates heard an updated assessment of the financing methods employed by ISIL, Al Qaeda and affiliates, and released a public statement on FATF members’ actions to identify and disrupt their financing.  Despite ISIL’s loss of territory, it still has access to significant reserves of funds, while its extremist ideology continues to inspire acts of terror. 

The investigation and prosecution of terrorist financing is central to global efforts to counter terrorism. However, FATF and FSRBs’ assessments reveal that many countries still face challenges in investigating terrorist financing activity. A global workshop, hosted by the Israeli government in Tel Aviv in March 2019, building on the targeted outreach to judges and prosecutors initiated under the Argentinean Presidency of the FATF, sought to explore common challenges and best practices experienced by jurisdictions when prosecuting terrorist financing. The Plenary decided that the FATF should develop guidance to help countries effectively investigate and prosecute terrorist financing. 

Guidance on Terrorist Financing Risk Assessment

The FATF requires each country to identify, assess and understand the terrorist financing risks it faces in order to mitigate them and effectively dismantle and disrupt terrorist networks.  Assessing terrorist financing risks can be challenging due to the cross-border nature of terrorist financing, and the low value and routine nature of funds and transactions often involved.  The FATF finalised a Guidance which will assist countries, in particular low capacity countries with limited terrorist financing expertise, in assessing their risk context. Recognising that there is no one-size-fits-all approach when assessing terrorist financing risk, the Guidance provides relevant information sources and considerations for different country contexts. This report builds on the FATFs 2013 Guidance on National Money Laundering and Terrorist Financing Risk Assessments and draws on national experiences and lessons learnt in assessing terrorist financing risk from across the FATF Global Network.

Countering the Financing of Proliferation

Under the U.S. Presidency, in June 2019, the FATF agreed to pursue further work to strengthen the FATF Standards on countering the financing of proliferation by requiring jurisdictions and private sector entities to understand and mitigate their proliferation financing risks, as well as by enhancing requirements for domestic cooperation and coordination on proliferation financing.  FATF has conducted extensive analysis on a range of proposals, but has agreed to prioritize this work moving forward. Other options considered included new requirements to use criminal justice measures and financial intelligence, expanded targeted financial sanctions tools, and more effective mechanisms to ensure international information sharing on proliferation financing activity. The FATF agreed to potentially consider these other options at a later date.

2. Mutual Evaluations and Follow-Up Reviews, and Compliance

Discussion of the mutual evaluation reports of Greece and Hong Kong, China

The Plenary discussed the mutual evaluation reports of Greece and Hong Kong, China and the level of effectiveness of each jurisdiction’s AML/CFT system and their level of compliance with the FATF Recommendations.

The Plenary concluded that Greece has a sound legal framework to support effective action against money laundering and terrorist financing, but that the country needs to improve its prosecution of these crimes, the supervision of its designated non-financial professions and businesses and NPO sector, and the confiscation of proceeds of crime.   

The Plenary discussed the joint APG-FATF assessment of Hong Kong, China and concluded that the jurisdiction has a strong legal foundation to underpin its AML/CFT regime.  Hong Kong, China understands its risks, has effective measures to combat terrorist financing and to confiscate the proceeds of crime, and actively cooperates with international partners. However, it needs to prioritise efforts to prosecute ML linked to foreign predicates, increase risk understanding and AML/CFT implementation by smaller institutions, and strengthen supervisory measures for some sectors.

The reports were prepared on the basis of the FATF Methodology for assessments which requires countries to take into account the effectiveness with which AML/CFT measures are implemented, as well as technical compliance for each of the FATF Recommendations.

The Plenary discussed the key findings, priority actions and recommendations regarding each jurisdiction’s AML/CFT regime. The mutual evaluation reports are expected to be published by September 2019 after the quality and consistency review, in accordance with procedures.

Discussion of the follow-up report for the mutual evaluation of Iceland in which the country achieved technical compliance re-ratings

The Plenary discussed the progress that Iceland has made since its mutual evaluation report was adopted last year. The FATF Plenary agreed to re-rate Iceland a number of FATF Recommendations to reflect the country’s current level of technical compliance. After a quality and consistency review, the FATF will publish the follow-up report which sets out the actions that Iceland has taken to strengthen the effectiveness of its measures to combat money laundering and the financing of terrorism and proliferation.

Brazil’s progress in addressing the deficiencies identified in its mutual evaluation report

In February 2019, the FATF decided that it would review the Brazil’s recently adopted legislation for compliance with FATF Standards at its June Plenary and determine the next steps at that time.  The Plenary has issued a statement with regard Brazil.

Identifying jurisdictions with strategic anti-money laundering and countering the financing of terrorism (AML/CFT) deficiencies

The FATF maintains its February 2019 public documents which identify jurisdictions that may pose a risk to the international financial system, with the amendments set out below:

Jurisdiction no longer subject to monitoring: Serbia

The FATF congratulated Serbia for the significant progress made in addressing the strategic AML/CFT deficiencies identified earlier by the FATF and included in its action plan.

Serbia will no longer be subject to the FATF’s monitoring under its on-going global AML/CFT compliance process, and will work with its FATF-Style Regional Bodies MONEYVAL as it continues to further strengthen its AML/CFT regime.

New jurisdiction subject to monitoring: Panama

FATF has identified Panama as a jurisdiction with strategic AML/CFT deficiencies. The country has developed an action plan with the FATF to address the most serious deficiencies. The FATF welcomed the high-level political commitment of Panama to this action plan.

Monitoring Iran’s actions to address deficiencies in its AML/CFT system

In June 2016, the FATF welcomed Iran’s high-level political commitment to address its strategic AML/CFT deficiencies, and its decision to seek technical assistance in the implementation of the Action Plan. Given that Iran provided that political commitment and the relevant steps it has taken, the FATF decided in February 2019 to continue the suspension of counter-measures.

In November 2017, Iran established a cash declaration regime. In August 2018, Iran has enacted amendments to its Counter-Terrorist Financing Act and in January 2019, Iran has also enacted amendments to its Anti-Money Laundering Act. The FATF recognises the progress of these legislative efforts. The bills to ratify the Palermo and Terrorist Financing Conventions have passed Parliament, but are not yet in force. As with any country, the FATF can only consider fully enacted legislation. Once the remaining legislation comes fully into force, the FATF will review this alongside the enacted legislation to determine whether the measures contained therein address Iran’s Action Plan, in line with the FATF standards.

Iran’s action plan expired in January 2018. In June 2019, the FATF noted that there are still items not completed and Iran should fully address: (1) adequately criminalising terrorist financing, including by removing the exemption for designated groups “attempting to end foreign occupation, colonialism and racism”; (2) identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions; (3) ensuring an adequate and enforceable customer due diligence regime; (4) clarifying that the submission of STRs for attempted TF-related transactions are covered under Iran’s legal framework; (5) demonstrating how authorities are identifying and sanctioning unlicensed money/value transfer service providers; (6) ratifying and implementing the Palermo and TF Conventions and clarifying the capability to provide mutual legal assistance; and (7) ensuring that financial institutions verify that wire transfers contain complete originator and beneficiary information.

The FATF decided at its meeting this week to continue the suspension of counter-measures, with the exception of the FATF calling upon members and urging all jurisdictions to require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran, in line with the February 2019 Public Statement.

While acknowledging the progress that Iran made including with the passage of the Anti-Money Laundering Act, the FATF expresses its disappointment that the Action Plan remains outstanding.  The FATF expects Iran to proceed swiftly in the reform path to ensure that it addresses all of the remaining items by completing and implementing the necessary AML/CFT reforms.

If by October 2019, Iran does not enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards, then the FATF will require introducing enhanced relevant reporting mechanisms or systematic reporting of financial transactions; and increased external audit requirements for financial groups with respect to any of their branches and subsidiaries located in Iran. The FATF also expects Iran to continue to progress with enabling regulations and other amendments.

Iran will remain on the FATF Public Statement until the full Action Plan has been completed. Until Iran implements the measures required to address the deficiencies identified with respect to countering terrorism financing in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The FATF, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence with respect to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19, including: (1) obtaining information on the reasons for intended transactions; and (2) conducting enhanced monitoring of business relationships, by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.

3. Other Strategic Initiatives

Adoption of a report to the G20 Finance Ministers and Central Bank Governors

The Plenary discussed the FATF’s report to the G20 Leaders which highlights FATF’s recent work on the regulation of virtual assets. It also sets out other recent developments, including strengthening FATF’s institutional basis, governance and capacity of FATF, countering the financing of terrorism and proliferation of weapons of mass destruction terrorist financing, improving transparency and beneficial ownership, de-risking and work on FinTech/RegTech in relation to digital ID.

Publication of three Risk-Based Approach Guidance papers

The risk-based approach is at the core of the FATF Recommendations. It ensures that countries identify and understand the unique risks they are exposed to, allowing them to prioritise resources on areas where risks are highest. Informed by a public consultation in March 2019, the FATF updated three risk-based approach guidance documents that aim to support the implementation of the risk-based approach, taking into account national ML/TF risk assessments and AML/CFT legal and regulatory frameworks:

  • Lawyers
  • Accountants
  • Trust and Company Service Providers (TCSPs)

4. Welcoming the Kingdom of Saudi Arabia as a member to the FATF

The FATF granted full membership to Saudi Arabia. In 2018, the country underwent a mutual evaluation. Since then, Saudi Arabia has worked according to an action plan to address the key effectiveness issues identified during the evaluation. Based on the country’s commitment to complete the items on its action plan and the continuing progress to improve its AML/CFT, the Plenary agreed to grant membership.

5. Discussion of the FATF priorities under the Chinese Presidency

The FATF Plenary discussed and approved the priorities of the FATF under the Presidency of Xiangmin Liu which will commence on 1 July 2019. The main priority is the Strategic Review, but among other priorities, the FATF agreed to continue its important work to mitigate the money laundering and terrorist financing risks of new technologies and at the same time exploit the opportunities to more effectively fight these risks. Under the Chinese Presidency, the FATF will also prioritise work to promote and enable more effective supervision by national authorities.

More on:

July 1, 2019 in AML | Permalink | Comments (0)

Sunday, June 30, 2019

Alleged Cryptocurrency Fraudster Arrested in Thailand, Charged in Multi-Million Dollar Investment Scheme

In a criminal complaint unsealed, a citizen of Sweden and his company were charged with securities fraud, wire fraud and money laundering in a scheme to defraud potential investors.

In a complaint filed March 4, 2019, and unsealed today, Roger Nils-Jonas Karlsson and his company, Eastern Metal Securities (EMS), were charged with engaging in a scheme to defraud victims of more than $11 million. 

According to the complaint, since September 2006, Karlsson allegedly used websites to communicate false representations to victims in a scheme to defraud potential investors.  For example, one website,, allegedly was registered to a fictitious person and advertised shares in a product called a “Pre Funded Reversed Pension Plan” (PFRPP).  The complaint alleges Karlsson used the website to invite potential investors to purchase shares of the plan for $98 per share in exchange for an eventual payout of 1.15 kilograms of gold per share, even though as of Jan. 2, 2019, 1.15 kilograms of gold was worth more than $45,000.  Karlsson also allegedly advised investors that, in the unlikely event that the gold payout did not happen, he guaranteed to return to them 97 percent of the amount they invested.  According to the complaint, the government found no evidence of any accounts held by Karlsson that would allow him to pay off the investors.  Instead, the complaint alleges, the funds provided by victims were transferred to Karlsson’s personal bank accounts and now appear to be tied up in real estate in Thailand.

The complaint further describes how Karlsson allegedly used a second website,, to make multiple false communications to potential investors.  Karlsson allegedly brought the investors in HCI25 together with the investors in the PFRPP and posted multiple communications to delay the moment investors would realize there would be no payout.  For example, on one occasion, Karlsson allegedly explained that a payout had not occurred because releasing so much money all at once could cause a negative effect on financial systems throughout the world.  Karlsson also allegedly falsely represented that EMS was working with the U.S. Securities and Exchange Commission to prepare the way for a payout.

The complaint alleges Karlsson directed his victims to make investments using virtual currencies, such as Bitcoin.  Karlsson allegedly defrauded no less than 3,575 victims of more than $11 million. 

Karlsson was arrested on June 18 in Thailand.  The United States is seeking his extradition to stand trial in the Northern District of California.

June 30, 2019 in AML | Permalink | Comments (0)

Wednesday, June 12, 2019

Cypriot Police Raid FBME Bank, Which is Run By Central Bank of Cyprus and Former CBC Governors, in Money Laundering Probe

Organized Crime and Corruption Reporting Project (OCCRP) reports that: Cypriot police raided on Friday the premises of FBME Bank in Nicosia and in Limassol, looking for evidence of money laundering, two sources told OCCRP.  ... The investigation concerns “many cases” of legalization of illegal proceeds from various activities, including drug smuggling, as well as terrorism financing, he explained, adding that the bank’s owners had not been questioned yet.

FBME is run by the Central Bank of Cyprus (CBC) and has been for several years, via CBC Governors.  So this latest development is very interesting.  Are the Cyprus police investigating the activities of the Central Bank of Cyprus as these relate to CBC's control of FBME activities?  That the police were required to raid the FBME premise implies that the CBC is not cooperating in the AML investigation.  All mere speculation. But this FBME takeover by the CBC four years ago, and the FinCEN banking death penalty applied, raise many questions and issues.  To date, no bank employee or director have been charged with an AML violation?  No doubt that FBME has had AML violations.  But many banks have, and received quite different treatment, such as fines, monitors, non-prosecution agreements or deferred prosecution agreements.  What did FBME do that led FinCEN to shut it out of the US and US dollars market?  Did the CBC initiate the FinCEN action via providing FinCEN information because of something else going on in Cyprus?  Again - all speculation.  Perhaps we will never know what really happened with the FBME situation? 

Read previous articles about FBMEs long struggle with AML allegations (but no actual charges) 

June 12, 2019 in AML | Permalink | Comments (0)

Tuesday, June 11, 2019

Romanian National Sentenced for Multi-State ATM Card Skimming Scheme

A Romanian national was sentenced today in federal court in Springfield, Massachusetts, in connection with a multi-state ATM card skimming scheme. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Andrew E. Lelling for the District of Massachusetts, Special Agent in Charge Stephen Marks of the U.S. Secret Service’s Boston Field Division, Special Agent in Charge Peter C. Fitzhugh of Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Boston, East Longmeadow Police Chief Jeffrey Dalessio and Medford Police Chief Jack Buckley made the announcement.

Bogdan Viorel Rusu, 38, a Romanian national formerly residing in Queens, New York, was sentenced by U.S. District Court Judge Mark G. Mastroianni for the District of Massachusetts to 65 months in prison followed by 60 months of supervised release.  Judge Mastroianni also ordered Rusu to pay restitution in the amount of $440,130 and forfeit the same amount.  In September 2018, Rusu pleaded guilty to an Information that charged him with one count each of conspiracy to commit bank fraud, bank fraud and aggravated identity theft.  Rusu was arrested on Nov. 14, 2016, and initially charged by complaint in the District of New Jersey and has been in custody since.

According to Rusu’s plea agreement, from approximately Aug. 3, 2014, until his arrest on Nov. 14, 2016, Rusu engaged in a widespread bank fraud conspiracy that targeted various banks in Massachusetts, New York and New Jersey.  Rusu and his co-conspirators captured payment card account information from customers as they accessed their accounts through ATMs and then used that information to steal money from the customers’ bank accounts.

To capture the account information, Rusu and/or his co-conspirators installed electronic devices, i.e., skimming devices, which surreptitiously recorded customers’ bank account information on the banks’ card-readers at the vestibule door, the ATM machine, or both.  In addition, Rusu and/or his co-conspirators installed other devices (generally either pinhole cameras or keypad overlays) in order to record the keystrokes of bank customers as they entered their personal identification numbers to access their bank accounts.  After enough customers accessed the ATM machine, Rusu and/or his co-conspirators removed the skimming devices.  They then transferred the illegally obtained information from the skimming devices and pinhole cameras to counterfeit payment cards.  Finally, they visited other ATM machines with the counterfeit cards to obtain cash from the skimmed bank accounts before the bank or the customers became aware of their illicit conduct.

As a result of the scheme, $364,419 was lost in Massachusetts and $75,715 in New York (totaling $440,134 from 531 individual accounts), and another $428,581 was stolen in New Jersey.

June 11, 2019 in AML | Permalink | Comments (0)

Thursday, May 30, 2019

Did money laundering distort British Columbia’s economy and make housing unaffordable?

The Province will hold a public inquiry into money laundering that has distorted British Columbia’s economy, fuelled the overdose crisis and driven up housing prices.

The decision to proceed with a commission of inquiry follows three independent reviews that found extraordinary levels of money laundering in B.C.’s real estate market and other sectors of the economy.

“From day one, our government has been working to tackle the housing crisis and fraud that went unchecked for over a decade, hurting people and B.C.’s economy,” said Premier John Horgan. “We have taken decisive actions to combat money laundering, but questions remain and people in B.C. deserve answers. That is why we have decided to proceed with a public inquiry into money laundering in the Province of British Columbia.”

B.C. Supreme Court Justice Austin F. Cullen has been appointed to head the inquiry, which will look at the full scope of money laundering in British Columbia, including real estate, gaming, financial institutions and the corporate and professional sectors. He will also examine regulatory authorities and barriers to effective law enforcement of money laundering activities. He will have the ability to compel witnesses and order disclosure. 

“This inquiry will bring answers about who knew what when and who is profiting from money laundering in our province,” said David Eby, Attorney General. “The Honourable Justice Cullen will have the mandate, authority and resources to seek answers, perhaps most importantly among people and organizations who refuse to share what they know unless legally compelled to do so.” 

The Commission of Inquiry into Money Laundering in British Columbia will deliver an interim report within 18 months and a final report by May 2021. 

The Expert Panel on Money Laundering in Real Estate estimates that more than $7 billion in dirty money was laundered in B.C. in 2018 and that dirty money increased the cost of buying a home by about 5%. This could be significantly higher – upwards of 20% – in areas like Metro Vancouver where there is more money laundering activity.

“People are understandably shocked and upset about money laundering, and it’s not right that homeowners and renters are carrying the costs of crime,” said Carole James, Minister of Finance. “We’ve already taken action to make our real estate market more fair and transparent with our 30-point housing plan. Moving forward with this public inquiry reinforces our commitment to stamp dirty money out of our province and out of people’s lives.”

Peter German’s 2018 report, Dirty Money, described a history of money laundering and criminal activity in Lower Mainland casinos. His recently released follow-up report into money laundering in real estate, luxury cars and horse racing found thousands of specific properties worth billions of dollars were owned by individuals or entities with service addresses in “high risk” jurisdictions for money laundering. He also found that there was no agency or police force with adequate oversight or resources to investigate these suspicious activities.

Government is acting on the findings of the Dirty Money report. Nine of the 48 recommendations from the 2018 Dirty Money report have been completed, plus two additional interim recommendations from December 2017. Half of the recommendations are expected to be complete by summer 2019.

Government has also taken the following actions to address money laundering, tax fraud and to close loopholes in the real estate market:

  • introduced legislation to establish Canada’s first public registry of beneficial owners to put an end to the hidden ownership of real estate in B.C.;
  • established Canada’s first online register for pre-sale condo sales to track assignments;
  • updated the property transfer tax return to uncover beneficial owners behind corporations and trusts;
  • enacted legislation to allow information sharing on the homeowner grant with federal tax officials to improve tax enforcement;
  • strengthened property transfer tax auditors’ ability to take action on tax evasion;
  • implemented the speculation and vacancy tax, which targets foreign owners and satellite families who own real estate in the province but pay little or no tax in B.C.; and
  • established a federal-provincial working group on tax fraud and money laundering.

Learn More:

Read the terms of reference for the commission of inquiry:

Read biography of B.C. Supreme Court Justice Austin F. Cullen:

Billions in money laundering increased B.C. housing prices, expert panel finds:

Second German report finds money laundering in B.C. luxury car market:

Review finds zero dedicated federal anti-money laundering police officers working in B.C.:

Province cracking down on money laundering:

Dirty Money: An Independent Review of Money Laundering in Lower Mainland Casinos:

Province launches probe into dirty money in real estate:

May 30, 2019 in AML | Permalink | Comments (0)

Wednesday, May 29, 2019

Phone Provider Found Guilty for Role in $11 Million International Telemarketing Scheme

An Ohio man was found guilty today for his role in an $7 million telemarketing scheme that defrauded primarily elderly victims in the United States from call centers in Costa Rica.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney R. Andrew Murray of the Western District of North Carolina, Inspector in Charge David M. McGinnis of the U.S. Postal Inspection Service’s Charlotte Divison, Acting Special Agent in Charge William Cheung of the IRS Criminal Investigation’s (CI) Cincinnati Field Office, Special Agent in Charge Matthew D. Line of the IRS CI Charlotte Field Office and Special Agent in Charge John Strong of the FBI’s Charlotte Field Office made the announcement. 

Following a five-day jury trial, Donald Dodt, 76, originally of Cleveland, Ohio, was convicted of one count of conspiracy to commit wire fraud and mail fraud, two counts of mail fraud, eight counts of wire fraud, one count of conspiracy to commit international money laundering and 10 counts of international money laundering.

According to evidence presented at trial, Dodt worked in a call center in Costa Rica in which co-conspirators, who posed as representatives of the District of Columbia Department of Consumer and Regulatory Affairs and federal agencies, including the U.S. Federal Trade Commission, and who also posed as federal judges, contacted victims in the United States — primarily senior citizens – to tell them that that they had supposedly won a substantial “sweepstakes” prize.  After convincing victims that they stood to receive a significant financial reward, the co-conspirators told victims that they needed to make a series of up-front cash payments before collecting, purportedly for items like insurance fees, taxes and import fees.  Co-conspirators used a variety of means to conceal their true identity, such as Voice over Internet Protocol (VoIP) services provided by Dodt that made it appear that they were calling from Washington, D.C., and other places in the United States. 

As the evidence presented at trial illustrated, Dodt was an integral part of this scheme in that he knowingly provided services that were necessary for the scheme to operate and that facilitated the concealment and, ultimately, success of the scheme for many years.  Specifically, Dodt provided and maintained VoIP phone technology and assigned phone numbers associated with locations in the United States through which members of the conspiracy were able to make the fraudulent calls to victims in the United States and conceal their identities and location.  Dodt specifically assigned virtual phone numbers with area codes associated with Washington, D.C., to make it appear that the calls originated from within the United States and that also bolstered conspirators’ misrepresentations that they were representatives of government agencies located in Washington.  Dodt also warned the co-conspirators if certain numbers were “hot” – i.e., there were customer complaints or law enforcement inquiries – and replaced those phone numbers with new phone numbers that the co-conspirators then used in furtherance of the scheme, the evidence showed.

Dodt and his conspirators stole more than $7 million from victims, the evidence showed.    

May 29, 2019 in AML | Permalink | Comments (0)

Friday, May 24, 2019

President And CEO Of Las Vegas Investment Company Sentenced to 50 Years in Prison for Running $1.5 Billion Ponzi Scheme

The former president and CEO of MRI International Inc. (MRI), a purported investment company and medical collections business located in Las Vegas, Nevada, and Tokyo, Japan, was sentenced to 50 years in prison today for his role in a $1.5 billion Ponzi scheme.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicholas A. Trutanich of the District of Nevada and Special Agent in Charge Aaron C. Rouse of the FBI’s Las Vegas Division made the announcement.

Edwin Fujinaga, 72, of Las Vegas, was sentenced by Chief Judge Gloria Navarro of the U.S. District Court for the District of Nevada, who also sentenced Fujinaga to three years of supervised release, ordered restitution in the amount of $1,129,409,449 and forfeiture in the amount of $813,297,912.65.  In November 2018, after a five-week trial, Fujinaga, was found guilty of eight counts of mail fraud, nine counts of wire fraud and three counts of money laundering in connection with his Ponzi scheme.

According to evidence presented during trial, from 2000 until approximately 2013, Fujinaga fraudulently solicited over $1 billion in investments in MRI from over 10,000 Japanese victims who resided in Japan. The victims would wire their funds from Japan to bank accounts in Las Vegas under Fujinaga’s control.  Fujinaga approved and disseminated marketing materials that promised investors that their funds would only be used for purchasing medical claims and that an escrow agent would ensure that MRI used investor funds for only that purpose.  In truth, Fujinaga spent less than two percent of investor funds to purchase medical claims.  Instead, Fujinaga used the vast majority of new investors’ funds to pay off old investors.  He used the balance of investors’ funds for impermissible business and lavish personal expenses, such as a private jet; a mansion on a Las Vegas golf course; real estate in Beverly Hills, California wine country and Hawaii; and Bentley, McLaren and Bugatti luxury cars.  When the Japanese government revoked MRI’s license to market securities in April 2013, MRI owed its investors more than $1.5 billion.  Victims traveled from Japan and other locations to testify about the funds they gave to Fujinaga. Some victims lost their life savings to the scheme.

Co-defendants Junzo Suzuki, 70, and Paul Suzuki, 40, were extradited from Japan in April 2019, and are currently awaiting trial.

May 24, 2019 in AML | Permalink | Comments (0)

Wednesday, May 22, 2019

Former Georgia County Commissioner Indicted on Extortion and Bribery Charges

A federal grand jury in the Northern District of Georgia has returned a three-count indictment against a former commissioner in DeKalb County, Georgia, for extorting bribe payments from a DeKalb County subcontractor.  Attachment(s): Download Barnes Sutton Indictment

Sharon Barnes Sutton, 59, of Stone Mountain, Georgia, was arraigned on an indictment that charges her with two counts of extortion and one count of federal program bribery by U.S. Magistrate Judge Russell G. Vineyard for the Northern District of Georgia.

According to the allegations in the indictment, Barnes Sutton was an elected member of the DeKalb County Board of Commissioners (“the DeKalb Board”), representing District No. 4 of DeKalb County.  The DeKalb Board is comprised of seven elected, part-time commissioners.  Among other functions, the DeKalb Board appropriates funds for infrastructure development within the county, and a simple majority of four commissioners is needed to award public contracts for any such project.  The indictment alleges that, during the relevant time period, Barnes Sutton also chaired the DeKalb Board’s subcommittee on Finance, Audit, and Budget, which undertook preliminary reviews of contracts, and was a member of the DeKalb Board’s subcommittee on Public Works and Infrastructure.

The indictment further alleges that, in May 2014, Barnes Sutton approached an individual whose company had received a sizeable procurement award from the DeKalb Board in connection with the construction of a wastewater treatment plant.  Barnes Sutton demanded monthly payments of $500 from this individual, later increasing her demand to $1,000.  The individual made the first $500 payment in June 2016 at a restaurant in Decatur, Georgia.  The indictment further alleges that Barnes Sutton asked the individual to meet her at the restaurant and brought her son along so that her son would receive the cash payment on her behalf.  The individual made the second $500 cash payment at Barnes Sutton’s residence in July 2014.  The FBI disrupted Barnes Sutton’s continued demands in August 2014.

The indictment is the result of an ongoing investigation by the FBI’s Atlanta Field Office and the DeKalb County Police Department, and is being prosecuted by Trial Attorneys Amanda R. Vaughn and Victor R. Salgado of the Criminal Division’s Public Integrity Section.

May 22, 2019 in AML | Permalink | Comments (0)

Tuesday, May 21, 2019

Loopholes in the UK AML legislation must be addressed, says Joint Parliament Committee

The Joint Committee on the Draft Registration of Overseas Entities Bill has today published its pre-legislative scrutiny report. The Committee welcomes the Bill, but calls for its concerns to be rectified to ensure that the legislation successfully deters money laundering in the UK property market.


The UK is valued for its democratic political environment, its independent legal system, and its rigid financial protections. While these attributes have made the property market popular for legitimate investors, it also appeals to money launderers who use property to conceal or clean illicit funds.

  • Between 2004 and 2015 £180million of UK property was subject to criminal investigation as suspected proceeds of corruption, and this may be just the tip of the iceberg.
  • In 2017 160 properties worth over £4 billion were identified as being purchased by high corruption-risk individuals, and 86,000 properties in England and Wales have been identified as owned by companies incorporated in secrecy jurisdictions.
  • The Committee's witnesses suggested that a lack of information about anonymous owners often stands in the way of criminal investigations.

It has been more than three years since the Government pledged to introduce a transparent register of the foreign entities that own UK property, and of the individuals who actually control them. Time is of the essence and regardless of the effect of Brexit on the parliamentary timetable, this legislation is needed now. The Serious Fraud Office has recently pledged to speed up investigations into fraud and corruption, and with an effective Register of Overseas Entities there is now a real chance to add another tool to the UK’s anti-money laundering toolbox.

Chairman’s comments

Chairman of the Committee, Lord Faulks QC, said:

"We welcome this much-needed legislation as one of the vital tools required to create a hostile environment for money launderers who want to use the UK property market to hide unlawful funds. The legislation is well drafted, but there are still some loopholes in the draft Bill which, if unaddressed, could jeopardise the effectiveness of this important piece of legislation. In the current political climate, anti-money laundering may not seem an immediate priority. But the evidence we took shows there’s a huge problem, and it’s not going away. Time is of the essence: the Government must get on with improving this Bill and making it law."

Conclusions and recommendations

  • Trusts – The Bill does not cover trusts. Since trusts are not technically "entities", there are concerns that they will be used to circumvent this law. The Government’s plan to ensure that trusts are transparent  – the Fifth EU Anti-Money Laundering Directive – must therefore be introduced at the same time as this draft Bill.
  • Exemptions – The Bill allows the Government to exempt certain entities from publishing their information, and in some cases from disclosing it at all. The Government should make clear in the legislation exactly which entities can be exempted.  And to be as transparent as possible, the Government should publish in an annual statement to parliament the number of times these exemptions are used.
  • Updating – Out-of-date information will mean the Register is not fit for purpose. Vendors of property should update their ownership information once a year, but also update information about proposed transactions before they take place – capturing information at the point where most money laundering occurs.
  • Accuracy – the current proposals lack verification checks to deter individuals, including criminals, who want to submit false information.
  • Enforcement – Enforcing this new law may be difficult. Without enforcement the Bill risks being an ineffective deterrent. The report therefore suggests that civil penalties will be easier than criminal sanctions to enforce abroad, and against land or other assets in the UK.

May 21, 2019 in AML | Permalink | Comments (0)