International Financial Law Prof Blog

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

Monday, May 25, 2020

Former Senior U.S. Navy Employee Charged for Role in Bribery Conspiracy and Lying to Investigators

The former Director of Operations of the U.S. Navy’s Military Sealift Command Office in Busan, Republic of Korea (ROK) was charged in a complaint filed today in connection with his alleged participation in a bribery conspiracy and alleged lying to federal investigators.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge David Bell of the Naval Criminal Investigative Service’s (NCIS) Far East Field Office, and Special Agent in Charge Stanley A. Newell of the Defense Criminal Investigative Service’s (DCIS) Transnational Operations Field Office made the announcement.

Xavier Fernando Monroy, 62, a U.S. citizen, was charged in a complaint filed in the District of Columbia with one count of conspiracy to commit bribery, one count of bribery, one count of false statements, and one count of obstruction of justice. 

The affidavit in support of the complaint alleges that Monroy engaged in a conspiracy to commit bribery with Sung Yol “David” Kim, the owner of DK Marine, a ROK-based company that provided ship husbanding services to the U.S. Navy, and James Russell Driver III, a former civilian U.S. Navy cargo ship captain, in connection with the provision of husbanding services for Driver’s ship during a December 2013 port visit in Chinhae, ROK.  In order to steer the ship’s husbanding services business to DK Marine, Driver sought, and Kim conveyed, Monroy’s directions on how to circumvent appropriate Navy procedures.

According to the affidavit, Monroy also provided Kim with confidential and other proprietary, internal U.S. Navy information.  In exchange for the steering of business and the provision of such information, Kim paid bribes to Monroy, including cash, personal travel expenses, meals and alcoholic beverages, and the services of prostitutes.  The affidavit further alleges that in July 2019, Monroy repeatedly lied to DCIS and NCIS during a voluntary interview. 

Driver pleaded guilty to one count of conspiracy to commit bribery for his role in March 2019 before U.S. District Judge Arthur J. Tarnow of the Eastern District of Michigan.  Kim pleaded guilty to one count of conspiracy to commit bribery for his role on May 1, 2020, before U.S. District Judge Mark A. Goldsmith of the Eastern District of Michigan.

May 25, 2020 in AML | Permalink | Comments (0)

Friday, May 22, 2020

Founder and CEO of Iranian Financial Services Firm Extradited on Money Laundering, Wire Fraud, and Conspiracy Charges

The DOJ unsealed a six-count federal indictment against Seyed Sajjad Shahidian, 33, Vahid Vali, 33, and PAYMENT24 for conducting financial transactions in violation of U.S. sanctions against Iran.  The defendants were charged with conspiracy to commit offenses against and to defraud the United States, wire fraud, money laundering, and identity theft.  Shahidian, who was arrested and extradited from the United Kingdom, made his initial appearance earlier today before Magistrate Judge David T. Schultz in U.S. District Court in Minneapolis, Minnesota.  Vali remains at large.

According to the allegations in the indictment, PAYMENT24 was an internet-based financial services company with approximately 40 employees and offices in Tehran, Shiraz, and Isfahan, Iran.  The primary business of PAYMENT24 was helping Iranian citizens conduct prohibited financial transactions with businesses based in the United States, including the unlawful purchase and exportation of computer software, software licenses, and computer servers from United States companies.  According to PAYMENT24’s website, the company charged a fee to circumvent “American sanctions,” and claimed to have brought in millions of dollars of foreign currency into Iran.

According to the allegations in the indictment, beginning in or before 2009 through November 2018, Shahidian, the founder and Chief Executive Officer of PAYMENT24, conspired with Vali, the Chief Operating Officer of PAYMENT24, and other individuals to commit offenses against the United States by violating the restrictions on trade and exports from the United States to Iran.  On its website, PAYMENT24 sold a package to assist its Iranian clients with making online purchases from United States-based businesses, which included a PayPal account, a fraudulent “ID card and address receipt,” a remote IP address from the United Arab Emirates, and a Visa gift card.  The PAYMENT24 website also offered its clients advice on how to create accounts with a foreign identity and how to avoid restrictions on foreign websites, including advising clients to “never attempt to log into those sites with an Iranian IP address.”

As part of the scheme, Shahidian and Vali made material misrepresentations and omissions to United States-based businesses regarding the destination of the United States-origin goods.  In order to accomplish the transactions, Shahidian obtained payment processing accounts from United States-based companies using false residency information, fraudulent passport documents, and other false documents fabricated using the identity and personally identifiable information of another person.

Pursuant to the International Emergency Economic Powers Act (IEEPA), unauthorized exports of goods, technology or services to Iran, directly or indirectly from the United States or by a United States person are prohibited.

This case is the result of an investigation conducted by the Minneapolis Division of the FBI.  The Criminal Division’s Office of International Affairs secured the extradition from the United Kingdom with significant assistance from law enforcement authorities in the United Kingdom.

May 22, 2020 in AML | Permalink | Comments (0)

Thursday, May 21, 2020

Alleged Narcotrafficker and High-Ranking Cartel Member Extradited from Uruguay to the United States

A Mexican national, Gerard Valencia, will have his initial appearance in federal court in the District of Columbia on charges related to his alleged involvement in a criminal conspiracy to distribute cocaine and methamphetamine. Download Gonzalez-Valencia_indictment

Gerardo Gonzalez Valencia, aka “Lalo,” 43, arrived at Dulles International Airport after being extradited from Uruguay, where he was arrested in April 2016.  The indictment charges Gonzalez Valencia with an international conspiracy to distribute cocaine and methamphetamine, intending and knowing that those substances would be unlawfully imported into the United States.  The indictment alleges that Gonzalez Valencia’s criminal conspiracy ran from 2003 to 2016.

“The Department of Justice will never waver in our commitment to disrupt and dismantle CJNG and its enablers, wherever they are found,” said Assistant Attorney General Benczkowski.  “Thanks to the dedicated efforts of our law enforcement partners in Uruguay, Valencia Gonzalez now will be held to account in the United States for his alleged crimes.”

“Today’s extradition and arrest of Mr. Gonzalez-Valencia deals another blow to the leadership of the Cartel de Jalisco Nueva Generacion,” said DEA Acting Administrator Dhillon. “Mr. Gonzalez-Valencia is alleged to have distributed significant quantities of cocaine and meth and will now face justice in the United States.  We are grateful for the outstanding partnership with the National Police and Government of Uruguay during this long term investigation.”

The charges contained in the indictment are merely accusations, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by DEA Los Angeles.  Trial Attorneys Brett Reynolds, Kaitlin Sahni, Cole Radovich, Kate Naseef and Acting Deputy Chief Anthony Nardozzi of the Criminal Division’s Narcotic and Dangerous Drug Section are prosecuting the case.

The Justice Department extends its gratitude to the government of Uruguay for making the extradition possible and the U.S. Department of State’s Diplomatic Security Service (DSS) for its support.  The Criminal Division’s Office of Enforcement Operations provided assistance in support of this investigation and the Criminal Division’s Office of International Affairs provided significant assistance in securing the defendant’s extradition from Uruguay.

May 21, 2020 in AML | Permalink | Comments (0)

Wednesday, May 20, 2020

EU Blacklisted Countries for Money Laundering Concerns

The European Commission has today put forward a series of measures designed to further strengthen the EU's framework to fight against money laundering and terrorist financing:

  • An Action Plan for a Comprehensive EU policy on Preventing Money Laundering and Terrorist Financing
  • A refined and more transparent methodology to identify high-risk third countries
  • An updated list of high-risk third countries

To ensure inclusive discussions on the development of these policies, the Commission launched a public consultation today on the Action Plan. Authorities, stakeholders and citizens will have until 29 July to provide their feedback.

EU Blacklisted Countries for Money Laundering 

  1. The Bahamas,
  2. Barbados,
  3. Botswana,
  4. Cambodia,
  5. Ghana,
  6. Jamaica,
  7. Mauritius,
  8. Mongolia,
  9. Myanmar/Burma,
  10. Nicaragua,
  11. Panama,
  12. Uganda, and
  13. Zimbabwe

have strategic deficiencies in their AML/CFT regime, also based on the fact that these countries were identified in the FATF document “Improving Global AML/CFT Compliance: on-going process statement".

Consequently, the Commission considers that The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar/Burma, Nicaragua, Panama and Zimbabwe meet the criteria set in article 9(2) of Directive (EU) 2015/849. These countries should be added to the list of the Delegated Regulation (EU) 2016/1675 as countries presenting strategic deficiencies in their AML/CFT regime that pose significant threats to the financial system of the Union.

It is further noted that Uganda was also identified by the FATF as having strategic deficiencies in its AML/CFT regime in February 2020. Uganda is already included in the list
of Delegated Regulation (EU) 2016/1675. Therefore, the status and current measures applied with regard to Uganda remain unchanged and the Delegated Regulation (EU) 2016/1675 does not need to be amended in this respect.

The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar/Burma, Nicaragua, Panama, Uganda and Zimbabwe provided a written high-level political commitment to address the identified deficiencies and developed an action plan with the FATF for this purpose. The Commission welcomes these commitments and calls on these jurisdictions to complete the implementation of the action plan expeditiously and within the proposed timeframes. The implementation of the action plans will be closely monitored by the FATF. In order to take into account the level of commitment that has been demonstrated in the context of the FATF, these high-risk third countries are listed in the table in point I of the Annex to the Delegated Regulation (“High-risk third countries which have provided a written high-level political commitment to address the identified deficiencies and have developed an action plan with FATF”).

According to article 18a of Directive (EU) 2015/849, obliged entities in all Member States will be bound to apply enhanced customer due diligence measures with respect to business relationships or transactions involving countries included in Delegated Regulation (EU) 2016/1675.

Deletion from the list of Delegated Regulation (EU) 2016/1675

The Commission reviewed the strategic deficiencies of other countries listed in Delegated Regulation (EU) 2016/1675 that have been delisted by the FATF since July 2016 (BosniaHerzegovina, Guyana, Lao People’s Democratic Republic, Ethiopia, Sri Lanka and Tunisia) based on the requirements of Directive (EU) 2015/849.
The Commission's assessment concluded that, at this stage, Bosnia-Herzegovina and Guyana do not have strategic deficiencies in their AML/CFT regime considering the available
information. Those countries have recently taken a number of measures in order to reinforce their AML/CFT regimes and remedy identified strategic deficiencies and the Commission will review those countries when new information sources become available.

Similarly the Commission's analysis concluded that Tunisia no longer has strategic deficiencies in its AML/CFT regime considering the available information. Tunisia has
strengthened the effectiveness of its AML/CFT regime and addressed the strategic deficiencies identified by the FATF. These measures are sufficiently comprehensive and meet
the necessary requirements to consider that strategic deficiencies identified under article 9 of the Directive (EU) 2015/849 have been removed. The European Union has provided technical assistance to Tunisia to help the country to address the FATF Action Plan.

Furthermore, the Commission's assessment concluded that Ethiopia, Lao People’s Democratic Republic and Sri Lanka no longer have such strategic deficiencies in their AML/CFT regime considering the available information. Following the measures implemented to address the action plan agreed with the FATF, Ethiopia, Lao People’s Democratic Republic and Sri Lanka have remedied the strategic deficiencies in their AML/CFT regime and no longer present a significant AML/CFT threat to the international financial system. Taking into account their relevance under the revised methodology, the Commission considers that these jurisdictions no longer have strategic deficiencies in the AML/CFT framework and do not pose a significant threat to the financial system of the Union.

For other countries which were delisted by the FATF since the adoption of Delegated Regulation (EU) 2016/1675, the assessment by the Commission is still ongoing (i.e.,
Afghanistan, Iraq, Trinidad and Tobago and Vanuatu). Regarding Iraq and Afghanistan, available information sources did not allow the Commission to conclude, at this stage, whether they addressed their strategic deficiencies, in particular with respect to the effectiveness of their AML/CFT system and the relevant requirements of Article 9(2) of Directive (EU) 2015/849. The evolving security situation in these countries and its impact on the AML/CFT regime also require further analysis before concluding whether strategic deficiencies have been addressed. Regarding Vanuatu, available information sources (notably recent relevant information from the Global Forum) did not allow the Commission to conclude, at this stage, whether it addressed its strategic deficiencies, notably with regard to transparency of beneficial ownership. Regarding Trinidad and Tobago, available information sources did not allow the Commission to conclude, at this stage, whether it addressed its strategic deficiencies, notably with regard to transparency of beneficial ownership for legal arrangements. The Commission will make a review of the AML/CFT regime of those countries as a matter of priority and will engage with them as appropriate, based on the revised methodology.

Other third countries publicly identified by the FATF

On 21 February 2020, the FATF publicly identified Albania as having strategic deficiencies in its AML/CFT regime. Albania made a written high-level political commitment to work with the FATF and MONEYVAL to remedy the identified strategic deficiencies. Since the publication of its Mutual Evaluation Report in July 2018, Albania has made progress to improve technical compliance and effectiveness, including by enhancing relevant authorities’ understanding of terrorist financing risks in order to prosecute terrorist financing more effectively and by establishing a legal framework to implement targeted financial sanctions related to proliferation financing.

Albania will work to implement its commitments, including by: (1) conducting additional in-depth analysis to understand its money laundering and other risks sufficiently, and enhancing institutional coordination and cooperation; (2) improving the timely handling of mutual legal assistance requests; (3) establishing effective mechanisms to detect and prevent criminal infiltration of the economy, including by strengthening competent authorities’ powers to take necessary action; (4) ensuring that accurate and up-to-date basic and beneficial ownership information is available on a timely basis; (5) increasing the number and improving the sophistication of prosecutions and confiscations for money laundering, especially in cases involving foreign predicate offenses or third-party money laundering; (6) improving the implementation of targeted financial sanctions, in particular through enhanced supervisory action and targeted, proactive outreach.

As provided by the revised methodology, with respect to candidate countries, the Commission, in its assessment, may consider mitigating measures included in the accession
negotiations that address the identified strategic deficiencies. In this context, the Commission has developed further mitigating measures with Albania in order to ensure alignment with Directive (EU) 2015/849, including by setting up registers of beneficial ownership information. The implementation of these mitigating measures goes beyond the commitments
that Albania undertook with the FATF. Subject to the implementation of the commitments taken by Albania, the Commission considers that those additional mitigating measures allow addressing sufficiently the remaining deficiencies. Therefore, there is no need to adopt further measures under article 9 of Directive (EU) 2015/849 at this stage. 

May 20, 2020 in AML | Permalink | Comments (0)

Former Cleveland Clinic Employee and Chinese “Thousand Talents” Participant Arrested for Wire Fraud

Dr. Qing Wang, a former Cleveland Clinic Foundation (CCF) employee, is charged with false claims and wire fraud related to more than $3.6 million in grant funding that Dr. Wang and his research group received from the National Institutes of Health (NIH). 

According to the criminal complaint, Dr. Wang knowingly failed to disclose to NIH that he had an affiliation with and held the position of Dean of the College of Life Sciences and Technology at the Huazhong University of Science and Technology (HUST) and received grant funds from the National Natural Science Foundation of China (CNSF) for some of the same scientific research funded by the NIH grant.  As a result, Dr. Wang’s false representations and promises led NIH to approve and fund grants to Dr. Wang and his research group at CCF. 

It is also alleged that Dr. Wang participated in the Thousand Talents Program, a program established by the Chinese government to recruit individuals with access to or knowledge of foreign technology and intellectual property.  As a result of his admission into the TTP, China provided $3 million in research support to enhance the facilities and operations at HUST.  Dr. Wang received free travel and lodging for his trips to China, to include a three-bedroom apartment on campus for his personal use.  This also occurred at the time Dr. Wang was receiving NIH grant funds yet failed to disclose this affiliation to the NIH.

May 20, 2020 in AML | Permalink | Comments (0)

Tuesday, May 19, 2020

U.S. Repatriates over $311.7 Million in Assets to the Nigerian People that were Stolen by Former Nigerian Dictator and His Associates

The Department of Justice announced that it has transferred $311,797,876.11 to the government of the Federal Republic of Nigeria (Nigeria) in accordance with a Feb. 3, 2020, trilateral agreement among the governments of the United States, Nigeria and the Bailiwick of Jersey (Jersey) to repatriate assets the United States forfeited that were traceable to the kleptocracy of former Nigerian dictator Sani Abacha and his co-conspirators.

In 2014, U.S. District Judge John D. Bates for the District of Columbia entered judgment forfeiting approximately $500 million located in accounts around the world, as the result of a civil forfeiture complaint the Department of Justice filed against more than $625 million traceable to money laundering involving the proceeds of Abacha’s corruption.  After appeals in the United States were exhausted in 2018, the government of Jersey enforced the U.S. judgment against the funds located in that jurisdiction.

The forfeited assets represent corrupt monies laundered during and after the military regime of General Abacha, who assumed the office of the president of the Federal Republic of Nigeria through a military coup on Nov. 17, 1993, and held that position until his death on June 8, 1998.  The complaint alleges that General Abacha, his son Mohammed Sani Abacha, their associate Abubakar Atiku Bagudu and others embezzled, misappropriated and extorted billions from the government of Nigeria and others, then laundered their criminal proceeds through U.S. financial institutions and the purchase of bonds backed by the United States.  Jersey’s cooperation in the investigation, restraint and enforcement of the U.S. judgment, along with the valuable contributions of Nigeria and other law enforcement partners around the world, have been instrumental to the recovery of these funds.

Under the trilateral agreement signed in February, the United States and Jersey agreed to transfer 100 percent of the net forfeited assets to the Federal Republic of Nigeria to support three critical infrastructure projects previously authorized by the Nigerian government.  Specifically, under this agreement, the recovered funds will help finance the construction of critical infrastructure in key economic zones to include the Second Niger Bridge, the Lagos-Ibadan Expressway and the Abuja-Kano road.  These investments will benefit all of the Nigerian people. 

The agreement includes key measures to ensure transparency and accountability, including administration of the funds and projects by the Nigeria Sovereign Investment Authority (NSIA), financial review by an independent auditor, and monitoring by an independent civil society organization with expertise in engineering and other areas.  The agreement also precludes the expenditure of funds to benefit alleged perpetrators of the corruption or to pay contingency fees for lawyers.  The agreement reflects the sound principles for ensuring transparency and accountability in the return and disposition of recovered assets adopted at the Global Forum on Asset Recovery (GFAR) in December 2017 in Washington, D.C., which the United States and the United Kingdom (UK) hosted with support from the Stolen Asset Recovery Initiative of the World Bank and the United Nations Office on Drugs and Crime.  

In addition to the more than $311.7 million forfeited in Jersey, the Department of Justice is seeking to enforce its forfeiture judgment against approximately $30 million located in the UK and over $144 million in France.  The United States continues to seek forfeiture of over $177 million in additional laundered funds held in trusts that name Abacha associate Abubakar Atiku Bagudu, the current governor of Kebbi State, and his relatives as beneficiaries. 

The United States entered into the trilateral agreement to repatriate the Jersey assets because of its longstanding commitment to recover asset for the benefit of the people of countries harmed by corruption and the important safeguards embodied in the agreement.  The transfer announced today demonstrates the U.S. commitment to asset recovery and responsible repatriation, consistent with its obligations under the trilateral agreement.

This case was brought under the Kleptocracy Asset Recovery Initiative by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section working in partnership with the FBI.  Through the Kleptocracy Asset Recovery Initiative, the Department of Justice and federal law enforcement agencies seek to safeguard the U.S. financial system from criminal money laundering and to recover the proceeds of foreign official corruption.  Where appropriate and possible, the department endeavors to use recovered corruption proceeds to benefit the people harmed by acts of corruption and abuse of public trust.

May 19, 2020 in AML | Permalink | Comments (0)

Monday, May 18, 2020

United States Reaches Settlement to Recover More Than $49 Million Involving Malaysian Sovereign Wealth Fund

The Department of Justice has reached a settlement of its civil forfeiture cases against assets acquired by Khadem al-Qubaisi using funds allegedly misappropriated from 1Malaysia Development Berhad (1MDB), Malaysia’s investment development fund, and laundered through financial institutions in several jurisdictions, including the United States, Switzerland, Singapore and Luxembourg. 

These assets are estimated to be worth more than $49 million.  With the conclusion of this settlement, together with the prior disposition of other related forfeiture cases, the United States will have recovered or assisted in the recovery of nearly $1.1 billion in assets associated with the 1MDB international money laundering and bribery scheme.  This represents the largest recovery to date under the department’s Kleptocracy Asset Recovery Initiative and the largest civil forfeiture ever concluded by the Justice Department. 

“As alleged in the forfeiture complaints, Khadem al-Qubaisi and others laundered billions of dollars embezzled from 1MDB, a Malaysian investment fund,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Instead of benefitting the people of Malaysia, as intended, these funds were used by the co-conspirators to finance lavish acquisitions of personal property, luxury real estate and business investments in the United States and elsewhere.  This settlement agreement ensures that nearly $50 million in stolen funds will be recouped, and sends a clear signal that the Department of Justice is committed to tracing, seizing, and forfeiting criminal proceeds that are laundered through the U.S. financial system.”

“This settlement is another milestone in the asset forfeiture cases related to the 1MDB money laundering scheme – cases that have already led to the recovery of well over $1 billion,” said U.S. Attorney Nick Hanna of the Central District of California.  “Funds stolen from the people of Malaysia were used to acquire high-end properties, including residences each worth tens of millions of dollars. The cases resolved today continue to demonstrate our commitment to protecting the integrity of American financial institutions and ensuring that corrupt players cannot use our nation to conceal stolen riches.”

“As this case demonstrates, when it comes to corruption, the FBI's reach is long and uncompromising,” said Assistant Director Calvin Shivers of the FBI's Criminal Investigative Division.  “Our extensive investigation into Khadem al-Qubaisi and his co-conspirators has directly led to the return of over $1 billion to the people of Malaysia.  The FBI, through our International Corruption Squads, shows this same level of commitment in all our international corruption investigations.  Let this stand as a message to anyone who may consider using United States markets for money laundering: you will not prosper and you will be investigated and brought to justice.”

“This settlement is another step in our ongoing effort to return the embezzled funds misappropriated from 1Malaysia Development Berhad to the people of Malaysia,” said Chief Don Fort of IRS Criminal Investigation (IRS-CI). “While tens of millions of dollars were appropriately surrendered by al-Qubaisi’s family, the real win is the unprecedented international cooperation shown in this case that will have a lasting impact for the people in Malaysia now and well into the future.”

According to the civil forfeiture complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1MDB were allegedly misappropriated by high-level officials of 1MDB and their associates, including al-Qubaisi, through a criminal conspiracy involving international money laundering and bribery.  1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people. 

Under the terms of the settlement, the Atlantic Property Trust, which oversees the assets at issue in these forfeiture actions, agreed to forfeit all assets subject to pending forfeiture complaints in which they have a potential interest.  The trustee, who is the wife of al-Qubaisi, is also required to cooperate and assist the Justice Department in the orderly transfer, management and disposition of the relevant assets.  The assets subject to the settlement agreement include the sale proceeds of high-end real estate acquired in Beverly Hills as well as a luxury penthouse in New York City that al-Qubaisi allegedly acquired with funds traceable to misappropriated 1MDB monies.   

The assets being forfeited subject to this settlement are in addition to the more than $1 billion in assets the United States previously forfeited in connection with the Department of Justice’s 1MDB investigation.  Following the conclusion of today’s settlement, several civil forfeiture complaints arising out of the 1MDB criminal conspiracy remain pending against assets associated with other alleged co-conspirators.

The FBI’s International Corruption Squads in New York City and Los Angeles and the IRS-CI are investigating the case.  Deputy Chief Woo S. Lee and Trial Attorneys Barbara Levy, Joshua L. Sohn and Jonathan Baum of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorneys John Kucera, Michael R. Sew Hoy and Steven R. Welk of the Central District of California are prosecuting the case.  The Criminal Division’s Office of International Affairs is providing substantial assistance.

The department also appreciates the significant assistance provided by the Attorney General’s Chambers of Malaysia, the Royal Malaysian Police, the Malaysian Anti-Corruption Commission, the Attorney General’s Chambers of Singapore, the Singapore Police Force-Commercial Affairs Division, the Office of the Attorney General and the Federal Office of Justice of Switzerland, the judicial investigating authority of the Grand Duchy of Luxembourg and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg.

United States Reaches Settlement to Recover More Than $700 Million in Assets Allegedly Traceable to Corruption Involving Malaysian Sovereign Wealth Fund

Malaysian Financier Low Taek Jho, Also Known As “Jho Low,” and Former Banker Ng Chong Hwa, Also Known As “Roger Ng,” Indicted for Conspiring to Launder $2.7 Billion Stolen From Malaysian Sovereign Wealth Fund

1Malaysia Development Berhad (1MDB): White Collar Crime & the DOJ

Goldman Sachs Negotiating Guilty Plea and $2 Billion Fine for Assisting with Malaysia 1MDB Theft from Sovereign Wealth Fund, Malaysia May Reduce It $7.5 Billion Claim

May 18, 2020 in AML | Permalink | Comments (0)

Sunday, May 17, 2020

University of Arkansas Professor Arrested for Wire Fraud

Simon Saw-Teong Ang, 63, of Fayetteville, Arkansas, was arrested on Friday, May 8, 2020, on charges related to Wire Fraud. The complaint and complaint affidavit were unsealed this evening after Ang’s initial appearance in court before The Honorable Timothy L. Brooks at the United States District Court in Fayetteville.

In the one-count complaint, Ang was charged with one count of Wire Fraud.  The complaint charges that Ang had close ties with the Chinese government and Chinese companies, and failed to disclose those ties when required to do so in order to receive grant money from NASA.  These materially false representations to NASA and the University of Arkansas resulted in numerous wires to be sent and received that facilitated Ang’s scheme to defraud.

If convicted, Ang faces a statutory maximum punishment of 20 years in prison.  If convicted, Ang’s sentence will be determined by the court after review of factors unique to this case, including Ang’s prior criminal record (if any), the Ang’s role in the offense and the characteristics of the violations. 

The FBI is investigating the case.  Acting U.S. Attorney David Clay Fowlkes from the U.S. Attorney’s Office for the Western District of Arkansas and Trial Attorneys Michael Eaton and Ali Ahmad from the National Security Division are prosecuting the case.

May 17, 2020 in AML | Permalink | Comments (0)

Saturday, May 16, 2020

Former Emory University Professor and Chinese “Thousand Talents” Participant Convicted and Sentenced for Filing a False Tax Return

On May 8, 2020, Dr. Xiao-Jiang Li, 63, of Atlanta, Georgia, pleaded guilty to a criminal information charging him with filing a false tax return and has been sentenced by a U.S. District Judge on the same day.  Dr. Li, a former Emory University professor and Chinese Thousand Talents Program participant, worked overseas at Chinese Universities and did not report any of his foreign income on his federal tax returns.

“The Department of Justice remains vigilant over programs such as the Thousand Talents Program that recruits professors and researchers to work for China,” said Assistant Attorney General for National Security John C. Demers.  “In this case Li was caught in his lack of transparency.  We are grateful for the work our partners have done to bring light to this case.”

“This defendant thought that he could live two, separate lives — one here at Emory University and one in China as a Thousand Talents Program participant,” said U.S. Attorney Byung J. “BJay” Pak.  “Eventually, the truth caught up to this defendant, and he is now a convicted felon who is ordered to repay over $35,000 to the IRS.”

"Li's actions demonstrated a flagrant disrespect for the law and all taxpayers," said Chris Hacker, Special Agent in Charge of FBI Atlanta. "The FBI and our federal partners will always pursue individuals like Li, who victimize innocent taxpayers for their own personal gain."

“IRS Criminal Investigation is diligent when it comes to enforcing tax laws directed at those who attempt to defraud our nation’s tax system," said James E. Dorsey, Special Agent in Charge of Atlanta Field Office.  “This sentencing is an example that federal tax crimes will not go unpunished.  Those consequences include being a convicted felon and paying back all the taxes owed including penalties and interest.”  

“Our watchdog agency will continue to aggressively investigate anyone who does not adhere to agency rules regarding the disclosure of foreign funding and affiliations,” said Special Agent in Charge Derrick L. Jackson, U.S. Department of Health and Human Services Office of Inspector General.  “We will continue to work closely with our law enforcement partners to bring these type cases to justice.”

According to the charges and other information presented in court: In late 2011, while employed at Emory University, Li joined the Thousand Talents Program, a Chinese-government talent recruitment initiative that targets professors and researchers to work in China.  Starting in 2012 and continuing until 2018, Li, while still working at Emory University researching, among other things, the use of large animal models to investigate Huntington’s disease, also worked at two Chinese universities — first at the Chinese Academy of Sciences and then at Jinan University — conducting similar large animal model research.  Over those six years, Li earned at least $500,000 in foreign income that he never reported on his federal income tax returns.

Li’s false income tax returns came to light after the National Institutes of Health (NIH) reviewed Li’s NIH research grant applications and became concerned that he had failed to disclose, among other things, foreign research activity.  Those concerns prompted Emory University, and later federal law enforcement, to investigate the matter which revealed Li’s false tax returns.

Li was sentenced to one year of probation on a felony charge and was ordered to pay restitution in the amount of $35,089.  He was also ordered to file lawful income tax returns for the years 2012 through 2018 within the first two months of his probation and fully cooperate with the IRS, in making a complete and accurate determination of all taxes, penalties, and interest that he owes.

The IRS Criminal Investigations, FBI, and Department of Health and Human Services investigated this case.

May 16, 2020 in AML | Permalink | Comments (0)

Friday, May 15, 2020

Government Official and Contracting Executive Plead Guilty to Bribery Conspiracy

The former Director of Procurement for the Pension Benefit Guaranty Corporation and the president and chief executive officer of a government contracting firm pleaded guilty to conspiring to bribe a public official.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney G. Zachary Terwilliger of the Eastern District of Virginia, Acting Inspector General Nicholas J. Novak of the Pension Benefit Guaranty Corporation, and Assistant Director in Charge Timothy R. Slater of the FBI’s Washington Field Office made the announcement.

Jeffrey B. Donahue, 42, of Herndon, Virginia, and Nadeem Ansari, 47, of Haymarket, Virginia, each pleaded guilty to one count of conspiracy to bribe a public official.  Sentencing is scheduled for Sept. 11, 2020, for Donahue and Ansari.

According to court documents, Donahue served as a Supervisory Contract Administrator with PBGC and then as Director of the Procurement Department from March 2014 to February 2020. From at least 2015 through August 2017, Donahue solicited and received cash payments and other things of value, including the promise of a job valued at $1 million, from Ansari and Ansari’s company. In exchange, Donahue agreed to steer PBGC contracts to Ansari’s company.   

In 2015, Donahue approached Ansari and offered to help Ansari’s new company win a PBGC contract, worth approximately $55 million, in exchange for a future job with the company. Among other things, Donahue provided Ansari with sample bid proposals; helped draft, review, and edit the company’s bid proposal; and disclosed labor pricing estimates. When the company did not win the contract, Donahue helped Ansari draft the company’s bid protest. Ansari admitted that his business partners were aware of his arrangement with Donahue.

In 2016, Donahue proposed a second arrangement with Ansari in which Donahue would receive up to $125,000 from Ansari and his company in exchange for steering a contract to Ansari’s company. PBGC awarded the contract to Ansari’s company, which resulted in payments to the company totaling approximately $3.29 million. Donahue steered the contract by, among other things, providing sensitive, non-public information and work product to Ansari; providing guidance for contract pricing; and adjusting the terms of the contract to align with the qualifications of the company’s personnel. Donahue received at least $48,000 in cash, plus additional gifts.  Donahue and Ansari also took steps to conceal the scheme and their communications with each other, including using separate, dedicated cellular telephones and e-mail accounts and communicating through encrypted software.

May 15, 2020 in AML | Permalink | Comments (0)

Tuesday, May 12, 2020

FinCEN Reissues Real Estate Geographic Targeting Orders for 12 Metropolitan Areas

he Financial Crimes Enforcement Network (FinCEN) today announced the renewal of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate.  These renewed GTOs are identical to the November 2019 GTOs.  The purchase amount threshold remains $300,000 for each covered metropolitan area.

The terms of this Order are effective beginning May 10, 2020 and ending on November 5, 2020.  GTOs continue to provide valuable data on the purchase of residential real estate by persons possibly involved in various illicit enterprises.  Reissuing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector.

Today’s GTOs cover certain counties within the following major U.S. metropolitan areas:  Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle. 

FinCEN appreciates the continued assistance and cooperation of the title insurance companies and the American Land Title Association in protecting the real estate markets from abuse by illicit actors.

A copy of the GTO is available here.

Frequently asked questions regarding these GTOs are available here.

May 12, 2020 in AML | Permalink | Comments (0)

Monday, May 11, 2020

Commerce Tightens Restrictions on Technology Exports to Combat Chinese, Russian and Venezuelan Military Circumvention Efforts

The Department of Commerce announced new export control actions to prevent efforts by entities in China, Russia, and Venezuela to acquire U.S. technology that could be used in development of weapons, military aircraft, or surveillance technology through civilian supply chains, or under civilian-use pretenses, for military end uses and military end-users.

"It is important to consider the ramifications of doing business with countries that have histories of diverting goods purchased from U.S. companies for military applications," said Department of Commerce Secretary Wilbur Ross. "Certain entities in China, Russia, and Venezuela have sought to circumvent America’s export controls, and undermine American interests in general, and so we will remain vigilant to ensure U.S. technology does not get into the wrong hands."

Specifically, the rule changes include:

  • Expansion of Military End Use/User Controls (MEU)
    Expands MEU license requirements controls on China, Russia, and Venezuela to cover military end-users in all three countries, as well as items such as semiconductor equipment, sensors, and other technologies sought for military end use or by military end-users in these countries.
  • Removal of License Exception Civil End Users (CIV)
    Removes a license exception for exports, reexports, or transfers (in-country) to civilian
    end-users in countries of national security concern for National Security- (NS) controlled items.
  • Elimination of License Exception Additional Permissive Reexports (APR) Provisions
    Proposes to eliminate certain provisions of a license exception for partner countries involving the reexport of NS-controlled items to countries of national security concern to ensure consistent reviews of exports and reexports of U.S. items.

The Bureau of Industry and Security (BIS) in the Department of Commerce is responsible for overseeing these export control activities. BIS’s mission is to advance U.S. national security and foreign policy objectives by ensuring an effective export control and treaty compliance system and promoting continued U.S. strategic technology leadership. BIS is committed to restrict U.S.-origin commodities and technology from use in support of Weapons of Mass Destruction (WMD) projects, terrorism, or destabilizing military modernization programs. For more information, please visit

May 11, 2020 in AML | Permalink | Comments (0)

Saturday, May 9, 2020

CFTC Files Charges in $20 Million International Binary Options and Digital Asset Fraud Scheme

The Commodity Futures Trading Commission announced the filing of a multi-million dollar fraud action in the U.S. District Court for the Southern District of Florida, charging three individuals and three companies with fraudulently soliciting tens of millions of customers and prospective customers to open and fund off-exchange binary options and digital asset trading accounts. These accounts traded foreign exchange currency pairs, metals, and digital assets through websites operated by unregistered binary options and digital asset brokers. 

The complaint charges defendants Daniel Fingerhut of Miami, Florida, and three companies that he worked with, Digital Platinum, Inc. (DPI), a Florida corporation, Digital Platinum, Ltd. (DPL), an Israeli company, and Huf Mediya Ltd. (Huf) a Bulgarian company, as well as the control persons of all three entities, Tal Valariola and Itay Barak of Israel. According to the complaint, beginning in at least October 2013 and continuing through August 2018, the defendants allegedly created fraudulent marketing materials which promised astronomical profits with no risk of loss and disseminated them via email spam and by making videos available online. Over 59,000 customers opened and funded trading accounts as a result of these fraudulent marketing campaigns, which generated payments of over $20 million in commissions to the defendants. 

According to the complaint, the marketing materials touted fake trading performance using advertised binary options and digital asset trading software and systems. The marketing videos typically featured actors—often posing in front of props such as mansions and private jets—who falsely claimed they had become rich trading.

The complaint also charges Fingerhut with making materially false or misleading statements to CFTC staff, including while under oath, in an apparent effort to conceal the extent of his role in the fraud and to avoid producing documents. The complaint is related to a previously filed multi-million dollar retail binary options fraud action [See CFTC Press Release No. 7807-18].

In its continuing litigation against the defendants, the CFTC seeks full restitution to defrauded individuals, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and permanent injunctions against further violations of the Commodity Exchange Act and CFTC regulations, as charged.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously to protect customers and ensure wrongdoers are held accountable.

The CFTC thanks the Israel Securities Authority, the Federal Bureau of Investigation, the Securities and Exchange Commission, and the Department of Justice for their assistance in this matter.

The Division of Enforcement staff members responsible for this case are Candice Haan, Allison V. Passman, Joseph Patrick, Susan J. Gradman, and Scott R. Williamson.

May 9, 2020 in AML | Permalink | Comments (0)

Friday, May 8, 2020

Criminal Charges Filed Against Two Iranian Nationals for Violating Money Laundering & Sanctions Laws by Procuring Petroleum Tanker

Related Forfeiture Complaint Filed for Approximately $12.3 Million in Funds Is Largest Ever Seizure of IRGC-QF Related Funds

Amir Dianat, 55, and Kamran Lajmiri, 42, both Iranian nationals, were charged with violating U.S. export laws and sanctions against Iran in the U.S. District Court for the District of Columbia. 

A two-count criminal complaint returned today charges Dianat and Lajmiri with conspiracy to provide U.S. financial services to Iranian entities and their front companies attempting to purchase a petroleum tanker, the Nautic, in September 2019.  The complaint alleges that the defendants concealed from the seller, financial institutions that clear U.S. dollar transactions, and the U.S. government that the sale of this vessel was destined for Iran, all as part of a scheme to enrich the defendants and other conspirators, and to evade the regulations, prohibitions, and licensing requirements of the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR).

A related verified civil forfeiture complaint was filed against $12,338,941.91.  These funds were allegedly involved in this scheme to launder funds into the United States to illicitly procure the Nautic. The civil forfeiture complaint alleges that this scheme involved the National Iranian Oil Company, the National Iranian Tanker Company (NITC), and the IRGC-Qods Force (IRGC-QF), all specially designated nationals.  The IRGC has also been designated a Foreign Terrorist Organization.  This forfeiture action represents the largest ever seizure of IRGC-QF related funds.  All funds of terrorist organizations are subject to forfeiture. 

“These defendants purchased a crude oil tanker valued at over $10 million by illegally using the U.S. financial system, defiantly violating U.S. sanctions,” said Assistant Attorney General for National Security John C. Demers. “This is yet another example of Iran brazenly using front companies and false documentation in an attempt to hide the illegal transactions that the Iranian regime desperately needs to fund its malign activities.  The enforcement of U.S. sanctions and related financial criminal laws is a major component of the National Security Division’s commitment to protecting the national security of the United States.  I commend the efforts of the prosecutors, agents, and analysts who uncovered this illegal scheme and whose work resulted in the largest ever forfeiture action involving IRGC-QF.” 

“Employing civil forfeiture authorities specifically available to the U.S. Attorney’s Office in the District of Columbia, we will continue to aggressively prosecute those who abuse our financial system to support sanctioned entities,” said U.S. Attorney Timothy J. Shea for the District of Columbia. “We will use every measure available under the law, to include civil forfeiture to recover funds for the victims of terrorism. These laws exist and serve to prevent hostile countries from illicitly generating revenue, such as through the sale of oil, to fund their weapons proliferation programs. Today’s charges are another example of the dedicated and unrelenting efforts of our office, the FBI, and HSI.”

“Today's complaint demonstrates that those who use the U.S. financial system to benefit the Iranian oil industry will be investigated by the FBI and prosecuted to the fullest extent of the law,” said FBI Minneapolis Special Agent in Charge Rainer Drolshagen. “Iran's petrochemical and petroleum sectors are primary sources of funding for the Iranian regime, and the FBI will continue to aggressively pursue those who illegally use the U.S. financial system for their benefit."

“Protecting our homeland encompasses many missions, including safeguarding our nation's exports and currency," said Steven W. Cagen, HSI Colorado Special Agent in Charge. “These criminals thought they could enrich themselves while aiding Iran, a country that continues to pose a serious threat to our nation’s security. They will now face the consequences of their actions.”

A concurrent action was filed by the Department of the Treasury, sanctioning Dianat and his related front company, Taif Mining.

According to the pleadings, beginning around May 2019 through December 2019, Dianat and Lajmiri conspired to purchase the Nautic via a complex web of front companies, including Taif Mining.   After sending the final wire payment to the seller, Taif Mining took possession of the Nautic.  It quickly changed its name and began making trips to Iran to load Iranian petroleum. Because a U.S. bank froze the funds related to the sale of the vessel, the seller never received payment.  As a result, the seller instituted a civil action in the U.A.E. to recover the vessel. 

On March 15, 1995, the President, pursuant to IEEPA, issued Executive Order No. 12957, finding that “the actions and policies of the Government of Iran constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States” and declaring “a national emergency to deal with the threat.”  In subsequent Executive Orders, the President imposed economic sanctions, including a trade embargo, on Iran.  The Executive Orders and the ITSR prohibit the exportation, re-exportation, sale, or supply, directly or indirectly, to Iran of any goods, technology, or services from the United States or by a United States person without prior authorization or license from the U.S. Department of the Treasury, the Office of Foreign Assets Control, located in Washington, D.C. The conspirators utilized the U.S. correspondent banking system to process illicit transactions in U.S. Dollars, and at no time were U.S. financial institutions alerted that they were financing the purchase of a tanker for Iranian entities.

If convicted, Dianat and Lajmiri would face a maximum of 20 years imprisonment.

The investigation was conducted by special agents from the FBI Minneapolis Field Office and HSI Colorado Springs.

The details contained in the pleadings are mere allegations.  All defendants are presumed innocent unless and until proven guilty in a court of law, and the burden to prove forfeitability in a civil forfeiture proceeding is upon the government.

Assistant U.S. Attorneys Zia M. Faruqui and Brian Hudak, National Security Division Trial Attorney David C. Recker, and Supervisory Paralegal Specialist Elizabeth Swienc and Legal Assistant Jessica McCormick from the U.S. Attorney’s Office for the District of Columbia, are representing the government. 


May 8, 2020 in AML | Permalink | Comments (0)

Thursday, May 7, 2020

Action plan for a comprehensive Union policy on preventing money laundering and terrorism financing

The European Commission has today put forward a comprehensive approach to further strengthen the EU's fight against money laundering and terrorist financing.

The Commission has published an ambitious and multifaceted Action Plan, which sets out concrete measures that the Commission will take over the next 12 months to better enforce, supervise and coordinate the EU's rules on combating money laundering and terrorist financing. The aim of this new, comprehensive approach is to shut down any remaining loopholes and remove any weak links in the EU's rules.

Executive Vice-President Valdis Dombrovskis said: 

"We need to put an end to dirty money infiltrating our financial system. Today we are further bolstering our defences to fight money laundering and terrorist financing, with a comprehensive and far-reaching Action Plan. There should be no weak links in our rules and their implementation. We are committed to delivering on all these actions - swiftly and consistently – over the next 12 months. We are also strengthening the EU's global role in terms of shaping international standards on fighting money laundering and terrorism financing.”

The Commission has also published today a more transparent, refined methodology to identify high-risk third countries that have strategic deficiencies in their anti-money laundering and countering terrorist financing regimes that pose significant threats to the EU's financial system. This will enhance our engagement with third countries and ensure greater cooperation with the Financial Action Task Force (FATF).

Finally, the Commission has also adopted a new list of third countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks.

Action Plan for a Comprehensive EU policy on Preventing Money Laundering and Terrorist Financing

Today's Action Plan is built on six pillars, each of which is aimed at improving the EU's overall fight against money laundering and terrorist financing, as well as strengthening the EU's global role in this area. When combined, these six pillars will ensure that EU rules are more harmonized and therefore more effective. The rules will be better supervised and there will be better coordination between Member State authorities.

The six pillars are as follows:

  1. Effective application of EU rules: the Commission will continue to monitor closely the implementation of EU rules by Member States to ensure that national rules are in line with the highest possible standards. In parallel, today's Action Plan encourages the European Banking Authority (EBA) to make full use of its new powers to tackle money laundering and terrorist financing.
  2. A single EU rulebook: while current EU rules are far-reaching and effective, Member States tend to apply them in a wide variety of different manners. Diverging interpretations of the rules, therefore, lead to loopholes in our system, which can be exploited by criminals. To combat this, the Commission will propose a more harmonized set of rules in the first quarter of 2021.
  3. EU-level supervision: currently it is up to each Member State to individually supervise EU rules in this area and as a result, gaps can develop in how the rules are supervised. In the first quarter of 2021, the Commission will propose to set up an EU-level supervisor.
  4. A coordination and support mechanism for Member State Financial Intelligence Units: Financial Intelligence Units in Member States play a critical role in identifying transactions and activities that could be linked to criminal activities. In the first quarter of 2021, the Commission will propose to establish an EU mechanism to help further coordinate and support the work of these bodies.
  5. Enforcing EU-level criminal law provisions and information exchange: Judicial and police cooperation, on the basis of EU instruments and institutional arrangements, is essential to ensure the proper exchange of information. The private sector can also play a role in fighting money laundering and terrorist financing. The Commission will issue guidance on the role of public-private partnerships to clarify and enhance data sharing.
  6. The EU's global role: the EU is actively involved within the Financial Action Task Force and on the world stage in shaping international standards in the fight against money laundering and terrorist financing. We are determined to step up our efforts so that we are a single global actor in this area. In particular, the EU will need to adjust its approach to third countries with deficiencies in their regime regarding anti-money laundering and countering terrorist financing that put our Single Market at risk. The new methodology issued alongside this Action Plan today provides the EU with the necessary tools to do so. Pending the application of the revised methodology, today's updated EU list ensures better alignment with the latest FATF (Financial Action Task Force) list.

To ensure inclusive discussions on the development of these policies, the Commission launched a public consultation today on the Action Plan. Authorities, stakeholders and citizens will have until 29 July to provide their feedback.

Refined methodology

The Commission has today published a new methodology to identify high-risk third countries that have strategic deficiencies in their national anti-money laundering and countering terrorist financing regimes, which pose significant threats to the EU's financial system. The aim of this new methodology is to provide more clarity and transparency in the process of identifying these third countries. The key new elements concern: (i) the interaction between the EU and FATF listing process; (ii) an enhanced engagement with third countries; and (iii) reinforced consultation of Member States experts. The European Parliament and the Council will have access to all relevant information at the different stages of the procedures, subject to appropriate handling requirements.

Updated List

Under the Anti-Money Laundering Directive (AMLD), the Commission has a legal obligation to identify high-risk third countries with strategic deficiencies in their regime regarding anti-money laundering and countering terrorist financing. Pending the application of the above-mentioned refined methodology, the Commission has today revised its list, taking into account developments at the international level since 2018. The new list is now better aligned with the lists published by the FATF.

Countries that have been listed: The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama, and Zimbabwe.

Countries that have been delisted: Bosnia-Herzegovina, Ethiopia, Guyana, Lao People's Democratic Republic, Sri Lanka, and Tunisia.

The Commission amended the list in the form of a Delegated Regulation. It will now be submitted to the European Parliament and Council for approval within one month (with a possible one-month extension). Given the Coronavirus crisis, the date of application of today's Regulation listing third countries – and therefore applying new protective measures – only applies as of 1 October 2020. This is to ensure that all stakeholders have time to prepare appropriately. The delisting of countries, however, is not affected by this and will enter into force 20 days after publication in the Official Journal.


The Commission's Anti-Money Laundering Package of July 2019 highlighted a number of weaknesses in the EU's anti-money laundering / countering the financing of terrorism framework. While the transposition and entry into force of recent legislation will address some of these issues, other problems remain. In response to this package, the European Parliament and the Council invited the Commission to investigate what steps could be taken to achieve a more harmonized set of rules, better supervision, including at EU level, as well as improved coordination among Financial Intelligence Units. Today's Action Plan is the Commission's reply to this call for action, and the first step to achieve the Commission's priority to deliver a new, comprehensive framework to fight money laundering and terrorist financing. The new methodology to identify and mitigate threats that strategic deficiencies in the anti-money laundering and countering terrorist financing of third countries pose to the integrity of the EU's financial system, also issued today, will further equip the EU to deal with external risks.

For more information about todays

May 7, 2020 in AML | Permalink | Comments (0)

Tuesday, May 5, 2020

Record year for Swiss money laundering reports

The number of reports of suspected money laundering jumped by about 25% in Switzerland last year. Read the analysis of the Swiss Financial Authority Annual AML / STR Report for 2019 here on SwissInfo


Publications of the Money Laundering Reporting Office (MROS)

Annual reports

Other publications

May 5, 2020 in AML | Permalink | Comments (0)

Monday, May 4, 2020

United Arab Emirates' measures to combat money laundering and terrorist financing

The United Arab Emirates recently strengthened its legal framework to fight money laundering and terrorist financing but, as a major global financial centre and trading hub, it must take urgent action to effectively stop the criminal financial flows that it attracts.

The UAE’s understanding of the risks it faces from money laundering, terrorist financing and funding of weapons of mass destruction is still emerging, following their recent national risk assessment. The risks are significant, and result from the UAE’s extensive financial, economic, corporate and trade activities, including as a global leader in oil, diamond and gold exports. The UAE's strategic geographical location between continents, in proximity to conflict zones and its own jurisdictional complexity of 7 Emirates, 2 financial free zones and 29 commercial free zones further increase the UAE's risk of attracting funds with links to crime and terror

In recent years, the UAE has significantly strengthened relevant laws and regulations and has put in place a range of committees to improve national coordination and cooperation. While the country needs to swiftly address a number of remaining issues, the elements of an effective framework to detect and prevent criminals and terrorists from misusing the financial system are mostly in place. However, this framework is relatively new and it has not yet been able to demonstrate the expected results.

With 39 different company registries, which helped the UAE grow its various free zones, the misuse of legal persons is a real risk. The UAE also faces a significant risk of exposure to proceeds of crimes conducted abroad, but authorities do not make sufficient use of formal international legal assistance processes to pursue money laundering or the financing of terrorism and proliferation, although they demonstrated better capacity in using informal processes.

Authorities have access to a broad range of financial information in their investigation of terrorist financing, fraud and other offences. The UAE has achieved positive results in investigating and prosecuting the financing of terrorism, but its limited number of money laundering prosecutions and convictions, particularly in Dubai, are a concern given the country’s risk profile. Authorities do not fully exploit financial intelligence to go after money laundering or trace the proceeds of crime. Improvements to the Financial Intelligence Unit’s role and capacity are positive but were too recent to demonstrate better operational outcomes.

The UAE has extremely large and diverse financial and non-financial sectors and the report identified issues in the supervision of some of the higher risk sectors, such as banks, the Dubai property market, dealers in gold and other precious metals and stones and hawaladars.

The UAE is a major international and regional financial centre and trading hub which attracts both legitimate financial and business activities as well as financial flows with links to crime and terrorism. The country must urgently deepen its understanding of the risks it faces at national and individual Emirate-level and take action to strengthen the effectiveness of its measures to stop money laundering, terrorist financing and proliferation financing.


May 4, 2020 in AML | Permalink | Comments (0)

Israel’s Largest Bank, Bank Hapoalim, Admits to Conspiring with U.S. Taxpayers to Hide Assets and Income in Offshore Accounts

Bank Hapoalim (Switzerland) Pleads Guilty and Bank Hapoalim B.M. Enters into Deferred Prosecution Agreement for Criminal Misconduct; Agree to Pay Nearly $875 Million

Jeffrey A. Rosen, the Deputy Attorney General of the United States, Richard E. Zuckerman, the Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division, Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Don Fort, the Chief of the Internal Revenue Service, Criminal Investigation (IRS-CI), announced today the guilty plea of Bank Hapoalim (Switzerland) Ltd. and filing of criminal charges against Bank Hapoalim B.M. for conspiring with U.S. taxpayers and others to hide more than $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts and the income generated in these accounts from the Internal Revenue Service (the IRS).  BHS’s Chief Executive Officer appeared on behalf of the bank to enter the guilty plea before U.S. District Judge Mary Kay Vyskocil.

As part of today’s resolutions, along with resolutions entered into with state and federal partners, Bank Hapoalim B.M. (BHBM), Israel’s largest bank, and Bank Hapoalim (Switzerland) Ltd. (BHS), its Swiss subsidiary, agreed to pay approximately $874.27 million to the U.S. Treasury, the Federal Reserve, and the New York State Department of Financial Services. Today’s resolution is the second-largest recovery by the Department of Justice in connection with its investigations since 2008 into facilitation of offshore U.S. tax evasion by foreign banks.

“Today’s resolutions and payment of $874 million make clear that tax evasion cannot be taken lightly,” said Deputy Attorney General Jeffrey A. Rosen. “A fair tax system requires even-handed compliance, and honest conduct by all participants in the system.”

“The Department of Justice continues to aggressively prosecute banks and other financial institutions that help U.S. taxpayers conceal their income and assets in offshore bank accounts,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman.  “Today, Bank Hapoalim is being held accountable for its conduct – it has admitted to its crimes and will surrender all fees it earned, repay the United States for lost tax revenue, and pay a substantial fine.”

“Israel’s largest bank, Bank Hapoalim, and its Swiss subsidiary have admitted not only failing to prevent but actively assisting U.S. customers to set up secret accounts, to shelter assets and income, and to evade taxes,” said U.S. Attorney Geoffrey S. Berman of the Southern District of New York.  “The combined payment approaching $1 billion reflects the magnitude of the tax evasion by the Bank’s U.S. customers, the size of the fees the Bank collected to provide this illegal service, and the gravity of the illegal conduct.”

“There is no excuse for a foreign financial institution to unlawfully assist wealthy Americans in flouting their responsibilities to pay their taxes,” said IRS Criminal Investigation Chief Don Fort. “With today’s guilty plea, Bank Hapoalim is taking responsibility for their role in deliberately breaking the law and undermining the integrity of this nation’s tax system. Offshore tax evasion is a top priority for IRS Criminal Investigation and we are wholeheartedly committed to bringing offenders to justice. Today’s resolution serves as proof that financial institutions engaging in tax fraud face dire criminal and financial consequences for their behavior.”

“The vast majority of New Yorkers follow the rules and pay their taxes, thereby contributing their fair share towards critical state and federal government operations and public services,” said Superintendent Linda A. Lacewell of New York State Department of Financial Services. “There are some, however, who went to great lengths to avoid paying their share, and Bank Hapoalim offered a whole array of services to U.S. citizens, including New Yorkers, that knowingly facilitated their tax evasion. DFS will not tolerate such behavior from banks that operate in the State of New York. DFS thanks our federal partners at the U.S. Department of Justice, U.S. Department of the Treasury, and the Federal Reserve Board for their assistance and coordination during this investigation.”

Today’s resolutions include agreements with BHBM and BHS (collectively, the “Bank”) under which the Bank agreed to accept responsibility for its conduct by stipulating to the accuracy of extensive Statements of Facts. BHBM further agreed to refrain from all future criminal conduct, implement remedial measures, and cooperate fully with further investigations into hidden bank accounts. Assuming BHBM’s continued compliance with its agreement, the Government has agreed to defer prosecution of BHBM for a period of three years, after which time the Government will seek to dismiss the charge against BHBM. 

According to documents filed today in Manhattan federal court:

BHBM is Israel’s largest bank and operates primarily as a retail bank with approximately 250 branches throughout Israel and more than 2.5 million accounts. In addition to retail banking services, BHBM offered private banking services for onshore and offshore customers through its retail branches and its Global Private Banking Center. BHBM also wholly owned Poalim Trust Services Ltd., which provided trust formation and management services. Outside Israel, BHBM owned BHS, a Swiss subsidiary that provided private banking. BHS is headquartered in Zurich and at times during the prosecution period had branches in Geneva, Luxembourg, and Singapore. BHBM also had branches in New York, Miami, the Cayman Islands, the United Kingdom, and Jersey.

From at least in or about 2002, and continuing until at least in or about 2014, the Bank conspired with employees, U.S. customers, and others to: (1) defraud the United States with respect to taxes; (2) file false federal tax returns; and (3) commit tax evasion. Employees of BHBM and BHS assisted U.S. customers in concealing their ownership and control of assets and funds held at the Bank, which enabled those U.S. customers to evade their U.S. tax obligations, by engaging in the following conduct:

  • Assisting U.S. customers with opening and maintaining accounts in the names of pseudonyms, code names, trust accounts, and offshore nominee entities;
  • Opening customer accounts for known U.S. customers using non-U.S. forms of identification;
  • Enabling U.S. taxpayers to evade U.S reporting requirements on securities’ earnings in violation of the Bank’s agreements with the IRS;
  • Providing “hold mail” services for a fee, avoiding any correspondence regarding the undeclared account being sent to the U.S.;
  • Offering back-to-back loans for U.S. taxpayers to enable them to access funds in the United States that were held in offshore accounts at the Bank in Switzerland and Israel; and
  • Processing wire transfers or issuing checks in amounts of less than $10,000 that were drawn on the accounts of U.S. taxpayers or entities in order to avoid triggering scrutiny.

At least four senior executives of the Bank, including two former members of BHS’s board of directors, were directly involved in aiding and abetting tax evasion of U.S. taxpayers.

Under today’s resolutions, the Bank is required to cooperate fully with ongoing investigations and affirmatively disclose any information it may later uncover regarding U.S.-related accounts. The Bank is also required to disclose information consistent with the Department of Justice’s Swiss Bank Program relating to accounts closed between Jan. 1, 2009, and Dec. 31, 2019. The agreements provide no protection from criminal or civil prosecution for any individuals.

BHBM will pay a total of $214.38 million, which has three parts. First, BHBM has agreed to pay $77,877,099 in restitution to the IRS, which represents the unpaid taxes resulting from BHBM’s participation in the conspiracy. Second, BHBM has agreed to forfeit $35,696,929 to the United States, which represents gross fees (not profits) that the bank earned on its undeclared accounts between 2002 and 2014. Finally, BHBM has agreed to pay a penalty of $100,811,585.

BHS will pay a total of $402.53 million, which also has three parts. First, BHS has agreed to pay $138,908,073 in restitution to the IRS, which represents the unpaid taxes resulting from BHS’s participation in the conspiracy. Second, BHS has agreed to forfeit $124,628,449 in gross fees to the United States.  Finally, BHS has agreed to pay a fine of $138,998,399. These payments were approved by Judge Vyskocil today in connection with BHS’s plea and sentencing.

Both the penalty and fine amounts take into consideration that the Bank, after initially providing deficient cooperation through an inadequate internal investigation and the provision of incomplete and inaccurate information and data to the Government, thereafter conducted a thorough internal investigation, provided client-identifying information, and cooperated in ongoing investigations and prosecutions. The Bank further implemented remedial measures to protect against the use of its services for tax evasion in the future.

The Board of Governors of the Federal Reserve System is also announcing today that it has reached a resolution with BHBM, by which BHBM has agreed to a consent order, certain remedial steps to ensure its compliance with U.S. law in its ongoing operations, and a civil monetary penalty of $37.35 million. Additionally, the New York State Department of Financial Services is announcing a similar resolution by which BHBM has agreed to a cease and desist order and a monetary penalty of $220 million.

This agreement marks the third time an Israeli bank has admitted to similar criminal conduct. The Bank Leumi Group (in December 2014) and Mizrahi-Tefahot Bank Ltd. (in March 2019) entered into DPAs with the Department of Justice admitting that they conspired with U.S. taxpayers to prepare and present false tax returns to the IRS by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.

Deputy Attorney General Rosen, Principal Deputy Assistant Attorney General Zuckerman, U.S. Attorney Berman, and Chief Fort commended special agents of IRS-Criminal Investigation, who investigated this case, and Assistant Chief Todd A. Ellinwood and Senior Litigation Counsel Nanette Davis of the Tax Division, and Assistant U.S. Attorneys Sagar K. Ravi and Timothy V. Capozzi of the United States Attorney’s Office for the Southern District of New York, who prosecuted this case. Principal Deputy Assistant Attorney General Zuckerman also thanked Assistant Chief Kathleen Barry and former Trial Attorney Timothy Russo of the Tax Division for their substantial assistance. 

May 4, 2020 in AML | Permalink | Comments (0)

Sunday, May 3, 2020

Owner of U.S. Navy Husbanding Services Provider Pleads Guilty to Conspiracy to Commit Bribery

The owner and Chief Executive Officer of a Republic of Korea–based company, DK Marine, that provided ship husbanding services to the U.S. Navy pleaded guilty today for his role in a bribery conspiracy.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge David Bell of the Naval Criminal Investigative Service’s (NCIS) Far East Field Office, and Special Agent in Charge Stanley A. Newell of the Defense Criminal Investigative Service’s (DCIS) Transnational Operations Field Office made the announcement.

Sung Yol “David” Kim, 49, a citizen of the Republic of Korea, pleaded guilty to one count of conspiracy to commit bribery before U.S. District Judge Mark A. Goldsmith of the Eastern District of Michigan.  Sentencing has been scheduled for Nov. 17, 2020, before Judge Goldsmith. 

Pursuant to his guilty plea, Kim admitted that between October 2013 and January 2014, Kim conspired with James Russell Driver III, a civilian U.S. Navy cargo ship captain, and another civilian U.S. Navy employee to have Kim and his company provide husbanding services for Driver’s ship during a December 2013 port visit in Chinhae, Republic of Korea, in violation of appropriate U.S. Navy husbanding procedures.  Driver also provided Kim with confidential and other proprietary, internal U.S. Navy information.  In exchange, Kim paid bribes to Driver, including personal travel expenses for Driver and his family.  Driver pleaded guilty for his role in the conspiracy in March 2019. 

May 3, 2020 in AML | Permalink | Comments (0)

Friday, May 1, 2020

Bank Hapoalim Agrees to Pay More Than $30 Million for Its Role in FIFA Money Laundering Conspiracy

Bank Hapoalim B.M. and Hapoalim (Switzerland) Ltd. Enter Into Three-Year Non-Prosecution Agreement Download Hapoalim FIFA Non-prosecution Agreement

Bank Hapoalim B.M. (BHBM), an Israeli bank with international operations, and its wholly owned subsidiary, Hapoalim (Switzerland) Ltd. (BHS), have agreed to forfeit $20,733,322 and pay a fine of $9,329,995 to resolve an investigation into their involvement in a money laundering conspiracy that fueled an international soccer bribery scheme. 

Specifically, BHBM and BHS have admitted that they, through certain of their employees, conspired to launder over $20 million in bribes and kickbacks to soccer officials with Fédération Internationale de Football Association (FIFA) and other soccer federations. 

“For nearly five years, Bank Hapoalim employees used the U.S. financial system to launder tens of millions of dollars in bribe payments to corrupt soccer officials in multiple countries,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Today’s announcement demonstrates the department’s commitment to holding financial institutions to account when they knowingly facilitate corruption and other criminal conduct.”

“Today’s resolution marks another successful chapter in this district’s effort to hold accountable those corporations and individuals who participated in a bribery scheme that corrupted international soccer,” stated U.S. Attorney Richard P. Donoghue of the Eastern District of New York.  “This office, along with our law enforcement partners, will continue to identify wrongdoers who manipulate international soccer in order to reap illicit profits and bring them to justice.” 

“This announcement illustrates another aspect in the spider web of bribery, corruption and backroom deals going on behind the scenes as soccer games were played on the field,” said Assistant Director in Charge William F. Sweeney of the FBI’s New York Field Office.  “Bank Hapoalim admits executives looked the other way, and allowed illicit activity to continue even when employees discovered the scheme and reported it.  The New York FBI Eurasian Organized Crime Task Force and our law enforcement partners have doggedly pursued every strand uncovered in this criminal investigation, and will keep at it until they root out all of the bad actors.”

“This forfeiture sends a clear message that no matter how complex or far reaching the conspiracy, justice will prevail.  Bank Hapoalim B.M. and its subsidiary, Hapoalim Ltd., participated in a conspiracy that corrupted international soccer, its confederations, and member associations,” said Special Agent in Charge Ryan L. Korner of the IRS-Criminal Investigation (IRS-CI) Los Angeles Field Office.  “IRS-CI is proud to work alongside our international law enforcement partners, the FBI, and the United States Attorney’s Office to bring closure to this egregious international scandal that corrupted the sport of soccer.”

According to admissions in the statement of facts stipulated to by BHBM and BHS as part of the agreement, from approximately Dec. 10, 2010, to Feb. 20, 2015, BHBM and BHS personnel conspired with sports marketing executives, including executives associated with Full Play Group S.A. (Full Play), a sports media and marketing business based in Argentina, and others, to launder at least $20,733,322 in bribes and kickbacks to soccer officials.  In exchange for those bribes and kickbacks, the soccer officials awarded or steered broadcasting rights for soccer matches and tournaments to the sports marketing executives and their companies.  Full Play allegedly executed the illegal payments from accounts at BHS and BHBM’s branch in Miami, Florida, which were held in the names of Full Play subsidiaries and affiliates.  On March 18, 2020, Full Play was charged along with others in a superseding indictment in the Eastern District of New York with racketeering conspiracy, wire fraud, wire fraud conspiracy, and money laundering conspiracy.

BHBM and BHS also admitted they conspired to launder money for Luis Bedoya, who at various times served as the president of the Federación Colombiana de Futbol, a vice president of the Confederación Sudamericana de Fútbol (CONMEBOL), and a member of FIFA’s executive committee.  BHBM’s Miami branch and BHS allowed accounts controlled by Bedoya to be used to receive illicit bribe and kickback payments.  Bedoya pleaded guilty to racketeering conspiracy and wire fraud conspiracy on Nov. 12, 2015, in the Eastern District of New York. 

Notwithstanding the repeated concerns raised by BHS compliance personnel about certain payments made to soccer officials from the accounts associated with Full Play, BHS failed to take action.  Instead, the banks’ relationship managers continued executing illicit bribe and kickback payments on behalf of Full Play. 

Under the agreement, BHBM and BHS will jointly pay a criminal penalty of $9,329,995.  The banks will additionally forfeit funds totaling $20,733,322.

As outlined in the agreement, the government’s decision to enter into a non-prosecution agreement with BHBM and BHS was premised upon the banks’ thorough and complete cooperation and the banks’ other substantial remedial efforts, which have included closing Bank Hapoalim (Latin America) S.A. and BHBM’s branch in Miami.  BHS is also in the process of closing its operations. 

The agreement announced today is part of an investigation led by the FBI’s New York Field Office and the IRS-CI’s Los Angeles Field Office.  Trial Attorney Michael P. Grady of the Bank Integrity Unit of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorneys Lauren Howard, Brian D. Morris, and Samuel P. Nitze of the U.S. Attorney’s Office for the Eastern District of New York prosecuted the case.  Former MLARS attorneys Kendrack D. Lewis of the Justice Department’s Civil Division and Maria K. Vento of the U.S. Attorney’s Office for the Western District of North Carolina, the Criminal Division’s Office of International Affairs, and the government of Switzerland provided significant assistance in this matter.


May 1, 2020 in AML | Permalink | Comments (0)