Friday, June 29, 2012

Treasury Targets Drug-Money Laundering Network, Hezbollah Fundraiser

By Samuel Rubenfeld
Wall Street Journal

The U.S. Treasury Department said Wednesday it designated four individuals and three entities under the Kingpin Act for their role in laundering drug money for alleged international drug trafficker Ayman Joumaa.
The Treasury also designated a Colombia-based individual as a terrorist for directing the Americas fundraising activity of Hezbollah, a U.S. State Department-listed foreign terrorism organization.
“The Joumaa network is a sophisticated multinational money laundering ring, which launders the proceeds of drug trafficking for the benefit of criminals and the terrorist group Hezbollah,” said David S. Cohen, the undersecretary of Treasury for terrorism and financial intelligence, in astatment.
Abbas Hussein Harb and Ibrahim Chibli were designated for collaborating with Joumaa to move millions in drug-related money, Treasury said. Harb’s Colombia and Venezuela-based organization launders money for the network through the Lebanese financial sector, while Chibli used his position as manager of a branch of Fenicia Bank in Lebanon to help Joumaa and Harb, Treasury said.
Ali Mohamad Saleh, a Lebanese Colombian national, was designated as a global terrorist for acting as a Hezbollah facilitator, directing the group’s activity in Colombia, Treasury said. Saleh was the acting leader of a support cell in Maicao, Colombia,which raised funds for Hezbollah; he solicited donations and coordinated the transfer of checks and donations to the group in Lebanon via Venezula.
Saleh was placed under Kingpin Act sanctions in December 2011 for his role as a Maicao-based money launderer for a reputed criminal organization with links to the Joumaa network.
Also placed under sanctions Wednesday are Harb’s brother, Ali Houssein Harb, and Saleh’s brother, Kassem Mohamad Saleh, for their links to the Joumaa network. They control the three companies targeted in Wednesday’s action.
Joumaa, for his part, was designated in January 2011 under the Kingpin Act. He was charged in December 2011 with cocaine distribution and money laundering through, among other venues, the Lebanese Canadian Bank, whose untainted assets were bought—with American blessings—by a Beirut-based branch of Societe Generale after Treasury issued a finding against it as a “primary money-laundering concern.”
“The [Drug Enforcement Administration] investigation of Ayman Joumaa that helped lead to today’s Treasury actions is critical to protecting the U.S. financial system from illicit activity and is another tool used to disrupt and dismantle these drug and money laundering networks,” said John Arvanitis, DEA financial operations chief, in the statement

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at: and on twitter at :!/LaunderingMoney

Tuesday, June 26, 2012

U.S. bank looked other way to Mexican drug war money laundering, agent says

A former compliance officer with the U.S. bank Wachovia, Martin Woods has seen the Mexican drug war and its illicit money unseen by even the most seasoned observers. Woods started asking questions about billions of dollars pouring into Wachovia accounts in the U.S. from Mexican currency exchanges back in 2006. "I guess what surprised me most was my own naïveté . I aggravated my own employers (by bringing forward evidence of laundering) and also the regulators themselves."

Wachovia, currently owned by Wells Fargo, settled out of court for the largest violation of the Bank Secrecy Act in U.S. history in 2010, paying a fine of $160 million for laundering a staggering $378.4 billion from Mexican currency exchange houses between the years 2004 and 2007.  The majority of the cash is believed to be drug money, moved without proper documentation from Casa's de Cambio in Mexico to U.S. banks.

"There was no consequence for anyone dealing with that money. Some other compliance officers broke the rules and they kept their jobs. I obeyed all the rules, blew the whistle and lost my job," Woods says. This is a side of the Mexican drug war that few people see. Ever since Mexican President Felipe Calderon used his nation's military against the drug cartels, an estimated body count has soared past 50,000 people dead.  Public beheadings have become commonplace and the cartels have brazenly gunned down unarmed civilians in public. Financial analysts, then say there is no exaggeration in accusing bankers of laundering blood money for international assassins.

"The whole point of being a drug dealer is money," Heather Lowe, a Washington-based lawyer with Global Financial Integrity says. "Identifying and stopping that money flow is crucial." The U.N. Organization on Drugs and Crime estimates that illegal narcotics represent the world's third-biggest export, after oil and the arms trade, worth more than $300 billion annually. "You have these horrendous crimes being committed, people being shot 10, 20 or 30 at a time," Walter MacKay, a former Canadian police officer who has trained Mexican security forces says. "This dirty money washing through economies just exacerbates everything," he told Al Jazeera.

Illicit drug sales in the United States generate annual revenues between $18 billion and $39 billion, according to the U.S. Justice Department's Federal Bureau of Investigation. The money in turn flows back into Mexico, where cartels use it to pay underlings, bribe politicians, invest in legitimate businesses and purchase raw product. Most tragically, the "war on drugs" doesn't seem likely to end anytime soon. Many analysts believe the military solution isn't working as violence is increasing. Some policy experts and forensic accountants believe tracking money earned by cartels, along with waging a PR campaign to tackle the demand side of the equation in the U.S., is the best in a series of bad options.

"In order to weaken organized crime, it is far safer and more effective in the long run to erode its financial base," Laura Carlsen, director of the Americas program of the International Relations Centre in Mexico City says. Currency exchange houses, like the ones used by Wachovia, are probably the most common way for cartels to launder funds. Traffickers normally "contract with money brokers to use their networks of bank accounts and business connections to structure large sums for transport across the border"; former Arizona Attorney General Terry Goddard told a gathering at Woodrow Wilson Center said.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at: and on twitter at :!/LaunderingMoney 

Friday, June 22, 2012

Ireland levies first fine under money laundering law

The Central Bank of Ireland has reprimanded and fined the Dublin-based life assurance arm of Swiss bank UBS after it failed to comply in a timely manner with anti money-laundering legislation introduced in 2010.
The CBI said it had fined UBS International Life Limited (UBSIL) 65,000 euros ($81,900) for failing to instruct its staff on changes to the law embodied in the Criminal Justice Act 2010.
"This is the first fine we have issued under this anti money-laundering legislation," said CBI spokeswoman K atie Philpott.
The law, which came into force in July 2010, is designed to protect Ireland's financial system from exposure to money laundering and terrorist financing, the CBI said.
The CBI also said UBSIL had failed to show it was adequately checking information on policy holders provided by third parties, thus failing to comply fully with "know your customer" requirements.
UBSIL had also failed to adopt adequate written policies and procedures for identifying and reporting suspicious transactions, the CBI said.
"The breaches identified related to delays by UBSIL in implementing certain requirements of the act after it was implemented on 15 July, 2010," said UBS in a statement, adding that it had dealt with all the control weaknesses identified.
A spokesman for UBS said UBSIL had worked closely with the CBI to redress the control weaknesses, and had received a near 30 percent discount on the fine originally proposed as a result, adding that UBSIL had not committed any contraventions in doing business.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at and on twitter at :!/LaunderingMoney