The Financial Services Authority has warned small and medium sized institutions that controls need to be improved in order to avoid doing business with members on the Government’s “blacklist” of financial sanctions, according to a report earlier this week in The Times newspaper.

The blacklist is managed by the Treasury and consists of around 1,400 individuals and 500 entities linked to terrorist financing in Britain and abroad.

Following a survey of 228 financial firms by the regulator, it was found that there was widespread confusion about the sanctions regime. Many smaller businesses remain unaware that it is a criminal offence to provide banking or other financial services to blacklisted clients and company directors can face imprisonment or a fine if convicted.

The FSA has urged small firms to make sure they have sufficient controls in place in order to screen clients. Software such as the Financial Sanctions Register (FSR) Checker, from Linksfield Technologies, is designed to help smaller businesses compare their customer lists with updates from the Treasury’s list of financial sanctions targets.

The FSR Checker can either run on site (integrating with other back office systems and facilitating batch processing), or give an online, web-based version targeted primarily at brokers who want to do ad-hoc searches.

Both versions produce the necessary reports to evidence to the FSA that appropriate searches are being run regularly against the blacklist.

Mark Posniak, Head of Business Development at Linksfield, said: “We have been aware of the challenges that all financial institutions face for quite a while now. We are excited by the upcoming launch of our online version of our system, which is specifically aimed at small and medium-sized financial institutions, and is priced accordingly. By making the solution as cost-effective as possible, we’re ensuring that there are no excuses for non-compliance!”

Customers can now use a free online trial of the service, which includes up to 5 free searches, at www.linksfield.com/fsr.

Source: bridgingandcommercial.co.uk

Lawyer Marc Dreier will plead guilty May 11 to money laundering and other charges in an alleged scheme to sell $700 million in fictitious promissory notes, his lawyer said Monday.

Gerald L. Shargel, Mr. Dreier's lawyer, said his client will enter a guilty plea to all the charges in a superseding indictment unsealed in March -- conspiracy, securities fraud, money laundering and five counts of wire fraud.

Mr. Dreier will plead guilty without a deal in place with the government, said Mr. Shargel, who had previously indicated they expected a quick resolution of the case.

On Monday, U.S. District Judge Jed S. Rakoff in Manhattan, without prejudice, denied a motion by Mr. Dreier to dismiss the securities-fraud charge.

Prosecutors have alleged that Mr. Dreier sold about $700 million of fake promissory notes and misappropriated client funds from his law firm.

The out-of-pocket loss to investors and clients when the fraud was discovered in December was more than $400 million, the government has said.

The overall scheme allegedly ran from 2004 to 2008.

Source: The Wall Street Journal

Iran says it has showed documents to the International Monetary Fund and has proved that US claims regarding money laundering in Iran are baseless.

The US brings about baseless accusations with special political aims against Iran to divert public opinion away from the illegal actions taken by American banks, claimed the chief of Iranian Central Bank (CBI), Mahmoud Bahmani.

"(Iran's) banking laws and regulations do not allow that kind of illegal activities," he said.

Bahmani had announced earlier last week that CBI was implementing a newly-passed Anti-Money Laundering law to restrain any possible crimes.

"The money laundering law approved by the Guardian Council is now being enforced in the banks throughout the country," Bahmani was quoted as saying.

Bahmani says a committee has been formed to ensure the implementation of the law.

Money laundering is the practice of disguising illegally obtained funds so that they seem legal.

Last year, the Financial Action Task Force (FATF) praised Tehran for its crackdown on money laundering. The 34-member financial watchdog congratulated Iran on its commitment to seal money laundering loopholes.

Source: Press TV

By Robert Sutcliffe

The director of a Bradford-based company which was set up to help students find college places has gone on trial accused of involvement in heroin smuggling and money-laundering.

Yorkshire College Ltd was formed in 2004 to help students from overseas to gain qualifications and college placements, but Bradford Crown Court heard yesterday that director Roohul Amin and some of his colleagues were allegedly part of a smuggling conspiracy involving heroin worth almost £650,000.

Amin, of Raglan Terrace, Bradford, also ran the international money transfer business AA Travel in Leeds Road, Bradford, with co-defendant Ali Iftikhar, and prosecutor Peter Moulson alleged that in 2007 just over £1m passed through its hands.

In November 2007 alone more than £500,000 was transferred by the company, a month when parcels containing heroin had arrived.

Amin is one of five defendants who have denied conspiracy to smuggle heroin and money-laundering. Iftikhar, 39, of Thornbury Crescent, Bradford, Mohammed Alamgir, 25, of Tyne Street, Bradford, Mohammed Faisal, 31, also of Tyne Street, Bradford, and his wife Patricia Malicka, 30, of the same address also deny the charges.

The jury heard that Faisal, Malicka and Faisal's younger brother Alamgir were also on the staff at Yorkshire College Limited.

"The crown say the defendants were involved by way of an agreement, a conspiracy, to smuggle heroin from Pakistan to England,'' said Mr Moulson.

"Principally addresses and or personnel were made available so that the heroin secreted in parcels of clothing sent from Pakistan could be safely received.''

Just under 13 kilos of heroin was seized or intercepted after various parcels were examined at the Revenue and Customs/ Parcel Force depot in Coventry.

Mr Moulson described in detail how once the consignments of heroin were substituted "controlled deliveries'' of the packages were made by undercover police officers to their intended addresses in Bradford.

The jury heard that two men Ijaz Rahim and Shazhad Khan had already been convicted in respect of their involvement with the heroin.

In relation to AA Travel Mr Moulson alleged that expert accountancy evidence would show that in 2007 £1,047,721 passed through its hands and that amount could not be reconciled with the accounting records or other documents.

An inspector concluded that there was a failure to have anti-money laundering procedures in place, there was ignorance of the requirement to report suspicious transactions to the Serious and Organised Crime Agency and a failure to confirm the identity of customers.

He alleged Iftikhar's income had increased from just over £9000 in 2006 to more than £168,000 in 2007 with cash deposits in excess of £140,000.

The trial continues.

Source: Yorkshire Post

By Vineetha Menon

NCB Capital (NCBC) - the investment banking division of Saudi Arabia’s National Commercial Bank - have adopted financial crime solutions to dissuade illegal behaviour and beef up security in trying times.

Launched in 2007, NCBC presently manages around $13 billion in assets and one million clients, making it the Kingdom’s largest manager of wealth for high net worth individuals.

It also has a presence in other parts of the region through its subsidiaries - HC Securities in Egypt, Al Futtaim HC Securities in Dubai and EastGate Capital Group in Dubai.

The financial crime solutions from Norkom Technologies will enable the investment banking arm to monitor transactions across its client base, watching for any suspicious behaviour that involves individuals/entities mentioned on specific watch lists. Additionally, NCBC will be able to assign risk ratings to customers and routinely asses their behaviour over time.

The solutions will be implemented across NCBC’s operations in the Middle East, starting from its headquarters in Saudi Arabia.

Source: ITP

By Lisa Wade McCormick

Federal authorities on Monday charged five people in connection with a "Dream Home" mortgage scheme that cost investors nearly $70 million.

The defendants allegedly promised to pay off the mortgages on the "dream homes" of the more than 1,000 consumers taken in this scheme, but left them with nothing but shattered dreams and drained bank accounts, said Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney for the District of Maryland Rod J. Rosenstein.

According to the grand jury indictments unsealed on Monday, the defendants allegedly ran their deceptive mortgage payment program from 2005-2007 under various corporate names, including Metropolitan Grapevine LLC, Metro Dream Homes, POS Dream Homes, and POS DH LLC (collectively, MDH).

The defendants named in the federal indictments Andrew Hamilton Williams, Jr., 58, of Hollywood, Florida, the founder and owner of MDH; Michael Anthony Hickson, 46, of Commack, New York, the chief financial officer; Isaac Jerome Smith, 46, of Spotsylvania, Virginia, the president; and Alvita Karen Gunn, 31, of Hanover, Maryland, the vice president of operations.

Authorities also filed information against a fifth defendant, Carole Nelson, 50, of Washington, D.C., the chief financial officer of POS Dream Homes.

The indictments allege the defendants used deceptive marketing tactics to convince consumers to participate in their "Dream Homes Program."

Here's how the scheme worked:

• The defendants convinced consumers to pay a minimum of $50,000 for each home enrolled in the program. Investors also had to pay an "administrative fee" of up to $5,000;

• The defendants told investors not to worry about high mortgages because Metro Dream Homes would pay their future monthly payments and pay off their mortgages within five to seven years — using returns on the homeowner's original investment. At that time, the homeowner and Metro Dream Homes would then own an equal interest in the home;

• The defendants told consumers their $50,000 would be used to fund investments in automated teller machines, flat-screen TV displays that carried commercial advertisements, and Touch-N-Buy electronic kiosks that sold telephone calling cards and other items;

To make their scheme appear more legitimate, the defendants marketed the program through live presentations at posh hotels in Washington, D.C.; Baltimore, and Beverly Hills, California.

But authorities allege the defendants didn't use investors' money as promised.

"The indictment alleges that there was no revenue to pay the mortgage payments," Rosenstein said. "Instead, the conspirators used some of the investors' money to repay earlier investors in the Ponzi scheme and spent the remainder on themselves."

Authorities learned the defendants used investors' money to pay for 10 chauffeurs and a fleet of luxury cars, travel and tickets to the 2007 National Basketball Association All-Star game, the 2007 National Football League Super Bowl, and luxury accommodations on both trips.

The defendants also used consumers' money to pay themselves salaries of up to $200,000 a year — and their mortgages; pay off investors in a prior failed ATM investment venture founded by Williams; make multiple donations of up to $50,000 each to charitable organizations to allegedly give MDH the appearance of being financially successful; and fund investments in third-party businesses that had not been disclosed to investors.

Federal prosecutors also allege the ATM machines, flat-screen TVs, and electronic kiosks never generated any meaningful revenue.

"The effects of this wide-ranging mortgage fraud scheme are particularly disturbing against the backdrop of today's economic environment," said Thomas J. Harrington, Executive Assistant Director of our Criminal, Cyber, Response, and Services Branch.

The Maryland Securities Commissioner on August 15, 2007, issued a cease-and-desist order against Williams, MDH, and other related companies. That order directed them to immediately stop offering and selling unregistered securities in connection with the Dream Homes Program.

The defendants, however, allegedly ignored that order and held additional meetings in which they made further misrepresentations about the financial success of MDH's operations.

On September 4, 2007, the defendants filed a legal challenge to the cease-and-desist order in federal court.

The federal indictment alleges during a September, 12, 2007, hearing, Hickson testified that the financial success of the Dream Homes Program did not rely on new investor funds. Hickson, however, knew the sole source of meaningful revenue for MDH was new investor funds, the indictment alleges.

Federal authorities said more than 1,000 consumers invested approximately $70 million in the Dream Homes Program.

When the defendants stopped making the mortgage payments, authorities said, the homeowners had to try and make the payments MDH promised to pay in full.

"These types of crimes drive homeowners into foreclosure, erode the integrity of our tax system, and threaten the financial health of our communities," said Eileen Mayer, Chief, IRS Criminal Investigation.

The four indicted defendants face a maximum sentence of 20 years in prison for the fraud conspiracy; 20 years in prison on each of the 15 counts of wire fraud; and 20 years in prison for conspiracy to commit money laundering.

Hickson also faces a maximum sentence of five years in prison for making false statements. And Smith faces a maximum sentence of 30 years in prison for bank fraud in connection with his alleged misrepresentation of his income to obtain a bank loan for a new Bentley automobile. Nelson was charged by information with money laundering, which carries a maximum penalty of ten years in prison.

The indictments also seek forfeiture of the fraud proceeds, including the $70 million investors lost in the scheme. An indictment is not a finding of guilt, federal authorities said. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceeding.

Source: ConsumerAffairs.com

By CURT ANDERSON

A Colombian who was one of the top financial managers and supervised money-laundering for a cocaine cartel accused of smuggling $10 billion in drugs into the U.S. was sentenced Tuesday to 30 years in federal prison.

Eugenio Montoya Sanchez, 39, pleaded guilty in January to drug trafficking and obstruction of justice charges, the latter involving his role in setting up the torture, killing and dismemberment a cartel associate suspected of cooperating with authorities. In a brief statement, Montoya expressed remorse.

"There is no justification for what I did," Montoya said through a Spanish interpreter.

Montoya is the brother of the purported mastermind of Colombia's North Valley cartel. Diego Montoya Sanchez is also in U.S. custody in Miami and has pleaded not guilty to a 12-count federal indictment charging cocaine trafficking, money laundering, witness retaliation and obstruction of justice. Another brother, Juan Carlos Montoya Sanchez, is serving a 22-year prison sentence in the U.S. his role in the drug cartel.

The Montoyas are accused of overseeing a cocaine empire that smuggled cocaine into the U.S. beginning in the 1990s. U.S. District Judge Cecilia M. Altonaga set a July 10 hearing to consider whether Montoya can pay restitution to the U.S. government for his drug activities.

Assistant U.S. Attorney Michael Davis said most of Montoya's assets have been seized by the Colombian government and that the additional time is needed to determine how much he could pay.

Eugenio Montoya, who has been cooperating with U.S. authorities, previously admitted his role as a top financial manager of the cartel. Among his duties was handling a series of so-called "stash houses" in Colombia where about $20 million in U.S. currency was hidden. Montoya also made numerous real estate investments and oversaw a computer equipment business.

The obstruction charge stems from the August 2003 killing of Jhon Jairo Garcia Giraldo, known as "Dos Mil," whose main job was handling pagers and cell phones for the Montoya organization. According to court documents, Garcia was tortured at a farm outside Cali, Colombia, on orders from Diego Montoya to find out if he had talked with U.S. officials during a visit to South Florida.

"Methods used included hitting Garcia Giraldo with baseball bats in the shins and other parts of the body, holding his head under water, and asphyxiating him with a plastic bag over his head," according to a statement of facts signed by Eugenio Montoya.

Although Garcia denied being an informant, he was beaten to death and dismembered, his body parts thrown in a river.

Source: AP

by Sandeep Dikshit

An international conference on countering terrorist financing of charity organisations quietly got under way here on Monday, with a strong representation from India and its neighbours.

Quarterbacked by the United States, the conference is being held against the backdrop of increasing international realisation that charities are being used for financing terrorist activities.

Officials from Afghanistan, Pakistan, Sri Lanka, Nepal, Bangladesh and Maldives, apart from the U.S and India, are attending the event.

Hosted by the U.S. Embassy and the Asia Pacific Group on Money Laundering, it aims at promoting government action to prevent terrorist outfits from exploiting humanitarian or religious charities as a way of concealing the illegal international movement of funds.

At the conference, technical experts, under the Asia Pacific Group on Money Laundering, are exploring best practices and a wide range of options for cooperation to protect the charitable sector from this regional and global threat. The U.S. is aware of the need to strike the right balance. Charities complicit in terrorist groups must be shut down and adequate oversight is required to promote transparency, but the world must ensure safe alternative channels to provide charity in critical areas such as humanitarian services.

International financial flows came under scrutiny after the financial system in the 1990s provided for seamless movement of funds across the world.

Source: The Hindu

By DALJIT DHESI

Evidently, it takes one to catch one. Nothing excites Kenneth Rijock more than to stop money launderers – and he was once one of them. He says it gives him great satisfaction to nab those who “legalise” ill-gotten gains, thus curbing these illegal activities from spreading across borders.

“Busting these wicked people and making sure they are punished by upholding the rule of law is what I intend to do in my life,” he says.

“By pursuing this noble journey, I feel like I am paying back for what I did as a money launderer. At the same time, I like to help financial institutions worldwide and their compliance officers, who lack adequate knowledge, to combat this menace.’’

Rijock is a financial crime consultant with World-Check, an international risk management firm that advises banks and government agencies on financial crime.

Drawing on his experience operating outside the law, Rijock has become a leading money laundering expert. He has written over 4,000 articles on the subject and other financial crimes, and is also author of the Confessions of A Money Launderer series, a feature on the World-Check website.

Apart from this, he regularly lectures around the world on emerging threats and money laundering tradecraft. He was in Kuala Lumpur recently to speak at a conference on financial crime and terrorism financing.

Into the dark side

Rijock was lured into the dark world of money launderers by the usual enticements: greed, the company of women and a quick way to make big bucks. And yet he had no peace of mind because of the constant fear of getting caught by the authorities or being killed by crime lords.

His clients then included South American cocaine kingpins, with whom he has travelled with large amounts of cash to tax havens in the Caribbeans, Europe and other places.

It is a lonely and dangerous profession, he recalls, as one cannot lead a normal life with a family. A money launder is always obsessed with the job – the threats and pitfalls, and the success and failure of the operations. Although money laundering is a white-collar crime, the people one deals with can be violent criminals.

“It’s a one-way ticket to hell and it’s hard to leave once you are stuck in it. The way out is either imprisonment or death. I got the former,’’ he adds.

Rijock was in the army for a few years, and had served in Cambodia and Vietnam. He then studied history and law. It was when he was a bank lawyer in Miami that Rijock spent 10 years in money laundering. He was arrested and sentenced to four years in jail.

After getting out of prison, he joined World-Check, where his job involves detecting emerging threats in financial crime and money laundering, finding out the latest techniques, and ensuring the clients know how to spot such activities.

Rijock says it is not that difficult to launder money as the current detection systems still have loopholes and the compliance officers looking for the culprits do not know enough about the crime.

Money launderers are usually professionals with a deep knowledge of law and finance and are often more savvy and skilled than the compliance officers, he notes.

According to international body Financial Action Task Force, about US$1.5 trillion illegal funds are laundered each year worldwide.

“There are three distinct phases of money laundering. If the first phase is undetectable, then it is difficult to prosecute the suspects because of the lack of evidence to show that the money obtained is from criminal profits,” Rijock explains.

“The first phase is known as placing. Here the ‘dirty’ money is placed in the global financial system. The second phase – called layering – takes place when the money from the financial system is moved to maybe, a tax haven, to disguise its origin. Lastly, integration takes place when a purchase is made.’’

According to World-Check, more than 3,000 institutions, including over 90% of the world’s largest banks and 200 enforcement and regulatory agencies, rely on its database of known heightened-risk individuals and businesses.

The clients use the information to screen their customers, associates, transactions and employees for potential risk. This database is updated daily in real time by World-Check’s international research team and is derived from hundreds of thousands of public sources.

Coverage includes money launderers, fraudsters, terrorists and sanctioned entities, plus individuals and businesses from over a dozen other categories.

No rest

Rijock says money launderers work seven days a week and basically every hour of the day to ensure that their trade is perfected. The advent of the Internet has made money laundering more rampant because it makes the necessary information readily available.

Imaginative and patient, money launderers have an edge over the banks because they are prepared to work at awkward hours like 4am and late on Fridays, when most of the banks’ compliance officers have gone home for the weekend.

Rijock says compliance officers need to be educated and trained on how to tackle financial crimes. At the same time, the technology that drives money laundering detection systems needs to be constantly upgraded.

However, banks find it difficult to halt the incidence of money laundering because some of them are reluctant to invest in sophisticated systems. This is particularly so before the 9/11 terrorist attacks. However, the introduction of the Patriot Act in the United States has changed this.

Rijock points out that foreign banks doing business with US banks are on the same level as the latter in terms of compliance with best banking practices.

Still, the banks cannot afford to let their guard down. Money launderers are constantly looking for what he describes as “old wine in new bottles”. In other words, they seek new techniques or modify existing money laundering systems so as to avoid detection.

Asked whether it is easy to launder money in Malaysia, Rijock says: “People traditionally launder money through tax havens. Malaysia is not a tax haven. A tax haven is where the government makes a lot of money from the formation of corporations and from the banking business. The government does not enforce money laundering laws nor does it question the source of the illegal funds.

“Malaysia, on the other hand, has a legitimate business structure and does not solely depend on offshore funds. It has a sound tax system unlike the zero-tax jurisdictions prevalent in tax havens.”

Rijock now spends his free time mostly travelling to give talks on money laundering. Last year, he lectured in 30 countries. Apart from working, which he loves, he also cycles and does other outdoor activities.

But he admits that he does not have much time for himself as he is busy tracking financial criminals. He loves tropical places and food as it reminds him of his home base of Miami in Florida, the United States.

Source: The Star

Anti money laundering compliance procedures have become more of an exercise in box ticking than a concerted effort to prevent criminal activity, according to Professor Jackie Harvey of Newcastle Business School, Northumbria University.

The first money laundering guidance notes were introduced in the early 1990s and marked the start of a painstakingly slow process. Up to and including the 2007 money laundering regulations we have seen some 15 changes to the money laundering regulatory framework. The rationale underpinning this regulatory creep is provided by the presumed (but untested) positive correlation between legislation and the costs of money laundering; and the suspicion that there is criminal wealth that cannot be causally connected to specific crimes within the economy.

The police (supported by a government desperate to be seen as being ‘tough on crime’) wanted to attack these criminal assets directly and to do so required new and stronger powers. The upshot is that law enforcement authorities are now in the position of being able to target the funds of criminals separately from targeting the criminals themselves. As a result, a suspected criminal does not need to be convicted of a criminal act to see his ‘unexplainable’ assets confiscated. Of course, establishing the size and ownership of these assets requires close scrutiny of the financial affairs of the suspect, which is where the financial institutions come in.

Detection or self-protection?
AML legislation has effectively transferred some of the detective activities of law enforcement into the compliance and supervisory functions, with some banks establishing internal detective functions. With this comes the inherent presumption that banks are in some unspecified way able to distinguish criminal from legitimate account activity, bearing in mind the fact that money is money and by its very nature is neither clean nor dirty. Indeed, all they can reasonably do is point to transactions that, against a given history, might appear unusual – the leap of faith inherent in the approach being that ‘unusual ‘by definition must equate to ‘suspicious’.

Add to this the risk that reporting the unusual is driven by a desire to avoid regulatory censure, particularly where business sees such reporting as absolving them of responsibility, and we have a scenario where there is a geometric rise in the number of suspicious activity reports. Indeed, I am aware of banks using the number of SARs submitted as an internal performance measure, while at least one bank has been told that for their size they should be submitting more reports. Put against this the most recent mutual evaluation report (FATF, 2007) which comments on the apparent lack of FSA disciplinary sanctions and one wonders if the whole process is to tick the box rather than uncovering criminal activity.

A vested interest
Unfortunately, what is clear from recent market history is that damage to reputation is brought about not by criminal account keeping, but by failures in other areas of risk management.

We have created a win-win situation for the many agencies whose existence and expense are justified by the dubious assumption that there is a huge volume of crime money that (if laundered) would threaten the integrity of the global financial system. Whether or not the assumptions are proven is irrelevant for justifying the costly existence of a host of anti-laundering agencies. The result is a global security business supporting an ever expanding list of security consultants, training, conferences, journals, bulletins and updates. It is hard not to conclude that there exists a strong vested interest in maintaining the status quo. It is hardly surprising that compliance is now regarded as a profession in its own right. Naturally their interest is to reinforce the threat of money laundering and the continued importance of their function which is a cost overhead on the real business.

The ultimate tension will be between the desire to collect increasing amounts of criminal money and the consequent demands for ever more information from financial institutions. While assets have been recovered from criminals, it’s been at significant cost to the law enforcement agencies as well as to business, at a time when business can least afford it.

Source: AccountingWEB

By TIMOTHY L. O'BRIEN

A powerful Russian industrialist whose empire is under investigation in the money laundering inquiry at the Bank of New York said yesterday that a large part of the billions of dollars moved through the bank was controlled by Russian officials protecting their fortunes by shipping their money abroad before Russian markets collapsed last year.

In his first interview since the money laundering investigation became public last week, the industrialist, Mikhail Khodorkovksy, said by telephone from Moscow that many Russian officials began selling Government securities in 1998 because they had inside knowledge about Government deliberations in the months leading to a decision to permit the devaluation of the ruble. That move occurred in August 1998, and caused the Russian economy, and the value of Government debt, to spiral sharply downward.

Anyone who sold securities before the devaluation would have gotten out of the market while the securities' value was still relatively high, locking in profits on the bonds just before they fell to earth. Mr. Khodorkovsky said he believed that Russian officials did just that, shipping their profits abroad through a front company and into the Bank of New York.

Mr. Khodorkovsky, of course, has a vested interest in this theory. He believes that Russian investigators, who he said have yet to make contact with him, are poised to re-examine his business dealings in light of the money laundering inquiry. By pointing his finger at the investigators' current and former political bosses, Mr. Khodorkovsky seemed to be warning Russian leaders that they too may be dragged into the wide-ranging investigation.

Even so, Federal investigators believe that the amount of money moved through the Bank of New York -- at least $4.2 billion and possibly as much as $10 billion -- was so large that Russian organized crime figures linked to the investigation could be directly responsible for only a small part of it. Investigators say it is very likely that the bulk of the money that flowed through the bank is tied to corporate embezzlement and political graft in Russia. And Russia's securities markets, marred by rampant insider trading, have long been considered easy for public officials in Russia to manipulate.

The Bank of New York confirmed last week that it was cooperating with an investigation of what Federal authorities describe as the biggest money laundering inquiry in history. The bank has not been charged with any wrongdoing.

Mr. Khodorkovsky, 35, is the chairman of Yukos, one of Russia's largest oil companies, and was the chairman of Menatep, a now insolvent Russian bank. Federal investigators are examining whether Menatepmoved funds illegally through the Bank of New York. Investigators' interest is heightened because Natasha Kagalovsky, a Bank of New York executive suspended until the investigation is complete, is married to Konstantin Kagalovsky, who is the vice chairman of Yukos and was also vice chairman of Menatep. The Kagalovskys have not been charged with any wrongdoing.

The Kagalovskys ''wish to state unequivocally that they have never been involved in money laundering in any way, shape or form,'' the couple's lawyer, Stanley Arkin, said in a statement. ''Nor do they have any knowledge of such activity.''

Mr. Arkin's statement was prompted, it said, by ''unfair press coverage'' based on ''innuendo, rumors, selective and irresponsible leaks from U.S. governmental sources and disingenuous 'guilt-by-association' assumptions.''

Mr. Khodorkovsky called a reporter directly yesterday to offer his theory on what was behind the scandal and to defend his integrity.

''Menatep never in its history has done any money laundering,'' he said through an interpreter. ''Menatep has undergone investigations by many commissions on this issue.''

Nonetheless, he said the money laundering investigation at the Bank of New York was significant. ''The investigation that is under way in the U.S. appears to be of great importance,'' he said. ''Because if the investigation is carried out competently, we will see that Russian criminals will be caught red-handed.''

Mr. Khodorkovsky said that Russian organized crime figures were undoubtedly tied to the scandal, and that he believed, as has been reported, that Semyon Mogilevich, a reputed head of organized crime, was involved. Investigators say Mr. Mogilevich used a company called Benex to launder funds through the Bank of New York. Mr. Mogilevich could not be reached for comment; in the past he has denied any ties to organized crime.

Mr. Khodorkovsky declined to speculate on other crime figures he believed to be involved in the scheme, saying he feared for his safety, but he enthusiastically offered his view that political insiders in Russia had shipped their own ill-gotten gains through the Benex pipeline.

The chronology of events surrounding the money laundering investigation adds some credibility to this view. In early 1998, just as Russia's economy began to show serious signs of strain, funds started moving through the Benex accounts at the Bank of New York. Activity in the accounts is believed to have been particularly heavy starting in the fall of 1998, shortly after the Russian ruble was devalued, accelerating a financial crisis in the country.

Individuals with direct knowledge of the money laundering investigation have said that more than $4.2 billion passed through these accounts between early 1998 and March 1999.

''I believe that such huge money over such a short period of time could only be generated by that operation,'' Mr. Khodorkovsky said, referring to his theory that Russian officials took advantage of inside knowledge about the financial crisis and shipped bond gains abroad.

But United States intelligence officials believe that many commercial banks in Russia also began shipping money out of the country shortly after the ruble was devalued, when a 90-day debt moratorium imposed by the Russian Government gave the banks an opportunity to avoid paying debts by stashing their cash abroad.

Mr. Khodorkovsky was privy to an exclusive meeting in Russia's presidential offices attended by a handful of powerful Russian financiers the weekend before the ruble was devalued. The group successfully pushed for the moratorium, although Mr. Khodorkovsky said yesterday that he had not taken advantage of his position as an insider.

News reports about the money laundering investigation at the Bank of New York have offered a variety of other theories about where the money came from in Russia. The International Monetary Fund and the United States Department of Agriculture said yesterday that they had no evidence to support one of those notions -- that their aid to Russia had been misappropriated. But the I.M.F. conceded yesterday that it had badly misjudged how challenging it was to lend and track billions of dollars in corruption-plagued countries like Russia.

The issue of whether I.M.F. loans to Russia were illegally diverted was extensively investigated earlier this year with no evidence found then that indicated misappropriation.

Still, Representative Jim Leach, an Iowa Republican, who said this week that he would hold hearings in mid-September examining the threat of money laundering and the Bank of New York case, said yesterday that further I.M.F. loans to Russia should be halted until steps are taken to insure that the money is not diverted.

Source: The New York Times

A UK newspaper’s claims that Dubai and other Gulf states are being used to launder money from piracy have been strongly refuted by the Dubai Police.

A report in The Independent newspaper on Tuesday said investigators, hired by the shipping industry, had discovered that $80m had been paid out in ransoms from hijacked vessels off the Horn of Africa – far more than had previously been reported.

Of this, millions of dollars had been laundered through bank accounts in the UAE and other parts of the Middle East, the newspaper claimed.

In a timely response on Wednesday Dubai Police hit back at the article calling its claims baseless and untrue, as part of a statement posted on the UAE’s official WAM news agency.

The newspaper's claims centred around comments made by Christopher Ledger, manager of security company Idarat Maritime, which is working to develop greater protection for ships in collaboration with ship insurers.

Ledger was quoted as saying: "There is evidence that syndicates based in the Gulf – some in Dubai – play a significant role in the piracy which is taking place off the African coast."

“There are huge amounts of money involved and this gives the syndicates access to increasingly sophisticated means of moving money as well as access to modern technology in carrying out the hijackings,” he added.

Ledger’s views were backed by Major General Julian Thompson, chairman of Idarat.

"What we can say is that these people are not just fishermen who have taken up a bit of piracy as a hobby."

"The people in ultimate charge of some of the groups have access to some pretty good information and they are well organised. Dubai seems to be the place which has a part in this," Thompson told the newspaper.

In his response Dubai Police Chief, Major General Khamis Mattar Al Mazinah countered the claims by pointing out that the UAE had tough anti-money laundering laws, and was the only country in the region that registered money laundering cases.

The Emirates was a member of the Financial Action Task Force, made up of seven major industrial countries, which issued periodic reports about countries that faled to cooperate on money laundering, he added.

Any amount more than AED40, 000 was treated as suspicious until proven otherwise, Mazinah said in comments published in UAE daily Emirates Today.

“We did not receive any report about the money laundering taking place in the UAE,” Mazinah said.

The Independent’s article is the latest in a wave of criticism aimed at the UAE in the international media, which has lead Emirates officials to comment that external journalists are targetting the country with negative press.

In an online address to the media earlier this week Sheikh Mohammed, Vice-President of the UAE and Ruler of Dubai, said: "Now the focus is on Dubai, and again the stereotypes are being brought up. It seems that any successful Arab model in economic development invites such negative treatment in the international media."

Mazinah reiterated this feeling, stating that the newspaper was targeting the UAE's reputation through the dissemination of unfounded rumours.

The Independent had published its report without getting any comment from the security authorities in Dubai or from the UAE Central Bank, he added.

Source: ArabianBusiness

A former top minister in the Chinese gambling resort of Macau already jailed for taking tens of millions of US dollars in bribes was Wednesday sentenced to a further 28-and-a-half years. Ao Man Long, 52, former secretary for transport and public works, is already serving a 27-year jail term after being convicted last year of taking huge bribes in return for awarding public work contracts.

At the end of a second trial Wednesday, he was convicted of 23 additional counts or bribe-taking and five of money laundering in the biggest corruption case in modern Macau history.

Sentencing him in Macau's Court of Final Appeal, judge Shum Ho-fai said Ao had abused his power as a government official and that his behaviour had seriously damaged the image of the territory.

The two sentences will be served concurrently because of limitations in the Macau Penal Code which mean Ao cannot serve more than 30 years in prison.

Ao was arrested in 2006 and sentenced to 27 years in January 2008 after being found guilty of taking huge bribes as he awarded public works contracts for a series of massive casino projects.

He built up a personal fortune of 100 million US dollars as the former Portuguese colony, which reverted to Chinese rule in 1999, welcomed a series of Las Vegas-owned casinos.

Ao was found guilty of 57 out of 76 charges including corruption, money-laundering, abuse of power and making false statements at the end of his original trial.

A graduate of Taiwan University, Ao joined the Macau government in 1987 and was appointed its first secretary for transport and public works after the territory reverted to Chinese rule.

Source: DPA- EARTH TIMES

Somali pirates' money is not laundered through Dubai, said Major General Khamis Mattar Al Mazeina, Dubai Police's Deputy Commander General, in reply to a report by a British newspaper.

The newspaper, Independent, said vast sums of ransom money that the pirates received for releasing ships they hijacked in Somalia and the African Horn was laundered in Dubai and other GCC countries through piracy syndicates based in these countries.

In a statement to Emarat Al Youm Arabic daily, Al Mazeina said the allegations are baseless, and stressed that the UAE has very strict legislations against all types of money laundring.

The Independent said about $80 million has been paid out by shipping companies to pirates in 2008.

While some of the money has ended up in Somalia, millions have been laundered through bank accounts in the UAE and other parts of the Middle East, the report said.

Al Mazeina said the UAE is the only country in the region where money laundering cases were taken to court, and sentences issued.

Any amount of money exceeding Dh40,000 is monitored and considered questionable until proven otherwise.

The Independent quoted Christopher Ledger, a former Royal Marine officer and a director of the firm, saying: "There is evidence that syndicates based in the Gulf – some in Dubai – play a significant role in the piracy, which is taking place off the African coast. There are huge amounts of money involved and this gives the syndicates access to increasingly sophisticated means of moving money as well as access to modern technology in carrying out the hijackings."

Al Mazeina said the Financial Action Task Force (FATF), the international organisation against money laundring, includes the Group of Seven (G7) leading industrial nations and other countries cooperating in this field, including the UAE.

"FATF issues periodic reports on uncooperative countries, and we have never received any remarks from them about such operations in the UAE, no matter how small the amounts of money," Al Mazina said.

He said Dubai Police cooperated with many countries in cracking money laundering rackets and other suspected activities, such as fraud, and played a part in arresting organised gangs.

Al Mazeina said some parties wanted to tarnish the image of the UAE through spreading these vicious rumours. "Countries that do not cooperate with efforts against money laundering are held accountable by special organisations, which do not include the media," he said.

He said that Dubai Police are always open to all reporters who want to confirm any information before publishing it. People can also view international reports on the FATF website and find out the UAE’s stand before spreading such rumours, he said.

The British newspaper published the report without any comment or feedback from security bodies in Dubai or the UAE Central Bank.

Source: Gulf News

Gulf banks are being used by organised pirate syndicates to launder millions of dollars taken as ransom from vessels hijacked off in the Gulf of Aden, the UK’s Independent newspaper reported on Tuesday.

Investigators hired by the shipping industry told the newspaper around $80 million was paid out by shippers last year, much of which finds its way to piracy “godfathers” based in the Gulf and African countries such as Kenya.

Investigators said these “godfathers” include businessmen from Somali and the Gulf region, as well as nationalities from the Indian subcontinent.

"There is evidence that syndicates based in the Gulf play a significant role in the piracy which is taking place off the African coast," Christopher Leger, a former Royal Marine officer and director of Idarat Maritime, was quoted as saying.

Idarat specializes in maritime protection and is working with underwriters Lloyd's to come up with safeguards for shippers.

"There are huge amounts of money involved and this gives the syndicates access to increasingly sophisticated means of moving money as well as access to modern technology in carrying out the hijackings."

Source: Maktoob Business

A British member of the European Parliament has been charged with false accounting and money laundering, the prosecutors' office said.

Tom Wise, 60, a former UK Independence Party (UKIP) MEP who now sits as an independent, was investigated by police after claims made about his conduct in tabloid the News of the World four years ago.

His former researcher, Lindsay Jenkins, faces the same charges, which relate to the generous expenses received by MEPs.

"Following the publication of a news article in October 2005 relating to Mr Wise and Ms Jenkins, the European Anti-Fraud Office (OLAF) began an investigation into Mr Wise's use of allowances," said Derek Frame of the Crown Prosecution Service in a statement released Monday.

OLAF had passed the investigation to a economic crime unit with the English police, said Frame, reviewing lawyer of the CPS' Special Crime Division.

"I received the full file on 20 March, 2009 and carefully reviewed the evidence before making this decision."

Wise's former party UKIP is a Eurosceptic party which feels too much power is being concentrated in Brussels at the expense of British sovereignty.

It withdrew European Parliament party voting rights from Wise in 2007 after it learned he was under investigation.

Party leader Nigel Farage said UKIP had acted swiftly to remove Wise.

"We dealt with Tom Wise ruthlessly, kicking him out of the group over two years ago," said Farage.

Source: AFP

Cuba's central bank has said it will limit cash withdrawals and deposits in Cuban bank accounts held by foreign companies and joint ventures.

No immediate explanation was given for the central bank move, which was set out in a letter sent to customers this week by Banco Metropolitano, one of the state-controlled banks on the communist-ruled island that handles corporate accounts.

Accountholders were informed that starting on May 7, cash transactions by foreign companies and associations would be restricted to withdrawals to pay salary supplements to Cuban employees.

Special authorization from bank officials would be required for all other future cash deposits and withdrawals.

In Miami, the Nuevo Herald newspaper said the limits on cash withdrawals and deposits were an attempt to clamp down on illegal financial activities such as money laundering.

But a local economist, who asked not to be named because of the sensitivity of the subject, told Reuters the moves were a "response to liquidity problems in the economy."

These problems stemmed from a disastrous 2008 when damage from three hurricanes caused Cuba's trade deficit to widen and the global financial crisis dried up credit.

As of May 7, Banco Metropolitano said "cash deposits and withdrawals will not be accepted in the current accounts of foreign entities domiciled or not in Cuba, of joint ventures or other forms of international economic association."

It also sent foreign companies a form through which to request authorization to carry out future cash withdrawals and deposits, asking them to detail the amount of the planned monthly transactions and the purpose.

Based on government figures, Cuba's trade deficit was estimated to have totaled $11.8 billion last year, up from $6.9 billion in 2007. Foreign businessmen have reported some payments problems and delays on the Cuban side, reflecting the effects of the liquidity squeeze.

The central bank directive cited by the Banco Metropolitano circular did not refer to individual accounts held by foreigners.

Last week, U.S. President Barack Obama slightly eased the 47-year-old U.S. trade embargo against Cuba by removing limits on cash remittances which can be sent by Cuban Americans to relatives on the island.

Source: Reuters

The Central Bank of Iran is enforcing the newly-passed Anti-Money Laundering law to curb possible crime, CBI chief Mahmoud Bahmani says.

"The money laundering law approved by the Guardian Council is now being implemented in the banks of the country," ILNA news agency quoted Bahmani as saying.

The Iranian Parliament (Majlis) passed the Anti-Money Laundering law on Jan. 22, 2008 and sent it to the Guardian Council for final ratification.

Bahmani says a committee has been formed to ensure the implementation of the law.

The minister of intelligence, the governor of the Central Bank of Iran (CBI) and several other ministers are among the members of the special committee in charge of the campaign against money laundering.

Money laundering, a key operation of the underground economy, is the practice of disguising illegally obtained funds so that they seem legal.

Last year, the Paris-based Financial Action Task Force (FATF) Watchdog praised the Islamic Republic's crackdown on money laundering. The 34-member financial watchdog congratulated Tehran on its commitment to seal money laundering loopholes.

"Since its October 2007 plenary meeting, the FATF has engaged with Iran and welcomes the commitment made by Iran to improve its Anti-Money Laundering/Combating the Financing of Terrorism," said the FATF statement.

Source: Press TV

The Canadian Government will provide an additional aid worth 330,000 USD for an on-going project to fight money laundering run by the United Nations Office on Drugs and Crime (UNODC) in Vietnam.

An agreement to this effect was signed by Canadian Deputy Foreign Minister Leonard Edwards and UNODC Representative to Vietnam Narumi Yamada in Hanoi on April 17.

The sum has brought the total aid granted by Canada to the 1.03 million USD project to over 700,000 USD.

This move begins a new stage of the Canada-Vietnam cooperation in preventing financial flows from terrorist and criminal groups, said the Canadian Deputy FM at the signing ceremony.

According to Sen. Lieu. Gen. Le The Tiem, Deputy Minister of Public Security of Vietnam, the government has exerted efforts to fight crimes, particularly those involved in money laundering, adding a committee has been set up and a national strategy on the issue is being drafted.

The three-year project, beginning in July 2007, aims to help increase authorised agencies’ capacity in investigating and prosecuting money laundering crimes, and intensify information exchange and international cooperation.

In the first stage, the project with funding of more than 600,000 USD from the United Kingdom and Canada, helped train more than 500 law enforcement and judicial workers and completed a draft plan of action against money laundering to submit to the Government for approval.

According to the project’s coordinator Hon Chan, from now to 2010, the project will help train trainers in localities who in future will directly teach workers, thus increase the effectiveness of the project.

According to UNODC, money laundering crime has become a global issue having impacts on all countries over the world. Vietnam, with booming trade and investment activities, is in need of effective measures to cope with this crime.

Source: VNA

The Canadian Government will provide an additional aid worth 330,000 USD for an on-going project to fight money laundering run by the United Nations Office on Drugs and Crime (UNODC) in Vietnam.

An agreement to this effect was signed by Canadian Deputy Foreign Minister Leonard Edwards and UNODC Representative to Vietnam Narumi Yamada in Hanoi on April 17.

The sum has brought the total aid granted by Canada to the 1.03 million USD project to over 700,000 USD.

This move begins a new stage of the Canada-Vietnam cooperation in preventing financial flows from terrorist and criminal groups, said the Canadian Deputy FM at the signing ceremony.

According to Sen. Lieu. Gen. Le The Tiem, Deputy Minister of Public Security of Vietnam, the government has exerted efforts to fight crimes, particularly those involved in money laundering, adding a committee has been set up and a national strategy on the issue is being drafted.

The three-year project, beginning in July 2007, aims to help increase authorised agencies’ capacity in investigating and prosecuting money laundering crimes, and intensify information exchange and international cooperation.

In the first stage, the project with funding of more than 600,000 USD from the United Kingdom and Canada, helped train more than 500 law enforcement and judicial workers and completed a draft plan of action against money laundering to submit to the Government for approval.

According to the project’s coordinator Hon Chan, from now to 2010, the project will help train trainers in localities who in future will directly teach workers, thus increase the effectiveness of the project.

According to UNODC, money laundering crime has become a global issue having impacts on all countries over the world. Vietnam, with booming trade and investment activities, is in need of effective measures to cope with this crime.

Source: VNA

Written by Heidi Wardman

Spanish authorities have arrested twenty people suspected of having facilitated an international money laundering operation through the sale of drugs. The investigation was initially launched in May 2008, when Police became suspicious over several substantial transfers of money to Colombia. Police reports suggest that the group was responsible for transferring in excess of 3 million euros during 2007 and 2008, which was sent from Spain to bank accounts in China, Panama, Venezuela and the United States and were eventually collated at a fake dentistry foundation in Colombia. The Police statement went on to say that the suspected ringleader of the Colombian network was detained by US police in Miami, whilst the remaining suspects were detained by Spanish police in raids carried out across Spain. At the same time, the Police confiscated 5 vehicles; 32 mobile telephones; a quantity of cocaine; 6 fake passports and other documentation.

Spain Torn by Albino Plea
An albino teenager from Benin has sent a plea to the Spanish Government, begging them not to send him back to his home land for fear of his life. The 18-year old’s wooden boat was intercepted immediately on arrival to the island of Tenerife in Spain’s Canary’s Islands, which carried some 60 other illegal African migrants. The Spanish Government vowed that all of its inhabitants would be returned directly, but confirmed that it will look upon the request to stay made by the albino youth more sympathetically, following suggestions that he would be killed in a witchcraft ritual if he was sent back home as albinos are considered to be bad omens, or conversely help to bring good fortune to anyone who crosses their path.

The asylum request was facilitated by the Spanish Commission for Refugee Aid (CEAR) which is also campaigning for his release from the centre for illegal immigrants in Tenerife, where he has been held since his arrival in Spain.

The Director of CEAR, Juan Carlos Lorenzo, confirmed that, “In Africa, albinos are considered to be a bad omen or a factor of good luck. It is logical that he fears for his life because among different ethnic groups, his body may be used in a sacrifice ritual.”

New Finance Minister Calls for Support
Spain’s new Finance Minister, Elena Salgado, has sent out an appeal to banks nationwide, requesting that they offer some form of aid to businesses and families who are struggling through the economic crisis. Elena Salgado said that Banks “must contribute strongly, but also rapidly to help overcome the problems that families are having; the self-employed, small and medium-sized businesses”, suggesting that the provision of loans is the way forward.

Ms Salgado’s replacement of former EU Economic Commissioner, Pedro Solbes, as Finance Minister, in the cabinet reshuffle announced by Prime Minister Jose Luis Rodriguez Zapatero, was no great surprise as suggestions had been made for some time that Mr Solbes would be standing aside. At 59-years old, Ms Salgado is the first woman to occupy the post, and has vowed that she will make “every effort” to get the economy “back on the path of growth”, adding that “Our first efforts will be focused on creating jobs”. Meanwhile, Mr Solbes, who has remained a key player in Zapatero’s cabinet since 2004, said that he had “mixed feelings” about leaving the Government but felt “reasonably satisfied” with what he had achieved during his time there.

Spain Rallies for 2016 Olympics
The Spanish Prime Minister has vowed that he will personally oversee the sports portfolio in a bid to push forward Madrid’s candidature for the 2016 Olympics. In a news conference Spanish Prime Minister, Jose Luis Rodriguez Zapatero, was heard to say that, “I can see that it is the most useful and most efficient way to support Spanish sport, where we have had success, and above all for the Spanish candidature for the Olympic Games”. Sport is currently the responsibility of the Secretary of State for Sport, Jaime Lissavetzky, who works under the Minister of Education and Sport. Mr Zapatero stressed that the Secretary would continue in his role, but would work directly alongside the Government in relation to the Olympics. Last November, he had also announced that Spain would soon be welcoming a Sports Minister at cabinet-level, but no such position has been confirmed to date.

Young Drink Drivers Plead Ignorance
A recent report has revealed shocking results in relation to legal blood/ alcohol levels. The drink driving survey was conducted by the ‘Royal Automobile Club of Cataluña’ (RACC), and unveiled a series of worrying misconceptions amongst young Spanish drivers. The survey questioned a random section of drivers between the ages of 18 and 34 years, and the majority responded by saying that they thought they could pass a breathalyser test after consuming up to four and a half glasses of beer. The legal limit in Spain is actually recorded at 0.5g of alcohol per litre of blood.

This equates to just one and a half glasses of beer, for a male driver, or one glass of beer, or less if drinking wine, in the case of a woman. Male drivers considered that they would be fined with as many as four glasses of wine inside them. What is even more worrying is that almost 30% of those questioned admitted to having driven while drunk at least once in the past three months, or had accompanied a drunk driver as a passenger.

Source: RTN

The Prime Minister Nguyen Tan Dung has given the nod to the establishment of a steering committee to help him in directing and coordinating anti-money laundering activities across Vietnam.

Under his Decision 470/QD-TTg, the committee will be headed by Standing Deputy Prime Minister Nguyen Sinh Hung and comprise the Governor of the State Bank of Vietnam, as well as leaders of the Ministry of Public Security and concerned ministries and agencies, the Vietnam news agency reported Thursday.

The committee is tasked to assist the Prime Minister in formulating strategies, plans, policies, programmes, mechanisms and solutions regarding the prevention and combat of money laundering.

It will also help the PM in directing the performance of the nation's membership obligations to the Asia-Pacific Group on Money Laundering (APG) and implementation of anti-money laundering recommendations proposed by the Financial Action Task Force (FATF).

The committee will coordinate with key anti-terrorism forces in working on proposals regarding the promulgation of laws and the adoption of programmes and measures against aid for terrorists in Vietnam.

Early this month, a large number of local policemen, judges, customs officers, border guards, bank staff members, and officials have been updated with the knowledge and skills to discover and fight money laundering crime, as well as Vietnamese and international laws related to this field.

This was part of a workshop jointly organised by the Ministry of Public Security and the UN Office on Drug and Crime (UNODC) in northern Lao Cai province, with the aim of strengthening the capacity of law enforcement institutions in preventing and combating money laundering.

Source: Bernama