NZ firms linked to money laundering

by MICHAEL FIELD

Criminals are using shell companies set up under New Zealand's lax company laws to launder money.

Companies created by an Auckland firm operating out of Queen St have been linked to Russian crime, a Mexican drug cartel and Romanian extortion.

A 16-month Fairfax Media investigation has also tied companies created by Geoffrey Taylor and his sons Ian and Michael, who work out of 363 Queen St, to a company that smuggled arms out of North Korea.

The government admits there is a problem but says it has had other priorities.

The Taylor operation is not illegal, but the companies they create are connected to serious crimes in a number of countries.

They set up a shell company, Bristoll Export Ltd, that helped move part of the proceeds of a $245 million Russian tax fraud out of Moscow and into Swiss bank accounts. London-based Hermitage Capital Management hired a lawyer to find out what happened, but he died in a Moscow jail.

Hermitage chief executive Bill Browder told the Sunday Star-Times he was "highly motivated to make sure all aspects of this story see the light of day", and that he had a "treasure trove of information" about New Zealand companies' ties to the scandal.

The Taylors set up complex webs of companies, and one of them, linked to Russians in Cyprus, is administered out of a home in Albany near Auckland.

A United States Justice Department investigation into the banking giant Wachovia, also tied Taylor-linked companies to the movement of drug money. Wachovia was fined more than $202m for helping disguise the illegal origins of up to $479 billion for Mexican drug lords, predominantly the murderous Sinaloa cartel. Four Taylor companies "filtered" $50m in drug money through banks in Latvia and on to Wachovia. Each of the companies had just one director – Stella Port-Louis, 32, of the Seychelles, until recently a director of around 300 New Zealand companies.

Canada's Financial Transactions and Reports Analysis Centre, which assessed Wachovia, identified the "exploitation of New Zealand's weak company registration laws" as a problem.

International expert Martin Woods said shell companies were "ideal vehicles for money launderers, tax evaders and arms traffickers".

In 2009, a Georgia-registered cargo plane flew from North Korea to Bangkok and was found to have 35 tonnes of arms on it. The plane was chartered by SP Trading Ltd, a company set up by the Taylors.

The company's director was a Burger King cook named Lu Zhang, 29, who was later convicted of 75 breaches of the Companies Act for giving false addresses on registration forms, something she described in court as "one little mistake".

She is also a director of companies linked to Romanian Lorenzo Kiss, who is under arrest over an alleged $14.5m embezzlement.

Ian Taylor told the Sunday Star-Times media reports connected dots that weren't there.

PricewaterhouseCoopers Auckland's forensic services director Alex Tan said using company service providers had become common here.

"The money-laundering and even terrorist financing risks associated with them are high, particularly considering they can be set up over the internet."

Source: Sunday Star Times

Terror Cell Uncovered in Canada

Three people have been arrested in Canada as part of an alleged hometown plot.

Hiva Mohammad Alizadeh, 30, and Misbahuddin Ahmed, 26, residents of Canadian capital Ottawa were arrested on Wednesday and made a brief court appearance on Thursday. Police have said that they expect more arrests.

The Toronto Star reported on a third arrest in the case, this time of a man who appeared on “Canadian Idol”, Canada’s version of the popular television program “American Idol”, in 2008.

Khuram Sher, 28, was arrested in London, Ontario, in connection to the terror plot. Sher is a 2005 graduate of the McGill medical school in Montreal. In 2006, he visited Pakistan during relief efforts after an earthquake in Kashmir. He auditioned unsuccessfully for “Canadian Idol” in 2008, where he told judges he was originally from Pakistan and came to Canada in 2005.

The suspects are charged in connection with a plot to make and detonate improvised explosive devices as well as financing terror groups operating in Afghanistan.

Canadian police said on Thursday that the terrorist cell was based in Ottawa and had international connections. The cell was only reportedly months away from exploding bombs on Canadian soil, said a senior police official.

Police allege that the three men have been conspiring since February 2008 with three others in a terrorist plot traced back to Iran, Pakistan and Dubai.

Chief Superintendent Serge Therriault, the Royal Canadian Mounted Police chief of criminal operations said police seized more than 50 electronic circuit boards that could be used to produce improvised explosive devices, similar to lethal bombs that have been involved in the majority of deaths and injuries of Canadian soldiers in Afghanistan.

“This group posed a real and serious threat to the citizens of the national capital region and Canada’s national security,” Therriault said.

Alizadeh faces charges of making or possessing explosive devices for terrorist purposes and terrorist financing. According to police, he is an active member of an unnamed terrorist group.

“Part of the decision to make the arrests at this time was to prevent the suspect from providing financial support to terrorist counterparts for the purchase of weapons which would in turn be used against coalition forces and our troops (in Afghanistan),” said Therriault.

Alizadeh and Misbahuddin were remanded in custody until they make a video court appearance next Wednesday.

Sher’s relatives reacted in shock to his arrest. "He was always joking around. He was a contestant on Canadian Idol. He's such a great guy," said Mariam Wasty, Sher’s cousin, to Postmedia News. "I don't know why he'd be connected to this."

Khurram Sher's uncle, Rafat Syed said: "Oh my god, impossible. He's not that type of person. You must be joking.”

Canadian Prime Minister Stephen Harper said Thursday that terror networks have a global reach: “They exist not only in remote countries but through globalization and the Internet, they have links in our country and all through the world,” he said.

Source: IsraelNationalNews

Corrupt Chinese officials transfer their assets overseas

Corrupt officials and company executives in China transfer their assets overseas through at least eight channels, according to a report released on Monday by the Anti-Money Laundering Monitoring and Analysis Center set up by the People's Bank of China.

Often a combination of legal and illegal channels is used to make cross-border transfers of ill-gotten gains, the report said.

The eight main channels are smuggling cash, underground banking services, trade under current accounts, overseas investment, credit cards, offshore financial centers, direct overseas payments and payments to family members or lovers living overseas.

However, the exact amount of assets transferred overseas, since Chinese officials on corruption charges began to flee the country at the end of the 1980s, remains a mystery, said the report.

The report quotes statistics released by the Chinese Academy of Social Sciences, which estimate that up to 800 billion yuan ($123 billion) has been transferred overseas by fleeing or missing officials and company executives since the mid-1990s.

The cross-border transfer of such assets causes huge losses to the country as the majority cannot be recovered and their whereabouts are hard to find, the report added.

The report also provided details about the destinations for corrupt officials and businesspeople.

People with a higher rank or larger assets tended to flee to Western countries such as the United States, Canada, Australia and the Netherlands.

Those who cannot reach Western countries directly, use Hong Kong or some small countries in Africa, East Europe and Latin America as a stopover.

Those with lower rankings or smaller assets often find safe havens in China's neighboring countries such as Thailand, Myanmar, Malaysia, Mongolia and Russia.

Source: China Daily

Canada: Money-laundering laws are inadequate

In the age of debit and credit cards, the Internet and online banking, large quantities of cash are inherently suspicious.

Legitimate businesses avoid cash because it's expensive. It's hard to secure and more difficult to manage than electronic transactions.

Illegitimate enterprises like it for many of the same reasons; it's anonymous, hard to trace and relatively easy to hide from tax collectors. But large quantities of illicit cash still pose a problem for criminals who want to bring it into their legitimate businesses -- they have to be able to show where they got it.

They do that through a process called laundering. And what better place to turn dirty cash into clean assets than a casino?

Police know this, as does the Financial Transactions and Reports Analysis Centre, a federal money-laundering watchdog.

All cash transactions of more than $10,000 at casinos must be reported to Fintrac, but as reports obtained by the CBC reveal, that alone hasn't been enough to stop what police believe is a spike in dirty money being channelled through B.C. casinos. Neither has the further requirement that casinos file suspicious-transaction reports, which should spark more urgent scrutiny, when they have reason to believe that a transaction is related to money laundering or terrorism.

The first problem is that casino security staff do not seem overly curious about why someone would come in with a large quantity of cash. In one example cited by police, someone bought $250,000 in chips with $20 bills and the casino only reported it as a large transaction.

In another case that was reported to Fintrac as a suspicious transaction but not reported to police, in the course of a week, one player paid for large amounts of chips four times with cash, including one purchase with $460,000 in twenties.

It strains credulity to imagine that such large amounts of cash could be accumulated legitimately, or that they could be brought to a casino for any reason other than laundering.

Assume for a moment, however, that someone with a suitcase full of cash is merely eccentric, that he or she doesn't trust banks and has somehow assembled all that cash legally. Why, in that rare case, should a casino be allowed to accept that cash before its providence can be verified?

The central problem here is that casino security are in a conflict of interest when it comes to money laundering. They work for a business that stands to profit from any kind of money, dirty or otherwise, coming through the doors. If they make it more difficult to play with cash, that business may go elsewhere. From a corporate standpoint, their responsibility is profit.

The government responsible for enforcing the law is also in a conflict, since the reason we have allowed casinos in B.C. is to fatten the provincial coffers. But we expect the provincial government to also recognize that it needs to live up to its responsibility to protect public safety through the vigorous pursuit of criminal enterprises.

Rich Coleman, the minister responsible for gaming, has finally stated that Victoria will consult with stakeholders and improve ways of detecting and reporting possible illegal activities. But what we need is action.

The government needs to review the systems in place for identifying money laundering, apprehending those so engaged and seizing their ill-gotten cash rather than letting it pass through and fuel more crime.

This editorial first appeared in the Vancouver Sun

Source: Postmedia News

Canada: We can't fight casino money laundering: RCMP report

By Chad Skelton, Vancouver Sun August 12, 2010

Money laundering by organized crime groups is rampant at Canadian casinos but police are essentially doing nothing to combat it, according to an internal RCMP report obtained by The Vancouver Sun.

"Since 2003, FINTRAC [the Financial Transactions and Reports Analysis Centre of Canada] has sent several disclosure reports to the RCMP on suspicious transactions involving casinos throughout Canada, with amounts totalling over $40 million," the 2009 report states.

"Anecdotally, police managers have suggested that, because of other priorities and a lack of resources, at this time, nothing is being done to investigate these situations."

Sgt. Dave Gray, of the B.C. RCMP's Integrated Proceeds of Crime unit, said in an interview Wednesday that not a single person has been charged with money laundering at B.C.'s casinos in recent memory.

"If we had more resources, then we could perhaps set broader priorities or conduct more investigations," he said. "That goes without saying. We could definitely use more resources."

However, Gray said the lack of casino-related charges is also due to police focusing on more "target-rich" areas -- such as currency seizures at the border -- where it is easier to prove criminal intent.

The internal RCMP report, obtained by The Sun through the Access to Information Act, states "organized crime is prevalent in casinos at several levels."

Those include money laundering and loan sharking, and that casinos provide several opportunities for criminals to make cash earned illegally appear legitimate.

For example, criminals have been known to approach people after a big win and offer to buy their casino cheque for 105 per cent of its face value.

The internal RCMP report notes many casinos now have self-serve kiosks where patrons can exchange winning tickets for cash, allowing launderers to operate without having to deal with a human cashier.

The report states that with little police enforcement, casino security is left to deal with the problem, something it is not equipped to do.

"Casinos do not have the necessary resources to determine whether ticket amounts represent legitimate winnings," the report states.

By law, casinos are required to report to FINTRAC all transactions over $10,000.

Last month, the B.C. Lottery Corp. was fined $670,000 by FINTRAC for problems with more than 1,000 of those reports, from delays in filing them to not recording enough information about who made the transactions.

FINTRAC has confirmed BCLC is the only provincial gambling corporation in the country to receive such a fine.

BCLC president Michael Graydon said at the time the corporation had fixed its reporting problems and was now in compliance with FINTRAC rules.

The report obtained by The Sun was prepared on Jan. 29, 2009, by B.C.'s Integrated Illegal Gaming Enforcement Team, which was responsible for policing illegal gambling such as bookmaking.

The 12-member team was disbanded by Housing Minister Rich Coleman on April 1, 2009.

At the time, Coleman said the team, which cost $1 million a year, wasn't cost-effective.

When news of BCLC's FINTRAC violations broke last month, Coleman said he didn't think organized crime was a big problem in B.C.'s casinos.

"[I've] not had at any time contacts from our people in the enforcement side saying there is a specifically high ratio of issues around organized crime in B.C.'s gaming sector," he said.

Coleman was not available for comment Wednesday.

cskelton@vancouversun.com

Source: The Vancouver Sun

Canada's New Currency Prompts Legal Money Laundering

When Canadians take the plastic out of their wallets, they're not holding a credit or debit card — it's cash, and it will foil would-be counterfeiters because it's harder to copy. The $100 note introduced this week is made from a sheet of polymer and features two transparent windows that add extra security. At the very least, the money is a technological wonder that could turn into the new dinner party game: How many hidden icons, colors, and numbers can you find in the bill?

According to CNET, the polypropylene substrate lasts twice as long as traditional paper-cotton money, so the Canadians will save taxpayers a bundle on printing. And, the bills are wipe clean and can be laundered without falling apart.

The technology was originally developed by the Reserve Bank of Australia, which issued the currency in 1988. As of 2011, at least seven countries have converted fully to polymer bank notes: Australia, Bermuda, Brunei, New Zealand, Papua New Guinea, Romania and Vietnam. A dozen or so more are testing the notes, presumably to check how they perform in ATM machines, and other mechanized pre-existing equipment.

The United States, in contrast to this high tech advance, has been toying with the idea of issuing dollar coins in lieu of paper money. Imagine carrying the weight of a coin instead of thin plastic. The Currency, Optimization, Innovation and National Savings Act bill, pitched to our crackerjack lawmakers, claims a savings of $5.5 billion over 30 years. Of course, the coins will last longer, since no one will want to use them.

Source: The Fiscal Times, By JACQUELINE LEO

Satyam Wins Pegasystems Partner Innovation Award for AML Solution

October 30, 2007: 12:33 PM EST

HYDERABAD, India, Oct. 30 /PRNewswire/ -- Satyam Computer Services Ltd. , a leading global consulting and IT services provider, announced today that it won the 2007 Pegasystems Partner Innovation Award in financial services. The announcement was made at PegaWORLD 2007, Pegasystems' annual conference, and one of the business process management (BPM) industry's flagship events.

Satyam won the esteemed award for its advanced Anti-Money Laundering (AML) solution, which enables financial institutions to intelligently track, manage and quickly resolve potentially fraudulent and criminal activity with greater speed and accuracy and to comply with stricter AML regulations. Satyam used Pegasystems' SmartBPM(R) Suite to create the new solution, which addresses a critical and underserved need in the market.

"Financial institutions now have an innovative way to fight fraud and financial crime, as well as stay in compliance with BSA/AML/KYCC statutes," said Anil Kumar, the Global Head of Satyam's Financial Services Business.

Integration among Satyam experts accelerated the solution's development and deployment.

"Satyam's business process management and banking experts leveraged Pegasystems' SmartBPM platform to rapidly deliver an advanced solution without additional and costly software development," said Joseph Lagioia, head of Satyam's Consulting and Enterprise Solutions Practice. "We are very proud and pleased to win this prestigious honor."

Satyam's AML solution optimizes a financial institution's existing transaction-monitoring systems-detecting suspicious activity such as the deposit of very large sums, multiple accounts for the same person, and suspicious names-while at the same time minimizing the number of false positives, which has been a nagging problem in the past. The solution also allows financial institutions to recognize suspicious transactions quickly, rather than waiting until the end of the day, which is the norm for institutions using case management systems.

"Satyam combines superior subject matter expertise in financial services with deep understanding of Pegasystems technology to deliver truly innovative business solutions in an accelerated fashion," said Douglas Kim, managing director of Global Alliances and Business Development for Pegasystems. "We're proud of our long-standing relationship with Satyam and are delighted to recognize them with this award."

About Satyam

Satyam , a leading global business and information technology services company, delivers consulting, systems integration, and outsourcing solutions to clients in 20 industries and 57 countries.

Satyam leverages deep industry and functional expertise, leading technology practices, and an advanced, global delivery model to help clients transform their highest-value business processes and improve their business performance. The company's 45,700* professionals excel in engineering and product development, supply chain management, client relationship management, business process quality, business intelligence, enterprise integration, and infrastructure management, among other key capabilities.

Satyam development and delivery centers in the US, Canada, Brazil, the UK, Hungary, Egypt, UAE, India, China, Malaysia, Singapore, and Australia serve 599* clients, 173 of which are Fortune Global 500 and Fortune US 500 corporations. For more information, see http://www.satyam.com.

*As of Sept. 30, 2007

Safe Harbor

This press release contains forward-looking statements within the meaning of section 27A of Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward- looking statements. Satyam undertakes no duty to update any forward-looking statements. For a discussion of the risks associated with our business, please see the discussions under the heading "Risk Factors" in our report on Form 6-K concerning the quarter ended June 30, 2006, furnished to the United States Securities Exchange Commission on July 28, 2006 and the other reports filed with the Securities Exchange Commission from time to time. These filings are available at http://www.sec.gov.

http://money.cnn.com/news/newsfeeds/articles/prnewswire/DCTU00430102007-1.htm

Bank of China: Terror allegations 'unfounded'

By Lydia Chen

Bank of China today dismissed allegations that it helped terrorist groups by transferring millions of dollars and said the accusations are "sheer nonsense" and are "completely unfounded."

The bank has always "strictly" adhered to regulations regarding international money laundering and terrorism financing. Its internal rules also forbid providing any services to terrorist groups, Wang Zhaowen, a spokesman for the country's third largest lender said, Xinhua news agency reported.

Kent Henderson, who represents more than 100 Israelis, has alleged in a complaint filed on August 22 in the Los Angeles Superior Court, that from 2003, Bank of China conducted dozens of wire transfers worth several million dollars to Hamas and Islamic Jihad through branches in the United States, the Associated Press reported.

The banking services "caused, enabled and facilitated the terrorist attacks in which the plaintiffs and their decedents were harmed and killed," Henderson wrote in the complaint, which seeks unspecified damages.

Wang said the bank will clarify its position through legal process and reserves the right to file lawsuits or take other legal action.

"We trust that the US court will reach a fair verdict based on the facts," Wang said.

The Shurat HaDin Israel Law Center, which is backing the suit against Bank of China, began suing banks on behalf of victims of terrorism in May. It accused the financial institutions, including UBS AG, of providing financial services that ended up helping terrorist groups. Last month, five Lebanese banks were sued in the US and Canada.

Source: Shangai Daily

ITALY: Canadian mobster behind Mafia operations

TU THANH HA

Globe and Mail Update with Reuters and AP

October 23, 2007 at 10:52 AM EDT

Montreal — Even from behind bars, Canada's most powerful Mafia boss still managed to operate a transnational drug smuggling and money laundering schemes, the Italian authorities allege, following the arrest Tuesday of at least a dozen people.

The pre-dawn arrests are the latest setbacks to hit Vito Rizzuto — who is identified in Canadian court documents as the " godfather of the Italian Mafia in Montreal" — and his 83-year-old father Nicolo.

Italian say the father and son pair were leading figures despite being detained for years.

"From prison they pulled the strings of their Italian colonies," anti-mafia official Col. Paolo La Forgia told the Associated Press.

Among those arrested in Italy were two bank workers who managed the clan's Swiss bank accounts, police said.

This allegation mirrors those outlined in past court documents filed in Montreal, which detail a 1994 investigation by Swiss officials probing whether Mr. Rizzuto, his mother Libertina, and their acquaintances laundered millions of dollars through banks in Lugano, Geneva and Lausanne.

Already, two years ago, Colonel La Forgia told a press conference that Italy's anti-Mafia police issued an arrest warrant for Mr. Rizzuto, alleging that he tried to invest $6.4 million in laundered money in a $7 billion project to build a suspension bridge between Sicily and the mainland.

In the latest crackdown, Italian authorities seized 150 million euros in asset, both in bank accounts and real estate.

Since January of 2004 Mr. Rizzuto has been under arrest. Detained in Montreal and New York, he pleaded guilty to racketeering charges relating to the murder of three captains of the Bonnano crime family and was transferred to a maximum-security penitentiary in Colorado to serve a 10-year sentence.

Even after the younger Mr. Rizzuto's arrest, the family business continued, focusing on drug smuggling, extortion and illegal gambling, according to court filings in a major crackdown against the organization's top leaders.

RCMP affidavits filed in Montreal allege a succession of cocaine importation schemes through Montreal's Pierre Elliott Trudeau International Airport, where baggage handlers, food-services employee and even a customs agent were alleged to be on the gang payroll.

Another major revenue source for the organization, according to the affidavits, was an online sports bookmaking outlet, with computers servers first based in Belize then in the Mohawk community of Kahnawake, south of Montreal.

Between October 2004 and mid-March 2006, the gambling operation raked in $26.9 million for the gang, the police said.

http://www.theglobeandmail.com/servlet/story/RTGAM.20071023.witalycanada1023/BNStory/International/home

Jersey lawyer criticises inconsistency of EU money laundering 'white list'

A Jersey lawyer specialising in the field of money laundering and financial services regulation has questioned the validity of the European Union's 'white list' of countries whose money-laundering controls are considered to be equal to those of EU member states, and which notably excludes leading offshore fund jurisdictions in Europe and the Caribbean.

Stephen Platt, an English barrister and chairman of BakerPlatt Group, queries the inclusion on the list of countries such as Russia, Argentina and Mexico, as well Australia and Canada, which have been adjudged to be less than 25 per cent compliant with the international standards established by the Financial Action Task Force.

Platt describes as "bewildering" the suggestion that the white list countries have higher standards of anti-money laundering controls than leading offshore financial services jurisdictions including the UK's Crown Dependencies.

"Having researched the background to some of the countries included, we question why countries that fall behind recognised international standards are on the list, while finance centres such as Jersey, the Bahamas and the Cayman Islands are not," says Platt, who advises governments and regulators on the implementation of regulatory and anti-money laundering rules.

An analysis by BakerPlatt and its alliance partner in London, Seven Bedford Row, notes that the first mutual evaluation report on Russia in 2001 by the European Committee on Crime Problems noted as a "critical deficiency" the country's lack of comprehensive laws and regulations implementing international standards on money laundering.

Although a second evaluation in 2004 noted significant improvements, it also found that numbers of investigations, prosecutions and convictions for money laundering were falling and know your customer procedures remained deficient.

A report on Argentina by Gafisud, a regional FATF offshoot for South America, noted inherent weaknesses in legislation that had the effect of impeding successful prosecution of money laundering, while no offence of terrorist financing existed. The country was criticised for its failure to provide statistics in anti-money laundering areas, preventing an assessment of the implementation of core requirements from being carried out.

The FATF's September 2004 report described the application of anti money laundering measures in Mexico as somewhat haphazard, and said the lack of mutual legal assistance legislation not only inhibited the country's ability to co-operate internationally, it also undermined national prosecutions. Bank and trust secrecy was also criticised as impeding investigations.

In addition, the lawyers say, while the FATF praised South Africa for developing a legislative structure to combat money laundering, the absence of a framework to combat the financing of terrorism was noted, whilst the framework in place was so new it needed time to be assessed for its effectiveness.

BakerPlatt notes that Jersey, which was not included on the white list, was assessed as 76 per cent compliant at the time of the island's last assessment by the International Monetary Fund in 2003. The most recent FATF assessments, issued in November last year, rated the Bahamas as 45 per cent compliant and Cayman as 78 per cent compliant.

However, five of the 13 countries on the list were far below this level, according to their most recent IMF assessments: Australia (24 per cent), Canada (14 per cent), Singapore (23 per cent), Switzerland (22 per cent) and the US (31 per cent).

"Australia's and Canada's staggering level of non-compliance with FATF recommendations makes it difficult for the EU to justify their inclusion on the white list on the grounds of 'equivalence'," Platt says.

"Given that the EU recently announced that it is to pursue infringement measures against 15 of its member states for failing to implement the Third Money Laundering Directive into national law, it would perhaps be better placed to give a jurisdiction such as Jersey the recognition it deserves, and the role model some of its member states appear to need, as the leader in the field of anti-money laundering."

Source: HedgeWeek

Canadian Govt. Introduces New AML-CFT Regulations

23 December 2007

Canada's Minister of Finance, Jim Flaherty, has introduced new measures to the anti-money laundering and anti-terrorist financing regime that bring it in line with international standards, according to the Financial Action Task Force.

The new regulations stipulate that client identification and record-keeping requirements, under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, apply to, among other sectors, the legal profession as well notaries and dealers in precious metals and stones in British Columbia.

As a measure to ensure compliance, failure to meet the terms of the new regulations will result in an administrative penalty scheme.

The details surrounding the new regulations will be published in the Canada Gazette on December 26, 2007.


Source: http://www.diamondintelligence.com/magazine/magazine.asp?id=5842

'East European mafia boss', captured in Moscow

One of the world’s most feared mafia bosses accused of arms dealing, drug running, uranium trafficking and multiple murders has been captured by around 50 police commandos in Moscow.

The pock-marked Semyon Mogilevich, known as the “Brainy Don” because of his economics degree, has reportedly ruled a powerful Eastern European organised crime ring since the 1990s.

He is thought to be worth around $100 million. He is wanted by the FBI, Interpol and the UK police for numerous international crimes including fraud, racketeering and money laundering.

Police seized Mr Mogilevich, 61, and a large group of his bodyguards outside a Moscow supermarket on Wednesday night, Russian police confirmed today.

State television showed footage of the alleged mobster as police held him and bodyguards against their luxury cars. They also broadcast film of the rarely photographed figure in custody, wearing jeans, a cap and leather jacket.

“Sergei Schneider has been arrested. He is better known as Semyon Mogilevich. He has several names, several nationalities and has been wanted for more than 15 years,” said Anzhela Kastuyeva, a Moscow police spokeswoman.

The arrest was made in connection with an investigation into an alleged $2 million tax evasion scheme run in connection with Arbat Prestige, a successful chain of Russian cosmetic stores. Vladimir Nekrasov, the owner of Arbat-Prestizh, was arrested in the same raid.

Monya Elson, a known associate of Mr Mogilevich, claimed in an interview given ten years ago that the Ukrainian was “the most powerful mobster in the world”.

An investigation by US newspaper the Village Voice, which apparently brought a death threat for its author, cited classified FBI and Mossad documents claiming that he was responsible for trafficking nuclear materials, drugs, prostitutes, precious gems, and stolen art. He was also said to have run a series of contract hit squads operating in the US and Europe.

Mr Elson claimed Mr Mogilevich, who was born in the Ukraine, controlled everything going in and out of Moscow's Sheremetyevo International Airport, which he called a ''smugglers' paradise”.

The Mogilevich family were reported to live in two opulent villas near Prague where they reportedly operated torture chambers run by young enforcers trained by veterans of the Soviet-Afghan war.

In December 1994, British police officers, tipped off by their counterparts in eastern Europe, first began investigating allegations that the Mogilevich organisation might be laundering profits from arms dealing, prostitution, extortion and drug trafficking through a firm of London solicitors.

Detective Sergeant John Wanless, who investigated the Red Mafia’s role in the UK at the time told the Sunday Times: "Semion Mogilevich is one of the world's top criminals, who has a personal wealth of $100m. As a result of the effect of his financial impact on the City of London, he clearly falls in the category of a core criminal."

In 1999 London investigators attempted to question him once again, this time over a $10 billion money-laundering scheme that unwittingly embroiled the Bank of New York and a network of other leading financial institutions in the UK, America and six other countries.

Mr Mogilevich is also included on the FBI wanted list for racketeering, securities fraud, wire fraud, mail fraud and money laundering. The Bureau warns that he should be considered armed, dangerous and an escape risk.

During a 2005 speech in Hungary Robert Mueller, then FBI director said: “Right here in Budapest, Ukrainian-born Semion Mogilevich established the headquarters of his powerful organized crime enterprise.”

“The group engaged in drug and weapons trafficking, prostitution and money laundering, and organized stock fraud in the United States and Canada in which investors lost over 150 million dollars.”

UK authorities and the FBI are unlikely to ever get the opportunity to question the man even after his arrest as Russia has no extradition treaty with either country.

http://www.timesonline.co.uk/tol/news/world/europe/article3253243.ece

Canada's Strengthened AML-CFT Regulations Come into Force

The Honourable Jim Flaherty, Minister of Finance, today announced that regulatory changes expanding Canada’s anti-money-laundering and anti-terrorist-financing regime are now in effect.

"These regulations widen the scope of our efforts to combat these global criminal activities," said Minister Flaherty. "When combined with other regulations coming into effect later this year that expand the scope of the regime to new sectors, they bring Canada’s regime into line with revised international standards set out by the Financial Action Task Force (FATF)."

The regulations, which were published on June 27, 2007, enhance client identification, record keeping, and reporting requirements for banks, credit unions, trust and loan companies, life insurance companies, securities dealers, casinos, money services businesses, accountants, and real estate agents.

Since 2002, reporting sectors are required to identify clients handing over funds in a transaction, and to obtain information if the transaction is being handled on behalf of someone else. The range of these requirements is now being expanded in certain reporting sectors, such as the real estate and accounting professions. In addition, the regulations require that all money services businesses in Canada register with the Financial Transactions and Reports Analysis Centre of Canada. They also extend the requirement to report suspicious transactions to include suspicious attempted transactions.

"Similar regulations are enforced in FATF member countries around the world," said Minister Flaherty.

The regulations can be found on the Canada Gazette website at http://gazetteducanada.gc.ca/partII/2007/20070627/html/sor122-e.html.

Source: Canada News Center

Montreal men face money-laundering charges

Three Montreal-area men appeared in court in New York for the first time yesterday to face charges they helped launder Colombian drug money, in a case the United States government calls a landmark investigation.

The three - Juan Carlos Ellis, 45, of Ste. Julie, and Gerardo Palma and Giovanni Di Rienzo, both of Montreal - arrived in New York on Tuesday, weeks after the Quebec Court of Appeal rejected their challenge of U.S. extradition requests filed in 2004.

The men were arrested by the RCMP on May 3, 2004, after they and 31 other individuals and companies were named in a U.S. District Court indictment alleging all were part of a complex scheme based in Bogota to launder money that Colombian drug traffickers were making in Canada, the U.S. and elsewhere.

Operation White Dollar, the U.S. Drug Enforcement Administration investigation into the scheme, uncovered more than $100 million U.S. in drug money that had been converted into Colombian pesos for traffickers.

Currency brokers were used to sell pesos to companies in Colombia; in exchange, the brokers received drug money in the U.S. and Canada at a favourable rate. The brokers would deposit the dirty money in various international banking systems. They sold the U.S. dollars to Colombian firms looking to avoid taxes, import duties and transaction fees.

According to the U.S. State Department, a "prominent Colombian industrialist" agreed to forfeit $20 million after the investigation found he had bought pesos through the exchange for years.

Ellis and the two others are alleged to have taken more than

$2 million in 2002 to undercover agents posing as intermediaries for a Colombian man who arranged to exchange dirty U.S. and Canadian dollars into pesos.

During the spring of 2002, an undercover agent based in New York was asked to organize the collection of $500,000 in Montreal for German Moreno-Zuluaga, a Colombian man charged in Operation White Dollar. The agent was given a pager number and the code name El Toussou.

The information was given to an RCMP undercover agent in Montreal who set up a meeting with a man, alleged to have been Ellis. The undercover RCMP agent was handed $500,000 after a second meeting in May 2002.

Using similar methods, undercover RCMP agents were sent to pick up money on three other occasions in Montreal restaurants and hotel parking lots between August 2002 and February 2004.

Palma is alleged to have helped Ellis with some of the cash deliveries. Di Rienzo is alleged to have handed over more than $400,000 in August 2002 and to have told an undercover agent he had much more money in Toronto to deal with.

The RCMP deposited the money in a Canadian bank account and it was transferred to a secret DEA account in New York so investigators could trace the funds back to Colombia.

http://www.canada.com/montrealgazette/news/story.html?id=d4068fb8-4701-444b-a408-1e7e686c1730

India warned of suspicious transactions

29 Sep 2007, 0058 hrs IST,Pradeep Thakur,TNN

NEW DELHI: The Financial Intelligence Unit (FIU) has forwarded a list of suspicious transactions, including hundreds of cases of suspected terror financing and doubtful foreign remittances, to Intelligence Bureau and other investigating agencies.

In its first annual report released recently, the FIU identified several accounts having a common beneficiary with huge and unexplained money transfers made to them.

Tasked to keep an eye on money laundering and combating terror financing, the FIU report said many of these foreign remittances were doubtful with scant information on the source of funds and actual beneficiaries. Some such account holders were even found to be on the Interpol's watch list and were known criminals.

These suspicious transactions included "cash deposits in bank accounts at multiple locations, off-market transactions in demat accounts, fraudulent use of ATM and credit cards and unexplained activity in accounts inconsistent with what would be expected from declared business."

Banks reported the highest number (437) of suspicious transactions in the last one year while financial institutions and intermediaries accounted for 380 such reports up to March 2007.

The ease with which terrorists and their fronts have laundered money in India through formal channels of transaction raises serious doubts on the efficacy of the strict due diligence regimen imposed by the government on banks and financial institutions a few years ago.

With reports of terror outfits gaining access to stock and commodity markets and evolving ways to evade checks put in place to scan their transactions, it seems money launderers and terrorists have perfected some device to go under the radar of the due diligence mechanism.

In light of the IPO scam, the government had begun harsh punitive action and barred some multinational banks from expanding in India and opening new branches. The punitive measures included sacking dozens of employees of at least two banks. But it seems these measures had only a momentary effect.

The FIU report said India received at least 14 enquiries from abroad related to terror financing and other suspicious transactions. In two cases, some countries, including the US, Canada, Russia and Germany, assisted India in disseminating information.

FIU officials were also sent to the US, Australia, Canada and Thailand to train with the anti-money laundering mechanism put in place by these countries. In the last one year, FIU officials also attended nine joint-working groups on counter-terrorism with the US, Germany, China, Russia, Italy, Canada, Singapore and Israel.

http://timesofindia.indiatimes.com/India_warned_of_dubious_transactions/articleshow/2412984.cms

Canada: Tighter money laundering rules on deck

Fiona Anderson , Canwest News Service
Published: Thursday, June 19, 2008
Drug dealers and other criminals will have a tougher time disposing of their ill-gotten gains as new federal anti-money laundering legislation cracks down on real estate purchases and currency exchange operations and adds other rules aimed at hindering disposing of large amounts of cash.

Under the new law, which comes in force Monday, real estate agents will have to take more steps to ensure they know who they are dealing with. They will also need to keep the information identifying their client for five years.

"We know organized crime buys houses and they buy houses on a regular basis," said Ken Fraser, executive director of investigations with the Financial Institutions Commission of B.C.

Some of the purchases are to carry out more illegal activity, such as marijuana grow operations or amphetamine labs, he said. Others are just to launder the money to turn proceeds of crime into a legitimate asset.

And to date, those purchases have often been made using fake identification, Fraser said.

"It's not that onerous to assume another identity and purchase property," he said.

Under the new rules, real estate agents have to "ensure the person they are dealing with is the person whose ID is produced," Fraser said.

Last November, police in B.C. froze $6 million worth of real estate they claim was owned by Yong Long Ye, the alleged mastermind behind a drug syndicate charged with importing thousands of kilograms of cocaine from the United States and supplying local methamphetamine and ecstasy labs with ingredients. At the time of Ye's arrest, police seized $168 million in drugs, $2.1 million in cash and $300,000 worth of cars and declared they had "chopped the head off the snake."

Most of the properties were not in Ye's name, and police would not say how they traced the homes back to Ye.

Currency exchanges and money transfer operations - but not cheque-cashing companies - are also targeted in the new legislation.

Starting Monday, money services businesses will have to be registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the organization that collects reports on suspicious transactions.

Now these businesses will have to make sure that people depositing cash have a legitimate business that can generate that amount of money on a regular basis, said Kim Marsh, managing director of the Vancouver office of IPSA International, Inc., a company that helps others comply with anti-money laundering legislation.

In the past, a person could deposit cash using fake ID and say he had a car wash, Marsh said. Now money services businesses will have to get more information and be satisfied that the story, and the ID, are real.

The point is to prevent people from depositing large amounts of cash that come from crime, he said.

"Grow-ops generate huge amounts of cash," Marsh said. "And (the criminals) have to get that cash into the system. If they can get it into an MSB (money services business) who can get it into a bank account, they're halfway there."

Marsh advises companies to get more than one piece of identification and ask for documents on the company. A particularly useful document to request is a credit report "because that's a hard thing to generate."

"If you don't have a credit history that's a huge red flag," he said.

The new laws - which have been adopted to bring Canada in line with the international standards set by the FATF, created by the Group of Seven industrialized countries in the early 1990s - also now require companies to report attempted suspicious transactions, where an individual aborts a transaction that would otherwise have to be reported.

In 2006-2007, FINTRAC referred close to 200 cases, involving almost $10 billion to law enforcement for further review based on reports received. Three of the cases involved money transactions worth more than $1 billion.

Source: Vancouver Sun 2008

Toronto non-profit raised millions for Tamil Tigers

Stewart Bell, National Post

A Toronto non-profit group wired more than $3-million to overseas bank accounts, some of them linked to the Tamil Tigers, before it was shut down by the government in June for alleged terrorist financing, says an RCMP report released yesterday.

The report, marked "Secret" but unsealed by order of a Federal Court judge, provides the first detailed look at the banking activities of the World Tamil Movement (WTM), a Toronto-based group accused of bankrolling Sri Lanka's Tamil Tigers guerrillas.

Most of the money, $1.9-million, went to an account at the Bumiputra Commerce Bank in Kuala Lumpur, Malaysia, that the RCMP report says "is utilized as a vehicle to forward money to the LTTE [Liberation Tigers of Tamil Eelam] from Canada."

The 83-page financial report is the fruit of two years of analysis of banking records seized by Canadian anti-terrorism police who are investigating a financial network run by supporters of the Tamil Tigers that allegedly raised money in Canada to buy arms for the guerrillas.

"The bank records seized ... demonstrate that the World Tamil Movement has developed an elaborate machine like entity that moves throughout the Greater Toronto Area collecting funds with extreme proficiency," the police report says.

Stockwell Day, the Public Safety Minister, announced on June 16 that his government had added the WTM to Ottawa's official list of terrorist groups, alongside the likes of Al-Qaeda, Hamas and Hezbollah. The WTM is the first Canadian community group to be listed.

The WTM has denied any involvement in terrorist fundraising and vowed to challenge the government's decision, and at a large outdoor rally in Toronto on July 5, Tamils waved Tamil Tigers flags and endorsed a statement condemning Ottawa's decision to ban the WTM.

The Minister has accused the WTM of transferring money to LTTE bank accounts in Sri Lanka, but the RCMP's Feb. 1, 2008, financial report paints a more detailed picture of a complex network made up of 20 Canadian bank accounts.

Five banks held the accounts: Toronto Dominion, Bank of Nova Scotia, Royal Bank, CIBC and the National Bank of Canada. The Canadian account holders wired money regularly to accounts in Malaysia, Singapore, the United Kingdom and Tamil Tigers-controlled areas of Sri Lanka.

RCMP Corporal Deanna Hill, the author of the police report, wrote that the WTM's financial set-up was "congruent with the money laundering techniques often employed by organized crime groups.

"I also believe that the number of accounts alone demonstrate that the World Tamil Movement has utilized the Canadian banking system to raise funds in a manner that is best suited to financing the terrorist activities of the LTTE."

The Tamil Tigers have been fighting for 25 years for an independent homeland for Sri Lanka's ethnic Tamil minority, which has faced discrimination under the island's Sinhalese majority.

In addition to fighting a conventional guerrilla war, however, the Tigers also employ terrorist tactics, such as suicide bombings and political assassinations, which has landed them on international terrorist lists, Canada's included.

The RCMP began investigating the Tamil Tigers' Canadian fundraising network in 2002, focusing on the WTM's large head office in Toronto and its smaller branch offices in Montreal and Vancouver. Police raided the Toronto and Montreal offices in 2006.

Police seized letters from the Tamil Tigers leadership thanking Canada for its donations, explaining how the money had been used to purchase weapons, and asking for more. But much of the police evidence appears to have come from a study of bank accounts held by the WTM and its officers.

The Project Osaluki financial report claims the WTM's most lucrative fundraising method was a pre-authorized payment program, in which the group persuaded hundreds of its supporters to sign forms allowing money to be withdrawn from their bank accounts each month.

The WTM took in up to $763,000 a year using the payment scheme. On a single day in 2005, the WTM withdrew $63,528 from 1,582 bank accounts. "It is obvious from the amounts collected with this method that the pre-authorized payment scheme is effective, timely and spares valued resources," says the RCMP report.

Most of the forms had been signed in Canada but police also interviewed witnesses who said they had signed them at Tamil Tigers checkpoints in Sri Lanka. "Upon their return to Canada, these persons were visited by representatives of the World Tamil Movement to exact the collection of the monthly stipend," Cpl. Hill wrote.

In addition, the WTM made money through bake sales, car washes, newspaper sales, merchandise sales and festivals, the report says. "To date, the total amount of Canadian dollars that have been forwarded to accounts internationally from accounts controlled by the World Tamil Movement in Canada is $3,101,803.33."

Source: National Post

Canada: CSIS developing new model for understanding terrorist financing

Canada's spy agency has been forced to junk its approach to terrorist financing as clandestine groups both here and abroad learn to skirt the law-enforcement initiatives set up after Sept. 11, 2001.

Intelligence assessments obtained by The Canadian Press suggest Canadian authorities have been operating in the dark when it comes to tracking funds earmarked for terrorism.

"A generally accepted model for terrorist financing would provide a clear and common strategic understanding of how terrorist financing operates and a sound basis for deciding how to respond to it," reads a 2007 study from CSIS' Integrated Threat Assessment Centre.

"Currently, no such model exists."

The country's ability to trace money for terrorism was taken to task recently by the Financial Action Task Force, an international body that deals with criminal threats to financial systems.

In a February report, the group found "serious issues" with the effectiveness of the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, the federal body that traces illicit cash transfers.

"The feedback provided by some organizations that receive Fintrac disclosures was generally negative," the task force's report said.

"Until 2007, no conviction for ML (money laundering) or TF (terrorist financing) had directly resulted from a Fintrac disclosure."

Fintrac, which provides research to the RCMP and CSIS but has no enforcement powers itself, rejected the criticisms as unfounded and unreflective of the "legal reality" in Canada.

Last month, a 45-year-old Toronto man, Prapaharan Thambithurai, became the first Canadian to be charged with terrorist financing.

He allegedly used a humanitarian organization, the World Tamil Movement, as a front for raising money for the Tamil Tigers, an armed independence group fighting the Sri Lankan government.

RCMP officers sealed the movement's headquarters in Montreal and Toronto last week, although the group has repeatedly denied claims it is a front for the Tigers.

Charities are a particular area of concern for Canadian counter-terrorism investigators, who note that legitimately raised funds can often end up financing terrorist activities.

"Charities constitute, wittingly or not, a (censored word) source of financing," reads a 2006 intelligence assessment obtained through Access to Information laws.

While government officials disguised the scope of the problem, the Financial Action Task Force report said "charities and other non-profit organizations have figured in over one-third of Fintrac disclosures related to suspected terrorist activity financing."

The Canadian agency reported a total of 33 incidents last year linked to terrorist financing, worth around $200 million.

"Typically in Canada (funds for terrorism) are raised here and sent overseas," said Chris Mathers, a former undercover officer with the RCMP's proceeds of crime unit.

The CSIS intelligence assessments, which are marked "for official use only," indicate that problems tracking such funds may stem from the use of the money-laundering model to understand terrorist financing.

"Current techniques for the detection of money laundering, which is basically what is applied to terrorist financing in most cases, are essentially designed to track drug transactions," said Mathers, who now serves as a security consultant.

"But the problem is that the amounts of money used to finance terrorist activities are so small compared to drug trafficking proceeds that it doesn't really make sense to use the same techniques to catch both."

The assessments offer a new model for terrorist financing that takes into account the expanding variety of sources and uses for clandestine funds.

The model breaks financing into five stages: acquisition, aggregation, transmission to terrorist organization, transmission to operational cell, and expenditure.

Intelligence gathered since the 9-11 hijackings shows terrorist groups have avoided using conventional banking systems, largely because of the rigid regulatory environment.

"Deprived of safe access to conventional banking, terrorists have turned to harder-to-detect remittance methods, such as hawalas and couriers," says the 2006 assessment, referring to a traditional informal money transfer system.

Other open-source intelligence has noted recent trends towards Internet payment systems and value cards, which can store thousands of dollars with relative anonymity.

"The terrorist financing/resourcing "trail" is not like a piece of string one can follow from its beginning to its end," one 2007 assessment reads. "It is a process that involves many things from many sources to many recipients through many channels for many uses."

http://canadianpress.google.com/article/ALeqM5g-zSC8Bb1S49xg9EuhBzIzzk3_WA

Non-profit Tamil group added to terrorism list

Stewart Bell, National Post
Published: Monday, June 16, 2008

TORONTO -- A Toronto-based non-profit organization has been outlawed by Cabinet under the Anti-Terrorism Act, in what may signal an aggressive new approach to combating terrorist financing in Canada.

The decision to add the World Tamil Movement to Canada's list of outlawed terrorist groups marks the first time Ottawa has used the anti-terrorism law to shut down a Canadian community group for ties to terrorists.

Stockwell Day, the Minister of Public Safety, was expected to make the announcement in Toronto today at 1 p.m. but financial institutions were officially notified at 9 a.m. this morning by Canada's banking regulator.

The directive issued by the Office of the Superintendent of Financial Institutions advised banks and insurance companies to notify the RCMP or CSIS if they hold any accounts linked to the WTM.

The announcement may mark the end of the road for the WTM, which has operated in Canada since the 1980s. Earlier this year, the RCMP seized dozens of bank accounts linked to the group's officers and shut down its Montreal branch office.

The Anti-Terrorism Act, passed in the wake of the 9/11 attacks, allows federal Cabinet to prepare a list of "entitites" whose activities are proscribed by Canadian law due to their involvement in terrorist violence.

Until today's announcement, there were 40 listed entities, all of them groups directly engaged in violence, such as al-Qaeda, Hezbollah and Hamas. Although the law allows for the listing of front or support groups, Cabinet had so far refrained from doing so.

Because this is a first, it is unclear what will happen next. The listing makes it illegal to financially support the group. Presumably, the WTM offices in Canada would be forced to close and cease operations. The group could also appeal the ruling.

The WTM has been under close police scrutiny. Headquartered in Scarborough, Ont., the group is accused by Canadian police and intelligence of being the leading front organization for the Tigers, a separatist guerrilla group responsible for scores of terrorist attacks in Sri Lanka.

RCMP national security teams have been conducting a criminal probe of the WTM since 2003, and raided its offices in Toronto and Montreal in April 2006, seizing a truckload of documents and Tigers paraphernalia.

In court, RCMP officers claimed to have found evidence indicating the WTM serves as a Tigers front and has been aggressively fundraising in Canada in close concert with Tigers headquarters in Sri Lanka.

Many Tamil-Canadians support the Tamil Tigers, considering them freedom fighters, but other have complained to police about the heavy-handed fundraising tactics of the WTM, which some have likened to extortion, but the group, while it admits it is sympathetic to the Tigers, has repeatedly denied any wrongdoing.

Isolated on a small island, the Tigers are heavily dependent on outside sources of financing, which they use in part to purchase the weapons needed to prosecute a civil war that has been reignited by the collapse of a ceasefire agreement and the withdrawal of international monitors.

The Liberation Tigers of Tamil Eelam, or LTTE, have been fighting since 1983 for a separate state for Sri Lanka's ethnic Tamil minority but in addition to traditional guerrilla tactics, the group has resorted to such terror tactics as suicide bombings, targeted political assassinations of leading government figures as well as the bombing of buses, trains and commercial buildings.

As home to the world's largest ethnic Tamil populations, Canada has also become an important offshore base for the rebels, which control several front groups in Toronto that harness political and financial support to finance the ethnic insurgency half-a-world away.

Canada outlawed the Tigers under the Anti-Terrorism Act in 2006 but fundraising and other forms of support have continued. Late last year, thousands of Tamil-Canadians converged at the Markham Fairgrounds north of Toronto to attend funeral services for S.P. Thamilselvan, the second-in-command of the LTTE, who was killed in a government air strike. Several Toronto-area Liberal MPs also attended and later defended their actions.

sbell@nationalpost.com

Source: National Post