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

Cyprus’ anti-terror infrastructure ‘weak’ says US

The buffer zone separating the island’s divided communities is vulnerable to penetration by terrorist groups, a United States government report said.

“The largely porous, lightly-patrolled “green line” separating the two sides is routinely exploited for trafficking people, narcotics, and other illicit goods, and is vulnerable to penetration by terrorist groups,” the State Department 2009 Country Reports on Terrorism said.

“This de facto division has precluded counterterrorism cooperation between the two communities’ law enforcement authorities, and between Cyprus and Turkey.”

The report said the regular ferry service between Latakia, Syria and Famagusta, in the Turkish-occupied north, has facilitated increased illegal migration into Cyprus and the wider EU.

Cyprus continued to be an ally of the US in its fight against terrorism and the government was responsive to efforts to block and freeze terrorist assets, the State Department.

In January, Cypriot authorities detained the Cypriot-flagged MV Monchegorsk which was chartered by the Islamic Republic of Iran Shipping Lines and contained Iranian-origin weapons components allegedly headed for Hezbollah in Lebanon.

The components were confiscated by Cypriot customs officials after the Government of Cyprus determined the shipment was in violation of United Nations Security Council resolutions.

Cyprus also “continued to allow blanket overflight and landing rights to US military aircraft supporting operations in Iraq and Afghanistan,” the report said.

But the island’s legal framework for investigating and prosecuting terrorist-related activity remains relatively weak, the State Department said.

The two countries cooperated closely on terrorist financing and money laundering issues with Cyprus maintaining a “Prevention and Suppression of Money-Laundering Activities Law” that contained provisions on tracing and confiscating assets.

“In the Turkish Cypriot-administered area, issues of status and recognition inevitably restricted the ability of authorities to cooperate on counterterrorism,” the report said.

Turkish Cypriots cannot sign treaties, UN conventions, or other international agreements, and lack the legal and institutional framework necessary to combat money-laundering and terrorist financing effectively.

“Within these limitations, Turkish Cypriots cooperated in pursuing specific counterterrorism objectives.”

By George Psyllides Published on August 7, 2010

Source: Cyprus Mail

Cyprus: The inside track on money laundering

By Jean Christou

WHO better to teach you about money laundering than a reformed money launderer?

Cypriot banks, lawyers and financial crime officers are to be given the inside scoop on the ‘tricks of the trade’ tomorrow and on Tuesday in Nicosia and Limassol respectively.

Miami-based Kenneth Rijock, 59, a decorated Vietnam vet, is a former lawyer who spent the best part of the eighties engaged in money laundering, but was jailed in 1990 for two years.

When he was released, he put what he learned to better use and now acts as a consultant on financial crime.

This week, he will give presentations to representatives from the Cyprus Financial Intelligence Unit (MOKAS), the International Bankers’ Association, the Law Association, the Cyprus Bar Association and the Association of Cyprus Banks.

“Mr Rijock’s presentation will… feature money laundering tradecraft and insider tips of the trade to assist Money Laundering Reporting officers in their daily activities,” said Marion Willson Corporate Communications Manager of World-Check, an informational organisation for financial institutions.

World-Check says Rijock is believed to be the only former banking lawyer-turned career money launderer who actively consults with law enforcement and the financial community.

While serving a federal prison sentence for racketeering and money laundering, he assisted with the first joint Swiss-American money laundering investigation of bankers and lawyers, which resulted in a major seizure of the proceeds of crime.

Since 1992, Rijock has provided extensive professional anti-money laundering services, including testifying three times, in 1999 and 2000, before committees of the US Congress in favour of anti-money legislation that was later included in the Patriot Act of 2001.

Rijock introduced himself to Congress saying: “My name is Kenneth Rijock, and I am a veteran of over one hundred domestic and international bulk cash smuggling operations, all of them successfully completed. These activities were conducted by me in direct support of narcotics smuggling and trafficking operations that distributed most of their drugs in the New York-New Jersey metropolitan area.”

He said his trips involved sums of currency ranging from several hundred thousand dollars to six million, although he did not keep a personal record for obvious reasons.

Rijock also said the ever-expanding web of bank reporting requirements had caused many criminals to avoid the domestic financial sector entirely, and to rely upon an underground pipeline to export their net cash profits.

“Cash smugglers are only limited by the scope of their imaginations in contriving unusual and complex techniques in practicing their trade,” he said to Congress.

Some of the tactics used hiding cash in new computers being shipped or inside the padding of a hockey shirt.

“My personal methods of preference included the use of business jets carrying millions of dollars of drug cash, small, twin-engine aircraft owned by an affiliated charter service, taking scheduled airline service, meaning that I carried the cash right past the noses of airport security staff, and even small boats and water taxis,” he said.

Since giving up his criminal career, Rijock has also trained undercover agents for the Royal Canadian Mounted Police, acting as a money launderer in an undercover role on behalf of law enforcement in Florida, and on behalf of network television in the tax havens of the Caribbean, and acting as consultant in money laundering tactics for a major Hollywood motion picture studio.

Source: Cyprus Mail

UK Treasury backs warning of "serious threats" to international finance

The UK's Treasury has backed warnings from the Financial Action Task Force (FATF) that the international financial system could face "serious threats" from deficiencies in the anti-money laundering (AML) and counter-terrorist financing (CTF) systems of countries including Iran and Pakistan.

Uzbekistan and Turkmenistan were also flagged up by the FATF as countries that face AML and CTF deficiencies, along with the island of Sao Tome off the coast of west Africa and the northern part of Cyprus.

As a result of the warnings, the Treasury has advised all UK businesses covered by the Money Laundering Regulations 2007 to treat transactions from Iran and Uzbekistan as "situations that by their nature can present a higher risk of money laundering or terrorist financing" and therefore require increased scrutiny.

People operating under the authorisation of the Financial Services Authority should also consider the advice when developing their counter-financial crime systems in order to minimise risk, it added.

The FATF is an inter-governmental body that seeks to develop nationally and internationally adopted anti-money laundering and counter-terrorist financing policies.

Source: Bobsguide

Cyprus: Money laundering law to EU standards

The Turkish Cypriot Parliament approved the ‘Money laundering crime prevention Law’ at Monday’s sitting

The National Unity Party (UBP), who has ended its Parliamentary boycott, also voted for the law. The draft bill was created using the current ‘Money laundering crime prevention Law’ as a basis and included suggestions from the European Union (EU) adjustment works and the negativities in the current practice. The law, which was passed by a majority, defines the procedures and principles to prevent the laundering of income from crime and the financing of terrorism.

EU standards will be ensured
Minister of Finance Ahmet Uzun, who gave the first speech during the debate on the draft bill in the Parliament General Assembly, said that they are aiming to overcome the inadequacies of the current procedure. Uzun stated that last year the EU Financial Action Task Force (FATF) committee was planning to show northern Cyprus as being amongst the countries laundering money but they did not use the fact that there are no financial police operating to EU standards; and following that there was 1½ year’s worth of work to be done by officials and professionals from Turkey. After the draft bill is approved the second step will be to set up a financial police organisation. The Minister said that in this way EU standards will be ensured in the prevention of ‘laundering’ of tainted money.

Committee studies
While answering those claiming that the draft bill is still immature CTP MP and President of Economy, Finance, Budget and Planning Committee Alpay Afsaroglu said that the committee had held 5 meetings already concerning this draft bill in addition to 4-5 study sessions. He stated that one incident concerning a person convicted in Britain for drug smuggling was dealt with in the framework of ‘The law for the prevention laundering of criminal gains’ and gave information regarding the incident. The bill, he said, will prevent crimes. This is also the general understanding around the world: “It seems that in this way it will be easier to fight against this crime.”
They had examined legislation from many countries including Turkey, Afsaroglu said, and they were not expecting serious problems to come up in the draft though if problems did surface they can be fixed. He continued to say that after the September 11 attack in the US the financing of terrorism was also included in the compass of the law and said that “laundering of criminal income” will be determined by the courts and that the new law also defines the “financing of terrorism” which is almost standard in many countries.

Prime Minister’s speech
In his speech, General President of CTP/BG, Prime Minister Ferdi Sabit Soyer congratulated the members of the committee and everyone who contributed to the law for their hard work.
Soyer explained that in time the law for the ‘Prevention of money laundering’ will be accepted in north Cyprus as after September 11 terrorism has been discussed around the world and certain rules were laid down first in the UN and then in the EU. The PM reported that the Greek Cypriot side makes propaganda against northern Cyprus by saying that it is “a paradise for the laundering of criminal money.” The government has now shown that it is serious in its intent to prevent tainted money entering the country, that they attend meetings of international institutions with the Turkish delegation, that they have reached a certain point in the works and that the draft has been prepared in this framework.

Soyer said that they will go to FATF’s meeting in the middle of February with this new law and will show that northern Cyprus has laws conforming to UN and EU standards.

http://www.observercyprus.com/observer/NewsDetails.aspx?id=2618

FATF Statement - 16 October 2008

IRAN
The FATF welcomes Iran’s recent engagement with the international community on anti-money laundering, notes the initial steps taken towards remedying the deficiencies in this area, and urges Iran to address the remaining weaknesses.

The FATF is particularly concerned that the lack of corresponding effort by Iran to address the risk of terrorist financing continues to pose a serious threat to the integrity of the international financial system. Urgent action to address this vulnerability is necessary.

The FATF calls on its members, and urges all jurisdictions, to strengthen preventive measures to protect their financial sectors from this risk.

The FATF is prepared to engage directly in assisting Iran in decisively addressing the weaknesses in its AML/CFT regime.

UZBEKISTAN
The FATF takes note of the action plan prepared by Uzbekistan to address deficiencies in its AML/CFT regime.

The FATF is increasingly concerned that the continuing failure by Uzbekistan to restore its AML/CFT regime poses a serious threat to the integrity of the international financial system. Urgent action to address this vulnerability and to meet international standards is necessary.

The FATF calls on its members, and urges all jurisdictions, to strengthen preventive measures to protect their financial sectors from this risk.

The FATF, along with the Eurasian Group, is prepared to engage directly in assisting Uzbekistan in developing a robust AML/CFT regime.

TURKMENISTAN
The FATF notes Turkmenistan’s efforts towards adopting AML legislation. However, financial institutions should be aware that the lack of an AML/CFT regime in Turkmenistan constitutes a money laundering/terrorist financing vulnerability in the international financial system. Turkmenistan is urged to continue its efforts to establish a comprehensive AML/CFT regime that meets international AML/CFT standards and to work closely with the Eurasian Group and the International Monetary Fund to achieve this.

PAKISTAN AND SAO TOME AND PRINCIPE
The FATF reaffirms its public statement of 28 February 2008 regarding the money laundering and financing of terrorism risks posed by Pakistan and Sao Tome and Principe.

AML/CFT IMPROVEMENTS IN THE NORTHERN PART OF CYPRUS
The FATF welcomes the significant progress made in the northern part of Cyprus and notes that the northern part of Cyprus has substantially addressed the AML/CFT deficiencies that the FATF had identified. FATF encourages the northern part of Cyprus to continue to improve its AML/CFT system. Implementation will be monitored through appropriate mechanisms.

Source: FATF Website

Russia, Cyprus to cooperate in bank supervision

Central Banks of Russia and Cyprus have singed a memorandum of understanding on the basis of recommendations made by the Basel Committee on Banking Supervision concerning consolidation and cooperation in banking supervisory matters, the Bank of Russia indicated in a statement today.

The two banks are planning to exchange information on licencing procedures, combat money laundering and sponsorship of terrorist organizations, supervise the development of the banking sectors in accordance with national laws, among other things.

http://www.rbcnews.com/free/20080115133643.shtml