News/Events/AML Christmas Gift

AML Christmas Gift

12/12/2017

Merry Christmas, Guernsey – here’s several million bucks

The States of Guernsey have clearly been hanging their stockings on the wall and Father Christmas, in the guise of the US Department of Justice, has definitely come to call.  In case you missed the news, the States of Guernsey will be sharing US$14.3 million of money recovered from two money laundering cases; one relating to Full Tilt Poker and the other relating to laundered drug money.

Full Tilt Poker were regulated by the Alderney Gambling Control Commission.  This case, which accounts for $12.77 million of that $14.3 million, saw Raymond Bitar and his accomplices use client money to pay out millions of dollars for company expenses and ‘whatever purposes Bitar directed’.  The client money was not kept in segregated client accounts as those clients were promised.  Raymond Bitar then tried to hide some of these proceeds of crime within accounts in Guernsey.

The balance of the $14.3 million was from proceeds of drug money, laundered through Guernsey by Paul Hinderlang and his associates.

The Full Tilt Poker case has some similarities to the more recent Global Providence Case, which has seen the US indict the Providence Group’s CEO Antonio Buzaneli and COO Jose Ordonez Jr for their part in a $150 million fraud, £37 million of which was raised through Guernsey.  The allegation here is that instead of investing the money in factoring, it was spread across a web of companies controlled by Buzaneli and his associates.

In case you find yourself despairing at how Guernsey appears to get itself embroiled in these money laundering cases, take heart in that in Guernsey it is all relatively small change.   Look instead at the intriguing story of Reza Zarrab.   His tale is allegedly one of $1 billion sanction busting trades, $4.5 million found in shoe boxes at the CEO of Halkbank’s house, and bribes to high ranking Turkish Government officials including $500,000 hidden in chocolate boxes no less.  The Turkish President even gets mentioned as complicit in the scheme – which he strenuously denies.

The sanctions busting part of this Christmas Story is reported as one of disguising Iranian oil money, which Iran was not allowed to access under international sanctions, as gold money – which at the time it could access.   When gold subsequently was also sanctioned, payments were apparently disguised as allowing ‘humanitarian food shipments’, albeit with a distinct lack of food being shipped.

Although Guernsey is in no way implicated in the Zarrab story, we should take this as a pre-cautionary tale, because it so easily could have been.   Let’s say that the CEO of Halkbank decided to invest his $4.5 million into a Guernsey Fund (after banking the cash of course).  Would you have picked this up as allegedly being proceeds of bribery and corruption?

The common thread in all of these tales is one of money being used in ways it shouldn’t have been used, with millions being diverted from its proper purpose to meet the desires and whims of the people behind these schemes.   How easy would it have been to pick up that the entity created to make humanitarian food shipments to Iran was paying for those shipments, but no food was actually delivered?  Do you know the bigger story behind the relatively innocent transaction you are facilitating?

Having your staff properly trained to spot these matters is vitally important, as is knowing what to do once one gets concerned about suspicious activities – who should we tell and when?   Active Group offers comprehensive staff training packages designed to cover these issues.  Give your company its own Christmas present by getting your staff trained in the latest compliance processes and procedures.

And finally, on the subject of Christmas presents, what do you think the States should do with their multi-million windfall mentioned at the top of this article?  Here are some suggestions:

  • Fund a guerrilla marketing campaign to surreptitiously promote the GFSC’s AML policies;
  • Fund a statue of a large donkey kicking money launderers out of the island;
  • Build a new anti-money launderer wall at L’Ancresse (which also happens to keep the sea at bay).

Answers on a Christmas card please.  Chocolate boxes filled with cash are discouraged, unless…..

back

HAVE MERGED FROM JULY 2018

Active Group and Optimus Group, two leading corporate governance and regulatory compliance service providers have merged to provide an enhanced and more extensive service to clients. This brings together the two most experienced corporate governance, risk management and compliance service companies in Guernsey.

Details of the new name and web site will follow but in the meantime please access either website for information.