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

Russia ratifies treaty on AML actions

The Russian president has ratified the CIS treaty on anti-money laundering actions. Russian President Dmitri Medvedev has signed a federal law "On ratification of the treaty of the CIS member-states on prevention of money laundering and financing of terrorism", the news service for the Kremlin told Monday.


The signed law was adopted by the State Duma on 18 December and ratified by the Federation Council on 25 December 2009.

Source: Biz Club

Russian Police Bust Money-Laundering Ring, Detain Bank Manager, Adviser

Russian police detained an adviser and manager at two Moscow banks suspected of laundering more than 2 billion rubles ($65 million) a month, according to the Interior Ministry’s Economic Security Department.

The “organized group” charged companies a commission of 3 percent to 9 percent and state entities 12 percent to 17 percent to launder funds, the department said on its website today. Albert Istomin, a department spokesman, declined to say how long the group had been active.

Investigators raided the offices of three banks -- OOO Bank Imperia, OAO Tempbank and Basmanny -- and seized financial documents, 120 registration stamps from shell companies and “electronic keys” to a bank account-management system, the department said.

The ringleaders were an adviser to the chairman of Tempbank and the head of client services at Imperia and her daughter, according to the department. Investigators seized $100,000 found in a car belonging to one of the suspects.

Mikhail Gagloyev, chairman of Tempbank, said today that the bank was searched on Aug. 16, though “no documents (stamps, financial documents, cash) that could compromise OAO Tempbank were discovered.”

‘No Relation’

The suspects mentioned in media reports on the money- laundering ring aren’t Tempbank employees “and have no relation to the bank,” Gagloyev said in a statement on the bank’s website.

Ivan Kuleshov, chairman of Imperia, said the woman identified as a client-services manager by the Interior Ministry hadn’t worked in that capacity. She had worked at the bank on a trial period for less than a month, Kuleshov said on the bank’s website today.

The seizure of stamps, money and bank account-management access keys “have no relation to Imperia,” Kuleshov said.

No one was immediately available to comment at Basmanny.

To contact the reporter on this story: Anastasia Ustinova in St. Petersburg at austinova@bloomberg.net.

Source: Bloomberg

U.S. to allocate $29.3 million to Azerbaijan

The U.S. will allocate $29.3 million to Azerbaijan to develop democracy in 2011, the website foreignassistance.gov. reported.

U.S. assistance to Azerbaijan is aimed at promoting democratic reforma, strengthening governmental checks and balances, increasing public participation in state affairs, as well as combating domestic and transnational crime, including money laundering, terrorism financing, corruption, human and drug trafficking. U.S. assistance also helps to expand and diversify the country's economic growth by eliminating critical economic policy and institutional constraints to ensure stability and sustained growth in the sectors of the economy.

Georgia will receive $ 90.1 million in 2011, Armenia - $ 45.2 million, Russia $ 68.7 million, Turkey - $ 5.9 million.

Source: foreignassistance.gov

UK opens YUKOS-related money laundering case

The UK has filed a criminal case on money laundering by a British citizen who was directly involved with the YUKOS Company and its management.


This comes in a statement by the ITAR-TASS news agency with reference to the deputy chief of Interpol Russia at the Russian Interior Ministry Alexei Abramov.

According to British law enforcement agencies, the man became involved in laundering money made in a criminal way by the former YUKOS CEO Mikhail Khodorkovsky and former MENATEP Bank president Platon Lebedev.

The case of Khodorkovsky and Lebedev, sentenced to long prison terms in Russia for stealing billions, had been the subject of much discussion in the West.

Source: The Voice of Russia

Russia Raids Bank in Laundering Inquiry

The police raided a leading bank tonight as a Russian investigation into possible money laundering through the Bank of New York appeared to be gathering momentum.


The raid was at the Sobin Bank, one of the most politically well-connected banks, whose owners include some of the most powerful businesses.

The raid created an uproar when scenes of police officers prowling through the flashy glass-and-chrome headquarters of the bank were broadcast on television as bank employees gathered on the sidewalk.

When a crew from the state-owned network, ORT, arrived, they were almost immediately taken into custody. The crew said the authorities had been trying to open safe-deposit boxes.

The crew continued to film as they were taken away, on charges of entering the site of an investigation and filming against police instructions.

Tax and law-enforcement officials in Russia, who have been under pressure from United States authorties, have begun to investigate Russian banks linked to a huge money-transfering operation that involved billions of dollars that moved from Russia to the United States and then to other countries.

At the center of the United States inquiry, led by the Federal Bureau of Investigation, is the Bank of New York and a group of accounts at the bank controlled by the Benex International Company. The bank, which is cooperating with the Federal investigation, has said $7.5 billion moved through the Benex accounts over three years. The bank has not been accused of wrongdoing.

In New York, a Federal grand jury has indicted Benex and two other companies on charges of having illegally taken deposits and transmitting money without proper licenses, a violation of state and Federal laws.

The F.B.I. said it had been asking the Russian Government to examine banks in Russia that used Benex accounts. An American law-enforcement official said the F.B.I. had recently asked for information about the Sobin Bank and its links to money movement through the Bank of New York.

Russian officials contend that the United States is providing no information. ''We are compelled to check all these banks, because the Americans do not give us any information,'' the head of the State Tax Service, Aleksandr Pochinok, complained to the Russian newspaper Vedomosti. ''That does not mean all of these banks are bad. All of our banks worked with the Bank of New York.''

A member of the Sobin board, Mikhail Solovyov, declined to comment on the investigation.

Sobin has had a cozy and lucrative relationship with the Government. It handles the accounts of the State Customs Committee and has lent money to state agricultural enterprises. According to Banker magazine, it has been among the 1,000 largest banks in the world.

The main shareholders in the bank include Manezh Square, a fancy shopping center owned by the City of Moscow and Energiya, a manufactuer of rocket boosters, according to the AK&M, a Russian business-information agency.

Other major shareholders include the National Reserve Bank, a major bank with ties to the oil and gas industry, and SBS Agro, a once-powerful bank that has fallen on hard times.

The nation's leading oil company, Lukoil, is also said to be a major shareholder. And there have been reports that powerful executives with close relations to the Kremlin are also involved.

Last week, Russian prosecutors opened a separate criminal investigation into the Flamingo Bank, a small bank here that is one of several suspected of funnelling under-the-table payments from Russian importers through foreign banks.

Russian authorities said they had found $430,000 in cash at Flamingo with no official documentation to indicate its origin. That raised concerns about possible money laundering, according to Vladimir Minayev, director of the investigative unit for the prosecutor.

Source: The NY Times

Russians accused of Swiss money laundering

Russian tax officials are being investigated for alleged money laundering in Switzerland, the federal prosecutor’s office has confirmed.

The Swiss money laundering reporting office received a complaint from legal representatives of an investment fund run by Hermitage Capital Management, a company based in Guernsey that specializes in Russian markets.

The company’s head, Bill Browder, who works out of London, said Switzerland has frozen the accounts of the husband of one of the Russian tax officials suspected of financial fraud.

Hermitage, founded in 1996 by Browder and the late Edmond Safra (a Brazilian who established a bank in Switzerland), claims that it is the victim of a fraud perpetrated by Russian police and tax officials.

One former employee was killed in mysterious circumstances after revealing improper financial dealings.

Other Hermitage associates have reportedly been attacked and robbed, with information stolen from the company’s Moscow offices.

Browder, a supporter of former Russian president Vladimir Putin, was famously blacklisted by the Russian government as a threat to national security, reportedly because he interfered with the flow of money to bureaucrats and business accomplices with links to Putin.

Source: WRS

The New UN Sanctions Resolution Against Iran

The UN Security Council approved a resolution on June 9th imposing a fourth round of sanctions on Iran in response to its continued nuclear enrichment program in violation of prior Security Council resolutions. The vote was 12 in favor, 2 against (Brazil and Turkey) and 1 abstention (Lebanon).

The new resolution imposes new financial restrictions on Iran, expands an existing arms embargo, and authorizes greater stop and search of Iranian cargo ships. Targeted sanctions on specific individuals and entities were expanded. The resolution also includes measures directed against Iran’s Revolutionary Guard.

While the United States, Great Britain and France were its strongest sponsors, China and Russia also expressed their verbal support along with their votes, although the Russian ambassador added a major caveat in his response to a reporter’s question about Russia’s prospective sale of a sophisticated anti-aircraft system to Iran.

Lebanon’s decision to abstain was a pleasant surprise, considering the influence of Iran-backed Hezbollah in the Lebanese government. However, Brazil and Turkey as expected opposed the new resolution on the grounds that it could undermine the proposed nuclear fuel swap agreed by the two countries with Iran last month. They seemed to forget that the European Union has been trying to negotiate with Iran since 2005 and the Obama administration waited 18 months while trying to engage Iran before seeking passage of this resolution. Only when new sanctions became a real possibility did Iran come around to the fuel swap concept that it had first agreed upon and then promptly reneged on last fall.

Rice’s Positive Spin

U.S. Ambassador Susan Rice told reporters after the vote that the “resolution is strong, it’s tough and it’s comprehensive. And it is something that Iran fought very hard to prevent passage today. The effort, the time, the money, and the poise that they employed, to try to prevent this resolution’s passage only underscores their understanding, that this is a major blow.”

Despite the ineffectiveness of the three prior resolutions, Ambassador Rice expressed confidence that the cumulative effect on Iran of all the resolutions is “harmful and hurtful.”

Iran’s Rebuke

Iran remains unbowed. Its representative told the Security Council after the vote that it had no intention of changing its present course. He accused the United States and Great Britain in particular of continuing a long pattern of interference in Iran’s affairs and displaying a double standard vis a vis Israel. Ambassador Rice told reporters that these comments were “reprehensible, offensive, and inaccurate.”

Stronger Resolution on Paper

On paper at least, the new resolution does appear to represent a significant move forward from the prior three. More specifically, the resolution prohibits Iran from investing in sensitive nuclear activities abroad, like uranium enrichment and reprocessing activities, as well as activities involving ballistic missiles capable of delivering nuclear weapons. The ban also applies to investment in uranium mining.

States are prohibited from selling or in any way transferring to Iran various categories of heavy weapons (battle tanks, armored combat vehicles, large caliber artillery systems, combat aircraft, attack helicopters, warships, and certain missiles or missile systems). States are similarly prohibited from providing technical or financial assistance for such systems, or spare parts.

The resolution also sets up a new cargo inspection framework. States are expected to inspect any vessel on their territory suspected of carrying prohibited cargo, including banned conventional arms or sensitive nuclear or missile items. States are also expected to cooperate in such inspections on the high seas.

States are called upon to prevent any financial service and freeze any asset that could contribute to Iran’s proliferation.

Resolution targets the Islamic Revolutionary Guard Corps

Most significantly, the resolution targets the Islamic Revolutionary Guard Corps (IRGC) for its role in proliferation and requires states to mandate that businesses exercise vigilance over all transactions involving the IRGC. Fifteen IRGC-related companies linked to proliferation will have their assets frozen. The IRGC is the major power center in Iran’s economic and military spheres as well as one of the government’s primary instruments for suppressing political dissent. Impairing the IRGC’s freedom of operations will be a significant accomplishment, if successful.

The Proof Will be in Enforcement

UN Security Council sanctions resolutions against Iraq, North Korea and Iran have had a bad track record in actual practice. The resolutions have been easy for the sanctioned countries to evade, through the use of multiple front entities, money laundering and trading partners unwilling to give up short term advantage for longer term peace and security.

Also, enforcement of the cargo inspection at sea will be a challenge if Iran, as expected, refuses to cooperate. When the French UN ambassador, for example, was asked what measures France would be willing to take in such a scenario, he refused to answer what he called a “hypothetical question.”

Most ominously, the Russian UN ambassador told reporters that Russia did not consider the sale of its sophisticated S-300 anti-aircraft system to Iran to be within the resolution’s scope. The S-300 missile defense system would no doubt be used by Iran to shield its nuclear sites against a potential air strike, should military force become necessary to stop Iran from producing nuclear bombs. The Russian ambassador is technically correct because the resolution’s ban on the transfer to Iran of certain missile systems is written in such a way that it creates a big loophole for Russia to walk through in delivering to Iran its ground-to-air missiles, including its S-300 anti-aircraft missiles and anti-missile interceptors.

The Obama administration will spin the latest sanctions resolution against Iran as a major diplomatic triumph and a significant obstacle in the way of Iran’s progress towards achieving a nuclear arms capability. I hope they are right. However, until the S-300 loophole is closed; until the U.S. and its allies figure out a way to effectively stop evasions of the sanctions; and until enough countries show that they are willing to enforce the cargo inspections, the Obama administration might want to wait before it celebrates.

Source: Canada Free Press

Indian Govt signs MoUs with three countries to fight terror financing

The MoUs will enable the country’s Financial Intelligence Unit to share information with foreign FIUs and to obtain information from them on money-laundering activities

The government has signed memoranda of understanding with Russia, Malaysia and Brazil this year for combating money laundering and terror financing.

Negotiations with more than 30 other countries is under process for enhancing international cooperation in fighting illegal routing of money for terror and Hawala like operations, a senior finance ministry official has said.

India has also signed MoUs in this regard with Mauritius and the Philippines in 2008.

The MoUs will enable the country’s Financial Intelligence Unit (FIU) — a government agency to investigate and disseminate information between financial and law enforcement agencies for identification of suspicious money laundering — to share information with foreign FIUs wherever considered necessary and reciprocally to obtain information from them on money-laundering activities, the official said.

The government, in the same context this year, received 69 requests of information from foreign financial intelligence units while it sent 17 such requests to other countries.

The Union government has also established Joint Working Groups (JWG) — comprising senior officials from enforcement agencies — with a number of countries like the US, Germany, the UK and Russia on various operational issues relating to terrorism and other crimes including money laundering and drug trafficking.

A joint meet was held with Russia this year, the finance ministry official added.

The FIU-IND in relation to foreign FIUs screens and processes requests from foreign FIUs, disseminates information to foreign FIUs, establishes and maintains relationship with foreign FIUs, and facilitates, administers and negotiates Memoranda of Understanding (MoUs) with foreign FIUs.

According to established government guidelines, the MoU envisages that the information or documents obtained from the respective authorities will not be disseminated to any third party, nor be used for administrative, prosecutorial or judicial purposes without prior consent of the disclosing Authority.

The information acquired will be treated as confidential and will be subject to official secrecy. The MoU also provides that authorities will jointly arrange, consistent with the legislation of their respective countries, for acceptable procedures of communication and will consult each other with the purpose of implementing the Memorandum, the guidelines state.

The guidelines further add that the authorities would not be under any obligation to give assistance if judicial proceedings have already been initiated concerning the same facts to which the request is related. Further, the MoU may be amended or revoked at any time.

Source: Live Mint

KENYA: AML Bill Passes, But Does Govt Mean Business?

Kenya's Parliament finally passed the Proceeds of Crime and Anti-Money Laundering Bill in December. But while the passing of the bill is viewed as a highlight of the Tenth Parliament, many fear it may just be a gimmick by the government to appease international partners.

George Kegoro, the executive director of International Commission of Jurists - Kenya Chapter, says while the legislation is good, he doubts there is political will to completely stamp out money laundering in Kenya.

"The existence of the legislation is not sufficient to deter the vice neither are the stiff penalties that are recommended in the bill," he says. "There is need for genuine support from the government to enact this law. We need a good set of people to be put in place to interpret the legislation."

Kegoro, whose organisation undertakes advocacy and policy work aimed at strengthening the role of lawyers and judges in protecting human rights and the rule of law, argues that while the bill was government-sponsored, Kenya’s track-record on corruption is poor and he doubts the genuineness of the political class.

It is the fourth attempt since 2004 to pass a bill to prevent the concealment of large profits from drug trafficking and other organised crime, and even this time around it faced resistance from members of parliament who believed the bill was a sly back-door re-introduction of an Anti-Terrorism Bill which had been quashed.

When the bill was tabled in November, an assistant minister in defiance of his own government, strongly opposed the tenets of the Bill. The assistant minister for public service, Aden Sugow, opposed the Bill saying it was an attack on the Muslim community. He argued implementing the Bill would be bowing to the interests of external interests and said that Kenya currently has adequate laws in place to deter money laundering.

While supporting the bill, defence minister Yusuf Hajji warned of a general feeling among the Muslim community that the legislation was targeting them. The Bill went forward after assurances from Prime Minister Raila Odinga that the government had no such intentions.

Once signed by the president, the law will establish a Financial Reporting Centre to assist in the identification of the proceeds of crime. An Asset Recovery Agency will be charged with tracing and recovering ill-gotten assets.

According to Job Ogonda executive director of international corruption watchdogs Transparency International, this would mean millions of dollars stashed in off-shore accounts swindled from Kenya could be recovered.

But Ogonda doubts the passage of new legislation will improve Kenya’s standing as a corrupt state internationally.

"At the moment it is embarrassing to be a Kenyan. Nigeria is improving with regards to corruption because they have shown tangible commitment of doing something about graft. However, the same cannot be said for Kenya," he says.

"We have previously had good pieces of legislation which would have helped fight graft, however, nothing has been done. How many ministers or former ministers have ever gone to prison because of corruption?" Ogonda wonders.

Ogonda is referring to anti-corruption legislation such as the Public Procurement and the Public Officers Ethics Act which require all public office holders to declare their wealth and origin of the same: this older legislation has had no noticeable effect.

Kenya’s record internationally as a corrupt state has for many years been bad and in the bribery and corruption index released by Transparency International, the country has kept the company of states such as Nigeria, Russia and Zimbabwe. Currently, Kenya is position 147 out of 180 on the global index of corruption.

Indeed the passing of the anti-money laundering bill comes in the wake of the release of a U.S. State Department report saying 93 million dollars of earnings from drug trafficking are laundered in the country’s financial system annually.

Another equally damning report by a UK firm, Kroll Associates, hired by the Kenyan government to track wealth acquired corruptly, revealed an estimated $1.7 billion is currently stashed in off-shore accounts. While the results of this 2004 report have remained confidential, the document was leaked: no action has been taken against any of the prominent figures named in its 110 pages.

But all the right noises were made when the bill was moved in Parliament by deputy Prime Minister Uhuru Kenyatta, who said that in view of the magnitude of the problem to the economy, the debate should focus on the quality of the legislation to ensure it was stringent enough.

Seconding the bill, Raila said, "The country risks becoming a pariah state unless the legislation is passed. We have suffered from the effects of money laundering especially in the property sector whose value has been skyrocketing due to the money being brought from the acts of piracy off the coast of Somalia".

A boom in property prices in Nairobi is preventing a majority of Kenyans from buying real estate, and in some cases even pricing locals out of the rental market. Media reports are linking the boom with profits from Somali pirates who seized numerous vessels during 2009, extracting handsome fees from their owners before releasing ships and crew members. In certain Nairobi neighbourhoods, Somalis are willing and able to pay rent up front for periods of even up to two years.

Ogonda states that for many years, Kenya has been a hub of money laundering with illegally acquired cash from Europe, South Africa, South America, Democratic Republic of Congo, Sudan, Rwanda, Burundi, Uganda and Tanzania finding its way into local financial markets.

"Due to our porous borders and poor implementation of legislation, people have simply walked in with huge amounts of cash, hired a lawyer to front for them who in turn invest the cash, especially in property," Ogonda says.

He says despite moves to assure the independence of the new watchdog agencies' leadership, and fresh monitoring requirements for the banking system, the version of the bill which is now awaiting presidential assent does not demand greater accountability from lawyers whose lawyer-client privileges remain intact.

Kegoro notes that the prescribed penalties are fairly high - jail terms of two to five years, with fines of up to $65,000 for individuals, and corporate penalties set as high as $330,000 or the value of the property. But, he argues, it is not the severity of the penalty that will make people fear it. It is the certainty of being caught, hence the need for genuine political will to implement the law.

Ogonda is in agreement. "Application of the bill is what will be the determining factor. The structure of governance has to support the law and if it remains the same the legislation can exist and nothing will change."

By Susan Anyangu-Amu

Source: IPS

Bulgarian football's 'mafia links' exposed in cables

Some of Bulgaria's most popular football clubs have ties with mafia bosses, who use them to launder money, according to a US diplomatic document revealed by whistle-blowing website WikiLeaks.

"Bulgarian soccer clubs are widely believed to be directly or indirectly controlled by organised crime figures who use their teams as a way to legitimise themselves, launder money, or make a fast buck," a January 2010 cable from the US embassy in Sofia to Washington noted.

Details of the cable, which handed Bulgarian football "a red card for corruption", were published Monday on the website of the Spanish daily El Pais.

"Nearly all of the teams are owned or have been connected to organised crime figures," the cable's author, current US deputy chief of mission to Sofia Susan Sutton, wrote.

A "sampling of the most well-known connections" compiled by Sutton included some of Bulgaria's most popular first league clubs, such as Levski Sofia, CSKA Sofia, Litex Lovech, Slavia Sofia, Cherno more Varna, Lokomotiv Sofia and Lokomotiv Plovdiv.

An alleged arms dealer, a proxy to a notorious Russian businessman and three assassinated crime bosses were among the team owners listed in the cable.

As a result, "allegations of illegal gambling, match fixing, money laundering, and tax evasion plague the league", the cable found.

Sutton cited the example of one club owner who allegedly bet against his own team to pay back debts, as well as recent tax administration findings that most players received, at least on paper, the Bulgarian minimum wage of 240 leva (120 euros, 170 dollars) per month -- although in some cases their actual pay was at least 70 times higher.

The document concluded that a successful operation to sever the mafia's links to football would be "a public relations coup" for Prime Minister Boyko Borisov, whom it described as a "soccer fanatic".

Source: Bangkok Post

Dead Men on UN Terror List Hinder Global Fight Against Al-Qaeda

Ahmad Zerfaoui is one of the world’s most wanted terrorists, according to the United Nations, which lists him as a member of al-Qaeda’s North African arm. It may be difficult to bring him to justice: He died three years ago. At least 42 dead people and as many as 69 defunct companies are among about 500 names on the UN’s list of alleged al-Qaeda and Taliban supporters, said Richard Barrett, who heads the world body’s committee monitoring sanctions on the groups and is working to clean up the register.


UN member states are reluctant to apply sanctions on the Taliban, al-Qaeda and their supporters because governments don’t know who on the list is a legitimate threat, Barrett said. The inaccuracies also hamper Obama administration efforts to motivate allies in the war on terrorism who don’t want to be seen as too close to the U.S., said Eric Rosand, a security analyst in New York.

“We turn to the UN for its global legitimacy, but if the UN tool is seen as illegitimate, you limit your effectiveness,” said Rosand, co-director of the Center on Global Counterterrorism Cooperation, an independent research group. “The UN has a lot of cachet where the U.S. is not appreciated.”

The list grew out of UN sanctions levied against the Taliban in 1999 after the Afghan Islamists refused to give up al-Qaeda operatives following the bombings of U.S. embassies in East Africa.

Assets and Travel

The sanctions, which require nations to freeze assets of those listed and bar them from travel and weapons transactions, were extended to al-Qaeda in 2000 and strengthened after the Sept. 11, 2001, attacks.

“It was all a bit frantic after 9-11” and some names were added to the list that don’t belong, said Barrett.

All 15 Security Council nations must agree to add or remove any person or company from the register.

“There are dead people on the list and the committee can’t get them off,” Rosand said.

Groups on the list include Egyptian Islamic Jihad; branches of Saudi Arabia-based al-Haramain Islamic Foundation, which the UN called a main source of funds for al-Qaeda; and two honey shops and a bakery in Yemen whose owner was accused by the UN of being an al-Qaeda financier.

Thomas H. Nelson, an attorney for al-Haramain’s now- shuttered U.S. branch, called the terrorism accusation “ridiculous” in a phone interview from Welches, Oregon.

Barrett has removed 12 entities from the list this year. Some defunct companies are kept on to ensure they don’t revive, he said.

Death in Mali

Zerfaoui, who died in Mali in 2006, according to the UN, remains on the list because his name hasn’t come up for review.

“The problem with ‘dead’ people is proving that they are dead, particularly if they have died in ungoverned areas or countries where identities are uncertain and burials take place as soon as possible after death,” Barrett said in an e-mail.

Barrett, 60, a former officer of Britain’s MI6 spy agency, heads eight senior officials and about a dozen support staff from countries including Russia, France and the U.S., working from a midtown Manhattan office.

Many of Barrett’s security, intelligence and financial contacts are in countries that shy away from open cooperation with the U.S.

“This is a good way for the U.S. to get its agenda applied under a neutral flag,” said Barrett.

‘Significant Success’

Even with its flaws, the list helps the U.S. stifle al- Qaeda and the Taliban, said David S. Cohen, the Treasury’s assistant secretary for terrorist financing.

“We’ve had some significant success in degrading the financial facilitation networks by which al-Qaeda has been obtaining their funds,” he said in an interview.

Barrett said intelligence reports show al-Qaeda and the Taliban made several appeals for cash this year, a signal they are hurting from the sanctions. He said he didn’t have data from member states to show conclusively how much money has been seized under the sanctions.

Critics of the program including Jean-Charles Brisard, a former head of corporate intelligence at Paris-based Vivendi Universal SA, said the UN hasn’t kept up with terrorists’ financing methods. Since 2003, the amount of assets frozen and the number of names on the list has remained at about $80 million and 500 people, said Brisard, now a consultant for families of Sept. 11 victims.

“That’s quite ridiculous,” he said from Paris.

Legal Challenges

Countries have also been reluctant to enforce the sanctions out of concern the list won’t stand up to legal challenges, said Brisard and Barrett.

A Saudi businessman, Yassin Abdullah Kadi, also known as Yasin al-Qadi, who is on the list for allegedly supplying arms and funds to al-Qaeda and had his assets frozen, appealed to the European Court of Justice. The court ruled last year that the European Union regulations enforcing the UN sanctions denied his rights, including the right to judicial review. The asset freeze, the court said, was “an unjustified restriction” on property rights.

The council is discussing new rules on the listing and appeals process.

“For the sanctions to be efficient,” Barrett said, “they have to be respected.”

To contact the reporter on this story: Peter S. Green in New York at psgreen@bloomberg.net.

Source: Bloomberg

International terrorist database planned

The special services of several countries will be ensuring security at the upcoming Olympic Games in China, and football European championships in 2008 and 2012. The decision was made at an international security conference in the Siberian city of Khanty-Manseeisk.

Russian special forces have shown off their skills to foreign colleagues practicing various anti-terrorism operations.

The drills included storming a building where militants held hostages and releasing people in a bus hijacked by terrorists.

It is the seventh International Security Conference, hosted annually by Russia.

On the agenda were cyber terrorism, transport security and countering the financing of terrorism.

Security officials also discussed plans for an international terrorist database all countries would be free to use and update.

http://www.amlosphere.com/asia/cft/international-terrorist-database-planned.html

RUSSIA: Central Bank strips three Russian banks of licenses

MOSCOW, October 26 (RIA Novosti) - The Central Bank of Russia has withdrawn licenses from three banks, the CBR press department said Friday.

It said the International Social Bank, the Commercial Bank, and the Universal Commercial Bank Era lost their licenses to conduct banking operations over failures to comply with federal banking laws and CBR regulations.

In particular, the three banks violated money laundering laws and disclosure procedures, overstated their financial reserves, and were found guilty of other financial irregularities.

The CBR placed the banks under external management pending a court ruling on bankruptcy or putting them into receivership.

http://en.rian.ru/business/20071026/85562699.html

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

Two more Russian banks lose licences

Russia's central bank said on Thursday it has withdrawn the operating licences of bank Integro and Kurganprombank, citing the first bank's lack of capital and the latter's inability to meet creditors' demands.

The central bank has withdrawn over 10 banking licences since the end of August as mistrust and liquidity crisis hit the banking sector. Before the crisis, Russian banks lost licences mainly due to accusations of money laundering.

Authorities have repeatedly said they would welcome a consolidation in Russia's banking sector, consisting of over 1,000 banks.

Depositors of Integro and Kurganprombank will have to apply to the Deposit Insurance Agency to get their money back.

Authorities last month raised the amount of money guaranteed by the state to 700,000 roubles ($25,610), around 40 times higher than the average monthly wage. The state previously guaranteed 400,000 roubles. (Reporting by Dmitry Sergeyev; Editing by Chris Wickham)

Source: The Guardian

'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

Russia detains crime boss wanted by FBI

By Guy Faulconbridge
MOSCOW, Jan 25 (Reuters) - Russian police said on Friday they had detained suspected crime boss Semion Mogilevich, who is wanted by the U.S. Federal Bureau of Investigation for alleged fraud, money laundering and racketeering.

The FBI said Ukrainian-born Mogilevich had created a powerful Eastern European organised crime ring in the 1990s that smuggled weapons and drugs and engaged in prostitution, money laundering and organised stock fraud.

Mogilevich's representatives could not be reached for comment.

Mogilevich, 61, was using a different name when he was detained on Thursday along with Vladimir Nekrasov, the head of Russia's top cosmetics retailer, Arbat Prestige.
"Sergei Shnaider, who is better known as Semion Mogilevich, was also detained," a spokeswoman for the central regional department of Russia's Interior Ministry said by telephone.

"He is a person with multiple surnames, multiple citizenships and has been pursued for 15 years not only by Russia's law enforcement agencies but also by the law enforcement agencies of other countries," she said.

A Moscow court approved his arrest.

Russian state television showed pictures of a portly man in a leather coat and cloth cap being escorted into a minibus by heavily armed officers.

About 50 police and special forces troops were used to detain the men in central Moscow, Russian newspapers said.

The U.S. FBI says on its Web site, www.fbi.gov, that Mogilevich is wanted on suspicion of racketeering, securities fraud, wire fraud, mail fraud and money laundering.

The FBI says Mogilevich "should be considered armed and dangerous and an escape risk". Photographs of Mogilevich on the FBI's Web site show a balding man dressed in a suit.
"Right here in Budapest, Ukrainian-born Semion Mogilevich established the headquarters of his powerful organised crime enterprise," FBI Director Robert Mueller said in a 2005 speech, according to FBI's Web site.

"The group engaged in drug and weapons trafficking, prostitution and money laundering, and organised stock fraud in the United States and Canada in which investors lost over 150 million dollars," Mueller said.

The FBI said Mogilevich's primary residence was in Moscow though he had links to the United States and England.

Arbat Prestige's Vladimir Nekrasov was detained on suspicion of large-scale tax evasion, the Interior Ministry said. (Additional reporting by Vera Kalian; Editing by Charles Dick)

http://www.guardian.co.uk/feedarticle?id=7256005

Russian banks cut down on suspicious transactions

The volume of suspicious bank transactions in Russian banks decreased 8 percent to RUB 1 trillion (approx. USD 40.6bn) in 2007 compared to a year earlier, the Bank of Russia's Deputy Chairman Viktor Melnikov told journalists today. Meanwhile, the volume of dubious deals shrank 24 percent in Moscow, Melnikov noted, adding that Russia's cash circulation had grown 34 percent, while retail trade had increased by more than 10 percent in 2007. Dubious cash conversion deals often involve the purchase of agricultural equipment or securities, the official said, adding that conversion of assets into cash was used for tax evasion both in Russia and abroad.

http://www.rbcnews.com/free/20080124185819.shtml

EU to continue to assist Russia in countering money laundering

The European Union is to allocate more than EUR 3 mln to help counter money laundering and the financing of terrorism in Russia.

An EU-financed project with a EUR 3.15 mln budget will run until 2010 and will be implemented by the Council of Europe based on the successful results achieved during the first project between 2003 and 2005.

The goal of the project is to assist to the Federal Financial Monitoring Service (Rosfinmonitoring) and other organizations in countering the legalization of revenues acquired by criminal methods and the financing of terrorism through implementing European and international standards, exchanges of experience and strengthening staff potential at key institutions within the money laundering countering system.

http://gielda.wp.pl/POD,6,a,1,b,1,c,11,index.html?P%5Bnumer%5D=8875519&P%5Bobr%5D=ifx&ticaid=13cb6