Showing posts with label Serbia. Show all posts
Showing posts with label Serbia. Show all posts
on Saturday, June 9, 2012
The Special Prosecution for Organised Crime has charged alleged drug trafficker Darko Saric and eight others with money laundering, Belgrade-based daily Blic reported on Monday (August 9th). Prosecutors say the group had invested 20m euros gained from the sale of cocaine in hotels and farms in Vojvodina. In April, the special prosecution filed charges against Saric and 19 others suspected of smuggling 2.5 tonnes of cocaine from South America.

Source: SETimes.Com
on Friday, June 1, 2012
by Michael Roberts - 01.06.2011

Prime Minister Mirko Cvetkovic said yesterday that Serbia's goal is to eradicate money laundering or at least minimise it.

Cvetkovic told a conference on combating money laundering and financing terrorism in the context of European integration of Serbia held in the Continental Hotel that these criminal acts lead to undermining the stability of all countries, threaten the reform and competition, foreign investment, security and reputation of the country.

He stressed that Serbia is trying to combat these crimes by making modern comprehensive legislation, improving the cooperation in the region as well as cooperation with international financial institutions.

The Prime Minister pointed out that this struggle is certainly long, difficult and exhausting, and pointed out that organised crime and money laundering are equal kinds of crimes.

Illegal acquisition of property is a major, but not the only motive for criminal activity, and to enjoy the benefits, criminals falsely show that the property is lawful, he explained and added that the key to a successful fight is to disable the creation of favourable conditions for the money to be introduced into legal channels.

Cvetkovic said that Serbia has been struggling for almost a decade against these acts, but noted that the key to a successful fight is good cooperation of all stakeholders, as well as international cooperation and exchange of data.

Strengthening cooperation between police, prosecutors and the National Bank of Serbia (NBS) will improve and strengthen the fight against money laundering, he said.

Head of the EU Delegation to Serbia Vincent Degert said that Serbia has intensified its efforts to combat economic crime and said that this type of crime remains a threat to democracy and the rule of law.

The EU noted that Serbia has made significant progress in this area in 2009 and 2010, he said.

He stated that building financial system must continue in order to detect and prevent money laundering and expressed the belief that there is political will to fight against economic crime.

Director of Cooperation at the Council of Europe Maria Ruotanen pointed out that the prevention of money laundering and financing terrorism is essential to the development of democracy and the rule of law, adding that the Serbian government in previous years has taken a lot of courageous steps in this area.

Today's meeting represents the beginning of a joint project of the EU and the Council of Europe in order to help the fight against money laundering and financing terrorism and the main beneficiary of the project is the Directorate for Anti-Money Laundering.

The project, whose implementation is three years and is worth €2.2 million, is financed by the EU and the Council of Europe.

Source: Balkans.Com
on Tuesday, May 1, 2012
Bulgarian Interior Minister Mihail Mikov, his Serbian counterpart Ivica Dacic and Romanian interior minister Christian David have signed an agreement between the three countries on co-operation against organised crime, including a focus on countering trafficking in drugs and cigarettes and providing for joint anti-terrorist training.

The agreement was signed in Belgrade on September 29 2008.

Bulgarian National Radio (BNR) reported Dacic as saying that trafficking in drugs and cigarettes was one of the worst problems on the Bulgaria-Serbia border.

The Bulgarian side suggested measures to ease the system of crossing the Bulgaria-Serbia border.

The three ministers discussed the possibility of setting up a regional rapid reaction centre to deal with natural disasters. Mikov said that the proposal had been co-ordinated with the European Commission.

According to a media statement by the Bulgarian Interior Ministry, the agreement says that the three countries are concerned about the serious proportions that crime has reached in recent years at national and international level, which constitutes a serious threat to internal security and stability in the Balkans.

For this reason, Bulgaria, Romania and Serbia agreed on co-operation in prevention, detection and investigation of organised crime, and against serious crimes against persons, cross-border crime, terrorist acts, production and trafficking of drugs and weapons, and people trafficking.

The three countries will co-operate in preventing illegal economic activities, suspicious transactions, money laundering, smuggling, sexual exploitation, counterfeiting money, documents and trademarks. They will unite their efforts against cyber-crime, corruption
and extortion, the agreement said.

The interior ministries will exchange information, experience and expertise in combating transnational crime.

Speaking at a news conference after the signing, Dacic said: “We have to show in the short term that the Balkans may themselves define and pursue their priorities”.

Source: Sofia Echo
on Sunday, March 25, 2012
A new report from the European Commission notes progress but still finds too much organized crime and corruption in the two new member states

When Bulgaria and Romania joined the European Union in 2007, other member states expressed serious concern about the high level of corruption in both of the former communist states, and, in Bulgaria, about the political power wielded by violent criminal gangs operating there. Now, some 30 months after joining the union, widespread fraud, corruption, and organized crime remain problematic according to new European Union reports that openly question the will of political leaders to implement reforms to tackle these problems.

The latest progress reports on the justice system and fight against corruption, released on 22 July, come as a serious if not unexpected blow to Bulgaria and Romania – which suffer from the public perception they were accepted into the EU club too early – but also to EU candidate countries where accession talks have stalled, such as Croatia and perennial hopeful Turkey.

PLAY OR PAY

While noting Bulgaria's and Romania's progress in key areas, the European Commission, as in previous reports since 2007, listed an array of ills, among them inadequate measures to fight money-laundering and killings linked to organized crime. In total, the reports named 21 areas in which Bulgaria needs to improve its performance, and 16 for Romania, including the implementation of anti-corruption laws and boosting the judicial independence.

"The reform momentum that has been established now needs to be backed up by a national political consensus involving all political parties and institutions, and more convincing delivery of results," European Commission President Jose Manuel Barroso said in a statement. "Citizens in both countries and across the rest of Europe must feel that no one is above the law. I hope that the two governments will move quickly to implement the concrete recommendations for reform that the Commission has put forward."

The commission last year froze around 500 million euros in subsidies earmarked to help the Bulgarian economy and threatened to sanction Romania as well over exactly the same kinds of failings outlined in this week's reports.

This time the commission decided not to advise other member states to stop cooperation with Bulgaria and Romania on judicial issues, an option known as the "safeguard clause" in the two countries' accession agreements. Brussels also stopped short of saying that the shortcomings could imperil the countries' attempts to join the border-free Schengen area in 2011.

But the commission will extend into 2010 the monitoring system, known as the Cooperation and Verification Mechanism, with the next progress report due in a year's time. That extension is a political embarrassment for Sofia and Bucharest – and a wake-up call for Croatia to also get its house in order. EU Enlargement Commissioner Olli Rehn noted that Zagreb is also lagging in "key areas such as judicial and administrative reform, the fight against corruption, and organized crime."

BIG JOB FOR NEW BULGARIAN LEADER

Whether this will instill a need to fast-track reforms remains to be seen. Indeed, the commission – which has already barred two Bulgarian government agencies from handling EU funds – said in its latest report that while Sofia no longer is denying that organized crime and corruption are widespread, the political will to do something about it is not yet evident.

"In the public perception in Bulgaria justice is too slow" and is "subject to influence and interference," Johannes Leitenberger, chief spokesperson for the commission, told reporters in Brussels, as cited by EUobserver.com. "There are still shortcomings which need to be urgently addressed by the newly elected Bulgarian government."

The commission released the latest judicial and crime monitoring reports days before the scheduled swearing-in of Bulgaria's incoming prime minister, Boyko Borisov, the Sofia mayor and a former Interior Ministry official who won elections this month on an anti-corruption platform. His party GERB (Citizens for the European Development of Bulgaria) also pledged to go after former government officials suspected of graft and has promised to implement the commission's demands.

If Borisov talks tough, he may well have the background and political muscle to back up his words. The private security company he founded helped protect Bulgaria's deposed last communist leader, Todor Zhivkov, and on the other side of the political spectrum, Simeon Saxecoburggotski, the deposed monarch who returned from exile and served as premier from 2001 until 2005.

MILD PRAISE FOR BUCHAREST

Romania – criticized for its fragmented and politicized approach to reform – did earn praise for the work of its anti-corruption directorate. Organized crime is also seen as far less of a problem than in Bulgaria. According to the commission, the country's criminal and civil codes, while updated, have not been fully or systematically revised, leading to a "patchwork" of ad hoc legislation that risks compromising anti-corruption efforts.

In Romania, "reform efforts remain fragmented, they have not yet taken firmly root and must still produce practical results," the commission stated. "Overall, a broad based political consensus behind reform and an unequivocal commitment across political parties to real progress has still to be demonstrated." And while prosecutors in Romania have accused almost 20 cabinet ministers and former ministers of corruption since the country's accession to the bloc in 2007, not one has been convicted.

Opinion polls show EU citizens have grown more wary of bringing new countries into the bloc since the "early admission" of Bulgaria and Romania – and the perception of lawlessness in the region is a factor. But without the "carrot" of that qualified (i.e. monitored) membership and the "stick" of sanctions, the wheels of judicial reform in these countries would have turned far slower. The message to EU candidates Croatia, Turkey, and Macedonia and those waiting in the wings (Serbia, Montenegro, Bosnia, and Albania) is to raise the bar – accelerate reforms – ahead of entry or formal accession talks.

Likewise, if Brussels should renege on the promise of future membership to the Balkans it could destabilize an already volatile region, right on the EU border. In that regard, Enlargement Commissioner Rehn was right this month to propose offering visa-free travel for citizens of Macedonia, Serbia, and Montenegro from 1 January 2010, in an effort to bring these countries closer to the bloc even as Brussels pushes for faster political, judicial, and economic progress.

Source: BusinessWeek
on Tuesday, March 6, 2012
The UAE said yesterday it will sign new anti-money laundering agreements with 82 countries as part of an intensified strategy to combat dirty funds.

The National Anti-Money Laundering Committee (NAMLC) discussed the plans at a meeting that also covered recent cases of currency fraud and other issues.

The Central Bank, which organised the meeting in Dubai, said the committee heard that a memorandum of understanding (MoU) had so far been signed between the anti-money laundering unit and 21 countries.

They were told that the unit planned to sign MoUs with 82 other nations that were members of the Egmont Group, an international gathering of financial intelligence units.

Some of the countries covered by the agreements have large communities in the UAE and financial sources say the agreements will strengthen the drive to crack down on dirty money and ensure the banking system here remains clean.

"These agreements demonstrate the commitment of the UAE to share financial information with its global partners to co-ordinate the efforts against money laundering, terrorist financing and related crimes," a Central Bank spokesman said after some of the deals were signed earlier this year.

"These agreements were aimed at further supporting the UAE's continued co-operation with the international community on subjects of mutual concern and on ways to strengthen co-operation on combating money laundering."

MoUs were signed with the financial intelligence units of Lebanon, Belgium, Brazil, Croatia, Estonia, Isle of Man, Macedonia, Malawi, Monaco, Nigeria, Portugal, the Philippines, Serbia, South Africa and other countries.

The agreements followed a pledge by the UAE last year to push ahead with an extensive campaign against money laundering and terrorist funding through intensified regional and international co-operation.

Source: Emirates Business 24/7
on Sunday, February 26, 2012
The traffic of heroin is the main criminal activity in the so-called South East criminal hub in Europe, according to the Europol Report.

Europol, or the European Police Office, released their Europol Organized Crime Threat Assessment (OCTA) in which the criminal activities on the old continent are divided in five hubs where the hub is a conceptual entity that is generated by a combination of factors such as proximity to major destination markets, geographic location, infrastructure, types of organized crime groups and migration processes concerning key criminals or organized crime groups in general.

The OCTA is an assessment of current and expected trends in organized crime affecting the EU and its citizens. Based on analysis Europol assess that the most significant criminal sectors now are drug trafficking, human trafficking, illegal immigration, fraud, counterfeiting and money laundering.

Bulgaria falls within the South East hub where the “Balkan route” from Turkey to the EU is used for heroin traffic by Turkish criminals, often in cooperation with Bulgarian crime groups.

“The South East criminal hub is based upon its geographical location between Asia and Europe. Logistically, the importance of the Black Sea and related waterways define the hub and will create opportunities for both legal trade and organized crime. Opiates reach Europe through the Balkan routes and the Northern Black Sea route across Central Asia and Russia. The significance of the port of Constanta in cocaine traffic is growing, and cocaine seems to be increasingly arriving into the EU via Turkey and/or the Balkans. This may also be the effect of the already well-established role of West Africa as a transit zone,” the report reads.

Bulgarians and Serbians also play key role in the traffic of synthetic drugs to the Middle East. Nigerian criminal groups, residing in Bulgaria, are in constant touch with such Nigerian groups in Italy providing cocaine for the Italian market, Europol notes.

In addition to synthetic drugs Bulgaria plays a key role in the distribution of counterfeit EUR bills and fake bank debit and credit cards.

The Southeastern hub is also very active in cigarettes contraband from the Ukraine and Moldova to the EU. In addition, the Ukraine is a transit center for cocaine, human trafficking and illegal immigrants through Albania, Serbia, Kosovo, Monte Negro and Macedonia to the EU.

The other hubs are:

1) The North West criminal hub. It is a distribution centre for heroin, cocaine, synthetic drugs and cannabis products. Its influence extends to the UK, Ireland, France, Spain, Germany and the Baltic and Scandinavian countries.

2) The South West criminal hub. The impact of this market is felt especially in the criminal markets of cocaine, cannabis, trafficking in human beings and illegal immigration. West and North West Africa as well as other parts of this continent have emerged as significant feeders for either the South West criminal hub or, increasingly, directly to important markets and distribution centers in the EU.

3) The North East criminal hub. This area is and will continue to be strongly influenced by feeders and transit zones located just outside the eastern EU borders (the Russian Federation/Kaliningrad, the Ukraine and Belarus). Illicit flows may be traced from the East towards the West (women for sexual exploitation, illegal immigrants, cigarettes, counterfeit goods, synthetic drugs precursors and heroin) but also vice versa (cocaine and cannabis products).

4) The Southern criminal hub. The role of this hub is central in relation to cigarette smuggling, the smuggling and distribution of counterfeit products and the production of counterfeit EUR bills.

Source: Novinite
on Wednesday, February 15, 2012
PREDRAG Djordjevic, a Serbian businessman who claims that he lost $26 million in potential income under the Milosevic regime from money laundering in Cyprus, is reportedly planning to take his case to the European Court of Human Rights.

Djordjevic , who is a naturalised Cypriot, has lost two civil cases in Cypriot courts where he tried to prove that the then Cyprus Popular Bank was responsible for his lost money.

According to Alithia, Djordjevic is now trying to recover the amount of $10 billion, which he claims that Serbian dictator Slobodan Milosevic had transferred to Cyprus during a UN embargo on Serbia during the 1990s.

In 2006 Djordjevic had sued the Popular Bank accusing the lending institution of being an accessory to money laundering for its alleged failure to exercise due diligence in opening accounts that originated from the former Yugoslavia, despite the UN embargo.

Having failed to win the legal battle in Cyprus, Djordjevic, who has been living on the island since 1992, has expressed the intention to continue his crusade at the European level.

He has reportedly set up a meeting with the relevant department of the European Commission on 24 November. He also expressed his willingness to take his case to the European court of Human Rights.

In his case against the Popular Bank Djordjevic claimed that the bank had illegally held his money in the account of an offshore company called Antexol. In 1994 Djordjevic had attempted to ship cotton to Yugoslavia with a UN permit on humanitarian grounds. He claimed that a Bulgarian partner had wired money into his company’s account in Belgrade that was supposed to be transferred to Beogradska Banka in Cyprus. The transfer, however, was blocked preventing Djordjevic from closing his cotton deal.

During Djordjevic’s law suit in a Cypriot court, it had emerged that Antexol’s Popular Bank account mysteriously bore the same numbers as his account with Beogradska. Djordjevic claimed that because the two account numbers were identical, the Popular Bank assumed that the money transfer was directed to Antexol.

Antexol was identified by the International War Crimes Tribunal as one of the eight offshore companies that comprised a money-laundering network, while all of them had opened accounts in Cyprus with the Popular Bank and were registered in Cyprus by the Tassos Papadopoulos law firm.

Source: Cyprus Mail
on Thursday, February 22, 2007
If you shop with a major bank, chances are that all the transactions in your account are scrutinized by AML (Anti Money Laundering) software. Billions of dollars are being invested in these applications. They are supposed to track suspicious transfers, deposits, and withdrawals based on overall statistical patterns. Bank directors, exposed, under the Patriot Act, to personal liability for money laundering in their establishments, swear by it as a legal shield and the holy grail of the on-going war against financial crime and the finances of terrorism.

Quoted in Wired.com, Neil Katkov of Celent Communications, pegs future investments in compliance-related activities and products by American banks alone at close to $15 billion in the next 3 years (2005-2008). The United State's Treasury Department's Financial Crimes Enforcement Network (finCEN) received c. 15 million reports in each of the years 2003 and 2004.

But this is a drop in the seething ocean of illicit financial transactions, sometimes egged on and abetted even by the very Western governments ostensibly dead set against them.

Israel has always turned a blind eye to the origin of funds deposited by Jews from South Africa to Russia. In Britain it is perfectly legal to hide the true ownership of a company. Underpaid Asian bank clerks on immigrant work permits in the Gulf states rarely require identity documents from the mysterious and well-connected owners of multi-million dollar deposits.

Hawaladars continue plying their paperless and trust-based trade - the transfer of billions of US dollars around the world. American and Swiss banks collaborate with dubious correspondent banks in off shore centres. Multinationals shift money through tax free territories in what is euphemistically known as "tax planning". Internet gambling outfits and casinos serve as fronts for narco-dollars. British Bureaux de Change launder up to 2.6 billion British pounds annually.

The 500 Euro note makes it much easier to smuggle cash out of Europe. A French parliamentary committee accused the City of London of being a money laundering haven in a 400 page report. Intelligence services cover the tracks of covert operations by opening accounts in obscure tax havens, from Cyprus to Nauru. Money laundering, its venues and techniques, are an integral part of the economic fabric of the world. Business as usual?

Not really. In retrospect, as far as money laundering goes, September 11 may be perceived as a watershed as important as the precipitous collapse of communism in 1989. Both events have forever altered the patterns of the global flows of illicit capital.

What is Money Laundering?

Strictly speaking, money laundering is the age-old process of disguising the illegal origin and criminal nature of funds (obtained in sanctions-busting arms sales, smuggling, trafficking in humans, organized crime, drug trafficking, prostitution rings, embezzlement, insider trading, bribery, and computer fraud) by moving them untraceably and investing them in legitimate businesses, securities, or bank deposits. But this narrow definition masks the fact that the bulk of money laundered is the result of tax evasion, tax avoidance, and outright tax fraud, such as the "VAT carousel scheme" in the EU (moving goods among businesses in various jurisdictions to capitalize on differences in VAT rates). Tax-related laundering nets between 10-20 billion US dollars annually from France and Russia alone. The confluence of criminal and tax averse funds in money laundering networks serves to obscure the sources of both.

The Scale of the Problem

According to a 1996 IMF estimate, money laundered annually amounts to 2-5% of world GDP (between 800 billion and 2 trillion US dollars in today's terms). The lower figure is considerably larger than an average European economy, such as Spain's.

The System

It is important to realize that money laundering takes place within the banking system. Big amounts of cash are spread among numerous accounts (sometimes in free economic zones, financial off shore centers, and tax havens), converted to bearer financial instruments (money orders, bonds), or placed with trusts and charities. The money is then transferred to other locations, sometimes as bogus payments for "goods and services" against fake or inflated invoices issued by holding companies owned by lawyers or accountants on behalf of unnamed beneficiaries. The transferred funds are re-assembled in their destination and often "shipped" back to the point of origin under a new identity. The laundered funds are then invested in the legitimate economy. It is a simple procedure - yet an effective one. It results in either no paper trail - or too much of it. The accounts are invariably liquidated and all traces erased.

Why is It a Problem?

Criminal and tax evading funds are idle and non-productive. Their injection, however surreptitiously, into the economy transforms them into a productive (and cheap) source of capital. Why is this negative?

Because it corrupts government officials, banks and their officers, contaminates legal sectors of the economy, crowds out legitimate and foreign capital, makes money supply unpredictable and uncontrollable, and increases cross-border capital movements, thereby enhancing the volatility of exchange rates.

A multilateral, co-ordinated, effort (exchange of information, uniform laws, extra-territorial legal powers) is required to counter the international dimensions of money laundering. Many countries opt in because money laundering has also become a domestic political and economic concern. The United Nations, the Bank for International Settlements, the OECD's FATF (Financial Action Task Force), the EU, the Council of Europe, the Organisation of American States, all published anti-money laundering standards. Regional groupings were formed (or are being established) in the Caribbean, Asia, Europe, southern Africa, western Africa, and Latin America.

Money Laundering in the Wake of the September 11 Attacks

Regulation

The least important trend is the tightening of financial regulations and the establishment or enhancement of compulsory (as opposed to industry or voluntary) regulatory and enforcement agencies.

New legislation in the US which amounts to extending the powers of the CIA domestically and of the DOJ extra-territorially, was rather xenophobically described by a DOJ official, Michael Chertoff, as intended to "make sure the American banking system does not become a haven for foreign corrupt leaders or other kinds of foreign organized criminals."

Privacy and bank secrecy laws have been watered down. Collaboration with off shore "shell" banks has been banned. Business with clients of correspondent banks was curtailed. Banks were effectively transformed into law enforcement agencies, responsible to verify both the identities of their (foreign) clients and the source and origin of their funds. Cash transactions were partly criminalized. And the securities and currency trading industry, insurance companies, and money transfer services are subjected to growing scrutiny as a conduit for "dirty cash".

Still, such legislation is highly ineffective. The American Bankers' Association puts the cost of compliance with the laxer anti-money-laundering laws in force in 1998 at 10 billion US dollars - or more than 10 million US dollars per obtained conviction. Even when the system does work, critical alerts drown in the torrent of reports mandated by the regulations. One bank actually reported a suspicious transaction in the account of one of the September 11 hijackers - only to be ignored.

The Treasury Department established Operation Green Quest, an investigative team charged with monitoring charities, NGO's, credit card fraud, cash smuggling, counterfeiting, and the Hawala networks. This is not without precedent. Previous teams tackled drug money, the biggest money laundering venue ever, BCCI (Bank of Credit and Commerce International), and ... Al Capone. The more veteran, New-York based, El-Dorado anti money laundering Task Force (established in 1992) will lend a hand and share information.

More than 150 countries promised to co-operate with the US in its fight against the financing of terrorism - 81 of which (including the Bahamas, Argentina, Kuwait, Indonesia, Pakistan, Switzerland, and the EU) actually froze assets of suspicious individuals, suspected charities, and dubious firms, or passed new anti money laundering laws and stricter regulations (the Philippines, the UK, Germany).

A EU directive now forces lawyers to disclose incriminating information about their clients' money laundering activities. Pakistan initiated a "loyalty scheme", awarding expatriates who prefer official bank channels to the much maligned (but cheaper and more efficient) Hawala, with extra baggage allowance and special treatment in airports.

The magnitude of this international collaboration is unprecedented. But this burst of solidarity may yet fade. China, for instance, refuses to chime in. As a result, the statement issued by APEC in November 2001 on measures to stem the finances of terrorism was lukewarm at best. And, protestations of close collaboration to the contrary, Saudi Arabia has done nothing to combat money laundering "Islamic charities" (of which it is proud) on its territory.

Still, a universal code is emerging, based on the work of the OECD's FATF (Financial Action Task Force) since 1989 (its famous "40 recommendations") and on the relevant UN conventions. All countries are expected by the West, on pain of possible sanctions, to adopt a uniform legal platform (including reporting on suspicious transactions and freezing assets) and to apply it to all types of financial intermediaries, not only to banks. This is likely to result in...

The Decline of off Shore Financial Centres and Tax Havens

By far the most important outcome of this new-fangled juridical homogeneity is the acceleration of the decline of off shore financial and banking centres and tax havens. The distinction between off-shore and on-shore will vanish. Of the FATF's "name and shame" blacklist of 19 "black holes" (poorly regulated territories, including Israel, Indonesia, and Russia) - 11 have substantially revamped their banking laws and financial regulators.

Coupled with the tightening of US, UK, and EU laws and the wider interpretation of money laundering to include political corruption, bribery, and embezzlement - this would make life a lot more difficult for venal politicians and major tax evaders. The likes of Sani Abacha (late President of Nigeria), Ferdinand Marcos (late President of the Philippines), Vladimiro Montesinos (former, now standing trial, chief of the intelligence services of Peru), or Raul Salinas (the brother of Mexico's President) - would have found it impossible to loot their countries to the same disgraceful extent in today's financial environment. And Osama bin Laden would not have been able to wire funds to US accounts from the Sudanese Al Shamal Bank, the "correspondent" of 33 American banks.

Quo Vadis, Money Laundering?

Crime is resilient and fast adapting to new realities. Organized crime is in the process of establishing an alternative banking system, only tangentially connected to the West's, in the fringes, and by proxy. This is done by purchasing defunct banks or banking licences in territories with lax regulation, cash economies, corrupt politicians, no tax collection, but reasonable infrastructure.

The countries of Eastern Europe - Yugoslavia (Montenegro and Serbia), Macedonia, Ukraine, Moldova, Belarus, Albania, to mention a few - are natural targets. In some cases, organized crime is so all-pervasive and local politicians so corrupt that the distinction between criminal and politician is spurious.

Gradually, money laundering rings move their operations to these new, accommodating territories. The laundered funds are used to purchase assets in intentionally botched privatizations, real estate, existing businesses, and to finance trading operations. The wasteland that is Eastern Europe craves private capital and no questions are asked by investor and recipient alike.

The next frontier is cyberspace. Internet banking, Internet gambling, day trading, foreign exchange cyber transactions, e-cash, e-commerce, fictitious invoicing of the launderer's genuine credit cards - hold the promise of the future. Impossible to track and monitor, ex-territorial, totally digital, amenable to identity theft and fake identities - this is the ideal vehicle for money launderers. This nascent platform is way too small to accommodate the enormous amounts of cash laundered daily - but in ten years time, it may. The problem is likely to be exacerbated by the introduction of smart cards, electronic purses, and payment-enabled mobile phones.

In its "Report on Money Laundering Typologies" (February 2001) the FATF was able to document concrete and suspected abuses of online banking, Internet casinos, and web-based financial services. It is difficult to identify a customer and to get to know it in cyberspace, was the alarming conclusion. It is equally complicated to establish jurisdiction.

Many capable professionals - stockbrokers, lawyers, accountants, traders, insurance brokers, real estate agents, sellers of high value items such as gold, diamonds, and art - are employed or co-opted by money laundering operations. Money launderers are likely to make increased use of global, around the clock, trading in foreign currencies and derivatives. These provide instantaneous transfer of funds and no audit trail.

The underlying securities involved are susceptible to market manipulation and fraud. Complex insurance policies (with the "wrong" beneficiaries), and the securitization of receivables, leasing contracts, mortgages, and low grade bonds are already used in money laundering schemes. In general, money laundering goes well with risk arbitraging financial instruments.

Trust-based, globe-spanning, money transfer systems based on authentication codes and generations of commercial relationships cemented in honour and blood - are another wave of the future. The Hawala and Chinese networks in Asia, the Black Market Peso Exchange (BMPE) in Latin America, other evolving courier systems in Eastern Europe (mainly in Russia, Ukraine, and Albania) and in Western Europe (mainly in France and Spain).

In conjunction with encrypted e-mail and web anonymizers, these networks are virtually impenetrable. As emigration increases, diasporas established, and transport and telecommunications become ubiquitous, "ethnic banking" along the tradition of the Lombards and the Jews in medieval Europe may become the the preferred venue of money laundering. September 11 may have retarded world civilization in more than one way.

http://www.theconservativevoice.com/article/22965.html
on Sunday, February 11, 2007
NO TRACE has remained of a now-defunct offshore company, it emerged in court yesterday in the case of Predrag Djordjevic vs the Popular Bank.

Djordjevic, a Serbian businessman based in Nicosia, is suing the bank for compensation and damages in a 900,000 deutschmark transaction that was never completed.

The first witness on the day was Theodoros Parperis, an accountant with auditors Costouris & Michaelides (now PriceWaterHouseCoopers), auditors of Antexol Trade Ltd.

“It is normal practice to destroy the data seven years after a company ceases to be a customer,” Parperis said.
He did, however, recall the specific company and knew by name its nominees (or representatives).

Antexol was incorporated in 1992 with the Tassos Papadopoulos law firm as the nominees. But since it was an offshore company, its real owners or beneficiaries could not be Cypriots. The beneficiaries were named as Yugoslav nationals Ljljana Radenkovic and Radmila Budicin.


But neither Radenkovic nor Budicin had ever heard of Antexol, and had no idea their names were being used to front an offshore company in Cyprus.

Djordjevic says he first heard of Antexol in 1994, after arranging to sell raw cotton worth DM900,000 purchased from a Russian company to a Serbian businessman.

The businessman had a licence issued on humanitarian grounds by the United Nations that allowed him to sell cotton for making medical products to a Serbian company while sanctions were in force against Yugoslavia.

To facilitate payment, Djordjevic opened an account at Beogradska Banka in Nicosia in the name of Genemp, his trading company. But instead of receiving the full amount from Belgrade directly, Genemp was credited with DM537,000, which had been transferred from Antexol's account at Popular Bank.

Djordjevic is claiming the remaining DM360,000 plus damages from Popular Bank. He believes this amount was also credited to Antexol's account at Popular Bank but was used for other purposes.

The Popular Bank accepted Antexol made the DM537,000 payment, but claimed it had no knowledge of the DM900,000 transaction.

Antexol and several other Serbian-owned offshore companies were used for sanctions-busting by the government of Slobodan Milosevic, the former Yugoslav president.

Many of these were registered as “trading corporations” by the Tassos Papadopoulos law firm.
Antexol was struck off the company registrar’s record in August 2003.

It is Djordjevic’s contention that his company was mistaken for one of these fronts, and inadvertently caught in the money-laundering web at the height of the Bosnian war.

Several billion dollars transferred illegally to the island by the government of Milosevic were deposited in the Cyprus Popular Bank.

The funds were used to buy weapons, equipment and fuel for the Milosevic regime to pursue wars in Bosnia and Kosovo, according to an investigation by the United Nations war crimes tribunal at The Hague.

At a previous hearing, a former Serbian bank treasurer had told the court how millions of pounds in cash were jammed in plastic bags and then shipped from Yugoslavia to Cyprus.

The paper trail used by Djordjevic’s lawyers has been obtained from The Hague court, which investigated Serbian money-laundering in the 1990s.

According to a balance sheet dating to 1994 that was submitted as evidence, Antexol had a turnover of £2.35 million, over £1 million in payable interest, and hundreds of thousands of pounds in “management fees”.

There was no explanation of what these management fees were or any indication of commercial transactions by Antexol, which had been registered as a trading corporation.

Next a Central Bank employee took the stand. Witness Mary Piki was asked whether the Central Bank had any surviving files on Antexol.

She said the Central Bank destroyed foreign transactions records every seven years, so it was “possible, or probable that this data does not exist”.

And although she had heard of Antexol in the media, she was not aware in her capacity as a bank employee that any investigation was carried out.

Records of the real owners of offshore company are kept only by the Central Bank.

http://www.cyprus-mail.com/news/main.php?id=30632&cat_id=1

on Sunday, December 10, 2006
By Elias Hazou

MILLIONS OF pounds in cash were jammed into plastic bags and then shipped from Yugoslavia to Cyprus in the 1990s, in contravention of a UN embargo, a former Serbian bank treasurer testified in court yesterday.

Dusan Colic, who worked as a treasury manager at Beogradska Banka, described in detail how, “under instructions from above,” millions of Deutschmarks (DEM) were siphoned away to the island.

With authorisation from Yugoslavia’s National Bank, the money was counted by treasury employees at Beogradska, arranged in packets and placed inside bags. The bags were then transported by car to the airport by Beogradska security personnel.

Each wad of cash typically consisted of 1,000 DEM, the bags containing anywhere from 300,000 to 500,000 DEM, although “sometimes there were millions inside”, Colic said.

“We realised that we were breaking the law, but we had instructions from the National Bank.

This practice was like a state secret, it was known only to certain circles.”

Because of the embargo, Colic said, wire transfers abroad were not allowed, so the only way would be to physically transport the cash.

“To my knowledge, all of the money going abroad at this time went to Cyprus,” he said.

The case concerns a claim by Predrag Djordjevic, a Serbian businessman based in Nicosia, against the Popular Bank of Cyprus (now known as Laiki Bank), for compensation and damages in a DM900,000 transaction that was never completed.

Djordjevic says he first heard of an offshore company called Antexol in 1994, after arranging to sell raw cotton worth DM900,000 purchased from a Russian company to a Serbian businessman.

The businessman had a licence issued on humanitarian grounds by the United Nations that allowed him to sell cotton for making medical products to a Serbian company while sanctions were being applied against Yugoslavia.

To facilitate payment, Djordjevic opened an account at Beogradska Banka in Nicosia in the name of Genemp, his trading company. But instead of receiving the full amount from Belgrade directly, Genemp was credited with DM537,000, which had been transferred from Antexol's account at Popular Bank.

Djordjevic is claiming the remaining DM360,000 plus damages from Popular Bank. He believes this amount was also credited to Antexol's account at Popular Bank but was used for other purposes.

The Popular Bank accepted Antexol made the DM537,000 payment, but claimed it had no knowledge of the DM900,000 transaction.

Antexol and several other Serbian-owned offshore companies were used for sanctions-busting by the government of Slobodan Milosevic, the former Yugoslav president.

Many of these were registered as “trading corporations” by the Tassos Papadopoulos law firm.

It is Djordjevic’s contention that his company was mistaken for one of these fronts, and inadvertently caught in the money-laundering web at the height of the Bosnian war.

Several billion dollars transferred illegally to the island by the government of Milosevic were deposited in the Cyprus Popular Bank.

The funds were used to buy weapons, equipment and fuel for the Milosevic regime to pursue wars in Bosnia and Kosovo, according to an investigation by the United Nations war crimes tribunal at the Hague.

In court yesterday, Colic was grilled by Kikis Tallarides, the chief lawyer for Laiki.

In his cross-examination, Tallarides tried to demonstrate that there was no way of establishing a solid connection between the bags of money, the Cyprus branch of Beogradska and the Popular Bank.

Moreover, citing a payment order for the transfer of the 900,000 DEM to Djordjevic’s account, Tallarides asked the witness whether the name of the recipient – in this case Genemp Trading – was written on the bag of cash.

The witness said he did not recall the specific transaction – which took place 12 years ago –but said the name of the recipient was not written on the bag. However, each bag was accompanied by a payment order.

Tallarides next asked whether a copy of the payment order was sent to Beogradska.

Colic replied that a copy was sent to the Popular Bank, because it “didn’t make sense to send this to Beogradska.”

“The bags were to be delivered to the Popular Bank. How exactly this was done I do not know.”

Tallarides then tried to cast doubt on the witness’ credibility, asking Colic who had paid for his travel expenses and accommodation in Cyprus.

“Mr Djordjevic, of course,” said Colic.

“And did he pay or offer you anything else in exchange for your testimony here today?” pursued Tallarides.

“No sir, he did not,” Colic replied.

Tallarides then proposed that the reason why the claimant, Djordjevic, did not receive all of his money might have been because the Yugoslav National Bank cancelled payment.

Although not a banker by profession, Colic said that payment cancellations are made for the whole amount concerned, not part of it.

Copyright © Cyprus Mail 2006

http://www.cyprus-mail.com/news/main.php?id=29468&cat_id=1
on Thursday, November 23, 2006
By Elias Hazou

A WITNESS in the Predrag Djordjevic trial yesterday told the court how he came up against a brick wall with authorities in Cyprus when trying to investigate the case.

Djordjevic, a Serbian businessman, is suing Laiki Bank and a now-defunct offshore company called Antexol for illegally holding his money in an account, as a result of which he was unable to access the funds, missing out a number of contracts.

The money was supposed to be transferred to Beogradska Banka in Cyprus. After a long legal wrangle with Beogradska, Djordjevic found his money had been moved into an account with Laiki. A company he had never heard of, Antexol Trade Ltd, controlled the account.

This was in 1994, at the height of the Bosnian war, when Yugoslavia was subject to a strict UN embargo. Antexol was one of eight offshore ventures tagged as “Milosevic companies” by the Hague Tribunal as part of a money-laundering network. Most of them had opened accounts with Laiki.

Antexol was incorporated in 1992 by the Tassos Papadopoulos law firm as the nominees. But since it was an offshore company, its real owners or beneficiaries could not be Cypriots. The beneficiaries were named as Yugoslav nationals Ljljana Radenkovic and Radmila Budicin.

But neither Radenkovic nor Budicin had ever heard of Antexol, and had no idea their names were being used to front an offshore company in Cyprus.

They only found out years later, after both their names appeared on a blacklist issued by the Office of Foreign Assets Control (OFAC) of the US Treasury.

The two women subsequently managed to clear their names.

In trying to get to the bottom of the affair, they had hired Cypriot lawyer Pavlos Angelides.

Testifying in court yesterday, Angelides said that his clients, Radenkovic and Budicin, complained that the Tassos Papadopoulos law firm was calling the shots, conducting Antexol’s business without their consent.
But when Angelides tried to secure documents relating to Antexol from the Tassos Papadopoulos law firm, he was brushed off.

“Pambos Ioannides [a partner with the Tassos Papadopoulos law firm] spoke to me very condescendingly… he almost insulted me,” Angelides said.

Next, the witness said, he contacted Laiki for some information, but the bank “sabotaged me all the way”.
According to Angelides, one senior bank official told him: “Do you really want to get into this?”
Angelides was then cross-examined by Laiki’s lawyer Kikis Tallarides.

Tallarides attempted to question the witness’ credibility, putting it to Angelides that by 2002 – when he began investigating – neither Radenkovic nor Budicin were any longer the owners of Antexol.

He also suggested that Angelides’ evidence was flimsy, telling the witness that he had never actually seen his clients in person, only talked to them over the phone.

Angelides admitted he did not see Radenkovic or Budicin, only talked to them.

“Yet you still decided to represent them in Cyprus, only to later drop the case?” challenged Tallarides.
The witness said he did abandon the case, but only because he was getting nowhere. The Registrar of Companies could not give him the names of Antexol’s real owners, only of the nominees – the directors of the Tassos Papadopoulos law firm.

Records of the real owners of offshore company are kept only by the Central Bank. But when Angelides turned to the Central Bank for help, he was told the information could not be disclosed at the time because all Antexol files were being held by the police, who were investigating the company.

“If you want to hear the truth, sir, the Central Bank tried to cover it all up,” Angelides said, addressing Tallarides.

Other witnesses on the day were Nairy Merhej, one of the directors of Antexol in 1994 and a member of the Tassos Papadopoulos law office, and Elena Mouskou of Costouris & Michaelides auditors (now PriceWaterHouse Coopers).

Questioned by the plaintiff’s lawyer Christos Clerides, Merhej identified her signature on Antexol’s act of incorporation, co-signed by Pambos Ioannides.

But she could not specifically recall the company.

“Our law office set up hundreds of companies… and this was a long time ago,” said Merhej.
Antexol was struck off the Registrar of Companies in August 2003, even though this is prohibited when a company is involved in litigation.

Clerides also summoned Elena Mouskou, who worked for Costouris & Michaelides, auditors of Antexol at the critical time.

Mouskou was not sure that she “made the books” for Antexol, nor did she remember who the shareholders were.

Also, she had never heard of Djordjevic or his company, Genemp Trading Ltd.
Lastly, a former assistant manager of Laiki’s Larnaca branch Andreas Iacocou took the stand. The witness was not sworn in, as he was subpoenaed with a special summons known as duces decum – requiring him simply to produce a document in court.

The document was a sworn testimony by Iacovou to the International Criminal Tribunal, where he admitted to meeting at Larnaca airport with Yugoslav couriers bringing suitcases packed with cash.

Tallarides objected, arguing the testimony was irrelevant because it dated to a period other than that in question.

That prompted a tirade from Clerides, who said that Antexol was inextricably linked to the whole money-laundering scheme perpetrated by the Milosevic regime in the 1990s.

Judge Nikos Sandis admitted Iacovou’s testimony, and the witness was excused.
The trial resumes on December 4.

Copyright © Cyprus Mail 2006