FATF Public Statement

The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In order to protect the international financial system from ML/FT risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.

Jurisdictions subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/TF) risks emanating from the jurisdictions*.

Iran

Democratic People's Republic of Korea (DPRK)

Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies** The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction, as described below.

Bolivia
Cuba**
Ethiopia
Kenya
Myanmar
Sri Lanka
Syria
Turkey


* The FATF has previously issued public statements calling for counter-measures on Iran and DPRK. Those statements are updated below.
**Cuba has not engaged with the FATF in the process.


Iran

The FATF remains concerned by Iran’s failure to meaningfully address the on-going and substantial deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime. The FATF remains particularly concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system. The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements.

The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. If Iran fails to take concrete steps to improve its AML/CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in October 2011.

Cuba

Cuba has not committed to the AML/CFT international standards, nor has it constructively engaged with the FATF. The FATF has identified Cuba as having strategic AML/CFT deficiencies that pose a risk to the international financial system. The FATF urges Cuba to develop an AML/CFT regime in line with international standards, and is ready to work with the Cuban authorities to this end.

Bolivia

Despite Bolivia’s high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies, Bolivia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Bolivia should work on addressing these deficiencies including by: (1) ensuring adequate criminalisation of money laundering (Recommendation 1); (2) adequately criminalising terrorist financing (Special Recommendation II); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); and (4) establishing a fully operational and effective Financial Intelligence Unit (Recommendation 26). The FATF encourages Bolivia to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Ethiopia

Despite Ethiopia’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Ethiopia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Ethiopia should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing an adequate legal framework and procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Ethiopia to address its remaining deficiencies and continue the process of implementing its action plan.

Kenya

Despite Kenya’s high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies, Kenya has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Kenya should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Kenya to address its remaining deficiencies and continue the process of implementing its action plan, including by implementing the AML legislation and operationalising the new AML Advisory Board.

Myanmar

Myanmar has taken steps towards improving its AML/CFT regime, including by clarifying the scope of the ML offence. Despite Myanmar’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Myanmar has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Myanmar should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) further strengthening the extradition framework in relation to terrorist financing (Recommendation 35 and Special Recommendation I); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (5) enhancing financial transparency (Recommendation 4); and (6) strengthening customer due diligence measures (Recommendation 5). The FATF encourages Myanmar to address its remaining deficiencies and continue the process of implementing its action plan.

Sri Lanka

Despite Sri Lanka’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Sri Lanka has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Sri Lanka should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); and (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III). The FATF encourages Sri Lanka to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Syria

Syria has taken steps towards improving its AML/CFT regime, including by improving the ML and TF offences. Despite Syria’s high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Syria has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain Syria should work on addressing its deficiencies, including by: (1) adopting adequate measures to implement and enforce the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I); (2) implementing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); (3) ensuring financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); and (4) ensuring appropriate laws and procedures are in place to provide mutual legal assistance (Recommendations 36-38, Special Recommendation V). The FATF encourages Syria to address its remaining deficiencies and continue the process of implementing its action plan.

Turkey

Turkey has taken steps towards improving its AML/CFT regime, including by working on CFT legislation. Despite Turkey’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Turkey has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Turkey should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); and (2) implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III). The FATF encourages Turkey to address its remaining deficiencies and continue the process of implementing its action plan.

Source: FATF

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

Turkey property 'scam' man faces court hearing

An NI man alleged to be involved in a multi-million pound property scam in Turkey is to appear in court later this month charged with 171 fraud offences.

Kevin O'Kane, 51, who is originally from Bellaghy and now lives in Portglenone, is accused of obtaining money and property by deception.

About 80 people from NI are believed to have paid £75,000 each for three bedroom properties near Bodrum.

Mr O'Kane has consistently claimed he is himself the victim of a scam.

His solicitor has said he will be denying the charges.

He faces one court of money laundering, three of forgery and 167 of obtaining money or property by deception.

The charges date from between 2005 and 2007.

It is alleged that he falsely represented himself as the landowner, builder and developer of the Golden Beach Villas and claimed that he had the authority to sell them.

His solicitor, Hugh Leslie of John J Rice and Company, said his client had fully co-operated with investigating police.

"He has given full explanations as to his business activities in Turkey.

"He makes the point that he has lost financially as a result of his involvement in those activities and that the people who are responsible for the loss of money involving so many investors in Northern Ireland are still in Turkey.

"He says he acted in good faith."

He added that Mr O'Kane believed there was a risk to his personal safety in Turkey.

"He is anxious to clear his name and he will be pleading not guilty at his eventual trial."

It is believed that at the court hearing on 27 August, the Public Prosecution Service will apply to have Mr O'Kane returned for trial by a jury.

Source: BBC

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

Cyprus’ anti-terror infrastructure ‘weak’ says US

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

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

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

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

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

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

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

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

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

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

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

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

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

By George Psyllides Published on August 7, 2010

Source: Cyprus Mail

Saudi Arabia: Cabinet looks at money laundering

Monday’s Cabinet meeting, chaired by King Abdullah, Custodian of the Two Holy Mosques, resulted in approval for measures to address issues concerning money laundering and terrorism funding as well as housing.


The King briefed the session, held at Al-Yamama Palace in the capital, on the most significant communications of the past week, including the visits to the Kingdom of the President of Egypt, Hosni Mubarak, Palestinian President Mahmoud Abbas and the President of Sudan, Omar Hassan Al-Bashir.
King Abdullah also briefed the Cabinet on communications he received from the President of Yemen, Ali Abdullah Saleh, and his reception of Turkish Foreign Minister Ahmed Dawoud Awghlou and the Second Vice President of Afghanistan, Abdul Karim Khalili.

Minister of Culture and Information Abdul Aziz Khoja released a statement to the Saudi Press Agency (SPA) saying that the meeting looked at reports on developments in the Arab and Islamic world as well as wider international affairs and discussed the Kingdom’s economy following the recent announcement of the national budget.

Cabinet approval was given to authorize Prince Naif, Second Deputy Prime Minister and Minister of Interior, to sign with foreign authorities a memorandum of understanding on collaboration in investigation into money laundering and the financing of terrorism.

Measures were also approved following a study on providing land grants to Saudi nationals to facilitate the acquisition of homes. The measures included joining the Ministry of Municipal and Rural Affairs program to the Iskan housing program to guarantee citizens housing, the provision of land to the Housing Commission to build homes for nationals in conformity with regulations and government-planned zones, provide all services stipulated for by the budget, and help beneficiaries of housing projects integrate with the rest of society by ensuring that projects are evenly distributed across cities. Cabinet approval was further given for the proposed Board of Directors at the Balad Al-Ameen Construction Development Company for the period of three years and its members from government, private and other sectors.

Similar approval was given for the restructuring of the Board of Directors of the Jeddah Development and Construction Company.

Source: The Saudi Gazette

Ghana fingered in Australia massive identity fraud

Ghana has been named as one of the countries whose citizens are stealing the identities of Australians.

News out in the Australian media say the theft which is in a large scale involves spies, drug dealers, illegal immigrants and people engaged in money laundering.

The report say passport details of five people emailed to a travel agent for travel for people from Ghana has been found.

One report by the Herald Sun citing documents from the country’s Department of Foreign Affairs and trade says the illegal practice of forging passports of living Australians is widespread.

According to the report, a fake or doctored Australian passport has been found, on average, once a week in the past three years.

Fake passports were detected at ports in countries including Britain, Dubai, Ghana, Thailand, Hong Kong, Indonesia, Malaysia, Egypt, Turkey, and Peru, the report indicated.

According to the report, some of the passports were in the hands of spies, smugglers and thieves.

Australian passports were used in 525 frauds in the last financial year, and many people were caught lying to get a passport, it said.

Source: Citifmonline

Turkey-UK: Gambling Web site linked to money laundering

An investigation into an England-based Web site, whose owners work from within Turkey targeting Turkish gamblers, has revealed that 600,000 Turks have lost money on the Web site, which has laundered the money to several Swiss bank accounts.

The Web site, superbahis.com, has a YTL 20 membership fee. Computers with the Web site's member database were seized by police from a building that is home to "Shopping TV."
Once the Financial Crimes Investigation Board (MASAK) noticed that the Web site launders money from Turkey through online betting via an England-based Web site, the office of the chief public prosecution in İstanbul took action. An operation was begun on May 27, 2008 by İstanbul police in İstanbul, Ankara, İzmir, Mersin and Trabzon simultaneously. Thirty-nine people, two of them women, were taken into custody. Among the detainees are Aydın A. and his brother, Turgay A., owners of superbahis.com and "Shopping TV." The police have reportedly confiscated 70 computers, seven hard drives, 1,115 DVDs and CDs, 33 memory sticks, 134 credit cards and many documents found in the course of a search of the detainees' houses and workplaces. The police also confiscated one kilogram of gold, TRY 368,800, $10,371 and 4,550 euros.

Eleven of the suspects were released following interrogation while 28 suspects were transferred to the İstanbul Court of Justice and stand accused of establishing a criminal organization, being intermediaries in betting and gambling, and laundering money.

The suspects allegedly illegally collected TRY 7 million. A report drafted by MASAK claims the money acquired through gambling was first transferred to England and then to the suspects' bank accounts in Switzerland or to "Shopping TV" in payment for its services in an attempt to launder the money. MASAK is continuing to account for all the funds.

In connection with this case is that of Barış Kum, who had had reportedly won up to TRY 2,750,000 through online gambling on superbahis.com with money he collected from family and friends. He allegedly committed suicide on Nov. 6, 2006 after losing all his earnings. His family has sued the Web site over his death.

Source: Zaman

Turkey Seeks to Tighten Legislation Aagainst Money Laundering

By Gareth Jenkins

Friday, September 26, 2008

On September 16 a directive by the Turkish Ministry of Finance to try to tighten Turkish anti-money-laundering legislation was published in the country’s Official Gazette.

“The Directive on the Harmonization Program Regarding Responsibilities Related to the Prevention of the Laundering of Criminal Proceeds and the Financing of Terrorism” requires all financial institutions in the country—such as banks, brokerage houses, and insurance and pension companies—to improve the monitoring of financial transactions through the adoption of standardized procedures and an increase in staff training. The directive also obliges the institutions to establish specialized departments to ensure that the appropriate procedures are being followed (Official Gazette, No. 26999, September 16).

The directive is the latest in a flurry of legislative amendments passed by the Turkish authorities in the run-up to an assessment in February 2009 of Turkey’s anti-money-laundering efforts by the Financial Action Task Force (FATF) of the Organization for Economic Cooperation and Development (OECD). A previous assessment by the FATF in February 2007 listed numerous shortcomings in Turkish legislation and its implementation. They included the lack of a precise definition in Turkish law of the crime of money laundering; inadequate fulfillment of Turkey’s obligations under the 1999 International Convention on the Suppression of the Financing of Terrorism, particularly with regard to non-indigenous groups; the low level of notifications of suspicious transactions; and poor implementation of anti-money laundering-legislation by the Turkish court system (Dunya, July 7).

The Turkish authorities subsequently passed measures to tighten the legal definition of the financing of terrorism (Official Gazette, No. 26693, November 7, 2007), improve coordination between state authorities against money laundering (Official Gazette, No. 26730, December 12, 2007), and increase the measures that should be taken to combat it (Official Gazette, No. 26751, January 9). Serious doubts remain, however, about how effective these changes will be in practice.

The Financial Crimes Investigation Board (MASAK), whose primary purpose is to combat money laundering, was first established in the Turkish Ministry of Finance in 1997. Its legal status and responsibilities were overhauled in 2006 (Law No. 5549 on the Prevention of the Laundering of Criminal Proceeds, published in the Official Gazette, No. 26323, October 18, 2006). In addition to its activities inside the country, it is faced with an additional problem: Turkey’s position on one of the main heroin trafficking routes into Europe has ensured that members of the Turkish underworld have been able to amass considerable fortunes, much of which has been ploughed back into the Turkish economy. Yet, in the 11 years since MASAK was founded, nobody has served time in jail in Turkey for money laundering.

According to MASAK’s own figures, from February 17, 1997, until December 31, 2007 (the latest period for which official data are available), a total of 231 money-laundering cases were filed with the Turkish courts, of which 170 were still continuing as of December 31, 2007. Of the 61 cases that had been concluded in the court of first instance, 51 resulted in acquittal and 10 in convictions. The court granted the right of appeal in 54 of the 61 cases. Of these 54 cases, 46 were still continuing. Of the other eight, the appeal courts ruled for an acquittal in seven and a retrial in one (MASAK Annual Report 2007, www.masak.gov.tr)

There is no reason to doubt the Turkish authorities’ determination to combat indigenous terrorist organizations such as the Kurdistan Workers’ Party (PKK), nor Prime Minister Recep Tayyip Erdogan’s personal antipathy toward organized crime groups such as those involved in narcotics trafficking; but, while there is no evidence to suggest that leading members of the ruling Justice and Development Party (AKP) have knowingly concealed illegal financial transfers, there have recently been disturbing signs of a lack of political will by some members of the government to subject those with whom they are personally acquainted, or whom they believe share their ideological affiliations, to legal scrutiny.

On September 17 in a court in Frankfurt, Germany, three members of the Deniz Feneri e.V. charity, which collected donations from Muslims in Europe, were convicted of embezzling 41.3 million euros (approximately $58 million) (see EDM, September 11). The convicted men confessed to having transferred a large share of the money to Turkey, where it was invested in businesses (Milliyet, Radikal, Hurriyet, NTV, September 18). The three convicted men, Deniz Feneri e.V., and the businesses in Turkey in which the embezzled funds were invested were all close to the AKP. Yet, not only was the AKP reluctant to launch an investigation into what had happened to the money after it arrived in Turkey, but when non-AKP Turkish newspapers published details of the verdict, together with documents apparently implicating AKP-appointed members of the bureaucracy, Erdogan instructed AKP supporters: “Don’t allow these newspapers into your homes” (NTV, CNNTurk, Milliyet, Radikal, Hurriyet, September 19).

The AKP’s apparent reluctance to subject its own supporters and acquaintances to judicial scrutiny came less than a month after former AKP Foreign Minister and now President Abdullah Gul formally pardoned 82-year-old Necmettin Erbakan, the doyen of the Turkish Islamist movement and under whose wings both Erdogan and Gul himself had begun their political careers. Erbakan had been convicted of embezzling treasury aid while head of the Islamist Welfare Party (RP). The original indictment also named Gul as a co-defendant, although his parliamentary immunity meant that he could never be tried (Radikal, August 20). Gul defended his decision on the grounds of Erbakan’s age, but he has not extended this courtesy to other elderly convicted criminals.

As a result, in addition to doubts about how effective Turkey’s new anti-money laundering-measures will prove in practice, there are also now questions about how evenly they will be applied. There is no reason to suppose that Deniz Feneri e.V. was involved in the financing of terrorism, but other organizations masquerading as Islamic charities undoubtedly are; including some that are active in Turkey.

Source: Eurasia Daily Monitor

Bulgarian Football Club Owner Charged with Money Laundering, Human Trafficking

Prosecutors indicted Monday the owner of Bulgaria's football club Spartak - Varna, Ivan Slavkov, for money laundering and human trafficking.

Slavkov, who is a councilor from the Turkish Ethnic Party in the municipal council in the seaside city of Varna, was also charged with drugs possession and incitement to prostitution.

The announcement was made by the defendant's lawyer Branimir Balachev in an interview for Darik Radio.

"Slavkov is in poor health condition but doctors declared he could be on life support while in custody," Balachev explained.

The municipal councilor will be put behind bars for 72 hours immediately after being discharged from the hospital he is currently taken to.

Source: Novinite

Cyprus: Money laundering law to EU standards

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

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

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

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

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

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

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

US generally pleased with terrorism co-operation from Cyprus

CYPRUS' legal framework for investigating and prosecuting terrorist-related activity remains relatively weak, the US said in its 2007 report on terrorism.

It also said the large volume of container traffic moving through Cypriot ports in the government-controlled area made Cyprus “an attractive and convenient venue for terrorist organisations seeking transshipment points for weapons and other items of concern”.

“While Cypriot agencies responsible for non-proliferation assess only a small risk of illicit materials moving through transit cargo, the United States continued to push for increased maritime co-operation,” said the report.

Three years ago, Cyprus was the first EU member state to sign a ship boarding agreement with Washington, which provides the US with the authority to board sea vessels suspected of carrying illicit shipments of weapons of mass destruction, their delivery systems, or related materials.

In addition, during 2007 the US embassy in Cyprus organised and executed training programmes to assist Cyprus to create a stronger export control regime and to pursue more proactive non-proliferation enforcement.

On terrorist financing, the report said the two countries co-operated closely. It said the Cypriot Anti-Money Laundering Authority (MOKAS) implemented new decisions immediately and informally tracked names listed under US Executive Orders.

“Cyprus was responsive to international efforts to block and freeze terrorist assets, implemented the Financial Action Task Force’s (FATF) recommendations, and conformed to EU counterterrorism directives,” the report said, but added: “Cyprus' legal framework for investigating and prosecuting terrorist-related activity remained relatively weak.”

As far as other support to the US in 2007, Cyprus continued to allow blanket overflight and landing rights to US military aircraft supporting operations in Iraq and Afghanistan, the report said.

It also referred to the presence of the Kurdish PKK group on both sides of the island. The US considers the PKK to be a terrorist organisation.

“The KGK/PKK has a presence in Cyprus, although its activities generally were limited to fundraising and transit en route to third countries; authorities believed there was little risk the group would conduct operations there,” said the report.

“Cyprus maintained that it was fulfilling all responsibilities with respect to the EU designation of the KGK/PKK as a terrorist organisation.”

In reference to the north, the US report said issues of status and recognition inevitably restricted the ability of authorities there to co-operate on counterterrorism.

“Turkish Cypriots cannot sign treaties, UN conventions, or other international agreements, for example. Moreover, the Turkish Cypriot-administered area lacked the legal and institutional framework necessary to meet minimum standards on combating money laundering and terrorist financing effectively,” the report said.

It said the Turkish Cypriot community's financial sector was vulnerable to abuse by criminals and terrorists but that within the limitations, Turkish Cypriots co-operated in pursuing specific counterterrorism objectives.

Copyright © Cyprus Mail 2008

Finance Ministry follows trail of PKK finances to Scandinavia

The Finance Ministry is stepping up efforts to prevent the financing of terror activities and the laundering of criminal revenue, working to map the course of Kurdistan Workers’ Party (PKK) financing in Scandinavian countries.

In recent days, the Finance Ministry’s Financial Crimes Investigation Board (MASAK) and Revenues Administration (GİB) have stepped up their efforts to map the financial traffic of the outlawed PKK. MASAK officials say that efforts to expand intelligence on PKK financing in Scandinavian countries such as Switzerland, Norway, Finland and Denmark picked up speed with meetings toward the end of 2009. In 2010, Turkish authorities are aiming to reach an agreement with these nations that will bring an end to money laundering and fundraising for the terrorist group in these nations.

The Scandinavian nations are a focal point of many PKK financial activities, MASAK says, and during the year Turkey aims to gather detailed information on the money trail through these countries. Two years ago, a mutual memorandum was signed between MASAK and Swiss Confederation authorities aiming to prevent money laundering and the financing of terrorism. Within the framework of that memorandum, an agreement on double taxation between Norway and Turkey was revised last week. The agreement aims to prevent tax loss and fraud in mutual commercial relations by enabling the exchange of information between institutions to that end.

The Finance Ministry is also planning changes to the Bylaws on Precautions to Prevent Money Laundering and Financing of Terrorism. The changes drafted by the ministry include changes to the information required when performing electronic money transfers, eliminating the different requirements for domestic and international electronic transfers. In addition to the current requirement that the sender of money provide a Turkish Republic identification number, passport number and tax identification number, to bring this up to the international standard, an address or date and place of birth will also be required.

Source: Today's Zaman

TURKEY: MASAK plan to step up anti-terror measures at financial firms

The Finance Ministry's Financial Crimes Investigation Board (MASAK) will soon require banks and other financial institutions to implement programs meant to prevent the financing of terror activities and the laundering of criminal revenues.

The Postal and Telecommunications General Directorate (PTT), brokerage firms, banks, insurance companies and retirement funds will prepare so-called harmonization programs for internal auditing, risk management monitoring and inspection activities within the scope of combating the finance of terror and money laundering.

According to the Anatolia news agency, the directive prepared by MASAK was given its final shape last week. It was prepared in consultation with the Association of Banks, the Banking Regulation and Supervision Agency (BDDK), the Capital Markets Board (SPK), the Treasury, the Turkish Union of Participation Banks, the Capital Markets Brokerage Institutions Union, the Insurance and Reassurance Corporations Union, PTT and the Central Bank of Turkey, and will reportedly be sent to the prime minister for approval in a week.

The harmonization program will be developed by each firm based on a risk-oriented approach to preventing the funding of terrorism and laundering of criminal revenues. It will include creation of corporate policy and procedures, execution of risk management activities, carrying out monitoring and control activities, appointment of relevant staff for harmonization, creation of a harmonization unit and implementation of training and auditing activities.

Within the harmonization program, firms will devise a corporate policy to reduce risk by considering the size of their enterprises, internal volumes and the characteristics of the transactions that they carry out in an attempt to adapt procedures to a focus on prevention of terror funding and laundering of criminal revenues.

Companies will draw up a risk description based on their customers, service type and country risks and rate their customers, services and transactions based on these risks.

The risk management units will monitor high-risk customers, transactions or services and subsequently submit reports on a regular basis to inform the relevant units of their risk assessment. They will also intervene in customers' transactions assessed as presenting high risk when necessary and report the results to the executive board on a regular basis.

The firms will also appoint personnel to ensure the proper execution of the harmonization program.

Under an interim provision in the directive, the companies must appoint a harmonization authority within 30 days after the directive goes into effect. The firms then must develop their harmonization programs within three months following the appointment of this person.

Source: ZAMAN

US: Changes Demanded in terrorist Financing Laws

Friday, 04 January 2008
by William Fisher

The government’s spotty record in obtaining convictions of people charged with providing “material support” to terrorist organizations is adding new impetus to the efforts of prominent constitutional lawyers to seek substantial changes in the law.

The latest failure in a terrorism-financing prosecution came late in 2007, when a Texas jury failed to render any guilty verdicts in the trial of the Holy Land Foundation (HLF) – once the largest and most prominent charity dedicated to supporting Palestinian and other Muslim causes. Several HLF officials were charged with giving money to Hamas, the militant Palestinian organization designated a terrorist group by the U.S. in 1995. The trial ended with a mix of acquittals and deadlocks.

The Federal Bureau of Investigation started looking into HLF in 1993. In December 2001, the U.S. Treasury Department (DOT) seized and confiscated the charity’s assets and records, effectively putting the organization out of business. Given that outcome, some legal scholars have questioned why the government pursued a criminal prosecution at all. The trial did not begin until mid-2007.

William Neal, a juror in the HLF case, told the media that the government’s evidence “was pieced together over the course of a decade — a phone call this year, a message another year.” Instead of trying to prove that the defendants knew they were supporting terrorists, Mr. Neal said, prosecutors “danced around the wire transfers by showing us videos of little kids in bomb belts and people singing about Hamas, things that didn’t directly relate to the case.”

Civil liberties groups say the HLF case was just the latest in a line of misguided prosecutions. One such group, OMB Watch, charges that the USA Patriot Act gives the government “largely unchecked power to designate any group as a terrorist organization.” It says that “once a charitable organization is so designated, all of its materials and property may be seized and its assets frozen. The charity is unable to see the government’s evidence and thus understand the basis for the charges. Since its assets are frozen, it lacks resources to mount a defense. And it has only limited right of appeal to the courts. So the government can target a charity, seize its assets, shut it down, obtain indictments against its leaders, but then delay a trial almost indefinitely.”

One result, say critics of the government’s policy, is that Muslim charities have experienced a precipitous decline in contributions. Contributions that do arrive often come in cash from anonymous givers. And donors who happen to be Muslim are increasingly turning to the large household names like Oxfam and Save the Children, which may conduct programs in predominantly Muslim areas abroad.

One of America’s foremost constitutional scholars, Prof. David Cole of the Georgetown University Law Center, argues that the “material support principle is ‘guilt by association’ in 21st-century garb, and presents all of the same problems that criminalizing membership and association did during the Cold War.” He told us that the problem requires fundamental changes in the terrorism-financing law.

Included in Cole’s recommendations for major changes:

1. The Treasury Department should be required to permit closed charities to direct their collected funds to charities mutually approved by the frozen charity and the government.

2. Congress should enact a statutory definition of a "specially designated terrorist." “Right now the Treasury Department makes such designations entirely on the basis of an Executive Order, and accordingly Congress has given the President essentially a blank check,” Cole told us.

3. Treasury should allow designated entities to use their own funds to pay for their own defense. “Treasury not only shuts down charities in a secretive one-sided process, but then bars the charities from using any of their own money to defend themselves against the designation,” according to Cole.

4. The criminal material support statutes should be amended to require proof that an individual supported a proscribed group with the intent to further its illegal activities. “Today,” according to the government, “even aid intended to discourage terrorist activities is a crime under the material support laws,” Cole says.

He adds, “There is no requirement that the aid have any connection to terrorism,” and cites a case he is handling with the Humanitarian Law Project (HLP) at the Center for Constitutional Rights (CCR).

He told us, “My clients had been providing human rights advocacy training to the PKK in Turkey, as a way of encouraging them to use peaceful lawful means to resolve their disputes with the Turkish government over its treatment of the Kurdish minority. By encouraging lawful outlets for dispute resolution, such aid would presumably discourage terrorism. Yet under the material support statute it is a crime even if HLP could prove that both the purpose and the effect of their support was to decrease the PKK's resort to violence.”

OMB Watch says the “material support” effort has resulted in the government shutting down charities that were not on any government watch list before their assets were frozen.

The organization says the result is that Muslims have no way of knowing which groups the government suspects of ties to terrorism. “Organizations and individuals suspected of supporting terrorism are guilty until proven innocent,” it says.

OMB Watch told us, “A group could comply 100% and still be shut down ‘pending an investigation’."

Material-support cases are just a small fraction of the Justice Department’s terrorism prosecutions, but some observers believe they represent a shift in government strategy from punishment to prevention. Earlier prosecutions were for acts of violence that actually took place. Examples include the first World Trade Center attack, the 1998 bombings of American embassies in Africa, and conspiracies that were relatively close to fruition.

Nonetheless, government terror-financing prosecutions have been reasonably successful. From the Sept. 11 attacks to last July, the government started 108 material-support prosecutions and completed 62. Juries convicted nine defendants, 30 defendants pleaded guilty, and 11 pleaded guilty to other charges. There were eight acquittals and four dismissals.

In terrorism prosecutions involving a violent act actually committed or near fruition, the government’s record is spottier. According to the Center on Law and Security at the New York University School of Law, the government has a 29 percent conviction rate in terrorism prosecutions overall, compared with 92 percent for felonies generally.

The latest government setback involves the so-called Liberty City Seven – seven men named for the blighted Miami district where they allegedly operated. Charged with plotting to join forces with al-Qaeda to blow up Chicago's Sears Tower, one was acquitted last month and a mistrial was declared for the six others after the federal jury deadlocked.

Prosecutors acknowledged that no attack was imminent, and then-Attorney General Alberto Gonzales said after the arrests in mid-2006 that the alleged terror cell was ''more aspirational than operational.''

In some cases, defendants are arguably convicted of terror-related offenses in the court of public opinion rather than in the courts. One example often cited by lawyers is the case of Dr. Rafil Dhafir, an Iraqi-born American citizen, who organized and raised money for a charity providing humanitarian relief to children in Iraq. He was never charged in court with a terrorist-related offense; the word “terrorism” was not allowed to be used in his trial, although prominent politicians such as then-New York Governor George Pataki hailed his arrest as a victory in the war on terror.

The upstate New York oncologist was sentenced to 22 years in jail in 2005 for 59 felony charges, including violating U.S. sanctions against Iraq.

http://www.atlanticfreepress.com/content/view/3179/32/

US State Department: Azerbaijan has done significant work toward combating terrorism

APA- It has closed organizations that were suspected of supporting terrorist groups and arrested at least 39 persons from three separate terrorist-associated groups, on terrorism-related charges”, reads in the annual report of US State Department on the anti-terrorism activities in the world countries in 2007.

“Since August 2003, Azerbaijan has supported peacekeeping operations in Iraq with an infantry company of approximately 150 soldiers stationed at the Haditha Dam. A platoon of Azerbaijani soldiers has worked with the Turkish peacekeeping contingent in Afghanistan since November 2002”.

The State Department emphasized that while Azerbaijan has taken steps to combat terrorist financing and identify possible terrorist-related funding by distributing lists of suspected terrorist groups and individuals to local banks, comprehensive legislation to counter terrorist financing has not yet passed parliament. “In December 2006, an inter-ministerial experts group responsible for drafting anti-money laundering and counterterrorist finance legislation through the President’s office provided its most recent draft to the U.S. Department of Justice and the Council of Europe; the Department of Justice provided comments on the law and discussed it with Azerbaijani government officials. The government has not yet presented the draft law to parliament”. Successful operations conducted by the Azerbaijani law-enforcement bodies for combating terrorism have also been focused in the report.

“In February, Azerbaijani authorities arrested a group of 15 Azerbaijani citizens in Baku who called themselves the Northern Mahdi Army. The group was charged with having ties to Iran’s Islamic Revolutionary Guards Corps (IRGC). In October, the group went before a closed trial. According to the Azerbaijani Ministry of National Security, one of the group members had met an IRGC officer in Iran, and was offered money to fight against the United States, Israel and other Western countries.

During security sweeps in late October and early November, a group of twelve Azerbaijanis, reportedly led by an ethnic Arab named Abu Jafar, were arrested in Sumgayit, Azerbaijan on terrorism-related charges”.

“Separately, in November, 11 Azerbaijani citizens were arrested over a number of days in connection with a late October threat against the U.S. Embassy in Baku, which resulted in the embassy working at limited staffing for two days”, reads in the report.

http://www.amlosphere.com/asia/aml/us-state-department-azerbaijan-has-done-significant-work-toward-combating-terrorism.html

‘Turkey successful in its fight against money laundering'

Turkey's battle against money laundering has proven effective, said the Financial Action Task Force on Money Laundering (FATF) of the Organization for Economic Cooperation and Development (OECD) at a general assembly in Paris last month.

The Anatolia news agency reported that the FATF said Turkey was "moving in the right direction" in terms of implementing necessary regulations to combat money laundering and terrorism financing. In their previous report on Turkey released in 2007, the FATF said Turkey was still coming up short, having failed to meet most of the FATF's 49 recommendations, which together form a complete set of countermeasures against money laundering. The FATF said in 2007 that the judicial mechanism was not operating well in battling money laundering, noting that Turkey had failed to enact 33 out of the 49 recommendations. The country was granted a 22-month follow-up period during which it was to finalize the implementation of necessary regulations to this end.

In last month's meeting, the FATF said Turkey had reconciled its policies with at least 20 recommendations and granted the country another 12 months to fix the remaining shortcomings. Anatolia quoted a senior Turkish official at the meeting as saying that the FATF had reached a conclusion that Turkey was proceeding as expected in terms of the fight against money laundering and that is why they gave the country another 12 months.

"If the FATF had found Turkey inefficient in its efforts, then they would summon Turkey to another meeting within a few months to assess its latest position. However, there was no need for such thing; we are doing well and have one year to handle the remaining problems," the official noted.

The FATF also appreciated the efforts of the Turkish Republic of Northern Cyprus (KKTC) against money laundering, underlining that the KKTC had established effective countermeasures against dirty money and had revised the laws governing the operations of banks and gambling houses in the country. Thus the KKTC is no longer under close inspection.

Meanwhile, the "wealth amnesty" program that allowed Turkish expatriates to bring in money held outside the Turkish banking system without being subjected to questions concerning the source of the funds was also reportedly discussed at the FATF meeting, where some members asked whether it was possible that the application would facilitate money laundering. Turkish officials informed the FATF that although the Turkish government does not inspect the source of the funds, it would be impossible for illegally acquired funds, such as drug money or money earned from terrorism or illegal arms sales, to be laundered through the wealth amnesty program since it is still subject to tax law, which makes the program reliable.

An intergovernmental body developing and promoting policies, both at national and international levels, to combat money laundering and terrorist financing, the FATF was established in 1989. The institution currently has 34 members, and its evaluations are regarded with special importance by international bodies, including the United Nations.

Zource: TODAY'S ZAMAN

Turkish financial institutions to start monitoring clients' transactions

The new "complaince programme" regulation, stipulating banks, stock brokers, insurance and retirement companies, postal services to take a series of measures against laundering of criminal money and financing of terrorism, will take effect as of Monday.

Under the risk oriented complaince programme, the said companies are expected to create corporate policy and procedures that would guide and govern processes of risk management, monitoring, control, training, and internal auditing.

Risk management

With the risk management enforced by the programme companies have to develop methods to define, classify, and assess risks related with services, clients and countries. Under risk management: the clients and transactions will be classified, the ones carrying risk will be monitored and reported to related units. Periodic reports on risk monitoring and assessment will be provided to the Board of Governors.

Engaging in business with clients that are in a high risk category will require legal consent of the superiors along with a through inspection of the source of assets. Complicated and unusual transactions will be put on watch, and when transactions exceed a certain limit, client profile will be checked for relevance.

"Know your customer"

All related companies assigned compliance officers. Larger companies also assigned compliance officers and a group of personnel to work under them to meet the requirements.

Adnan Erturk, Head of the Financial Crimes Investigation Board (MASAK), told the Anatolia news agency that a new era, in fight against money laundering and financing of terrorism had begun noting that the motto of this era was "know your customer".

"The game rules in fight against money laundering and financing of terrorism are clearly defined now. We are setting up a mechanism to make clear distinctions between the east and the west. We are eradicating the uncertainties. But there is no need to worry for people who have nothing to do with crime or financing of terror. Regulations are in compliance with international law."

He said it would take three to five months for the system to take root, noting that they would later start auditing.

Source: THE ANATOLIA NEWS AGENCY

FBI: Charities used to launder money

They talked in code. Cash was "gemoras." Money-laundering contacts were "washing machines." They met in cars, on a Brooklyn street corner, inside a bakery, and in a synagogue.

Tens of thousands of dollars in cash was transported in plastic bags, in boxes of Apple Jacks and Cinnabon Crunch cereal, and even a box decorated with Power Rangers stickers.

The men the FBI arrested July 23 and charged with being part of a massive international money-laundering scheme were, for all intent and purpose, "crime bosses," acting U.S. Attorney Ralph J. Marra Jr. said.

But at least several of them were, in fact, religious leaders in the tight-knit Syrian Jewish communities of Deal and Brooklyn, N.Y. They stand accused of using Jewish charities they controlled to launder millions of dollars in cash.

Court papers indicate that five rabbis and several other men were laundering money for an FBI cooperating witness who told them he needed to hide profits of his counterfeit handbag company, which produced knock-off versions of Prada, Gucci and Canali bags, which the witness said were sold for hundreds of dollars.

Sources have identified the witness as Solomon Dwek, 36, of Ocean Township, a disgraced real estate mogul who was arrested in May 2006 and charged with bank fraud. Dwek is accused of cashing a bad check for $25.2 million at a drive-in lane at PNC Bank branch in Eatontown. The bank spotted him the money, most of which he moved to other accounts. The bank was left with a $21 million loss when the check bounced, according to the FBI.

Brad Simon, a former federal prosecutor and assistant U.S. Attorney for the Eastern District of New York, said he is surprised the government's case appears to rely so heavily on the testimony of one key witness with a checkered past.

"This guy, at least from a defense attorney's point of view, seems like a treasure trove for defense purposes," said Simon, who is now a criminal defense attorney who represents clients accused of white collar crimes. "I would love to have the opportunity to cross-examine this guy."

Speaking to Brooklyn Rabbis Lavel Schwartz and Mordchai Fish in his car parked on a borough street in September 2008, the FBI's witness told them that a $50,000 check he was giving them to launder was "from the profits from the bags and the PNC," according to criminal complaints.

Fish, 56, and Schwartz, 57, both have been charged with money laundering.

The witness first infiltrated the money-laundering network, and then, in July 2007, began representing himself as a developer and the owner of a tile business to public officials in Hudson County, according to U.S. Attorney Marra.

The witness was eventually introduced to a web of public officials, council and mayoral candidates, and their associates, who took bribes in return for pledging their assistance in getting the witness's projects approved, or in steering contracts to him, Marra said.

When speaking to the targets of the money-laundering operation, Dwek openly discussed his bankruptcy problems, as well as the fact that he was involved in illegal businesses and bank frauds, according to sources and court records.

Dwek told the targets that his ongoing bankruptcy proceedings meant he had to conceal cash and assets, and that some of the money he needed to launder came from his "bank schnookie deals," a reference to bank fraud.

Prosecutors said they have hundreds of hours of video and audio recordings documenting much of the money laundering and bribes.

Marra called the money-laundering case "unprecedented" in the "number and prominence of the individuals involved."

The rabbis and their associates continued working with the witness even though they sometimes expressed concern about the possibility of getting caught.

In March, the witness was driving Fish to a Brooklyn meeting with Levi Deutsch, an Israeli who supplied cash for Fish's money-laundering operations. When the witness mentioned cross streets to which they were headed, Fish became nervous, according to court records.

"Don't even say the street. . . . in this car," Fish said, according to the complaints. The witness reassured Fish that "there's nothing. I had (the car) swept. Don't worry about it," to which Fish replied, "swept, shmept."

Latest corruption probe

The arrests marked the third phase of the "Operation Bid Rig," investigation by the FBI, the IRS Criminal Investigation Division and the U.S. Attorney's Office that began in Monmouth and Ocean counties 10 years ago.

The initial investigation became public in 2002 with the guilty plea of Ocean Township Mayor Terrence Weldon, who admitted extorting cash from several developers to influence approval of projects.

Forty-eight public officials have been convicted since the Operation Bid Rig investigation started in 1999.

On Thursday, another 44 people, including three mayors, two assemblymen, a Lakewood housing inspector and five rabbis were charged as part of a two-pronged investigation into political corruption and money laundering. Local Assemblyman Daniel M. Van Pelt, R-Ocean, was arrested on a charge of accepting $10,000 in a bribe.
Israeli cash

To start the money laundering, Dwek handed over checks — often made out to charities run by the religious leaders — and said they were proceeds of his illegal activities, sources and court papers indicate.

Three of the rabbis had connections to cash sources in Israel, and for a fee, those men in Israel made money available through "cash houses" run out of Brooklyn homes, offices and a bakery, according to court documents.

The men who ran those cash houses obtained the money at the direction of the co-conspirators in Israel, then gave the funds to the rabbis in Deal and Brooklyn, according to court papers.

The religious leaders took their cut, generally 10 percent, then turned over the remainder to the FBI witness, according to court papers.

During one meeting in Brooklyn, Eliahu Ben Haim, 58, of Long Branch, the principal rabbi of Congregation Ohel Yaacob in Deal who is accused of laundering $1.5 million, spoke with the witness about his cash source in Israel.

Ben Haim said he talked to the man every day or every other day, and said in the past four years, the Israeli man had the rabbi send out wires, under different names, all over the world, from Australia to New Zealand to Uganda, according to the FBI's complaint.

"It's unbelievable. I never saw anything like it," Ben Haim said, according to court documents. "I mean every country imaginable. Turkey, you can't believe it. . . . All different names. It's never the same name. . . . Switzerland, everywhere, France, everywhere, Spain . . . China, Japan."

In another method, the witness would bring a check to two other rabbis, Saul Kassin, 87, and Edmond Nahum, 56, principal rabbi at the Synagogue of Deal, according to prosecutors. Kassin is the spiritual leader of 75,000 Syrian Jews in Brooklyn.

Prosecutors said the rabbis would write the witness checks from a charity bank account for a slightly smaller amount, payable to the entity of his choice.

The witness then cashed the Kassin checks through Ben Haim, authorities said.

Criminal complaints say Kassin laundered more than $200,000 and Nahum laundered about $185,000.

Lawyers for the two men said they are innocent.

Nahum's attorney, Justin P. Walder, said the rabbi looks forward to clearing his name at trial. The rabbi has headed the Deal synagogue for many years, is well-established in the community and is married with four children, he said.

Walder did not mention Dwek by name, but said his client had been taken advantage of by a man who had known the rabbi for a long time.

"We intend to establish that his goodness was utilized by a person who was seeking to be absolved for his immense wrongful conduct by implicating another," Walder said. "Obviously, this man, under the system that exists in the federal court, the way he can get the best deal for himself is to implicate another, and obviously he took advantage of the rabbi."

Source: APP.COM

EU: Bulgaria, Romania Still Too Corrupt

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