US lists Vancouver company a “significant transnational criminal organization”

By Christine Duhaime | September 22nd, 2016

Vancouver company listed as a criminal organization 

Allegations of global money laundering from Vancouver through the financial system

Today, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC“), designated Vancouver based PacNet and its connected companies, as a significant transnational criminal organization (“TCO“) for its role acting as an alleged money laundering service. It is the first time a Vancouver company has been designated by OFAC as a TCO.

According to OFAC, PacNet has a “lengthy history of money laundering” and payment processing from Vancouver and is alleged to have used the financial system to move money between several countries.

The OFAC notice covers 24 PacNet companies and 12 persons affiliated with PacNet. The notice blocks all transactions of the PacNet entities worldwide pursuant to US sanctions law, and prohibits US persons and companies from dealing with them.

According to the US Treasury, PacNet has been allegedly laundering the proceeds of crime as a payment processor for over 20 years. In 2002, PacNet was previously implicated in similar activity involving criminal money laundering in the US said the US Treasury.

The company apparently had its own tiny airline, PacNetAir, that US Treasury said was used to move bulk proceeds of crime across the EU. It also had its own IT lab called Deepcove Labs in Vancouver and an entity called the Payments Factory, located in the UK, Ireland and Vancouver.

The US Attorney General, Loretta Lynch, held a news conference to announce that the bank accounts of PacNet had been seized and that it was aware that PacNet processed payments for more than 100 mass mail fraud schemes.

 A designation reserved for the likes of Las Zetas and Camorra criminal gangs

US Treasury has only issued seven TCO notices of sanctions and this is the first Vancouver entity to be listed.

The notice is issued pursuant to Executive Order 13581. EO 13581 was issued when the President of the US declared a national emergency to deal with the unusual and extraordinary threat to national security, foreign policy, and economy of the US by the growing threat of significant TCOs when they reach such scope and gravity that they weaken democratic institutions, degrade the rule of law and undermine economic markets.

Its authority is the International Emergency Economic Powers Act (50 U.S.C. §§ 1701 et seq.) and the National Emergencies Act (50 U.S.C. §§ 1601 et seq.)

It is used to sanction the most serious criminal activity involving the most serious  international criminal organizations. It was used to designate the Camorra, Italy’s latest criminal gang, and Las Zetas, Mexico’s Gulf cartel. Other designations include MS-13, Yamaguchi gang and the Brother’s Circle gang.

Canadian banks - freezing order effective immediately

As a result of the designation, all property (money, securities, and other property) of the designated persons and entities in the U.S. or in the possession or control of a U.S. person, or U.S. company must be immediately frozen and cannot be dealt with in any way.

The sanction applies to a U.S. person, a U.S. incorporated company or entity, a U.S. based partnership, joint venture, trust, group or any organization (even if Canadian parented) and any foreign branches of any of those entities.

Banks, funds, brokers, trust companies and in particular, charge and credit card companies in the U.S. or situated elsewhere but with a U.S. parent or U.S. connection need to take extra precautions to confirm they are not holding funds belonging to persons or entities on the list.

The list of entities and persons blocked is here.

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