Co-founder of infrastructure fund allegedly under investigation for money laundering

By Christine Duhaime | February 25th, 2017

Kola Aluko, a Nigerian energy mogul, is allegedly under investigation for money laundering in Nigeria. Among other things, Aluko is one of the founders of Made in Africa (MiAF), a foundation for infrastructure projects across Africa which, in 2013, joined the African Development to launch the Africa50 Fund on NASDAQ, Africa’s largest infrastructure investment vehicle. It seems to have no projects to date.

Mr. Aluko was the subject of a mareava injunction freezing his assets worldwide. Those assets are listed as including 3 mansions in Los Angeles, 2 high-end apartments in New York City, properties in Santa Barbara, California; numerous properties in Lagos, including 43 apartments in Banana Island, 58 vehicles, the Galactica Star yacht, and three airplanes.

The New York Times reported last year how Aluko made extensive use of shell companies and beneficial ownership structures to move money around the world through tax havens.

Aluko is a politically exposed person and was subject to enhanced due diligence by banks, law firms, wealth management firms as to the source and legitimacy of any funds he transacted in respect of. Persons connected to him at the Africa50 Fund are also each politically exposed persons.

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RCMP charge man in Alberta for money laundering for acting as a finder

By Christine Duhaime | February 25th, 2017

The RCMP has arrested Neil Andrew McDonald in Alberta for money laundering and fraud in connection with finding $240,000 from 7 investors in 2015 in Alberta, in violation of securities law.

It is unusual for Canadian prosecutors outside of Quebec to attach a money laundering offence to a serious predicate offence, especially for securities fraud and this signals a change among Canadian prosecutors.

In this case, it appears that Mr. McDonald may have been acting as a “finder” – a term that describes an unlicensed person who “finds” investors to invest in deals. In some cases, a finder is able to act in finding investors provided they comply with securities legislation by, among other things, filing disclosure statements that they acted as a finder. The arrest of Mr. McDonald is the first one resulting from a joint investigation in Alberta of the Alberta Securities Commission, the RCMP and prosecution office.

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US extends GTOs for tracking money laundering in real estate

By Christine Duhaime | February 23rd, 2017

The US Treasury has announced that it is extending its Geographical Targeting Orders to identify purchasers of luxury real estate properties in six areas in the US. The GTOs require title insurance companies to identify the natural persons behind shell companies used to pay all cash for high-end residential real estate.

A Special Agent with the US Department of Homeland Security said: “We don’t come across [money laundering in real estate] once every 10 or 12 cases – we come across real estate being purchased with illicit funds once every other case.”

FinCEN reported that 30% of the transactions covered by the GTOs involve a person (natural or legal) that is the subject of a previous suspicious activity report for money laundering, and is consistent with the concerns of FinCEN that shell companies and beneficial structures are used to buy luxury real estate. The GTOs are important to understand financial crime being used for real estate. As a Miami area lawyer noted: “It’s not good for real estate or for business if illicit dollars are artificially inflating the market. And law enforcement doesn’t want real estate to be a safe haven for money laundering.”
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The waitress, the casino, the money laundering scam

By Christine Duhaime | February 16th, 2017

The CEO of Mohegan Tribal Gaming Authority has resigned following a review by the Pennsylvania Gaming Control Board that indicates the possibility of financial irregularities at the Mohegan Sun Pocono Casino. The irregularities stem from charges laid against three people, Robert Pellegrini, Mark Hetitzel and Rochelle Poszeluznyj, who conspired to scam the Casino out of $400,000 and launder the proceeds of crime.

Poszeluznyj, a champagne cocktail waitress, pleaded guilty to defrauding the Casino of $419,000 for over a year and could serve up to 20 years in jail. The plan was concocted from a love triangle involving Poszeluznyj with two different men. When her relationship with one of the men soured, he informed the police about her scam.

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Q & A on Extreme Vetting

By Christine Duhaime | February 12th, 2017

The Executive Orders issued by the US Government for immigration and subsequent statements by the administration indicate that the Department of Homeland Security is starting a process of “extreme vetting” of prospective immigrants, refugee claimants and non-immigrant visa applicants. From a terrorism perspective, here is a Q&A about “extreme vetting.”

What is “extreme vetting”?

Extreme vetting is not in place yet. In the weeks to come, what extreme vetting will involve is that when a person from those 7 countries, and any other situation that may be determined to be high risk, attends a US Embassy for an interview to visit or immigrate to the US, according to what we know so far, they will be required to provide:

  • A list of the websites they have visited;
  • A list of social media they are members of with their passwords for access;
  • A review of those people who the applicant follows, and who follows the applicant on all social media platforms, together with checking of those followers and followed persons against global security databases for risks and such;
  • The contact list on their cellular phone which will be vetted as against those lists maintained in the global security database;
  • The telephone numbers the applicant has called or received calls from, again which will be vetted as against global security databases; and
  • The same type of vetting for emails, as for telephone numbers.

Continue reading

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US President signs Financial Crime Executive Order to, among other things, bring foreigners to “Face Justice in the US”

By Christine Duhaime | February 11th, 2017

Come Face US Justice

On Thursday, the US President signed an executive order to protect the US from transnational criminal organizations and, inter alia, to tackle financial crimes.

The executive order is entitled “Enforcing Federal Law with Respect to Transnational Criminal Organizations and Preventing International Trafficking.” Its purpose is to dismantle international organized crime.

Thwarting Organized Crime for Certain Offences

Pursuant to the order, the new US government policy is to strengthen enforcement of the law to stop international criminal organizations and groups that undertake the following types of illegal activities:

  • financial crimes – the Order does not identify them but typically these include tax evasion, insider trading, terrorist financing, financial fraud, sanctions avoidance and illegal gambling;
  • concealing or transferring proceeds of crime (the money laundering offence);
  • IP theft;
  • corruption;
  • cybercrime; or
  • illegal smuggling of foreign nationals, wildlife, weapons or drugs.

Continue reading

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World Check being sued over database of personal information

By Christine Duhaime | February 4th, 2017

A number of persons and organizations are allegedly preparing to sue Thomson Reuters, the organization that runs World Check for wrongly listing them in a database as a financial crime risk. World Check created (apparently without informed consent at least under Canadian law), an online global database that purports to provide anti-money laundering, sanctions and counter-terrorist financing mitigation advice by selling, for a fee, the personal and other information of people.

According to news reports, World Check listed a nine-month-old baby as a politically exposed person even though the baby did not have a bank account, was not opening one anytime soon and lacked the legal capacity to access financial services in any event.

Continue reading

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The smuggling of rhinoceros horns to China

By Christine Duhaime | January 22nd, 2017

The prosecution of wildlife smuggling is rare and especially if it involves a Canadian. But last year, Xiao Ju Gian, was sentenced in New York for 30 months incarceration for smuggling rhinoceros horns, elephant ivory and coral from the US into Vancouver, from which he abused the Canadian financial system.

Xiao Guan lived in Richmond, British Columbia and operated an antiques store called Bao Antique Ltd., from which he imported and sold smuggled goods. He also claimed to have an import business in Hong Kong. Over a one year period, he bought and smuggled illegally acquired wildlife with a value of over $500,000 in Ohio and Florida and sold the goods in China, after transporting them illegally, first to Vancouver. In one case, he bought one rhinoceros horn from the US for $30,000 and sold it to a Chinese foreign national who flew from China to Vancouver to buy it for $42,000. The Chinese foreign national then smuggled the rhinoceros horn out of Canada.

Guan was part of a sting operation in New York that involved the sale of rhinoceros horns to him by an undercover agent for $45,000 in 2014. As part of the undercover deal, Mr. Guan, who also lived in China, instructed his wife, Tie Jun Jian, in Richmond, British Columbia, to wire a $1,000 to the undercover agent in New York for a deposit. For SWIFT purposes, the wire transfer was noted as: “for a watch” in order to avoid scrutiny by the bank and law enforcement.

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Bail denied for “little known lawyer” charged with money laundering who had $19 million in cash parked at his firm and home because he poses a serious threat to the financial health of India

By Christine Duhaime | January 8th, 2017

Rohit Tandon, the Delhi lawyer charged with money laundering just before Christmas after approximately $19.9 million was found in cash at his law firm office and home, was denied bail on Saturday and remains incarcerated. In denying bail, the Court said that the money laundering offenses “pose a serious threat to the financial health of the country” and would “affect the economy of the whole country.”

The Court went on to note that financial crimes “constitute a class apart, and need to be visited with a different approach.”

“So much cash, they needed three cars to haul it away.”

There was so much cash seized from Mr. Tandon’s law firm and home, the police needed six suitcases, four steel trunks and three cars to haul it away.

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Nigeria gets ex parte asset recovery order for $153,000,000 in proceeds of corruption from PEP parked in banks

By Christine Duhaime | January 7th, 2017

The government of Nigeria will be able to recover $153 million in proceeds of corruption from Diezani Allison-Madueke, its former Minister of Petroleum, who was and remains a politically exposed person under anti-money laundering law.

The funds were alleged to have been stolen from the Nigerian National Oil Company when it was under her control as the petroleum minister. Nigeria’s national anti-corruption agency, the Economic and Financial Crime Commission, located the $153 million parked in three local banks, Sterling Bank, First Bank and Access Bank but it is unknown how much was removed from the country to London and Dominica.

The EFCC applied to Nigeria’s court on an ex parte application to seize the funds from the three banks.

Allison-Madueke fled Nigeria in 2015 where she was subsequently arrested on allegations of money laundering. She has a passport for Dominica which suggests there are funds parked there.

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