Banks warned against money laundering from Tunisia

By Christine Duhaime | January 24th, 2011

The Financial Crimes Enforcement Network has issued an advisory to U.S. financial institutions to take special precaution when dealing with funds from Tunisian politically exposed persons because of the increased money laundering risk if those funds are from the proceeds of crime (e.g., misappropriated or diverted State assets, proceeds of bribery, public corruption or other proceeds originating in or diverted from Tunisia).

The advisory is equally relevant to Canada, perhaps more so because of the news that several relatives of former Tunisian dictator Zine El Abidine Ben Ali arrived in Montreal on January 20th by private jet and appear to have substantial assets in Canada.

On January 14, Ben Ali stepped down as president of Tunisia and is now in Saudi Arabia. Ben Ali and his family members are politically exposed persons in international money laundering law. A politically exposed person (PEP) is a person who is or was a head of state, head of government, high ranking government official, judge or ambassador, and includes their family members.

Under Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act, banks must treat foreign PEPs with extra precaution and take additional client identification measures to ensure that funds used in their transactions (e.g., deposits, safety deposit box activities, withdrawals, wire transfers, etc.) are not proceeds of crime and that the banks are not inadvertently assisting PEPs to launder money.

The World Bank estimates that more than US$1 trillion is paid in bribes each year. The Stolen Asset Recovery Initiative estimates that corrupt money received by public officials in developing and transition countries is approximately US$40 billion per year, equal to 20%-40% of official development assistance. Corrupt PEPs need to use foreign financial systems to launder (e.g., hold funds derived from corruption and other criminal activities).

The U.S. Senate Committee on Homeland Security and Governmental Affairs released a special Money Laundering Report – “Keeping Foreign Corruption Out of the United States” (available at this site) that describes recent cases of PEPs who laundered hundreds of millions of dollars in the U.S. According to the Report, in at least one case, Yamilee Bongo-Astier (an immigrant to Canada and the daughter of Omar Bongo, the former president of Gabon) received cash from Canada and elsewhere that she deposited into New York banks for family members. In 2007, she had US$1 million in cash in her safety deposit box.  Her family is believed to have transferred over US$18 million into the U.S. financial system.

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