21ST SEP 2017 | WRITTEN BY: CHRIS SIEROTY IN WASHINGTON, D.C.
Federal regulators are telling U.S. financial institutions, especially those located in south Florida and Texas, to be aware of Venezuelan officials trying to move or hide illegal assets.
The Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of Treasury, issued a seven-page advisory on Wednesday to alert financial institutions of widespread public corruption in Venezuela.
FinCEN officials believe awareness of money laundering schemes used by Venezuelan officials may help financial institutions to differentiate between illicit and legitimate transactions.
They also expect the assistance to allow financial institutions to identify and report transactions involving suspected illegal proceeds being moved by their customers, including through private and correspondent banking relationships.
“In recent years, financial institutions have reported to FinCEN their suspicions regarding many transactions suspected of being linked to Venezuelan public corruption, including government contracts,” said acting FinCEN director Jamal El-Hindi.
The advisory also describes a number of financial red flags to assist in identifying and reporting suspicious activity. Those red flags are:
- Transactions involving Venezuelan government agencies and state-owned enterprises (SOEs), particularly those involving government contracts, can potentially be used as vehicles to move, launder, and conceal embezzled corruption proceeds.
- Corrupt officials may use contacts within the Venezuelan government as vehicles to embezzle funds and receive bribes, including transactions from government contracts into personal accounts.
- Transactions involving Venezuelan government contracts that are directed to companies that operate in an unrelated line of business. For example, payments for construction projects directed to textile merchants.
- Transactions for the purchase of real estate, primarily in the south of Florida and Houston, Texas, regions, involving current or former Venezuelan government officials, family members or associates that are not commensurate with their official salaries.
- Transactions involving Venezuelan government contracts that are directed to personal accounts.
El-Hindi also reminded financial institutions that “not all transactions involving Venezuela involve corruption.”
“But, particularly now, during a period of turmoil in that country, financial institutions need to continue their vigilance to help identify and stop the flow of corrupt proceeds and guard against money laundering and other illicit financial activity,” he said.
FinCEN said the advisory should be shared with private banking units, chief risk officers, chief compliance officers, anti-money laundering and Bank Secrecy Act analysts, sanctions analysts and legal departments.
FinCEN officials also reminded financial institutions of their regulatory obligations under the USA PATRIOT Act to apply enhanced scrutiny to private banking accounts held by, or on behalf of, senior foreign political figures.
They should monitor transactions that could potentially represent misappropriated or diverted state assets, the proceeds of bribery or other illegal payments, or other public corruption proceeds, the authority said.
Recent sanctions were placed on the country’s vice president and one of his associates for trying to launder money and assets connected with a narcotics trafficking business.
The Treasury Department’s Office of Foreign Assets Control (OFAC) designated Venezuelan Vice President Tareck El Aissami to the Foreign Narcotics Kingpin Designation Act.
OFAC also designated his front man, Samark Lopez Bello, for materially assisting El Aissami and acting on his behalf. Their designation disrupted their ability to launder illicit proceeds and hundreds of millions in assets have since been blocked.