THE FOLLY OF EAST CARIBBEAN ISLANDS THAT SELL CITIZEN BY INVESTMENT PASSPORTS: ALLOWING APPLICANTS TO MAKE PAYMENT IN US DOLLARS

The issues that compliance officers at North American banks, and US & Canadian immigration officers, have with holders of Citizenship by Investment (CBI)passports have been reported in the financial press of late, but there is a more serious problem that the five East Caribbean CBI states are facing: the threat of criminal prosecution, by the US Department of Justice, for violations of money laundering laws by government leaders, notwithstanding that they operate these problems outside the United States.

The problems the EC states have is that US money laundering laws confer what is known as extraterritorial jurisdiction upon foreign nationals, and this is occurring because the Caribbean attorneys who created CBI legislation committed what some legal experts regard as a fatal error: they adopted provisions in their CBI laws that allowed CBI program managers to accept US Dollars (USD$) as payment for their economic citizenships. That has been judged to be a major error. 

Why is this now actually considered legal malpractice? Any attorney drafting legislation in his country should be aware of the possibility that the laws he is creating might increase specific risks in other jurisdictions, and carefully weigh the potential consequences with his client before recommending that they be enacted into law.

In this case, most attorneys in the Caribbean are aware of the Money Laundering Control Act of 1986 (18 USC §§1956-1957), which imposes a maximum penalty of twenty years for violations, plus a mega-fine. The lawyers drafting CBI legislation in the East Caribbean failed to research that statute in depth, for if they had they would have learned that it has extraterritorial jurisdiction.

This means that a foreign national could be charged if the US Dollars they accept, for any purpose, are the proceeds of what is referred to Specified Unlawful Activities, and any portion of the transaction has a connection (nexus) with the United States, such as being deposited in a US bank, or transiting the American financial system. The MLCA, which was strengthened by the USA PATRIOT Act of 2001, will reach out and touch foreign nationals (e.g Reza Zarrab), for acts that they committed totally outside the USA.

Therefore, any dodgy applicant, using criminal proceeds for his cash to purchase that CBI passport, which is later deposited in a dollar account, and ends up passing into, or through, a US financial institution, has implicated not only himself, but the CBI program, and the country's leadership, as well, under US law.

We doubt that the Caribbean attorneys tasked with drafting their local CBI laws even bothered to look at the possible negative consequences of accepting US currency. They probably used the pioneering St Kitts & Nevis CBI program as a template. Unfortunately, that program became law back in 1984, two years before money laundering became a federal crime. Why didn't someone realize that using US Dollars might have consequences?

Should the CBI program directors, and their attorneys, have chosen the Pound Sterling, instead of the US Dollar ?  Probably so, given the extraterritoriality issue, as well as the fact that the USA has very broad conspiracy laws, unlike the UK, which adds to the undesirability of accepting US Dollars, unless you are completely sure of the Source of Funds, and of your applicant's bona fides.

We understand that the leaders of a number of the East Caribbean CBI States are feeling anxious of late; are they feeling a cold chill, perhaps coming from the possibility that the US Department of Justice might be investigating them ?   

Chronicles of Monte Friesner - Financial Crime Analyst 

Contributed by Kenneth Rijock - Finanacial Crime Consultant

DENZIL DOUGLAS FORMER PRIME MINISTER OF ST. KITTS LOSES VISA TO US

There has been much talk, in the five East Caribbean states operating a Citizenship by Investment (CBI) program, about reform, especially regarding the need to perform Enhanced Due Diligence upon all applicants, and lookbacks upon all existing CBI passport holders. For those prime ministers in those countries, you only need to look back to see what could happen to your own coveted US visa, should you fail to implement those reforms forthwith.

When the elected leaders of St Kitts & Nevis failed to clean up the many flaws in their CBI program, after a number of official complaints were lodged by the American Secretary of State, John Kerry, the US cancelled the US visa of the then St Kitts Prime Minister, Denzil Douglas. Additionally, FinCEN issued its now notorious Advisory, warning the financial world about US concerns regarding all St Kitts CBI passports. The lesson; there are consequences if you ignore your international compliance responsibilities after you are duly warned by Uncle Sam. Your prime minister might lose the right to shop in Miami or New York, and your voters will quickly tire of their long trips to the US Embassy in Barbados while applying for visas, and of you as their elected leader.

Even after Mr Douglas left office, in 2015, the United States has declined to reissue or reinstate his visa to enter the country, though we know that Douglas has requested his visa, as a private citizen. Also, Canada imposed visa entry requirements for all St Kitts passport holders.

For those CBI jurisdictions who keep repeating that the United States does not impose any sanctions for their continued failure to implement significant reforms, ask Denzil Douglas, who has not been in America for several years, and ask those Kittitian businessmen who must buy goods and equipment in repeated buying trips to the US, and now need submit to the tedious visa application process. We trust this has been instructive to the five sitting prime ministers in the EC CBI states.

Chronicles of Monte Friesner - Financial Crime Analyst  

Contributed by Kenneth Rijock - Financial Crime Consultant

TURKEY DELIBERATELY BREACHED UNITED NATIONS SANCTIONS ON IRAN & SOLD ISRAELI BULT HI TECH ELECTRONICS TO IRAN

Turkey buys, sends Iran electronics manufactured in Jerusalem suitable for nukes: 'If shipment reached Iran, Turkish buyer cheated us.'

The United Nations has launched an investigation against Turkey for allegedly selling electronic equipment to Iran that appears on the list of banned materials for export to the Islamic Republic under UN Security Council Resolution 2231 of 2015, prohibiting transfer to Iran of nuclear-related products and technologies, Ynetand Yediot Ahronot reported. It also asked Israel to open an investigation after it became clear the manufacturer of the electronic equipment sent to Iran via Turkey was none other than an Israeli company based in Jerusalem and considered a large manufacturer of electronic capacitors.

The UAE government, which seized the shipment of electronic equipment from Turkey to Iran in July 2017, led the investigation. In the shipment, UAE security authorities identified electronic capacitors that should not have been transferred to Iran under the UN Security Council resolution.

In a letter sent by the UN Secretariat to Israel, it said the electronic products were manufactured in Israel by a company called Celem Power Capacitors, whose headquarters are based in Jerusalem. The UN Secretariat asked Israel to investigate the matter.

The confiscated shipment contained CSP 180/300 capacitors manufactured by the Israeli company. "We would be grateful if your government would provide relevant information on the matter soon," wrote the UN Secretariat, the body that is supposed to investigate Security Council resolution breaches.

The company is one of the largest in Israel to manufacture electronic capacitors. It said yesterday it had sold a consignment of capacitors to a Turkey company after conducting a reliability check and receiving all the money in advance.

In response, it was reported that the Celem company had no idea that the capacitors would be sent to Iran. "We will prove that we sold it to Turkey, to an orderly company. We don't sell to enemy countries. Most of our sales are to Europe and the US, but Turkey is not an enemy state and there is no reason not to trade with it. In any event, if the shipment actually arrived in Iran, the Turkish buyer cheated us," the company said.

Chronicles of Monte Friesner - Financial Crime Analyst 

CBC INVESTIGATES - Cash for passports: Canadians play key role in lucrative business

Idyllic beaches such as this one in Antigua and Barbuda are part of pitches made by countries selling passports for cash. But one of the biggest attractions is the visa-free access the passports offer to more than 100 countries. Canada has imposed a visa requirement on passports from Antigua and Barbuda, because of concerns about the country's citizenship by investment program

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The multibillion-dollar trade could threaten national security, Canada, U.S. and EU warn:

Canadians are playing a key role in the lucrative and rapidly growing worldwide business of cash for passports, an industry that Canada, the United States and the European Union have warned could threaten national security, a CBC News investigation reveals.

Industry insiders paint a picture of a multi-million dollar industry that runs in large part through Canada, connecting wealthy individuals from areas like China, Russia and the Middle East to citizenship by investment programs around the world. In return, millions of dollars in commissions are being paid to middlemen  — often Canadians.

Estimates by top industry insiders of just how much the citizenship by investment business is worth each year range from $1 billion to $10 billion.

One of the biggest attractions for potential investors is the visa-free access the passports offer to more than 100 countries, including the European Union. Without that access, citizens of some countries like China or Russia have to go through the paperwork of applying for separate visas for each country they want to visit.

Canadians aren't only involved in promoting the programs — they're also designing and running some of them.

Antigua and Barbuda's program was designed by Don Myatt, a former Canadian federal public servant who worked with Henley and Partners, which designs and markets citizenship by investment programs.

Myatt went on to become the program's first manager. Chisanga Chekwe, a former Ontario deputy minister, was its second.

"One runs into Canadians all of the time," says Kristin Surak, a professor at the SOAS University of London who has been studying the industry for the past two years. 

 

Nuri Katz, founder of Apex Capital Partners, at Jolly Harbour Marina in Antigua. Katz says Canada pioneered citizenship by investment. 'Then other governments saw the success of the Canadian program and wanted to enjoy some of the success themselves.' (Apex Capital Partners)

"Really, the (citizenship by investment) industry was created by the Canadian government," said Nuri Katz, a top player in the industry and founder of Apex Capital Partners. "Then other governments saw the success of the Canadian program and wanted to enjoy some of the success themselves."

"I would say Canada is the grandfather of the industry."

The roots of the industry lie in Canada's former federal business immigration program.

Under that program, someone with a net worth of at least $1.6 million who agreed to make an $800,000 investment in Canada could qualify for permanent resident status.

Canada ended its program in 2014

When Canada shut down the program in 2014, it left a fully trained industry adept at selling immigration investment and public servants used to administering immigration investment programs, as well as a pipeline with thousands of clients from around the world who had applied to Canada's program and whose applications had not yet been processed.

Former immigration minister Chris Alexander said he shut down the program because of concerns about fraud, and the money being invested just contributed to government spending.

Those involved in selling citizenship by investment programs around the world maintain that they simply help cash-strapped countries connect with wealthy investors seeking greater mobility or a safe haven for their families.

They admit that there are some "fly by night" operators attracted by the big money involved. They make veiled suggestions of possible corruption on the part of politicians they refuse to name.

However, they maintain that most reputable people in the industry are careful about who they accept as clients and they say most government officials are doing their best to screen out those who could pose a security risk.

Warnings of criminals and terrorists

Government insiders, however, paint a picture of citizenship for sale programs open to abuse by criminals and potential terrorists. They say some countries aren't taking enough care or asking enough questions about where the money came from before handing over passports that come with visa-free access to more than 100 countries.

In June, those concerns led Prime Minister Justin Trudeau's government to impose a visa on everyone entering Canada with a passport from Antigua and Barbuda, "to protect the safety and security of Canadians and uphold Canada's commitment to secure the North American perimeter."

In its announcement, the Canadian government said it had been watching the program since it began in 2013. Chisanga Chekwe told Antigua's Daily Observer in August that he got wind of a plan to impose a visa over concerns about candidate vetting when he headed the program in 2016 and was able to convince Canadian authorities not to do it.

Three years earlier, the Canadian government imposed a similar measure on. St Kitts and Nevis, another Caribbean island nation. Alexander, the former immigration minister, said that decision was triggered when an Iranian, whom he described as an "Iranian state representative," showed up at Toronto's Pearson International Airport with a diplomatic passport from St. Kitts and said he had come to meet then prime minister Stephen Harper.

Canada closed its embassy in Iran in 2012 and expelled Iranian diplomats from Canada. Formal diplomatic relations have not yet resumed.

A European Parliament delegation warns that Malta's citizenship by investment program risks 'importing criminals and money laundering into the whole EU.' 

On Dec. 1, a European Parliament delegation led by Ana Gomes raised red flags about Malta's citizenship by investment program, saying there was "great concern" about the sale of Maltese passports to foreigners without disclosing who was buying them. The program, popular with Russians, includes European citizenship and visa-free access to Canada and the U.S.

"This system, with all its opacity, bears the risk of importing criminals and money laundering into the whole EU," Gomes wrote.

The U.S. government has also raised serious concerns about programs offering citizenship for a price. In a written presentation before the U.S Senate armed services committee in March 2015, then General John Kelly listed "cash for passports" programs among the security threats faced by the U.S, saying they "could be exploited by criminals, terrorists or other nefarious actors." Kelly now serves as chief of staff to U.S. President Donald Trump.

In its 2017 International Narcotics Control Strategy Report, the U.S. State Department warned Antigua and Barbuda's Citizenship by Investment Program (CIP) could be susceptible to money laundering and other financial crimes.

"The CIP remains among the most lax in the world," officials wrote."The CIU (Citizenship by Investment Unit) does not maintain adequate autonomy from politicians to prevent political interference in its decisions," they later added.

The report also warned about the program in St. Kitts, saying "prior lax vetting created AML (anti-money laundering) and security vulnerabilities domestically and internationally. … The CIP continues to be afflicted by significant deficiencies in vetting candidates and conducting due diligence on passport and citizenship recipients after they receive citizenship." 

Armand Arton, president of Arton Capital, estimates 25,000 people buy a second citizenship each year. (Arton Capital)

Antigua and St. Kitts are just two of countries in the growing business of citizenship for sale.

"There has been an explosion of demand based pretty much on political instability around the world in the last 10 years," said Armand Arton, president of Arton Capital, one of the largest firms matching wealthy investors with second citizenships.

Arton, who grew up in Montreal but now spends much of his time in Dubai, estimates 25,000 people buy a second citizenship each year. He expects that number to double in the next five years as more countries offer programs and the cost of buying citizenship drops.

In most programs, those seeking a second citizenship make an investment in the country, from contributing to a government-run development program to investing in real estate or a local business. After an application is studied and vetted, the investor and their family can become citizens of the country and are issued passports.

The programs can be a goldmine for cash-strapped developing nations, accounting for a substantial portion of their gross domestic product in some cases.

People in the industry say it has also proven to be a goldmine for Canadian immigration consultants, some of whom used to work for the federal government when Canada had its own immigrant investor program.

Canadian addresses dominate in Antigua

In Antigua, for example, 22 per cent of the 127 representatives authorized to market its citizenship by investment program list Canadian addresses — more than any other country.

A review of the program's reports posted online show that 80 per cent of commissions paid by Antigua's program over a year and a half — $2.2 million — went to Montreal-based ClientReferrals.com, a company that connects agents and other professionals with citizenship by investment programs and other investment options.

Corporate filings show one of the principals in Clientreferrals.com is Guy Pilote, a former federal public servant who worked briefly with Don Myatt on Canada's business immigration program. Patrick Peters is listed as president and Lei Li as a director.

'Canada developed this in the '80s and most of the original professionals, like myself, are from Canada.'— Nuri Katz

 Like many involved in the industry, Katz began by working with the Canadian program.

"Canada developed this in the '80s and most of the original professionals, like myself, are from Canada," said Katz, who grew up in Montreal. "We've expanded and created a whole new industry but it's really just an expansion of the Canadian experience."

Arton says Canadians are "proud pioneers" of the industry.

The sales pitches feature idyllic beaches and promises of more mobility. Visa-free travel to more than 100 countries including Europe. Protection for your family from wars or civil unrest. Protection for your wealth — a phrase often synonymous with protection from income taxes.

Many of those snapping up second citizenships come from countries like China or Russia, which have few visa-free travel agreements with other countries, or residents of Middle Eastern and North African countries that are in turmoil.

But some observers are concerned that others could be looking for passports with easy access into North America and Europe for more nefarious reasons. 

Peter Vincent, former homeland security adviser to U.S. President Barack Obama, warns of 'international criminals and terrorist organizations that are looking to evade the law.' 

Peter Vincent, who worked as a Homeland Security adviser to former U.S. president Barack Obama, says the U.S. is concerned about a small but potentially "devastating" group exploiting citizenship by immigration programs.

"That is the international criminals and terrorist organizations that are looking to evade the law, prosecutions in their own country or international prosecutions by global tribunals or actually looking to do something horrible and to use a passport that would ordinarily not raise suspicions to travel to commit those crimes or those acts of terrorism."

Naomi Hirst, a campaigner with Global Witness, which works to expose corruption around the world, describes citizenship by investment programs as "a tool in the corruption toolkit."

'Kleptocrats' can be 'brilliantly corrupt'

"One thing that people need when they are kleptocrats and … have been stealing money is kind of a way to get it out of the country. There's actually no point of being brilliantly corrupt if you can't enjoy it."

People like Katz and Arton dismiss the concerns of the Canadian and U.S. governments, saying it would be easier for a would-be terrorist to get into the U.S. on a tourist visa.

Industry officials insist the due diligence is thorough and say they do their best to check the backgrounds of applicants. However, they say that if someone is not yet the subject of an arrest warrant or convicted of a criminal offence, a threat wouldn't necessarily show up in background checks.

Eyebrow-raising citizenships

Despite the checks, there have been several cases of people whose citizenships have raised eyebrows.

Canadian Alexandre Cazes, alleged to be the mastermind behind the dark web site AlphaBay, became an Antiguan citizen in February.

Three Chinese nationals who bought Antiguan citizenship later generated controversy — one over allegations they had lied on their application and two others because they were wanted by Chinese authorities. One of them, Ai Yang, is mentioned in the dossier that informed the Canadian government's decision to impose the visa on Antigua.

Antigua opposition leader Harold Lovell said his United Progressive Party set up the program when it was in office to bolster Antigua's economy. However, he believes there have been serious problems with the way the program has been run by the current government.

For example, Lovell said Antigua tried to market the program in Iraq and invite 4,000 Iraqi families to live in the island nation. 

Canada's decision to impose a visa on Antigua "has set the program back considerably," he said, adding that he thinks the program still has potential.

No comment from Antigua's PM

Prime Minister Gaston Browne's office has not responded to repeated requests from CBC News for an interview.

Arton said the problem with some programs, like those in St. Kitts and Antigua, is that they haven't been doing enough to vet candidates.

The concerns have led to initiatives to clean up the image of the industry such as launching industry associations, and to a variety of recommendations.

Arton, for example, would like to see a common program for Caribbean countries and a database of rejected applicants.

Katz believes those who market citizenship by investment programs should be regulated.

Chronicles of Monte Friesner - Financial Crime Analyst  

Contributed by Elizabeth Thompson -  

OKKE ORNSTEIN DUTCH "FAKE NEWS" PUBLISHER FAILS TO SHOW UP IN COURT; WARRANT ISSUED

OKKE ORNSTEIN

Okke Ornstein, the Dutch career criminal who publishes fabricated news on the Internet, and then seeks to extort money from his victims, in return for deleting it, failed to attend a mandatory hearing, in his sixth Panama City criminal case, and a warrant has been issued for his arrest. Ornstein, who has a long history of multiple criminal convictions and sentences, in Panama and in his native Netherlands, is believed to have fled Panama, and to be in hiding in Holland, has $5m and a $1m final judgments of record against him, held by his victims.

OKKE ORNSTEIN IN PANAMA PRISON

Lawyers in Panama advise that Ornstein, after receiving donations to pay his attorney, which were fraudulently solicited online, failed to do so, and his attorney no longer represents him. In another case, where he solicited donations to pay his counsel, he obtained a court-appointed attorney free of charge, and kept those donations as well.

OKKE ORNSTEIN SHOCKED AT BEING THROWN IN PRISON IN 2016

If you live in the Netherlands, and you see this person, report him to your local police immediately, as he is a fugitive for a 1-year prison term there. Do not attempt to apprehend him, as he is a suspect in an unsolved murder in Panama, and he was violent when last arrested, upon arrival at the international airport in Panama City. He masquerades as a journalist and photographer, but in truth and in fact, the aim of any "journalism" he engages in is for the purposes of financial crime.

Chronicles of Monte Friesner

Contributed by Kenneth Rijock

IMPRISONED FRAUDSTER OKKE ORNSTEIN IS NOT A JOURNALIST, BUT A CONVICTED WHITE-COLLAR CRIMINAL, EXTORTIONIST, BLACKMAILER & SUSPECTED MURDERER

If you have been reading the Dutch press this week, a local journalists association is protesting the arrest, & imprisonment, of the Dutch fraudster, Okke Ornstein. He is NOT a journalist; he uses his blogs for criminal purposes. He's got 4 criminal convictions that I know of, in Panama, plus the case in the Netherlands. he also has a $5m judgment against him. Journalists do not engage in white-collar crime. The Dutch journalists association is being duped; this man is a career criminal, who preys on legitimate businessmen, and is suspected of murdering a man in Panama, for his wealth.

Read my previous dozen articles, all on this blog, if you require more proof. 

Contributed by Kenneth Rijock - Financial Crime Consultant

Posted  by Andrei Slavenkov - Netherlands 

REZA ZARRAB'S ATTORNEYS ARGUE FOR EASEMENT OF PRETRIAL EVIDENTIARY RESTRICTIONS

The law firms representing the Iranian gold trader, Reza Zarrab, charged with massive Iran sanctions violations, have asked the Court to loosen the severe restrictions placed upon them, regarding the sharing of Discovery with fact witnesses or third parties. This request, which came in the form of a letter to the sitting District Judge, which appears in the court file, reveals a disturbing change in the Government's position, affecting the more than 60,000 documents it has produced.

Early on in the case, and with agreement of both sides, the Court entered a Protective Order, restricting access to the Discovery to only defense counsel, their immediate support staff, and expert witnesses. The defense was prohibited from allowing any other party to review it, and could not  disseminate it to foreign individuals or entities, or send it outside the United States, for any purpose. All recipients were to receive a copy of the Protective Order, and could not share the evidence with anyone else.

The Government's stated reason for the severe restrictions it wanted placed upon the Discovery was that it contained certain materials that, if delivered to third parties, could impede ongoing investigations, and possibly affect the safety of others. Given those stated concerns, the defense team agreed to the Protective Order.

There are generally valid reasons for these grounds. If the documents revealed additional targets of the investigation, they could be alerted to this fact, and engage in flight to avoid prosecution. Also, some documents, if made public, might identify cooperating individuals, who supplied evidence, or even undercover law enforcement officers, both of whom might have their lives at risk, under those circumstances, if their names appeared in the Discoverym or they were the obvious sole source of the information.

Subsequently, the law firms representing Zarrab, in the preparation of his defense, concluded that they needed to show some of the evidence to fact witnesses, or to individuals that they planned to interview, with the aim that they ultimately become fact witnesses for the defense. Counsel then conferred with the Assistant US Attorneys handling the case, seeking some sort of agreement on modifying the Protective order.

The Government declined to agree to such a loosening of the Protective Order, but reportedly changed the grounds for its refusal, now no longer asserting that ongoing investigations must be protected, or that there were safety considerations, but that the Order could not be modified, for the reason that there were national security interests at stake. When pressed, Government prosecutors refused to be more specific, refraining from naming the documents, or categories of documents produced, which, if disclosed, would  threaten such national security interests. At that point, defense counsel sent the letter which is the subject of this article.

While there may be classified reasons to prevent third parties, especially third parties located outside the United States, from gaining access to the Discovery, produced by the Government, a blanket national security objection, not verified by the Court, perhaps through in camera inspection, or testimony. An order declining the defense request could end up denying the defendant a fair trial, through a failure to allow counsel present an effective defense. If the fact witnesses, or prospective defense witnesses, cannot see the evidence to be admitted at trial, they may be at a disadvantage when testifying.

The letter to the Court was sent on October 19, 2016; The following day, the Court ordered the Government to respond by noon, on October 24th, which is tomorrow. Thus far, this case has presented issues of great public interest, and it continues to hold the interest of the legal community, and of the public at large. Still unresolved is the motion to suppress evidence seized when the defendant was detained, upon arrival in the United States, while on vacation.

Contributed by Kenneth Rijock
Chronicles of Monte Friesner - Financial Crime Analyst http://www.wantedsa.com