Theft, money laundering allegations sparked raid at Woodfill law office

By Robert Downen and Lise Olsen

Former Harris County Republican Party Chairman Jared Woodfill is being investigated on theft and money laundering allegations, accused of misappropriating funds of at least two of his law firm’s clients, according to an affidavit by the Harris County District Attorney’s office.

Authorities on Monday seized 127 boxes of files, six computers and disk drives from the Houston high-rise office of the Woodfill Law Firm at Three Riverway, according to the returned search warrant filed in Harris County district court on Tuesday.

In his affidavit for the search warrant, which also targeted computer logins, passwords, memory devices, and telephones owned by Woodfill or the law firm, fraud examiner Bryan Vaclavik indicated authorities were seeking evidence used to commit felony offenses of misapplication of fiduciary property, theft and money laundering.

No charges have been filed against anyone in connection with the ongoing investigation. The Harris County District Attorney’s office declined comment on the investigation.

Investigators seized financial records, legal files, documents and correspondence on Monday related to two divorce cases handled by the firm, the search warrant documents show.

The ongoing investigation has nothing to do with Woodfill’s party activities, his attorney Jimmy Ardoin told the Houston Chronicle Tuesday.

Woodfill was chairman of the county Republican Party for 12 years, before losing the post in 2014.

Ardoin said his client had no advance notice of the search and had no details about the allegations beyond the content of the search warrant.

Ardoin said he had been in contact with the district attorney’s office about its review of finances in a divorce case for three to four months and was dismayed that Woodfill was not allowed to provide information voluntarily.

“We believe there’s an accusation of misappropriation of client funds,” Ardoin said. “We have yet to get confirmation of what it is.”

The search warrant indicates the district attorney’s investigation began in February 2017, after Woodfill’s former client, Amy Holsworth Castillo, alleged that Woodfill’s firm misused funds from her divorce case. Castillo filed for divorce from her husband Juan Castillo in 2012 and hired Woodfill in December 2013, court records show.

Juan Castillo later had the divorce case moved to bankruptcy court in Texas’ Southern District in part, he claimed, because of excessive legal fees. Woodfill’s firm filed a motion accusing Juan Castillo of filing his bankruptcy case to skirt payments to his estranged wife, federal court records show.

At one point, Amy Holsworth Castillo’s trust account had less than $650 in it, according to a fact-finding ruling in 2016, in which U.S. Bankruptcy Court Judge Jeff Bohm outlined a year’s worth of transactions and “discrepancies” between bank statements and ledgers for the trust. Based on those records, Bohm concluded that Woodfill’s firm had “taken funds from the (trust) account that have not yet been earned and, thus, several thousands of dollars have been unaccounted for.”

He put the amount of unaccounted funds or overpayments to Woodfill’s firm at more than $140,000.

Woodfill’s firm disputed the findings and planned to appeal Bohm’s finding, court records show.

Both Castillos later filed separate complaints against Woodfill with the State Bar of Texas. In September, the bar publicly reprimanded Woodfill and ordered him to pay $3,490 in attorneys’ fees and direct expenses.

“Woodfill had direct supervisory authority over members of his firm who violated the disciplinary rules during the representation in a divorce,” the State Bar of Texas wrote, “and Woodfill failed to take reasonable action.”

The district attorney’s office also cited a second complaint in the search warrant involving Woodfill’s representation of a woman named Teresa Ribelin Cook, who hired the law firm in June 2013 to represent her in a divorce. The search warrant alleges Woodfill “had used more than $45,000 of Ribelin Cook’s retainer for purposes not related to her case.”

The warrant also cites an interview with a man identified as Woodfill’s controller, Kenneth Kennedy, who is quoted claiming that Woodfill often moved money around between client accounts and his own bank accounts.

Richard Orlando Rodriguez, whose ex-wife also used Woodfill as her divorce attorney, has separately accused Woodfill of taking at least $300,000 from a trust account in a divorce case, according to a March 2017 complaint he filed with the Houston Police Department. That complaint is not mentioned in the search warrant.

House Democrats May Investigate Alleged Trump Ties to Russian Money Laundering

By Dan Friedman

Rep. Adam Schiff (D-Calif.), the incoming chairman of the House Intelligence Committee, has signaled plans to use his newly won subpoena power to aggressively investigate whether Russian interests laundered money through Donald Trump’s businesses and used the connection as leverage over the president, a line of inquiry sure to enrage Trump.

Schiff and other committee Democrats have recently said they do not intend to launch an entirely new Russia probe but will instead pursue investigative angles that other inquiries have not delved into. Schiff has repeatedly asserted that the question of whether Trump’s businesses relied on laundered Russian funds tops that list.

“No one has investigated the issue of whether the Russians were laundering money through the Trump Organization and this is the leverage that the Russians have over the president of the United States,” Schiff said at a Brookings Institution panel discussion last month, before Democrats regained control of the House in the midterm elections. He reiterated that sentiment in an NPR interview on Wednesday.

In a report issued in March after Republicans abruptly ended the Intelligence Committee’s Trump-Russia probe, committee Democrats said they want to gather more information on Trump’s past financing by Deutsche Bank, which in 2017 was hit with $630 million in fines from US and UK regulators over its involvement in a $10 billion Russian money-laundering scheme. “We have only begun to explore the relationship between President Trump and Deutsche Bank, and between the bank and Russia,” the lawmakers wrote. They said they hope to ask: “Did the Russian government, through business figures close to the Kremlin, seek to court Donald Trump and launder funds through the Trump Organization; and did candidate Trump’s financial exposure via Deutsche Bank or other private loans constitute a point of leverage that Russia may have exploited and may still be using?”

Trump and his defenders have asserted that investigating the president’s businesses prior to his presidential run should be out of bounds for investigators. In a news conference Wednesday after Democrats captured control of the House, Trump said he would assume “a warlike posture” if Democrats investigate his finances and political dealings. He threatened to use the GOP controlled Senate to launch competing investigations of Democrats, though Senate Republicans have not indicated they’d cooperate. “If the Democrats think they are going to waste Taxpayer Money investigating us at the House level, then we will likewise be forced to consider investigating them for all of the leaks of Classified Information, and much else, at the Senate level, ” Trump tweeted Wednesday.

Schiff has also said that he plans to pursue perjury charges against witnesses suspected of lying in interview with the panel. The committee can do this by sending referral letters to Special Counsel Robert Mueller or by voting to turn over to Mueller still-unreleased interview transcripts of witnesses believed to have provided false testimony. Prosecutors could then use any information they have gathered that contradicts the witnesses’ claims to pursue perjury charges.

Democrats have said they suspect that Erik Prince, the founder of the controversial private military contracting firm Blackwater and brother of Education Secretary Betsy DeVos, former Trump campaign adviser Carter Page, and longtime Trump adviser Roger Stone, were not truthful in testimony to the Intelligence Committee. Schiff on Wednesday singled out Stone, whose possible contacts with WikiLeaks have come under intense scrutiny from Mueller. Schiff told NPR that recently released emails, “if authentic,” show that “some of [Stone’s] answers before our committee are highly suspect.”

The New York Times reported this month that Stone had emailed in October 2016 with Steve Bannon, then the head of Trump’s presidential campaign, regarding what Stone suggested was his inside knowledge of WikiLeaks’ plans for releasing hacked Democratic emails. Stone has told reporters that he never communicated with the Trump campaign about WikiLeaks. Schiff’s statement suggests Stone may have made a similar claim under oath, though it is not clear what the congressman meant. A Schiff spokesman declined to comment. Stone did not respond to inquiry.

Intelligence Committee Democrats have previously flagged a number of areas where they say their Republican colleagues failed to pursue obvious leads. For example, the GOP-led panel failed to follow up after the White House stonewalled a request for records related to President Trump’s May 12, 2017 suggestion that he may possess “tapes” of his conversations with former FBI Director James Comey. The White House merely pointed to tweets in which Trump walked back his claim about tapes. But Democrats said in March that they have “reason to believe that the White House does in fact possess” records related to the meeting.

In public remarks, Schiff has repeatedly mentioned that he wants to look into a phone call that Donald Trump Jr. received from a blocked number while Trump Jr. was arranging the June 2016 Trump Tower meeting where he hoped to receive damaging information on Hillary Clinton he believed Russia was offering. Democrats are likely to subpoena records aimed at determining if the blocked number belonged to his father, a step committee Republicans declined to take. “That’s obviously pivotal in terms of the president’s involvement in any potential collusion or conspiracy to seek Russian help, illegal Russian help, during the campaign,” Schiff recently said.

Democrats have named more than 40 witnesses who the GOP-led committee declined to question, but who the committee may seek to interview under Democratic control. They include Kellyanne Conway, who appears to have been in touch during the campaign with a Republican political operative, Peter Smith, who attempted to get in contact with Russian hackers he believed were in possession of emails that Hillary Clinton deleted from the private server she used while Secretary of State. Smith committed suicide last year before news of his activity broke. The list of possible witnesses also includes White House aide Stephen Miller, former White House spokesman Sean Spicer, former White House Chief of Staff Reince Priebus, and many more.

Democrats could also subpoena Dimitri Simes, a former Nixon aide and CEO of the Center for the National Interest, which hosted an April 27, 2016 foreign policy speech by Trump at Washington’s Mayflower Hotel. Democrats in their March memo said that the committee “has reason to believe that Mr. Simes played a central role in drafting portions of the speech related to Russia.” Simes maintained close contact with Maria Butina, the Russian gun rights enthusiast indicted and jailed for acting as an unregistered foreign agent. Democrats have said they want Simes’ correspondence with the Trump campaign and with people close to the Russian government.

The Intelligence Committee will work to protect the Mueller’s investigation, Schiff says. Trump on Wednesday ousted Attorney General Jeff Sessions and announced the installation of Sessions’ chief of staff, Matt Whitaker, as acting attorney general, with responsibility for overseeing the Special Counsel. In past radio and TV appearances before joining the Justice Department, Whitaker has attacked Mueller’s probe and stated that there was no evidence to support the fact that Russia had intervened in the 2016 election.

“Interference with the Special Counsel’s investigation would cause a constitutional crisis and undermine the rule of law,” Schiff said in a statement last week. “If the President seeks to interfere in the impartial administration of justice, the Congress must stop him. No one is above the law.”

https://www.motherjones.com/politics/2018/11/house-democrats-may-investigate-alleged-trump-ties-to-russian-money-laundering/

Accenture Ventures links up with AI firm Quantexa to tackle money laundering, credit risk

John Davis and Sean McMahon

Accenture Ventures has taken a minority stake in data analytics firm Quantexa. The investment will spur Quantexa’s artificial intelligence-based network analytics and entity resolution technology. The solution will integrate with Accenture Applied Intelligence to aid Accenture clients in finding new, actionable insights. The collaboration will also enable the detection of financial crime.

Accenture plans to combine its own technology with Quantexa’s network analytics technology to develop AI-enabled solutions to detect money laundering, credit risk and provide customer insights. Accenture will use its Financial Crime Analytics Utility to refine Quantexa’s network analytics modeling.

“Accenture is committed to employing innovative techniques to help our clients tackle complex issues such as money laundering,” said Adam Markson, managing director, Accenture Finance & Risk Services. “By investing in Quantexa and combining our expertise, we are equipping our clients with new technologies and approaches to solving the most pressing data issues. Furthermore, the strategic alliance further enhances our Financial Crime Analytics Utility, which will help prevent the movement of illicit funds that enable real world issues, including human trafficking and drug crime.”

London-based, Quantexa applies leading-edge analytics and big data to identify difficult-to-detect customer connections and behavior. Quantexa’s technology has successfully detected potential money-laundering activity via the analysis via network analysis.

“We are delighted to be working with Accenture to deliver and scale our technology to help solve our clients’ biggest data challenges,” said Quantexa CEO Vishal Marria. “Creating context is critical in investigations to help clients connect the dots in their data, allowing them to see the complete picture and make better decisions.”

International anti-money laundering reforms and Iran

By Aaron Arnold

At its October meeting, the Financial Action Task Force—an intergovernmental body that promotes international anti-money laundering and counter-terrorism financing standards—decided that it will not call on its members to apply countermeasures against Iran. (In the world of such intergovernmental bodies, the word “countermeasures” has a very specific meaning: taking action to block Iran. Meanwhile, “measures” merely refers to enhanced scrutiny.) But the organization did say that countries should tightly watch over Iranian transactions even if not going so far as to terminate certain types of banking networks with Iran.

Why is this distinction important? Because in essence, the organization’s decision gives Iran an additional four months to enact anti-money laundering reforms that are in line with international standards—and gives the European Union that much more political wiggle room in its effort to try to salvage the nuclear deal with Iran.

The tortured history of anti-money laundering reforms in Iran. Such reforms are crucial if Iran is to get relief from sanctions. Although enacting new, anti-money laundering legislation is not a condition of the Joint Comprehensive Plan of Action—the agreement between Iran and the P5+1 (the United States, United Kingdom, France, Russia, China, and Germany) that curbed Iran’s nuclear program in exchange for sanctions relief—doing so is necessary for Iran to reintegrate into the global financial system. Foreign investment in Iran, for example, would be stymied if banks perceived the country’s financial system to be high-risk. This is why the Financial Action Task Force’s original decision, back in June 2016, to suspend countermeasures against Iran was so consequential: The decision provided the political space necessary for Iran to begin implementing new anti-money laundering rules and regulations. At least, that was the plan.

That plan changed in May this year, when the Trump administration decided to unilaterally withdraw from the Iran deal and reimpose US financial and economic sanctions. The US Treasury Department gave companies two separate 90-day and 180-day deadlines to end ties with Iran, otherwise known as “wind-down periods.” This week marks the end of the final wind-down period, whereby the United States reimposes sanctions on Iran’s financial, energy, shipping, and insurance sectors. Remarks by US Treasury Secretary Mnuchin suggest that the United States is even prepared to sanction SWIFT—the Belgium-based financial messaging service that handles the bulk of global transactions—if the company does not disconnect Iranian banks from its services. A move like that would not only intensify the dour state of relations with the European Union, but potentially invite significant blow-back against US banks.

In June 2016, Iran committed to implementing an action plan addressing its money-laundering and counter-terrorist financing deficiencies. Although Iran has since moved several reform efforts forward, they still fall short of international standards. Specifically, the Financial Action Task Force noted that Iran had failed to adequately address nine out of ten commitments from the country’s action plan. For example, Iran’s counter-terrorist financing legislation includes exemptions for groups “attempting to end foreign occupation, colonialism, and racism”—a rather glaring loophole. Iran also still lacks appropriate mechanisms and authorities to identify and freeze terrorist-linked assets in line with relevant UN resolutions. And it lacks rules and regulations to ensure adequate customer due diligence requirements. These are just a few of the many places where Iran has failed to measure up to international standards in this area—in some cases, for as long as a decade.

Since 2008 the country has made overtures to join the Financial Action Task Force, and promised to adopt a range of anti-money laundering and counter-terrorist financing reforms. But each year it has fallen short of making any meaningful progress.

Most recently, Iran’s President Hassan Rouhani and his supporters have called for new rules and regulations that would put Iran on track with international standards. Ayatollah Khamenei and hard liners, on the other hand, have expressed opposition to the Financial Action Task Force’s standards, citing concerns that the reforms were instruments of the West. (To be fair, it took Pakistan more than four years to come into compliance with FATF standards after committing to an action plan.)

By February 2019, the Financial Action Task Force expects Iran to implement all of its commitments or else the task force will “take further steps to protect against the risks emanating from deficiencies in Iran’s AML/CFT regime.” Whether this means a recommendation that countries take countermeasures against Iran or perhaps another delay is entirely up to Iran.

Is Iran getting a pass? Since May, EU leaders have been scrambling to keep the Iran nuclear deal intact. Leading proposals include establishing a “special purpose vehicle,” which would essentially act as an intermediary between EU businesses and Iran that would help transactions avoid US sanctions.

In other words, this means the establishment of an alternative payment system that avoids the US financial system. Anticipating such a move, Secretary Mnuchin  has already threatened to sanction the “special purpose vehicle” should EU companies use it to avoid US sanctions. For its part, in August, the European Council had tried to prepare for the effects of such a US move by updating its own “Blocking Statute,” which gives EU businesses a legal avenue to recoup damages from US secondary sanctions.

But it would be difficult (if not impossible) for European leaders to continue trying to salvage the JCPOA while also telling its banks that they must employ countermeasures against Iranian transactions as a result of the Financial Action Task Force’s designation of Iran as a “high risk and non-cooperative” jurisdiction.

Although it remains to be seen whether or not the Iran nuclear deal is salvageable, there are few incentives left for Iran to implement anti-money laundering reforms. For better or worse, the Financial Action Task Force and the future of the JCPOA have become politically intertwined as a consequence of US unilateral sanctions. On one hand, the task force has given EU leaders the political latitude to push back against US sanctions—at least for the next four months, during which the European Union will not require its banks to take active countermeasures against Iran. On the other hand, the decision sends the wrong signal to the international community—that international norms and standards are taking a backseat to geopolitics.

Feds indict Parkites on money laundering, drug charges

By Bubba Brown

Federal prosecutors indicted two Parkites on drug and money laundering charges, accusing them of using money from marijuana sales to operate a popular Salt Lake City concert venue and purchase property in Park City.

The 13-count indictment, announced Monday, names Gabriel Seth Elstein, 33, and his wife Angela Christina Elstein, 32, both of Park City, as well as St. George resident Scott Dale Gordon, 48. Prosecutors say they used multiple suppliers and drivers over a period of several years to transport more than 2,000 pounds of marijuana from California to Salt Lake City, Minnesota, Illinois and Wisconsin. Dumbles Holdings, LLC was also listed in the indictment.

Prosecutors accuse the trio of using $1.3 million from marijuana sales to build The Complex music venue, describing regular payments of $50,000 of cash in shrink-wrapped bags to the foreman of the construction project. The Elsteins and Gordon laundered at least $5 million through the venue and a music promotion business Bondad Productions, the indictment states.

The indictment also alleges that the defendants used laundered money to help purchase two properties in the Snyderville Basin, one on the 7000 block of Tall Oaks Circle in Pinebrook and the other on the 4000 block of Hilltop Drive in Jeremy Ranch.

In March, more than 600 grams of marijuana, packaged in five vacuum-sealed bags, as well as a digital scale and packaging material, were found in the Elsteins’ home on the 4000 block of Hilltop Drive, prosecutors say.

Prosecutors are seeking the forfeiture of both Snyderville Basin properties, as well as The Complex. A press release from the U.S. Attorney for Utah, John Huber, noted that the music venue will remain open.

The defendants on Friday were arraigned in federal court, where they pleaded not guilty to the charges, according to the release. They face a sentence of 10 years to life in prison if convicted on a count of conspiracy to distribute marijuana.

Gabriel Seth Elstein and Gordon were charged in February and released on pre-trial conditions. Angela Christina Elstein was added to the indictment last month and released Friday. A trial has been set for Dec. 14.

Attorneys for the defendants did not immediately respond to requests for comment.

Cryptocurrency Thieves On Track To Steal Over $1 Billion In 2018

By Nermeen Abbas

The total value of stolen cryptocurrency is expected to hit over $1 billion by the end of this year, which represents a 350% increase over the amount that was stolen in all of 2017, according to a new research from CipherTrace.

The U.S cybersecurity firm revealed that during the first three quarters of 2018, $927 million of cryptocurrency was reported as stolen from exchanges by hackers; $166 million was reported stolen since the second quarter, driven by an emerging trend toward more frequent and smaller cyber-attacks by sophisticated thieves.

According to CipherTrace 2018 Q3 Cryptocurrency Anti-Money, a quantitative analysis of all the transactions on the 20 top cryptocurrency exchanges globally, 97% of direct bitcoin payments from identifiable criminal sources were received by unregulated cryptocurrency exchanges.

Nearly 5% of all bitcoin sent to poorly regulated exchanges comes from criminal activity before the money is moved, undetected, into the global financial payments system.

The poorly regulated exchanges have laundered a significant amount of bitcoin, totalling 380,000 BTC, or $2.5 billion at today’s prices, which means that 36 times more criminal bitcoin was received by crypto exchanges in countries where AML is either lax or lacking.

The CipherTrace reports analyzed 45 million transactions at 20 top cryptocurrency exchanges globally between January 2009 until September 20, 2018. “There are likely 50% more criminal transactions than those that were traced for this report because criminals are typically very clever and deft at hiding their tracks,” the cybersecurity firm commented.

“This extensive research shows that regulation does have a direct correlation in hindering criminal activity, and we are on the right track to instill further trust in the crypto ecosystem. We will see the opportunities to launder Cryptocurrencies greatly reduced in the coming 18 months as Cryptocurrency AML regulations are rolled out globally,” commented Dave Jevans, CEO, CipherTrace and co-chair of the Cryptocurrency Working Group at the APWG.org.

The study shows that efforts to enact and enforce strong cryptocurrency Anti-Money Laundering (AML) regulations are drastically reducing criminal activity on digital currency exchanges.

It also marked a steadily growing number of cryptocurrency thefts, which included several heists in the $20-$60 million range; the data indicates a pattern of smaller robberies on a regular basis and sophisticated professional cyber thieves who carry out hacks at both the exchange and platform.

In the 2018 Q2 Cryptocurrency Anti-Money Laundering Report, CipherTrace revealed a three-fold increase in cryptocurrency thefts during the first half of 2018 compared with the entire year of 2017. Most notable were the $530 million worth of tokens stolen in Japan from Coincheck and $195 million worth of tokens stolen from BitGrail.

According to CipherTrace, criminals are expected to quickly launder the stolen tokens before stronger cryptocurrency anti-money laundering controls are deployed globally over the next 18 months.

Money Laundering Tactics Adapting to Colombia Cocaine Boom

By Parker Asmann

A new investigation says that record cocaine production in Colombia is causing criminal groups to diversify the ways in which they launder their money, reflecting the fragmented state of the country’s criminal world.

Criminal groups in Colombia are increasingly diversifying their traditional money laundering techniques involving real estate and large public works contracts, as well as new laundering methods involving cryptocurrencies and non-profit organizations, according to a report from the country’s national anti-money laundering body, the Financial Investigations and Analysis Unit (Unidad de Información y Análisis Financiero – UIAF), El Tiempo reported.

Such changes are occurring amid record cocaine production in the Andean nation.

The article reports that 40 trillion Colombian pesos (around $13 billion) of illicit money have been generated in Colombia, without specifying a time frame. Furthermore, every year 16 trillion pesos (around $5 billion) are moved through different money laundering schemes, according to the UIAF.

El Tiempo also received information that traffickers returning to Colombia and to drug-related activities after serving prison time in the United States have been increasing investment in rural properties since 2016.

The real estate boom that major urban centers like Medellín and Colombia’s capital city of Bogotá saw in the past has now moved on to smaller cities near major coca growing areas, such as Pasto in Nariño, southwest Colombia — the department with the most cocaine — and Popayán in the nearby Cauca department. Property records have grown by 300 percent in Pasto and Popayán alone, according to El Tiempo.

In 2017, Nariño department accounted for more than a quarter of the 171,000 total hectares used for coca cultivation last year, according to the United Nations Office on Drugs and Crime (UNODC). The UNODC also found that the number of coca hectares in Cauca department increased by 55 percent between 2016 and 2017.

On average, each hectare of coca produces 6.9 kilograms of cocaine, with one kilogram of cocaine selling for around 5 million pesos (about $1,600) in Colombia, meaning that a single hectare of coca could produce up to 35 million pesos in illicit earnings (about $11,500), according to El Tiempo.

While there are no official reports linking the real estate boom in Nariño and Cauca with the illicit money derived from increased cocaine production, Colombia’s outgoing superintendent of Notary and Registry (Notariado y Registro), Jairo Mesa, says he has no doubt about the links between what he calls the country’s “new urbanism” and illegal drug proceeds.

The shift in money laundering techniques used by criminal groups in Colombia is likely tied to the departure of the now largely demobilized Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC) and the increasingly fragmented criminal landscape that the guerrillas’ exit ushered in.

The more localized makeup of criminal groups in Colombia and the large profits that are coming in amid record cocaine production may help explain the diversification of money laundering techniques and the substantial uptick in property records observed in smaller municipalities in departments that are strategic to the cocaine trade, such as Nariño and Cauca.

“The Mexicans are full of cash and paying quickly for cocaine, so these more regional groups in Colombia are likely looking for places close to their centers of operation to put their money,” Adam Isacson, a senior associate at the Washington Office on Latin America (WOLA) think tank, told InSight Crime.

This is in line with the historic behavior of Colombia’s most notorious drug trafficking organizations, such as the Norte del Valle, Medellín and Cali cartels, according to Douglas Farah, president of the national security consulting firm IBI Consultants.

“Colombian crime groups have traditionally loved to operate in areas where they know the terrain, have family, and know officials and their vulnerabilities,” Farah said. “As you go from large transnational groups to smaller regional groups, there’s not much protection for them in big cities.”

As Colombia’s criminal landscape continues to take shape, it appears that traffickers are adapting their money laundering strategies to best suit the current dynamics of the cocaine trade.

Two Senate Dems call for investigation into money laundering in luxury real estate

By Francis Monofort

Senators Chris Van Hollen (D-Md.) and Sheldon Whitehouse (D-R.I.) have called on the Government Accountability Office to study whether vulnerabilities in anti-money laundering laws applicable to the real estate sector present increased risk of criminal activity.

The senators’ announcement noted that there has been widespread reporting on potential criminal activity in the real estate market, including between the Trump Organization and Russia.

In a letter to Comptroller General Gene Dodaro, the senators expressed concerns that transnational criminal organizations and other corrupt actors may be exploiting the gaps in US regulatory and law enforcement processes related to the laundering of money through the US real estate market.

“The luxury real estate market attracts money launderers because all-cash deals through shell corporations allow criminals to mask their ownership information. Cash-only real estate transactions are subject to fewer reporting requirements than financial institutions have to comply with. Addressing this problem is even more urgent when you consider the widespread reporting on the potential of criminal activity in the real estate market with regards to the Trump Organization and Russia,” according to the senators’ press release.

Van Hollen and Whitehouse requested the GAO to assess the results of the real estate Geographic Targeting Orders issued by FinCEN. GTOs temporarily require certain US title insurance companies to identify the persons behind shell companies used to purchase high-end residential real estate, among other requirements.

https://www.mpamag.com/news/two-senate-dems-call-for-investigation-into-money-laundering-in-luxury-real-estate-113274.aspx

North America’s most unaffordable city cracks down on dirty money

Vancouver’s red hot housing market has prompted authorities to introduce a series of transparency measures aimed at uncovering the owners of homes in Canada’s most expensive real estate market.

One new probe will scrutinize dirty money in the province of British Columbia’s real estate, horse-racing and luxury car sales industries, according to Attorney General David Eby who announced the investigation in late September, Bloomberg reported. Finance Minister Carole James also appointed an expert panel to examine money laundering in the housing sector.

These probes, which are expected to be complete by March, follow a similar review of the province’s casinos.

“There is good reason to believe the bulk of the cash we saw in casinos is a fraction of the cash generated through illicit activities that may be circulating in British Columbia’s economy,” Attorney General David Eby told reporters late last month. “We cannot ignore red flags that came out of the casino reviews of connections between individuals bringing bulk cash to casinos, and our real estate market.”

Similar calls to action have been made south of the border. Earlier this month, two U.S. senators — Chris Van Hollen of Maryland and Sheldon Whitehouse of Rhode Island — sent a letter to the Government Accountability Office, calling for an investigation into the potential vulnerabilities of existing U.S. money-laundering provisionsas they pertain to real estate.

Last month, The Real Deal‘s quarterly magazine in South Florida dove into a $1.2 billion Venezuelan money laundering case in which federal authorities are looking to seize 16 high-end properties. [Bloomberg]—Kathryn Brenzel

Senate Democrats call for federal investigation into money laundering in luxury real estate

By Ben lane

The Treasury Department’s Financial Crimes Enforcement Network has been looking into whether foreign buyers are using shell companies to buy luxury U.S. real estate in order to launder money for almost three years, but two Democratic senators want the government to do more to figure out how much criminal activity is prevalent in these deals.

The initial FinCEN investigation delved into unknown buyers using shell companies to buy high-end real estate in Manhattan and Miami-Dade County, because the government was “concerned about illicit money” being used in the deals.

The results of that initial investigation showed more than 25% of transactions covered in the initial inquiry involved a “beneficial owner” who is also the subject of a “suspicious activity report,” which is an indication of possible criminal activity.

The initial investigation also led FinCEN to expand the probe to include all of New York City, Los Angeles, San Francisco and several other areas. The investigation was later expanded again to include wire transfers.

The expanded investigation required title insurance companies in the designated areas to identify the actual person behind shell companies used to pay all cash for high-end residential real estate.

But that investigation isn’t enough for two Senate Democrats.

This week, Sens. Chris Van Hollen, D-Maryland, and Sheldon Whitehouse, D-Rhode Island, asked the Government Accountability Office, to also look into whether money laundering is taking place in U.S. real estate.

In a letter sent to the independent watchdog agency, Van Hollen and Whitehouse say that they are concerned that “transnational criminal organizations and other illicit actors” may be taking advantage of “gaps” in the government’s regulatory and law enforcement process surrounding real estate dealings.

“The widespread money laundering risks posed by real estate transactions conducted without any financing (i.e.,“all-cash”) through the use of shell companies creates challenges for law enforcement and federal regulators seeking to safeguard the financial system from illicit use,” the senators write in their letter to the GAO.

The senators write that they are hopeful that a GAO investigation will help determine whether violations of the Bank Secrecy Act or federal anti-money laundering laws are taking place.

“FinCEN has indicated that these GTOs (geographic targeting orders, the measures FinCEN has taken to this point), which have been renewed and extended several times, are temporary measures intended to help the agency, ‘better understand the vulnerabilities presented by the use of shell companies to engage in all-cash residential real estate transactions,’” the senators write.

“To better ensure effective and consistent AML safeguards, we are requesting an assessment of the results of the real estate GTOs, including the information provided to FinCEN and any actions taken, and how it has helped FinCEN achieve its defined objectives,” they add.

Van Hollen and Whitehouse also lay out a series of questions they’d like the GAO to answer about the issue, including:

Has the information gathered by the GTOs provided useful insight about any of the above mentioned regulatory gaps or exemptions that exist regarding the BSA and the real estate industry?

Has the information gathered by the GTOs produced other tangible benefits, and in what ways will closing the above mentioned regulatory gaps or exemptions enhance financial market integrity in the United States?

How has FinCEN used the information collected from the real estate GTOs to inform its ongoing efforts to address money laundering vulnerabilities?

Has the information gathered by the GTOs improved the ability of FinCen, DOJ, the FBI and other law enforcement agencies to prevent money laundering in the real estate industry?

Based on the information it has collected from these GTOs, is FinCEN considering any regulatory changes?

Are there ways to improve upon the information gathered by the GTOs to make FinCEN more effective in the fight against money laundering?

Are there any gaps or loopholes that exist in the design of the GTO program that could be exploited by illicit actors, such as the beneficial ownership thresholds  or limiting the GTO to title insurance companies?

Are there any unintended consequences from targeting specific geographic regions while leaving other areas uncovered? The adaptive nature of illicit actors raises concerns they may shift their real estate activities from GTO areas to other regions of the United States.

Lastly, we ask that GAO identify any additional vulnerabilities and gaps in the current BSA framework, specifically as they pertain to the real estate sector, and how they might be addressed through regulatory or legislative action.

https://www.housingwire.com/articles/47033-senate-democrats-call-for-federal-investigation-into-money-laundering-in-luxury-real-estate