New Requirements to Combat Money Laundering

By Charlie Rosenthal

Starting with the Panama Papers, a massive leak of confidential documents from a Panamanian law firm, much more light has been shed on the ways in which the rich and unscrupulous avoid government oversight of their assets. The Panama Papers—along with the Paradise Papers, which were released in a similar leak from another global offshore law firm—revealed that numerous politicians and celebrities have taken advantage of shell corporations and corporate secrecy to move money across borders.

Starting this month, banks now must comply with an extensive set of new due diligence requirements designed to combat money laundering and international money movement of the kind revealed in the Panama and Paradise Papers. The new rules, issued by the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury, require financial institutions to gather additional information about the identities of the ultimate owners of entity clients. By requiring banks to gather information about the owners of anonymous shell corporations that they do business with, the Treasury Department and FinCEN hope to remove the incentive to hide shady behavior behind anonymous corporate ownership.

The new due diligence rules apply both to new and existing accounts. When a legal entity customer—such as a corporation or a limited liability company—opens a new account, banks are required to identify the actual people who control the entity. Banks can determine ownership either by identifying any party who holds more than a 25 percent stake in the entity or by identifying the party who controls the entity.

With respect to already existing accounts, the new requirements are intended to supplement the protections built into the Bank Secrecy Act. That law requires banks to create anti-money laundering programs. These programs generally consist of four parts: internal controls; training; a compliance officer; and independent oversight. FinCEN’s requirements now effectively add a fifth part: “customer risk profiles.” This new component is intended to ensure banks will understand better what their customers are doing and why.

Although money laundering’s very nature makes estimating its precise size difficult, it has become a global issue of the first order. Often using shell companies to hide their identities, oligarchs, tycoons, and criminals around the world avoid taxes, buy real estate, and transfer funds across borders.

It is estimated that money laundering results in a multi-trillion-dollar drain on the global economy. The French economist Gabriel Zucman, in his book, The Hidden Wealth of Nationsestimated that 8 percent of the world’s wealth—$7.6 trillion—was held in tax shelters, costing countries $200 billion in tax revenue.

According to a 2016 report issued by the Financial Action Task Force, the United States is exposedto significant money laundering and terrorist financing risks because of the massive size and global reach of the American financial system and its relative openness. Although the task force recognized that the United States has made tremendous progress in monitoring money laundering since the last task force evaluation in 2006, it did note that transparency issues remain a major weakness of the American anti-money laundering infrastructure.

The new FinCEN customer due diligence requirements are far from the first attempts by U.S. bank regulators to combat money laundering. The Bank Secrecy Act contains a number of anti-money laundering provisions, such as requiring banks to file reports every time a customer engages in a transaction involving more than $10,000 in cash and requiring customers to disclose foreign bank accounts. Beyond that, the USA PATRIOT ACT also imposed new know-your-customer requirements on banks to combat terrorist financing.

American regulators have imposed massive fines on numerous domestic and foreign banks who have violated money laundering regulations. Over the past two years, U.S. Bancorp was fined $613 million and Deutsche Bank was required to pay $630 million. Those fines pale in comparison to the nearly $2 billion in penalties inflicted on British bank HSBC in 2012 for allowing Mexican drug cartels to launder money.

FinCEN’s latest rule was initially finalized in May 2016, but banks were given two years to comply with its requirements. According to the banks, implementation of the rule was expected to be very complicated. For example, although the beneficial ownership test under the rule appears simple on its face, the real-life complexities of entity structuring and the numerous exemptions and exceptions to the rule make it much more complicated.

At least one member of Congress—U.S. Representative Blaine Luetkemeyer (R-Mo.)—recently argued that banks should be given more time to implement the regulations, given their complexity. But no reprieve was granted. The new requirements took effect on May 11th, 2018.

Authorities charge man with money laundering after traffic stop

By Sanford Schmidt

EDWARDSVILLE — Authorities have charged a California man with money laundering after state police found more than $263,000 in a car he was driving.

Charged with two counts of money laundering is Daniel J. Hovland, 36, of Hayward, Calif. He is accused of transporting criminally derived property and carrying the property in bundles with rubber bands to avoid a transaction requirement. Bail was set at $200,000.

The charge came after a state trooper stopped a 2018 Toyota Camry, driven by Hovland April 26 on Interstate 70 in Collinsville. The details of the case became public Friday.

He was stopped for improper lane use, and told an officer he was traveling from “out east” back to California. However, he was unable to specify exactly from where “out east” he came.

Police brought in a drug dog who alerted on the Camry. Hovland told police he had $6,000 in his position. Police searched the car and found a suitcase in the trunk containing a large amount of bundled cash. Officers also found seven cell phones in the car.

Hovland declined to be interviewed without an attorney present. The Madison County State’s Attorney’s Office filed suit under a state law that allows law enforcement authorities to obtain assets believed used in the drug trade.

The suit claims Hovland was unable to explain the money and that he did not have a legitimate source of income for that amount of money. The suit claims the cell phones were intended for use in concealing the proceeds from some form of unlawful activity.

Hezbollah Said to Be Laundering Money in South American Tri-Border Region

By Ian Talley

WASHINGTON—Hezbollah, the Iran-backed Lebanese militia designated as a terror group by the U.S., is tapping a money-laundering ministate in Latin America that poses an escalating risk to U.S. national security, according to a report published Tuesday.

The illicit activities in the so-called tri-border region linking Brazil, Argentina and Paraguay have long been a source of concern for U.S. security officials: After the Sept. 11, 2001, attacks, it became a surveillance target as a haven for terrorists in the Western Hemisphere.

But now Venezuela’s political crisis and Argentina’s inflation, together with entrenched corruption and lax law enforcement, are helping fuel an illicit economy estimated to be worth $43 billion a year, far surpassing Paraguay’s entire gross domestic product, according to the report. The report was prepared by political risk consultancy Asymmetrica, funded and jointly published by the Washington-based nonprofit Counter Extremism Project.

 The ease of laundering ill-gotten proceeds and the economy of black market cigarettes, narco-trafficking, human trafficking and illegal arms sales have attracted criminal organizations from around the globe.

“It has become an epicenter, or a shopping mall, of all the illicit goods and money you need to fund your operations,” said Stuart Page, one of the authors of the new report.

“If you’re wanting to do something on U.S. soil, you’d get the materiel there,” said Mr. Page, a former senior Australian security official. “You can buy whatever you like, you can find whatever you like, and it’s on the verge of U.S. shores.”

After a free-trade zone was established in the region in 1970, regional drug cartels took advantage of corrupt government officials and weak border security to move their goods and launder cash around the region, say security experts. Over the years, the tri-border area effectively institutionalized corruption, those experts say.

The money going to Hezbollah from the illegal Lebanese networks is of particular concern to U.S. authorities, especially as the Trump administration ramps up pressure on Iran and its proxies. The group is a political and military force in Lebanon, playing a major role in the Syrian civil war supporting President Bashar al-Assad alongside Russia and Iran.

Argentina’s high inflation rate is helping drive illicit activities, the report’s authors said, as criminal networks sell their illegal goods and services for a higher value across their border. And as other countries such as Panama increasingly work with the U.S. to sever ties with Venezuela, the tri-border region has attracted illegal trade of goods, people and cash from Venezuela, whose government is accused by the U.S. of facilitating narco-trafficking.

Vanessa Neumann, a co-author of the report, said the region is growing to be one the easiest hubs to launder funds in the world, a place where armored trucks trundle down the streets of Brazil’s Foz do Iguaçu and Paraguay’s Ciudad del Este carrying loads of cash, but where banks that offer credit are scarce.

“It is well on its way to becoming an economically independent and fully criminalized substate,” said Ms. Neumann, a former member of the Organization for Economic Cooperation and Development’s Task Force on Countering Illicit Trade.

Drug cartels from Bolivia, Colombia, Mexico and Brazil, as well as organized crime groups from China, in conjunction with a large Lebanese merchant community, all operate in the area. So do mafias from Korea, Hong Kong and Russia, said Asymmetrica, which led an observation team to the area for its research.

Large numbers of Lebanese immigrants arrived in the region after the Arab-Israeli wars in the 1950s and again in the 1980s after the Lebanese Civil War. Even though only a small portion of the population is thought to be directly supporting Hezbollah, the criminal networks that have been uncovered over the years represent a significant risk to U.S. interests.

According to Argentine prosecutors, Lebanese individuals in the tri-border region provided support for the bombings of the Israeli embassy and a Jewish cultural center in Buenos Aires in the 1990s that killed scores of people. More recently, many of the individuals sanctioned by the U.S. for financing Hezbollah from the region are still operating there, according to U.S.-based analysts and recent court cases.

Earlier this year, the U.S. Department of Justice set up a task force of prosecutors with expertise in cases that involve drug trafficking, organized crime and money laundering to target Hezbollah’s financingoperations. Analysts expect the illicit operations out of the region to catch the task force’s attention.

Federal governments in the region have acknowledged there is a problem but over the years have been unable to curb the illicit activities there.

Paraguay’s government is now working with the Drug Enforcement Administration and Brazilian federal law enforcement to cut money laundering in the region. Likewise, Argentina’s new government agreed to host more DEA agents in the region.

But the report’s authors said the extent of the problem requires a much more comprehensive solution, including stronger involvement of the standard-setting body, the Financial Action Task Force, and leveraging the power of the International Monetary Fund.

The IMF, for example, could require Argentina to bolster its anti-money-laundering and anti-corruption oversight as fundamental conditions for the bailout loans Buenos Aires is seeking from the emergency lender.

https://www.wsj.com/articles/hezbollah-said-to-be-laundering-money-in-south-american-tri-border-region-1526389849

Combating fraud and money laundering with graph analytics

By Yu Xu at Tiger Graph

Dirty money and money laundering have been around since the existence of currency itself. On a global level, as much as $2 trillion is washed annually, estimates the United Nations. Today’s criminals are sophisticated, using ever-adapting tactics to bypass traditional anti-fraud solutions. Even in cases where enterprises do have enough data to reveal illicit activity, more often than not they are unable to conduct analysis to uncover it.

As the fight against money laundering continues, AML (anti money laundering) compliance has become big business. Global spending in AML alone weighs in at more than $8 trillion, says WealthInsight. This figure will continue to grow, considering how any organization facilitating financial transactions also falls within the scope of AML legislation.

But combating crime is never easy. Especially when organizations face pressing needs for cost reduction and faster time to AML compliance in order to avoid regulatory fees. Legacy monitoring systems have proven burdensome and expensive to tune, validate and maintain. Often involving manual processes, they are generally incapable of analyzing massive volumes of customer, institution and transaction data. Yet it is this type of data analysis that is so critical to AML success.

New ideas have emerged to tackle the AML challenge. These include: semi-supervised learning methods, deep learning based approaches and network/graph based solutions. Such approaches must be able to work in real time and handle large data volumes – especially as new data is generated 24/7. That’s why a holistic data strategy is best for combating financial crime, particularly with machine learning (ML) and AI to help link and analyze data connections.

Graph analytics for AML

Graph analytics has emerged at the forefront as an ideal technology to support AML. Graphs overcome the challenge of uncovering the relationships in massive, complex and interconnect data. The graph model is designed from the ground up to treat relationships as first-class citizens. This provides a structure that natively embraces and maps data relationships, even in high volumes of highly connected data. Conducted over such interconnected data, graph analytics provides maximum insight into data connections and relationships.

For example, “Degree Centrality” provides the number of links going in or out of each entity. This metric gives a count of how many direct connections each entity has to other entities within the network. This is particularly helpful for finding the most connected accounts or entities which are likely acting as a hub, and connecting to a wider network.

Another is “Betweenness,” which gives the number of times an entity falls on the shortest path between other entities. This metric shows which entity acts as a bridge between other entities. Betweenness can be the starting point to detect any money laundering or suspicious activities.

Today’s organizations need real-time graph analytic capabilities that can explore, discover and predict very complex relationships. This represents Real-Time Deep Link Analytics, achieved utilizing three to 10+ hops of traversal across a big graph, along with fast graph traversal speed and data updates.

Let’s take a look at how Real-Time Deep Link Analytics combats financial crime by identifying high-risk transactions. We’ll start with an incoming credit card transaction, and demonstrate how this transaction is related to other entities can be identified:

New Transaction → Credit Card → Cardholder → (other) Credit Cards → (other) Bad Transactions

This query uses four hops to find connections only one card away from the incoming transaction. Today’s fraudsters try to disguise their activity by having circuitous connections between themselves and known bad activity or bad actors. Any individual connecting the path can appear innocent, but if multiple paths from A to B can be found, the likelihood of fraud increases.

Given this, more hops are needed to find connections two or more transactions away. This traversal pattern applies to many other use cases – where you can simply replace the transaction with a web click event, a phone call record or a money transfer. With Real-Time Deep Link Analytics, multiple, hidden connections are uncovered and fraud is minimized.

By linking data together, Real-Time Deep Link Analytics can support rules-based ML methods in real time to automate AML processes and reduce false positives. Using a graph engine to incorporate sophisticated data science techniques such as automated data flow analysis, social network analysis, and ML in their AML process, enterprises can improve money laundering detection rates with better data, faster. They can also move away from cumbersome transactional processes, and towards a more strategic and efficient AML approach.

Example: E-payment company

For one example of graph analytics powering AML, we can look towards the #1 e-payment company in the world. Currently this organization has more than 100 million daily active users, and uses graph analytics to modernize its investigation methods.

Previously, the company’s AML practice was a very manual effort, as investigators were involved with everything from examining data to identifying suspicious money movement behavior. Operating expenses were high and the process was highly error prone.

Implementing a graph analytics platform, the company was able to automate development of intelligent AML queries, using a real-time response feed leveraging ML. Results included a high economic return using a more effective AML process, reducing false positives and translating into higher detection rates.

Example: Credit card company

Similarly, a top five payment provider sought to improve its AML capabilities. Key pain points include high cost and inability to comply with federal AML regulations – resulting in penalties. The organization relied on a manual investigative process performed by a ML team comprised of hundreds of investigators, resulting in a slow, costly and inefficient process with more than 90 percent false positives.

The company currently is leveraging a graph engine to modernize its investigative process. It has moved from having its ML team cobble processes together towards combining the power of graph analytics with ML to provide insight into connections between individuals, accounts, companies and locations.

By uniting more dimensions of its data, and integrating additional points – such as external information about customers – it is able to automatically monitor for potential money laundering in real time, freeing up investigators to make more strategic use of their now-richer data. The result is a holistic and insightful look at its colossal amounts of data, producing fewer false positive alerts.

As we continue into an era of data explosion, it is more and more important for organizations to make the most in analyzing their colossal amounts of data in real time for AML. Graph analytics offers overwhelming potential for organizations in terms of cost reduction, in faster time to AML compliance and most importantly, in their ability to stop money laundering fraudsters in their tracks.

Top Latest Japan World Business Sports Entertainment Opinion Lifestyle Features Photos Videos Japan struggles to hamper int’l cryptocurrency money laundering operations

TOKYO — Loose overseas regulation of virtual currencies has prompted increased money laundering among some designated Japanese organized crime groups, with the Mainichi Shimbun confirming one case where a total of some 30 billion yen was funneled through various overseas exchanges since 2016.

While the Japanese government has recently moved to strengthen measures against money laundering, these are limited to the country’s boundaries. Grasping the situation of money being transferred through anonymous overseas accounts is a problem that cannot be solved without international cooperation.

In a bar on the second floor of an old building just off a street bubbling with nightlife in Tokyo’s Akasaka district, a 30-something member of a designated organized crime group and a Chinese man have agreed to meet once a month. The bar is a haven for people who exchange information about virtual currencies online through members-only blogs and social media sites to meet face-to-face. Japanese and English fly back and forth with specialized terms relating to cryptocurrencies mixed in.

“There were no problems,” says a Chinese man to the gang member on a night in mid-April as he hands over a USB drive. On the drive is a data file named “ZDM” filled with numbers and English notations. This is the record of money laundering using the difficult-to-trace currencies “Zcash,” “DASH” and “Monero.”

The file begins from June 2016, and shows the gang’s capital at a total of 29.85 billion yen post-laundering. The most recent record for February shows a total of some 130 million yen run through the system via several hundred transfers. The amount was lower than normal, but due to scandals surrounding cryptocurrency exchanges at the time, the gang member simply commented, “We didn’t want to draw any attention to ourselves, so this will do.”

The men then move to a room in an apartment building within walking distance called “base camp.” There, eight men and women stare into computer screens. The Chinese national reveals they are Japanese in their 20s and 30s — mostly engineers and students. These members first convert the group’s capital to blockchain currencies such as Bitcoin and Ethereum at Japanese exchange operators. These groups spread out the virtual currency by sending the money to five or six accounts held at exchange companies that do not require identification documents like a passport to open an account, such as the Russian exchange “YoBit.”

From there, the Bitcoin or Ethereum is converted into “Zcash,” “Dash” and “Monero” — ZDM. In terms of privacy protection, trading logs in the blockchain for these three currencies are not made public, and both the sender and receiver of the money can do business anonymously. The members used several exchange operators to move the virtual currency over dozens of transactions to cover their tracks, with collaborators in Russia making the last transaction into the local physical currency.

The personnel and equipment is all provided by the gang. “We have bases just like this all over the Tokyo area,” the gang member explains. “The most important thing is to process the money in small amounts.”

It has been less than 10 years since virtual currencies came onto the financial scene. Still, the Chinese man says, “Gangs were attracted to the anonymity associated with cryptocurrencies from the beginning. Now, its use is not limited to just money laundering, but is also being used as a venture to generate capital.” Of the total of 29.85 billion yen recorded returned to the group via foreign exchange operators in the file he gave the gangster, he commented, “I was given roughly 35 billion yen. Five billion yen was the service fee.”

“It’s a typical money laundering scheme. In a way, I’m not surprised,” said a senior official at the Financial Services Agency (FSA). “If you are going to do something illegal, then everyone knows to use the ‘three anonymous siblings,'” the official continued, referring to Zcash, DASH, and Monero. In Japan, the only cryptocurrency exchange that dealt with the three siblings was scandal-hit firm Coincheck Inc., from which thieves siphoned off 58 billion yen worth of “NEM” currency. However, after Coincheck was bought out by Monex Group Inc., the new owner expressed its intention to cease trading in those virtual currencies.

The FSA now administers the revised Payment Services Act, which was introduced in April 2017. The new law required cryptocurrency exchanges to register with the agency and for users to provide proof of their identity. In addition, divided asset management and allowing for outside monitoring of accounts was also introduced. Following the Coincheck case, the FSA inspected cryptocurrency exchanges to find many problems in the anti-money laundering measures taken by those domestic firms, issueing orders to improve their business operations. .

However, even with the revised laws, nothing can be done to regulate the operating practices of exchange firms overseas. Once the money is wired abroad, it is difficult to grasp the whereabouts of the currency from Japan, especially when accounts that do not require official identification to open are used.

“It’s nearly impossible for Japan to handle the problem alone,” the FSA official explained. “Even if trade is restricted to only domestic transfers or monitoring is enhanced, it’s still not enough to counter money laundering. It would be best if all the group of 20 industrial and emerging nations and regions (G-20) would take the same steps toward prevention.”

Some countries are already moving in this direction. The Chinese government shut down exchange offices, while the South Korean government outlawed the practice of exchange operators issuing their own virtual currency to raise capital — or “initial coin offerings (ICO).” Meanwhile, India is set to outlaw the trade of cryptocurrencies all together, and the European Union is drafting legislation that would prioritize the protection of users. The United States is considering revisiting how the system is structured.

Still, it is unclear if all nations will take the same steps toward countering money laundering and other crimes. While the G-20 did decide in March this year to improve the system and come out with concrete measures to do so by July, it seems that it may still take time until agreement and enactment of those new rules is realized.

https://mainichi.jp/english/articles/20180514/p2a/00m/0na/002000c

Is money laundering easier in a digital world?

By Alexon Bell

The rise of social media, peer-to-peer platforms and online banks has had a huge impact on the convenience and ease of transactions between individuals. But these platforms have simultaneously opened new doors for fraudsters to trick people out of their money and particularly criminals looking for ever more innovative ways of laundering the proceeds of their crimes. In an increasingly digital world, is money laundering becoming easier to pull off?

New forms of money laundering

With ecommerce so commonplace and only on the rise, legitimate websites are being used as payment processors in order to launder vast amounts of money. Drugs can be ordered online and the transaction will appear as something innocuous on your statement, such as a floristry purchase. From the bank’s side, their customer appears to be an online florist, helping mask funds as cash is not used. Transactions are funnelled through other legitimate payment ecosystems for illegitimate purposes, including the financing of terror through criminal enterprises. Last year it was alleged that an ISIS operative in the US had used eBay to ‘sell’ computer printers and received payments for these transactions from overseas via PayPal.

Peer-to-peer marketplaces

The sharing economy is on the rise and some of the most recognisable peer-to-peer brands are being exploited through their online payment systems. The nature of a peer-to-peer marketplace enables direct transactions from criminals on one side and complicit players on the other side, thus laundering money through a legitimate platform. The ease of use of these apps and websites is fuelling such activity, and their popularity and global adoption allows criminals to hide amongst huge volumes of transactions between lay people.

Last year, it was discovered that Airbnb had been exploited by money launderers, with criminals booking fake stays in rooms with complicit Airbnb hosts. Such a scheme works by criminals using stolen credit cards to book rooms through the peer-to-peer marketplace and paying for their fake stay online – with complicit hosts closing the loop. The transaction turns criminal proceeds into ostensibly legitimate earnings. News sources claimed that online Russian forums were being used to connect criminals to complicit hosts. In many instances these funds were laundered across borders, allowing the money to be hidden even more effectively.

A similar scheme was recently reported in which Uber was being used to launder criminal proceeds through fake transactions. In this system, middle men use stolen credit cards to book fake rides which never actually happen, with complicit drivers. A cut is taken by the drivers and the middle men, leaving the rest of the now seemingly legitimate funds to the client.

Both these recent examples show the ease with which sharing economy marketplaces can be exploited. The current systems to police thousands of peer-to-peer transactions across the globe, monitoring transactions and flagging any suspicious activity, simply aren’t strong enough to spot scams that look very similar to the sea of legitimate interactions.

Social media

Social media has an increasingly dominant role to play in recruiting people to facilitate money laundering – whether they do so knowingly or unknowingly. Several recent reports have highlighted young people being recruited as money mules though social media. Last week, fraud prevention body, Cifas published their annual report, revealing that in 2017 there were 32,000 cases of 14 to 24 year olds allowing their bank accounts to be used to move the proceeds of crime – an increase of 27 per cent. Social media is fuelling the spread of images of young people with cash and luxury items, luring young people into schemes which promise to get them rich quick. Unwitting mules are also being recruited through social media offers of fake jobs or initiatives to make extra money. Messaging app WhatsApp is being used as a communication method with these young mules or victims.

Scale of the issue

Online platforms are an attractive option for money launderers due to their global reach, speed, low cost and simplicity. There is no need to create a fake ‘shop front’ or false identities and no goods need to be moved.

Online money laundering is only set to grow. Global retail e-commerce sales are estimated to top $2.2 trillion annually, providing greater opportunities for criminals to hide their laundering activities among high volumes of legitimate transactions. Likewise, the popularity of cryptocurrencies and alternative payment platforms are garnering growing criticism and concerns over the transparency of transactions and the potential for easier than ever money laundering.

A digital solution

The digital world we live in is opening new doors for criminals to launder their money in different and creative ways. Only a digital-first approach will help tackle the issue.

New and ground-breaking innovations in technology that monitor transactions are helping to identify suspicious behaviour and patterns amongst huge numbers of legitimate payments and interactions. In particular, monitoring software is being used to put transactions in their proper context: making links and connections between parties and their transactions, using internal as well as external data sources. This contextual monitoring approach helps companies to see a 360° view of their customers – making it easier to identify unusual and illegitimate transactions consistently and accurately amongst thousands of genuine interactions. Using a combination of this digitally compiled insight and human intelligence will challenge online money laundering with a digital-first approach.

Peer-to-peer platforms, online payments and banking, and social media have been adopted across the globe thanks to their convenience, speed and ease of use. However, it is exactly these qualities that criminals are increasingly exploiting to support illegitimate activity.

While technology is fuelling this new approach to money laundering, technology is also the solution. Just as the criminal spheres of fraud and money laundering are converging, many organisations see the solution as a fusion of human intelligence with Artificial Intelligence. The key is cutting through the noise.

https://www.itproportal.com/features/is-money-laundering-easier-in-a-digital-world/

Michael O’Donnell pleads not guilty to federal charges

By Rachel Skytta

WICHITA, Kan. (KWCH) Update 2: p.m. Wednesday, May 9:

Sedgwick County Commissioner Michael O’Donnell pleaded not guilty to 12 counts against him Wednesday afternoon in federal court.

A federal indictment unsealed Friday alleges O’Donnell took money from his campaign accounts to put into his personal account and to give to his friends and covered it up by making false reports electronically to the Kansas Governmental Ethics Commission.

O’Donnell is charged with five counts of wire fraud, five counts of bank fraud and two counts of money laundering.

In court Wednesday, the judge imposed a $5,000 unsecured bond. As part of the condition, O’Donnell must forfeit his passport, an obligation the judge says he already fulfilled.

O’Donnell says he’s had the opportunity to look at the indictment detailing the charges against him, understands what the government is alleging and the potential penalties associated with the crimes for which he’s accused.

—–

Factfinder 12 continues to push for information on the federal charges against Sedgwick County Commissioner Michael O’Donnell.

O’Donnell was indicted on charges of fraud and money laundering. He’s set to make his first appearance in court Wednesday. He confirmed to Factfinder 12 he will be at the regular county commission meeting before his court appearance.

We tracked down O’Donnell as he was coming and going from his office at the Sedgwick County Courthouse. He said he couldn’t comment, and asked that we contact his attorney.

O’Donnell did confirm he plans to be at the next county commission meeting. Factfinder 12 also asked if he’s prepared to answer questions after the meeting.

“I do not know. It is up to my attorney to tell me. But yeah, I’ll definitely be there tomorrow.” said O’Donnell.

We also asked if he wanted to say anything to his constituents who are wondering what will happen to his district.

“We’ll know more later this week.”

The federal indictment unsealed Friday says O’Donnell transferred money from his campaign accounts to his personal account. It says he wrote checks to other people as campaign expenditures, then had those people give the money back and deposited it into his personal account.

Commissioner Richard Ranzau has already called for O’Donnell’s resignation. It’s unclear if other commissioners plan to bring up the charges against O’Donnell at Wednesday’s meeting. That meeting starts at 9 a.m. O’Donnell will be in federal court at 1:30 p.m.

USA names Belize as a major drug trafficking and money laundering country

The 2018 International Narcotics Control Strategy Report (INCSR) prepared by the US Department of State has listed Belize as a major drug trafficking and money laundering country.

The INCSR is an annual report compiled by the Department of State to Congress in accordance with the Foreign Assistance Act. The report describes the efforts of key countries to attack all aspects of the international drug trade in Calendar Year 2017. Volume I covers drug and chemical control activities while Volume II covers money laundering and financial crimes.

Belize, the Bahamas, Haiti and Jamaica, were among 22 countries worldwide considered as major drug producing or major drug transit countries.

In the report, Jamaica was named as the largest Caribbean supplier of marijuana to the United States.

Washington describes a major illicit drug producing country as follows:

(A) a country where 1,000 hectares or more of illicit opium poppy is cultivated or harvested during a year; (

  1. B) a country where 1,000 hectares or more of illicit coca is cultivated or harvested during a year; or

(C) a country where 5,000 hectares or more of illicit cannabis is cultivated or harvested during a year, unless the President determines that such illicit cannabis production does not significantly affect the United States.

Belize is also named along with Bahamas, Barbados, British Virgin Islands, Cayman Islands, the Eastern Caribbean, Guyana, Haiti, Jamaica, Suriname and Trinidad and Tobago, as major money laundering countries.

The report describes a major drug-transit country as follows:

(A) a country that is a significant direct source of illicit narcotic or psychotropic drugs or other controlled substances significantly affecting the United States; or

(B) through which are transported such drugs or substances.

In January 2018,  Belize was one of three countries, the others being Haiti and Samoa, that were banned from applying for H-2A (agricultural) and H-2B (non-agricultural) work Visas by the Trump Administration.

Belize was reportedly banned from the list of countries whose citizens can apply for work Visas because of its standing on the 2017 US State Department report on Human Trafficking. In that report, Belize ranked the worst among all Central American nations with a tier 3 rating.

Teppanyaki owners charged with money laundering, hiding $8M in sales

INDIANAPOLIS — Marion County Prosecutor Terry Curry and officials from the Indiana Department of Revenue announced criminal charges Thursday in an investigation into Indianapolis buffet restaurants accused of money laundering.

Police raided two Teppanyaki Grill & Buffet locations in Marion County in August 2016 and seized more than $600,000 in alleged money laundering proceeds.

Prosecutors also filed a civil complaint again Teppanyaki Grill, Teppanyaki West, Union Broker Limited, Hokkaido Japanese Buffet in Terre Haute and dozens of the restaurants’ managers and affiliates.

At the time, prosecutors left open the possibility of criminal charges being filed in the case.

On Thursday, the Marion County Prosecutor’s Office announced it had filed charges of corrupt business influence, theft and failure to remit taxes against seven people accused of underreporting more than $8 million in sales from seven Teppanyaki and similarly branded restaurants.

The defendants charged in the case are as follows:

  • Shua Li, owner of Teppanyaki Grill Supreme Buffet (Indianapolis)
  • Chunhua Wang, owner of Teppanyaki Grill Super Buffet (Lafayette)
  • Guo Wu Wu, owner of Teppanyaki Supreme Buffet 285 (Fort Wayne)
  • Jin Qui Zhao, owner of Teppanyaki Buffet, Inc. (Marion)
  • Ji Rong Lin, owner of Hokkaido Japanese Buffet (Terre Haute)
  • Guang Feng Li, owner of China King Feng, LLLC (Plainfield) and Teppanyaki Grill Supreme Buffet (Indianapolis)
  • Sheng Yi Li, owner of Teppanyaki West (Indianapolis)

According to a probable cause affidavit filed in the case, investigators allege the defendants used cash sales to hide hundreds of thousands of dollars a year in sales revenue – which they then failed to pay sales taxes on.

The investigation began with search warrants served at a single Teppanyaki location in Indianapolis in October 2014. Ultimately it expanded to restaurants in Terre Haute, Plainfield, Lafayette and Marion, as well as a second Indianapolis location.

Although the charges only cover alleged activities during the 2014-2016 period, Marion County Prosecutor Terry Curry said they have “no reason to believe that it hasn’t been going on at these restaurants for years and years.”

Former Netflix VP Charged With Fraud, Money Laundering

SAN JOSE (CBS SF) — A lawyer for a former Netflix executive indicted in federal court in San Jose on charges of taking an alleged $690,000 in kickbacks said Wednesday his client “vigorously disputes the allegations of the indictment.”

Michael Kail “looks forward to vindication at trial where these allegations will be proven untrue,” said defense attorney Joseph Ainley.

Kail, 49, of Los Gatos, was vice president in charge of internet technology at the Los Gatos-based video streaming company from 2011 to 2014. His position gave him the authority to enter into contracts with outside technology companies providing services to Netflix.

He was indicted by a federal grand jury in San Jose on April 26 on 29 counts of fraud and money laundering in connection with his alleged receipt of kickbacks in cash and stock options from nine technology companies that had contracts with Netflix.

The indictment was issued under seal and was unsealed after Kail was arraigned before a federal magistrate in San Jose Tuesday and pleaded not guilty to the charges.

U.S. Magistrate Nathanael Cousins allowed Kail to remain free on a $200,000 property bond while awaiting trial.

Kail’s next court appearance is a status conference on July 10 before U.S. District Judge Beth Labson Freeman, the trial judge assigned to the case.

The indictment alleges Kail’s total gain from the kickbacks was $690,000.

The charges include 19 counts of wire fraud for documents sent electronically to and from the outside companies in 2013 and 2014, three counts of mail fraud for documents sent by postal mail and Federal Express, and seven counts of money laundering of alleged profits.

The fraud counts each carry a maximum sentence of 20 years in prison and the money laundering counts 10 years, if Kail is convicted.

He could also be fined twice the amount of his gross gain from fraud.

The indictment additionally seeks forfeiture of any property Kail bought with the alleged proceeds, including his Los Gatos house.

The Los Gatos house served as the address of a one-person consulting company Kail set up called Unix Mercenary LLC. The indictment alleges Kail created the company for the purpose of having the kickbacks sent to its bank account. He allegedly then transferred the payments to his personal accounts.

Ainley said in his statement, “As a known technology leader in Silicon Valley, Mr. Kail frequently advises cutting edge startups on next generation technology.

“This indictment is unfounded and takes direct aim at the spirit of innovation and entrepreneurship that makes the valley such a vital part of the economy,” Ainley said.

After leaving Netflix in August 2014, Kail went to work for Sunnyvale-based Yahoo as chief information officer. He left that job the following May in the wake of a civil lawsuit filed against him by Netflix in Santa Clara County Superior Court in November 2014.

Netflix’s lawsuit included claims of fraud, unjust enrichment, fraudulent concealment and breach of fiduciary duty. It alleged that Kail fraudently took so-called “commissions” of 12 to 15 percent on the contracts he approved. The lawsuit was settled on a confidential basis in 2015.

After leaving Yahoo, Kail co-founded a Boston-based cyber security company called Cybric.