Archive for March, 2012


FinCEN overreaches on beneficial ownership

March 22, 2012

The Democrats in Congress weren’t making much progress with their silly attempt to force a federal mandate down the throats of state officials who register and regulate corporations.  Despite arm-twisting and getting the Obama administration on board with Sen. Levin’s “incorporation transparency” bill, and getting Time magazine to write a glowing piece about the proposed law, the bill’s sponsors are stuck.

So what have they done?  Pres. Obama’s Treasury Department has established a rule that Congress could not get passed as a law.  Rather than getting the states to hunt down the “beneficial owners” (ie, the true owners of the corporation), the new rules established by FinCEN, an agency within Treasury, will require banks to discover the beneficial owners of all their commercial accounts.  This burden on the compliance division of banks will not be well-received by the business end of a still recovering financial sector.

Giving the states an unfunded mandate through a law would be bad enough, but imposing a costly regulation on the private sector through a backdoor rule is even worse.

This rule will not prevent terrorist financing or secret business activities by Iran.  The effect will be to increase tax revenues to the federal government by forcing banks to figure out what entities may be subject to additional American taxes.  If it is discovered that the customer is subject to a foreign tax, it may well be that the State Department will be lobbying the governments of those countries for a reciprocal law or rule to target Americans who off-shore their wealth.

The rule will also gum up the works at American financial institutions by creating new regulations that banks will have to pay for by increasing bank fees for ordinary customers.

From Complinet with a hat tip to Bachir El Nakib:

U.S. Treasury proposes due diligence and beneficial ownership clarifications for financial firms

Mar 01 2012 Brett Wolf

U.S. financial institutions’ obligations to know their customers have for years been implicit in anti-money laundering rules, but the time has come for an explicit rule to clarify and strengthen those requirements, especially with regard to accounts held by legal entities, the U.S. Treasury Department said on Wednesday.

Treasury’s Financial Crimes Enforcement Network (FinCEN), proposed such a rule and called for industry feedback. It cited concerns about “shell” companies that aid money laundering, terrorism financing, weapons proliferation and tax evasion by hiding the identities of participants from law enforcement authorities in the United States and abroad.

Ideally, financial institutions can mitigate such risks by conducting customer due diligence (CDD), which involves obtaining so-called “beneficial ownership” information necessary to reveal the people behind the legal documents.

Although AML regulations stemming from the USA Patriot Act clearly require CDD and more thorough enhanced due diligence measures in the relatively high-risk private banking and correspondent banking arenas, there is more ambiguity in other business lines, sources say.

Still, financial institutions are clearly required to know their customers well enough to develop a risk profile and spot transactions that are suspicious, which requires knowing who is behind accounts, FinCEN says.

“The explicit requirement that a financial institution know its customers, and the risks presented by its customers, is basic and fundamental to both serving those customers and implementing a program that protects a financial institution from abuse by illicit actors,” said FinCEN Director James Freis, Jr. “The comments we receive will help us balance the information needs of law enforcement with the responsibilities placed on the financial industry.

“Broad public input … will assist FinCEN in considering a CDD obligation that would bring consistency and uniformity both within and across financial institution sectors. With this consistency, FinCEN seeks to disrupt the ability of criminals to hide their assets behind the shroud of anonymity.”

Lack of “uniformity and consistency”

FinCEN expressed concern that its efforts over the past decade to highlight and clarify financial institutions’ obligations with regard to CDD and the collection of beneficial ownership information may have been insufficient. Specifically, it said it was “concerned that there is a lack of uniformity and consistency in the way financial institutions address these implicit CDD obligations and collect beneficial ownership information within and across industries.”

It cited a beneficial ownership survey it conducted in 2008 and industry reaction to guidance it issued a year later, both of which it said suggested that not all financial institutions understood their obligations. It also cited recent regulatory actions against several banks and broker-dealers, including the high-profile actions targeting HSBC Bank USA and Wachovia Bank (now part of Wells Fargo).

It added that it envisions a requirement obliging financial institutions to collect beneficial ownership information for all account holders, with possible “limited exceptions based upon lower risk.”

FinCEN’s proposal is primarily aimed at banks, brokers-dealers, mutual funds, futures commission merchants, and introducing brokers in commodities. However, it said it is also considering extending a rule to money services businesses, insurance companies, casinos, non-bank mortgage lenders or originators and other entities with AML program rules.

Historical challenge has new implications

Determining beneficial ownership of certain corporate accounts has long been a challenge for U.S. financial institutions, primarily because some states do not collect the information during the incorporation process. Some financial institutions have argued that the government is in a better position to determine beneficial ownership and therefore should shoulder the burden.

FinCEN’s proposal notes that Treasury’s “strategy” to address “ongoing abuse of legal entities” will also depend on Congress enacting a law requiring that the states collect beneficial ownership information…


Europe pays ½ ransom, but hostages die

March 21, 2012

A news report indicated that U.K., Italy, or both contributed toward a ransom down payment for the release of a Briton and an Italian from a jihadist group in Nigeria.

After the down payment, British special forces attempted to free the abductees.  Unfortunately, the jihadists murdered the two non-Muslim Europeans during the raid.

Now the hostages are dead, and some of the jihadists who were not detained in the raid may have made off with the down payment money.  If you need another reason why we should not negotiate with terrorists or why ransom demands should not be paid, now you have one.

From the Guardian on Mar. 10:

Nigerian kidnappers ‘received ransom downpayment’

Extremists given part of ransom before failed attempt to rescue British and Italian hostages, agency reports

Ransom money was paid to the Islamic extremists holding British and Italian hostages in Nigeria before British special forces tried to rescue them from their compound, a news agency has claimed.

Part of a €1.2m ransom was paid to release hostages Chris McManus and Franco Lamolinara, who were killed during the raid on Thursday which sparked a diplomatic row.

The ransom talks, in which both British and Italian officials had participated, began with a request for €5m and the release of prisoners, the Mauritanian agency reported, quoting sources close to the extremists. During the talks, questions were sent to the kidnappers for the hostages to answer about their families to prove they were still alive.

The British took a tougher line in negotiations than the Italians and demands eventually settled on €1.2m and no prisoner release, it is alleged. After a downpayment, British and Nigerian operatives were able to follow the extremists back to their hideout, setting up the raid.

The Italian foreign ministry declined to comment on the report. The Italians protested that London failed to inform them of the raid until it was under way President Giorgio Napolitano calledBritain’s unilateral action “inexplicable”.

Operatives from Britain’s elite Special Boat Service and Nigerian soldiers surrounded the kidnappers’ hideout on Wednesday, a day before the firefight in which McManus and Lamolinara were killed, the Italian paper Corriere della Sera reported on Saturday. Quoting a Nigerian journalist, Ahmad Salkida, the paper said that, once surrounded, the kidnappers asked to be able to flee the hideout but their request was turned down by soldiers, who demanded they surrender. The kidnappers refused and the raid got under way.

The wife of one of the guards holding the hostages said on Saturday the two men were taken into a lavatory and shot dead during the rescue attempt.

The woman, who gave her name only as Hauwa and said she was 31, cried into her hands as she spoke to Reuters. Hauwa said bullets were fired into the room where she and her husband were staying, killing him.

“After that, there were about six men who came out of the house with the two hostages,” she said. “They came into our wing of the compound, pushed the captives into the toilet and just shot them. I screamed.”

Nigerian authorities have detained five Islamist militants suspected of involvement in the kidnapping. Two of the men were arrested before the rescue attempt and three at the compound where the raid took place.

Italian secret service officials were first alerted to the raid by British counterparts at 10.15am on Thursday, Corriere della Sera reported. They, in turn, informed Italian PM Mario Monti 15 minutes later. By 12.30, the UK ambassador to Italy, Christopher Prentice, was holding talks with Italian government officials to update them on the operation.

British government officials have said Italy had been told of the possibility of a raid and Corriere della Sera said Italian defence minister Giampaolo Di Paola had been informed the week before that special forces had been deployed to the area.

But politicians across the political spectrum in Italy have demanded to know why Rome was not warned that the raid was about to take place, calling it a “slap in the face”.

Italy’s predilection for negotiating with kidnappers instead of rescuing hostages through force was shown in Afghanistan in 2007, when it released Taliban prisoners in return for the freeing of an Italian journalist…


“Halal certification has made me a millionaire”

March 20, 2012

With a tip of the hat to Act for Australia.  Coralie Smith is pushing for greater transparency to let Australian consumers know whether or not the companies they buy food from are paying money to halal certification agencies (the stealth halal tax) and indirectly aiding the spread of sharia law. It’s also making some Muslims stinking rich, while the Islamic nations of the world suffer from some of the greatest internal income inequalities on the planet.

Unfortunately, some food producers and sellers are bowing to behind-the-scenes shakedowns from the big halal industry.  This video from “Today Tonight” reports that corporations are paying secret fees and signing non-disclosure agreements with the halal certifiers:


Concerns mount over Bangladesh

March 19, 2012

FATF, the world’s leading international watchdog for money laundering, terror funding, and financial standard setting, is concerned that Bangladesh hasn’t done enough to criminalize terrorist financing, and isn’t freezing suspect accounts.

FATF is rightly concerned.  Just take Islami Bank Bangladesh Limited as an example.  IBBL is Bangladesh’s premier sharia bank, and it has used its wealth to fund jihad militants, according to intelligence from Bangladesh’s own interior ministry.  Naturally, a sharia bank that funds terrorism isn’t going to freeze the accounts, or even screen the accounts, of terrorist customers. 

(By the way, IBBL is currently attempting to push farmers into loans that they may not need.  Predatory lending by sharia banks should be condemned as vigorously as predatory lending by conventional banks.)

From Gulf Times on Mar. 4:

Dhaka urged to curb terror financing

By Mizan Rahman

Dhaka—The Financial Action Task Force (FATF), a global body to combat money laundering and terror financing, has asked Bangladesh to freeze terrorist assets and confiscate funds relating to money laundering.

A senior official in the finance ministry said yesterday that Bangladesh might see its place coming down in the global scenario from the current ‘grey list’ to the ‘black list’ if the government failed to implement the action plan of FATF on money laundering by June.

The warning from FATF and its action plan was conveyed to Bangladesh from a recent plenary meeting of the task force, held in Paris in mid-February.

Bangladesh Bank (BB) Deputy Governor Abu Hena Mohammed Razee Hassan led a four-member delegation to the meeting.

“The meeting was a groundbreaking one as it lauded Bangladesh for several steps to combat money laundering and for scrapping the fiscal measure allowing black money in share business,” a delegation member said.

“The FATF has asked us to implement a large number of measures to combat terror financing and money laundering at the earliest possible to avert a possible degradation of our global status from ‘grey list’ to ‘black list,” he added.

According to the action plan, Bangladesh has been asked to adequately criminalise money laundering and terrorist financing, establish and implement adequate procedures to identify and freeze terrorist assets, implement adequate procedures for confiscation of funds related to money laundering, ensure a fully operational and effectively functioning financial intelligence unit, improve suspicious transaction reporting requirements, improve international co-operation in money laundering and issue guidance to capital market intermediaries to effectively extend the anti-money laundering obligations.

The FATF is an inter-governmental body, the purpose of which is to develop and promote policies, both on national and international levels, to combat money laundering and terror financing.

The task force is a ‘policy making body’ which works to generate the necessary political will to bring about national legislative and regulatory reforms.

Earlier, the FATF in a report in 2010, said Bangladesh was still non-compliant in at least 10 key areas in attaining the international standard in the sector of money laundering and terror financing.

The government had formed a national co-ordination council, headed by Finance Minister A M A Muhith, to implement the recommendations of FATF.

A ministry of finance official said a joint effort by ministries of finance and home and central bank is needed to implement the action plan.


Energy self-sufficiency in sight

March 18, 2012

Even NPR is admitting that the United States has enough oil and domestic energy sources to achieve energy independence or “self-sufficiency.”

This Morning Edition report from Mar. 7 even goes as far as acknowledging that the increase in domestic energy production is due to American entrepreneurship.  Take a listen:

The concept of “peak oil,” or the idea that oil is a finite resource that will run out in short order, is a myth that has been propagated since the days of the very earliest oil discoveries.  Although NPR doesn’t go as far as to dispute the peak oil concept, their reporting clearly challenges the notion by showing that innovation can help access oil reserves that weren’t available with old technology.

The experts they talked to indicated that the U.S. could become the leading hydrocarbon producer by 2020.  The risk of price shocks induced by OPEC or the Arab nations of the world won’t vanish, but such shocks would become less damaging going forward.

And of course, the more we can fuel ourselves, the less profits will go to the Middle East which uses the funds to export Wahhabi causes, jihad, and terrorism.

Access related coverage and charts about the importance of American self-dependence and getting off of sharia oil here.


Al Qaeda offshoot demands record ransom

March 16, 2012

Ransom amounts demanded by jihadists to release their non-Muslim captives keep rising.  Why?  Because governments, particularly European ones, keep paying them behind the scenes.  In so doing, these governments are putting a bigger and bigger price tag on the heads of their own citizens when they travel abroad.  Foolhardy.  Dangerous.  Shameful.


Iran trades weapons for heroin with the Taliban

March 15, 2012

From the Wall Street Journal‘s ‘Corruption Currents‘ blog on Mar. 7:

Treasury Sanctions Iranian General For Afghan Heroin Trafficking

By Samuel Rubenfeld

The U.S. Treasury Department said Wednesday it sanctioned an Iranian general under the Kingpin Act for allowing Afghan narcotics traffickers to smuggle drugs through Iran.

Iranian Islamic Revolutionary Guard Corps Qods Force General Gholamreza Baghbani is the chief of a Qods Force office near the Afghan border.

Treasury said he facilitated the smuggling of heroin precursor chemicals and shipments of opium through the Iranian border and into Iran in exchange for moving weapons to the Taliban on his behalf.

It’s the first time the Kingpin Act has been used against an Iranian official, Treasury said in a statement.

“Today’s action exposes [Qods Force] involvement in trafficking narcotics, made doubly reprehensible here because it is done as part of a broader scheme to support terrorism,” said David Cohen, undersecretary of Treasury for terrorism and financial intelligence, in the statement.

Some related background follows from another source:

  • Is Iran providing tangible financial, military or political support for the Taliban?

There have been numerous public reports about support for the Taliban coming from Iran. There are reports that elements within the Revolutionary Guards may have transferred long-range rockets to the Taliban and provided training for the Taliban. In February 2011, British forces reportedly intercepted in Afghanistan a shipment of 48 122-mm rockets that they claimed had originated from Iran. Spokesmen of the Islamic Republic have consistently denied all these allegations. Such denials, even if we assume their validity, do not preclude the possibility that non-state actors within Iran may be used by the government to provide weapons or training to some factions within the Taliban organization.

From a strategic perspective, the Iranian government looks at the Taliban as a useful enemy that is undermining the interests of its other enemy, namely the United States. Therefore, it should not be surprising at all if the Iranian government supports the Taliban or if it looks the other away as behind-the-scenes support is provided by Iran’s non-state actors to the Taliban.