Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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2/14/2011 Mideast Developments Get FinCEN’s Attention

The upheaval in Tunisia and Egypt has not gone unnoticed by the Financial Crimes Enforcement Network. The agency has issued a warning to U.S. financial institutions that “senior foreign political figures” may be fleeing Tunisia and trying to take out money that does not belong to them. A senior foreign political figure includes senior members of a former government, as well as senior executives in political parties, corporations, and businesses. The term also covers members of the immediate families of such individuals, as well as known associates. When dealing with this category of client, financial institutions should be prepared to file Suspicious Activity Reports on activities that arouse suspicion. With the fall of the Mubarek government in Egypt, even more officials will be looking for financial ports in the storm.

Another action by FinCEN was to issue a proposed regulation making the Lebanese Canadian Bank an institution of primary money laundering concern. The regulation would require U.S. financial institutions to terminate any correspondent account established, maintained, administered, or managed in the U.S. for or on behalf of the Lebanese Canadian Bank. Financial institutions are also to apply special due diligence to correspondent accounts that are reasonably designed to guard against indirect use by the Lebanese Canadian Bank. The action was taken because of services the Lebanese Canadian Bank, which despite its name has only one representative office in Canada, had given to an individual labeled a drug kingpin, Ayman Joumaa, as well as individuals identified only as “Individual A,” “Individual B,” etc., who are nationals of Asia and Latin America involved in drug trading.

Both of these developments will be analyzed in detail in the next issue of the Monitor.

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