The Treasury Department’s Financial Crimes Enforcement Network issued an advisory Wednesday to alert banks about graft money flowing out of Venezuela.
The FinCEN advisory set out “financial red flags” to help banks spot and report “suspicious activity that may be indicative of corruption.”
Among the red flags FinCEN are real estate deals in South Florida and Houston involving current or former Venezuelan government officials “not commensurate with their official salaries.”
Other red flags are:
- Transactions involving Venezuelan government contracts that are directed to personal accounts.
- Transactions involving Venezuelan government contracts that are directed to companies that operate in an unrelated line of business (e.g., payments for construction projects directed to textile merchants).
- Transactions involving Venezuelan government contracts that originate with, or are directed to, entities that are shell corporations, general “trading companies,” or companies that lack a general business purpose.
- Invoices involving Venezuelan government contracts that include charges at substantially higher prices than market rates or that include overly simple documentation or lack traditional details (e.g., valuations for goods and services).
- Payments involving Venezuelan government contracts that originate from non-official Venezuelan accounts, particularly accounts located in jurisdictions outside Venezuela (e.g., Panama or the Caribbean).
FinCEN iincluded a special warning for export businesses in South Florida that specialize in sending goods to Venezuela. They are “particularly vulnerable to trade-based money laundering (TBML) schemes,” FinCEN said.
Acting FinCEN Director Jamal El-Hindi said not all transactions from Venezuela involve corruption. But he said banks need to be on guard against money laundering, “particularly now, during a period of turmoil in that country.”
FinCEN encouraged a risk-based approach.
“Normal business and other transactions involving Venezuelan nationals and businesses do not necessarily represent the same risk as transactions and relationships identified as being connected to the Venezuelan government,” FinCEN said.
FinCEN’s September 20, 2017 “Advisory on Widespread Public Corruption in Venezuela” is here.
Richard L. Cassin is the publisher and editor of the FCPA Blog.