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Two Financial Crime Cases with One Commonality: Standby Letters of Credit
By Colby Adams
printA $400 million settlement with an Israeli bank accused of facilitating tax evasion and an ongoing investigation into loan fraud and anti-money laundering violations at Citigroup's Mexican affiliate seem to have little in common, but share at least one trait: the exploitation of a typically low-risk instrument for trade finance. Unlike commercial letters of credit, which are used to pay exporters after goods and documents are delivered, standby letters of credit, or SBLC, are triggered only if the terms of a business deal are violated. In the normal course of business, the SBLC serves to provide peace of mind to...
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One of Israel's largest banks will pay $400 million to federal and state officials after admitting that it set up fake loans and corporations to help wealthy American clients stash their money abroad.
Long considered one of the toughest illicit finance schemes to crack, trade-based money laundering is on the rise in response to stricter regulatory oversight of financial institutions, U.S. investigators said Monday.
In internal reviews and an ongoing criminal and regulatory investigation, Citigroup employees and Mexican officials have privately voiced concerns that drug traffickers may have infiltrated Banamex's anti-money laundering department, say sources.
Belarus' House of Representatives advanced an anti-money laundering bill, a MoneyGram and Western Union agent was sentenced to 15 years in prison for laundering fraud proceeds, and more, in this week's roundup.
Trade-based schemes and bulk cash smuggling are among the most common tactics used by international money launderers, according to Joseph Gallion, the deputy assistant director of the Financial, Narcotics and Special Operations Division for the Homeland Security Investigations (HSI).
Businesses and individuals seeking to evade sanctions that target Iran and other nations may be utilizing back-to-back letters of credit to disguise their roles in transactions, say trade analysts.
Technological developments offer governments unprecedented ability to address trade-based crime. But there's a problem, according to Nikos Passas, a professor who studies financial crime at Boston-based Northeastern University: governments aren't utilizing available tools.
Bank consultants say they are concerned that the cost of complying with Bank Secrecy Act (BSA) regulations for trade finance transactions could force some banks out of that line of business.
The Bush Administration is seeking a 7 percent budget increase next year for the U.S. Immigration and Customs Enforcement that includes about $4 million for units that investigate bulk cash smuggling and trade finance-related money laundering.