The Financial Crimes Enforcement Network (FinCEN) issued an advisory (FIN-2018-A003) this week, highlighting the connection between “corrupt senior foreign political figures” and their enabling of human rights abuses.
“Corrupt senior foreign political figures” includes current or former senior foreign government officials and political figures; foreign government-owned businesses or other entities that have been formed by or for the benefit of, any such individual; and their immediate family members and close associates.
Corruption schemes include:
- Misappropriation of state assets to engage in narcotics trafficking, money laundering, embezzlement of state funds, and other corrupt activities;
- Using shell companies to obfuscate ownership and mask the true source of the proceeds of corruption; and
- Using real estate transactions to conceal the existence and origins of their illicit funds.
- Describes some of the ways these individuals access the U.S. financial system, and obscure and launder illicit proceeds;
- Provides “red flags” to help financial institutions identify their methods and illicit activities; and
- Reminds institutions of their due diligence and suspicious activity report (SAR) filing obligations related to corrupt senior foreign political figures and their financial facilitators.
In addition, the Office of Foreign Assets Control’s sanction programs broadly prohibit “U.S. persons” (which includes U.S. financial institutions), from engaging in transactions involving designated individuals and entities that have engaged in corruption, undermined democratic processes, or engaged in human rights abuse. All assets of the OFAC-designated individuals and entities subject to U.S. jurisdiction are frozen and U.S. persons are prohibited from dealing with the designated person.
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