In a quietly charming official memo, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) calmly walks U.S. bankers through the morass of Venezuelan kleptocracy in all its endlessly inventive forms.
It’s a remarkable read — a work of deep transcultural translation you have to read with your your chanchullero-English/English-chanchullero dictionary open at all times.
I especially enjoyed their “red flags” section:
The red flags noted below […] may help financial institutions identify suspected schemes by corrupt officials, their family members, and associates to channel corruption proceeds, often involving government contracts or resources, through transactions involving Venezuelan SOEs and subsidiaries:
Government Contracts: Corrupt officials may use contracts with the Venezuelan government as vehicles to embezzle funds and receive bribes. In this regard, some financial red flags can include:
- 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.
Members of the regime and their allies direct government contracts to their associated companies to import goods and obtain approval from the Venezuelan Corporation of Foreign Trade (CORPOVEX) for foreign-domiciled companies—often shell companies—to participate in the import activity.5 Both the importers and the receiving government officials often divert a portion of the merchandise to the black market, where pro ts are higher.
- Documentation corroborating transactions involving Venezuelan government contracts (e.g., invoices) 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). Venezuelan officials who receive preferential access to U.S. dollars at the more favorable, official exchange rate may exploit this multi-tier exchange rate system for pro t.
- Payments involving Venezuelan government contracts that originate from non-official Venezuelan accounts, particularly accounts located in jurisdictions outside of Venezuela (e.g., Panama or the Caribbean).
Export businesses in South Florida that specialize in sending goods to Venezuela are particularly vulnerable to trade-based money laundering (TBML) schemes. These include businesses that send heavy equipment, auto parts, and electronics (cell phones and other appliances) from Florida to Venezuela.
- Payments involving Venezuelan government contracts that originate from third parties that are not official Venezuelan government entities (e.g., shell companies).
Public reports indicate that the use of third parties, or brokers, to deal with government entities is common in Venezuela and is a signifiant source of risk. Brokers, particularly when colluding with corrupt government officials, can facilitate overseas transactions in a way that circumvents currency controls and masks payments from SOEs.
- Cash deposits instead of wire transfers in the accounts of companies with Venezuelan government contracts.
In addition, other financial red flags observed in transactions suspected of involving Venezuelan government corruption include:
- Transactions for the purchase of real estate—primarily in the South Florida and Houston, Texas regions—involving current or former Venezuelan government officials, family members or associates that is not commensurate with their official salaries.
- Corrupt Venezuelan government officials seeking to abuse a U.S. or foreign bank’s wealth management units by using complex financial transactions to move and hide corruption proceeds.
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