Tag: Cayman Islands

Bank Fraud is Okay, But not Drugs or Terrorism

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I would like to think that many of the bankers involved in illegal money laundering are not actually aware of the full extent of their malfeasance. Maybe they should have done a better job looking at a client when they noticed a red flag. But sometimes you run across a case where the bankers are truly scumbags. The Department of Justice just brought charges in such a case.

A combined Department of Justice and Internal Revenue Service sting lead to the arrests of two Caribbean-based bankers and their lawyer for conspiracy to launder money and hide the identities and assets of U.S. taxpayers. According to the indictment, Joshua Vandyk and Eric St-Cyr lived in the Cayman Islands and worked for an investment firm based there. Patrick Poulin was the firm’s attorney, based in Turks and Caicos. According to the indictment, Vandyk, St-Cyr and Poulin solicited U.S. citizens to use their services to hide assets from the U.S. government.

The case starts off as bread and butter fraud, trying to shield assets and avoid tax. The feds sent in three undercover agents to use the services to catch them red-handed. Vandyk and St-Cyr told the agents to create offshore foundations, with help from Poulin, so the investment firm wouldn’t look like it dealt with U.S. clients. Vandyk and St-Cyr then invested the money outside the United States in the name of the offshore foundation. The investment firm said it wouldn’t disclose its clients or their gains to the U.S. government, or send the clients any investment statements. The firm’s clients could monitor their investments online through the use of anonymous, numeric passcodes and liquidate their accounts on request.

What caught my attention was the defendants knew the money coming in was illegal money. One of undercover agents told all three defendants that the cash was coming from a bank fraud that he committed. Vandyk “indicated that this was acceptable to the co-conspirators so long as the money was not linked to drugs or terrorism.”

Of course, the information in this article comes only from the indictment, so the defendants have not had a chance to tell their side of the story.

References:

Compliance Bits and Pieces

Here are some interesting compliance stories that have not made their into their own posts:

Canada’s Commitment to Combating the Corruption of Foreign Public Officials: Watching Bill C-31 from the Wrageblog

Bill C-31, An Act to amend the Criminal Code, the Corruption of Foreign Public Officials Act and the Identification of Criminals Act, was introduced to Parliament on May 15, 2009. The timing of the bill’s first reading was clearly tied to the June 2009 release of Transparency International’s Progress Report on the Enforcement of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The TI Report criticized Canada, calling Canada a laggard, and listing it as one of 21 countries making little or no effort to enforce its anti-corruption laws.

The FCPA’s Murky Knowledge Element by Mike Koehler for the FCPA Professor

In a superb new piece titled, “The ‘Knowledge’ Requirement of the FCPA Anti-Bribery Provisions: Effectuating Or Frustrating Congressional Intent?,” – Kenneth Winer and Gregory Husisian of Foley & Lardner (the “Authors”) conclude that “[t]he DOJ and SEC … now interpret the knowledge requirement so broadly that they have effectively eviscerated the 1988 statutory changes thereby raising an important question: Are the DOJ and SEC frustrating the intent of Congress by ignoring the reason that Congress amended the FCPA?” (see here).

Changes to Cayman AML Guidance Notes from Compliance Avenue

According to recent changes to the Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands (the “Guidance Notes”), offshore funds registered in the Cayman Islands and regulated by the Cayman Islands Monetary Authority (“CIMA”) should designate and appoint a compliance officer (“Compliance Officer”) at the management level, who: . . .

How BAE Got Caught by Richard Cassin for the FCPA Blog

Investigative reporters may be disappearing from newsrooms everywhere, but they still have an important role to play in holding institutions and people accountable for overseas bribery. Rob Evans of the U.K. Guardian contributed an essay to TI’s Global Corruption Report 2009 here. It’s about how he and David Leigh broke the BAE story.

ERISA Bonding Requirements for Hedge Fund Managers by The Hedge Fund Lawyer

Hedge fund managers who manages hedge funds which exceed the 25% ERISA threshold will need to purchase a fidelity bond.  The questions and answers below on the ERISA fidelity bonding requirements were prepared by the Department of Labor which is the governmental agency which is in charge of enforcing the ERISA laws and regulations.

The Time I was Written Up for Blogging by New CommBiz

About a year and a half ago I was written up for blogging. It was kind of a weird moment and I’ve never really talked about it much. It wasn’t that big of a deal but I thought I’d share how it happened and what I learned from it.

Here’s what I did wrong:

  • Technically I responded to a “press inquiry” (nothing freaks out PR people more than employees talking to the press)
  • I talked about the layoffs and certain financial aspects of the company during the “quiet period”