On May 3, the Financial Crimes Enforcement Network (FinCEN) issued an updated advisory to alert financial institutions of continued widespread public corruption in Venezuela under the regime of Nicolas Maduro and the methods Venezuelan senior political figures and their associates, family members and front persons may use to move and hide proceeds of their corruption. This update mainly:
- Renews the description of public corruption in Venezuela;
- Adds information regarding examples of U.S. Government actions;
- Describes how corrupt Venezuelan senior political figures exploit a Venezuelan government administered food program that uses an over-invoicing trade-based money laundering scheme that can involve front or shell companies;
- Highlights the attempt to use digital currency to evade sanctions and AML/CFT controls by the corrupt illegitimate regime of Nicolas Maduro; and
- Provides revised financial flags to assist in identifying and reporting to FinCEN suspicious activity that may be indicative of corruption by Venezuelan senior political figures, including: (a) the abuse of Venezuelan government contracts; and (b) transactions for the purchase of high value assets that are not commensurate with the official salaries of the corrupt Venezuelan senior political figures making the purchase.
On January 23, 2019, the United States recognized Juan Guaido as the Interim President of Venezuela and the legitimate leader of the Venezuelan people. The illegitimate Maduro regime has engaged in massive corruption through state-owned enterprises and offshore third-parties. This corruption, particularly related to government contracts and resources, fosters a climate where financial crime and other forms of lawlessness can thrive.
The updated advisory states that financial institutions have reported to FinCEN increased activity with suspected links to Venezuelan public corruption, including corruption involving government contracts. It suggests that financial institutions should take risk-based steps to identify and limit any exposure they may have to funds associated with Venezuelan public corruption fueled by the Maduro regime. The updated advisory also includes a list of red flags to assist financial institutions in identifying and reporting activity which may be associated with the widespread Venezuelan public corruption. By way of example, financial institutions should be on the lookout for export businesses operating in South Florida, especially those with subsidiaries in Venezuela or that own companies incorporated in Venezuela with similar names, that export heavy equipment, auto parts, and electronics from Florida to Venezuela. The Maduro regime may be utilizing those export companies to launder the proceeds stemming from the public corruption. The FinCen guidance also includes several red flags relating to Venezuelan government contracts. Specifically, contract payments: (a) made to an unrelated type of business (e.g. payment made to a textile company when the contract relates to construction); (b) deposited in offshore accounts in Panama and the Caribbean; (c) originating from third parties who are not official Venezuelan government entities; and (d) in cash in the accounts of companies involved in the Maduro regime’s government contracts. Another red flag is when senior Venezuelan political officials, their family or close associates buy real estate or aircraft, the purchases are not commensurate with their official salaries and the assets are purchases in South Florida, Houston, Texas, the Caribbean or Southern Europe. Please see the updated advisory for a complete list of the red flags.