Institutions of Primary Money Laundering Concern

Institutions of Primary Money Laundering Concern in 2013

United States views on international law [1] in relation to Institutions of Primary Money Laundering Concern: (1) Rmeiti Exchange (Lebanon)

On April 25, 2013, the Department of the Treasury, Financial Crimes Enforcement Network (“FinCEN”) issued notice of its finding under § 311 of the USA PATRIOT Act, Pub. L. 107-56, that Kassem Rmeiti & Co. For Exchange (“Rmeiti Exchange”) is a financial institution operating outside the United States that is of primary money laundering concern. 78 Fed. Reg. 24,593 (Apr. 25, 2013). Based on this finding, FinCEN also issued a notice of proposed rulemaking under § 311. 78 Fed. Reg. 24,576 (Apr. 25, 2013). The rule proposed would impose “both the first special measure (31 U.S.C. 5318A(b)(1)) and the fifth special measure (31 U.S.C. 5318A(b)(5))” against Rmeiti Exchange. The first special measure imposes requirements with respect to recordkeeping and reporting of certain financial transactions. The fifth special measure prohibits or conditions the opening or maintaining of correspondent or payable-through accounts for Rmeiti Exchange. On April 23, 2013, FinCEN imposed the first special measure by temporary order to immediately address the threat to the U.S. financial system. FinCEN had previously determined that another bank in Lebanon, Lebanese Canadian Bank (“LCB”), was of primary money laundering concern. this world legal encyclopedia (in relation to issues that took place in the year 2011) at 61-65. Excerpts below from the notice of finding explain the determination with regard to Rmeiti Exchange (with footnotes omitted).

Some Aspects of Institutions of Primary Money Laundering Concern

III. The Extent to Which Rmeiti Exchange Has Been Used To Facilitate or Promote Money Laundering in or Through Lebanon In finding that Rmeiti Exchange is a financial institution of primary money laundering concern, FinCEN reviewed the extent to which Rmeiti Exchange facilitates or promotes money laundering and determined that Rmeiti Exchange, its ownership, management, and associates are involved in illicit activity that includes the same trade-based money laundering activities conducted by U.S.-designated narcotics kingpin Ali Mohamed Kharroubi and Elissa Exchange, facilitate money laundering by other Lebanese exchanges on behalf of drug traffickers, and provide financial services to Hizballah.

Developments

A. Rmeiti Exchange Engages in Trade-Based Money Laundering for U.S.-Designated Narcotics Kingpin Ali Mohamed Kharroubi and Elissa Exchange According to information available to the U.S. Government, Rmeiti Exchange engages in auto sale-related financial transactions working with [Specially Designated Narcotics Trafficker or] SDNT Ali Mohamed Kharroubi to send funds to U.S. auto dealers as part of a trade-based money laundering scheme. Before and after the January 2011 Treasury designation of Ali Mohamed Kharroubi and Elissa Exchange and FinCEN's Section 311 Action against LCB which exposed the use of LCB accounts by Kharroubi and his company, Elissa Exchange, to launder drug proceeds for the Joumaa drug trafficking organization through the purchase and export of used cars from the United States, Rmeiti Exchange and its management processed structured, regular, round-number, large-denomination international wire transfers for the purchase of vehicles in the United States. The funds often originated from unknown individuals in high-risk money laundering regions and were sent to auto auction companies and used car dealers, some of which have no physical presence or verifiable address.

Details

1. Rmeiti Exchange Engages in Trade-Based Money Laundering Activity With Narcotics Traffickers Rmeiti Exchange and its management facilitate extensive transactions for known money launderers and drug traffickers. Prior to Treasury's Kingpin designation and FinCEN's LCB 311 Action, Kassem Rmeiti, through Rmeiti Exchange, routinely processed structured international wire transfers from its accounts at LCB and other banks to many of the same U.S.-based car dealerships that received funds from Elissa Exchange and were subsequently named in the [U.S. District Court for the Southern District of New York, or] SDNY Complaint as participants in the Joumaa network's money laundering scheme. In fact, between 2008 and March 2011, Rmeiti Exchange and its owner, provided at least $25 million in large, round dollar, and repetitive payments to U.S.-based car dealers and exporters, including more than $22 million from accounts it held at LCB. Many of the used car dealers that received payments from Rmeiti Exchange were later named in the SDNY Complaint for receiving funds from the Joumaa network.

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2. Rmeiti Exchange Engages in Trade-Based Money Laundering Activity With Individuals the U.S. Government Has Designated as Narcotics Traffickers After SDNT Ali Mohamed Kharroubi's network was exposed in the Treasury and Department of Justice actions, the network adapted its business practices and utilized other exchange houses which they could control or otherwise use to continue sending funds to used car dealerships in the United States, in particular Rmeiti Exchange. After the LCB 311 Action in February 2011, Rmeiti Exchange companies continued to make structured international wire payments to U.S. car dealers and companies for car purchases in a manner representative of trade-based money laundering, and a Rmeiti Exchange company was specifically used to facilitate such payments on behalf of Treasury-designated narcotics trafficker Ali Kharroubi. According to U.S. Government information, in February 2011 Ali Mohamed Kharroubi directed Kassem Rmeiti to create the Trading African Group (TAG) in Benin so that Kharroubi could continue making international wire transfers for U.S. car purchases that avoided U.S. Government scrutiny. Further, by the fall of 2011, former Elissa Exchange employees were working for TAG, and Kassem Rmeiti was paying Kharroubi about 30-40% of TAG's profits.

TAG provided more than $1.7 million to U.S. car dealers and exporters between March and October 2011. These payments consisted of structured, regular, large-denomination international wire payments in a manner representative of trade-based money laundering, and included at least one U.S. car dealer named in the SDNY Complaint as receiving car purchase payments from Elissa Exchange as part of the money laundering scheme alleged in the Complaint. The U.S. car dealers also received multiple wire transfers from individuals and businesses in regions considered high-risk for trade-based money laundering, which funded purchases of cars that were then shipped to Lebanon and likely Benin. The sources of some funds were unknown, and the recipients had addresses that could not be verified or appeared to be a residence.

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3. Following U.S. Government Actions in 2011, Rmeiti Exchange Adapted Its Trade-Based Money Laundering Activity To Conduct Transactions Through Rmeiti's Other Businesses, Especially World Car Service LTD Kassem Rmeiti also serves as a board member or executive and represents himself as the owner of World Car Service LTD, a.k.a., World Car Service AG, (WCS AG)–an international transport and shipping business located in Switzerland, which is believed to be an affiliate of World Car Service International Transport and Shipping Company (a.k.a., WCS SA) located in Benin. Between March 2011 and August 2012, WCS SA in Benin processed numerous international wire transfers totaling over $100,000 and referencing auto purchases or vehicles to U.S.-based individuals and businesses and one other individual involved in auto exports or sales. From 2011 to 2012, WCS SA in Benin provided over $2.2 million in large, round-dollar wire transfers to numerous U.S. car dealers and car exporters, one of which was named in the 2011 SDNY Complaint, and many of which had previously received over $2 million in dozens of large, round-dollar wire transfers from Rmeiti Exchange or TAG between early 2007 and mid2011. This pattern of activity indicates that in 2011 Rmeiti shifted some transactions away from his exchange companies and TAG and began increasingly utilizing his WCS accounts for tradebased money laundering transactions with the same entities through 2012. Additionally, Kassem Rmeiti has engaged in commingling of over $2.5 million among his several businesses, including WCS SA, WCS AG, STE Rmaiti SARL, and Kassem Rmeiti and Co. For Exchange between 2009 and 2012, which is consistent with money laundering indicators and techniques.

Resources

Notes

1. Institutions of Primary Money Laundering Concern in Digest of United States Practice in International Law