US blacklists Panama-based money laundering operation

Issues rules requiring financial institutions to identify company owners

WASHINGTON: The US Treasury on Thursday blacklisted an extensive Panama-based money laundering operation that allegedly helped multiple drug trafficking groups hide the source of their illicit gains through various companies, including Balboa Bank & Trust.

The US Treasury’s Office of Foreign Assets Control (OFAC) said the operation, led by Nidal Waked Hatum and Abdul Waked Fares, used 68 companies including Grupo Wisa — a holding company that includes real estate, construction, retail and media businesses.

Panama’s banking regulator said it was taking control of Balboa Bank & Trust due to its alleged links to the money laundering scheme.“(Treasury’s move) puts at risk the interests of (Balboa) depositors ... given that the prestige of the banking group is in question, and a substantial portion of its liquid assets are located in foreign jurisdictions subject to seizure,” the regulator said in a statement, adding there was no risk of contagion to Panama’s banking system.

Treasury’s targeting of the 68 companies freezes any assets they may have in the United States, and prohibits US firms and people from dealing with them.Balboa Bank, which has $44.1 million in capital and 172 employees, did not respond to phone calls to its offices.

Abdul Waked, president of Grupo Wisa and one of the two alleged leaders of the money laundering operation, called the accusations “false and unfounded” and said the company would work with authorities to clear up the “unfortunate confusion.”

To launder money, OFAC said the two men used trade-based schemes like fake invoices, bulk cash smuggling, and a range of companies from and a range of companies from real estate to retail, such as a luxury mall in downtown Panama City, the La Riviera chain of duty-free stores, and two Panamanian newspapers: La Estrella and El Siglo.   Wajid Ali Syed adds: The Obama administration announced on Thursday a series of actions to increase transparency and disclosure requirements to enhance law enforcement's ability to detect, deter and disrupt money laundering, terror financing and tax evasion.

Out of the Panama Papers came a lesson for the administration and the White House introduced rules that will end the use of anonymous corporations in the US and require disclosure of beneficial owners when foreigners deposit money or buy assets.

The White House said Panama Papers put the issues of illicit financial activity and tax evasion in the spotlight. Hence, the actions will include: final treasury regulations on "Customer Due Diligence" that enhance transparency and protect the integrity of the financial system by requiring financial institutions to know and keep records on who actually owns the companies that use their services.

Along with that, the White House also introduced a tax rule to close a loophole allowing foreigners to hide assets or financial activity behind anonymous entities established in the US. "The legislative proposal will strengthen tools to fight corruption and money laundering," the announcement said.

"These efforts are critical to preventing criminals from using the global financial system to launder proceeds from corruption or other illegal activities, financial criminal activity or even terrorism, evade international sanctions regimes, or evade taxes," the White House said.

The White House also renewed its call to Congress to draft legislation in this regard. In a letter from treasury secretary, the administration asked the Senate to "finally approve tax treaties that have been pending for several years, and that would help crack down on offshore tax evasion. We stand ready to work with Congress to act on the administration's legislative proposal, that ensures the United States is in line with international standards on tax information sharing," the White House said.

As many as eight tax treaties with other countries have been awaiting Senate approval for several years - including amendments to existing treaties with Switzerland and Luxembourg that would enable US law enforcement to obtain information about financial accounts in those countries.

Similarly, the Department of Justice is also sending Congress a draft legislation to enhance and strengthen efforts to combat transitional corruption. The legislation would allow law agencies to prevent bad actors from concealing and laundering illegal proceeds of transnational corruption.

"It would also allow US prosecutors to more effectively pursue kelptocracy cases and prosecute money laundering as part of foreign corruption, and reinforce our role in the international community as a model for others in anti-corruption matters," the announcement said, adding that the proposals would assist investigators and prosecutors in gathering evidence which can be used in prosecuting those who seek to hide and move illegal funds.