Attorneys Warn of Potential for More Cases Over Money From Venezuelan Officials
Holland & Knight partner Wifredo Ferrer warned Florida bankers about the potential for more criminal cases being filed over money moved out of Venezuela.
April 17, 2020 at 02:28 PM
4 minute read
A string of U.S. indictments against Venezuelan officials should serve as a warning to the financial services community in South Florida to raise the bar for anti-money laundering and other compliance measures, lawyers from Holland & Knight say.
The Justice Department charged Venezuelan President Nicolás Maduro and 14 current and former government officials with money laundering and other charges March 26 in an alleged narco-terrorism conspiracy to "flood" the United States with cocaine. The indictments came from New York, Miami and Washington, D.C.
Wifredo Ferrer, chair of Holland & Knight's global compliance and investigations team and executive partner of the firm's Miami office, said he expects U.S. agencies to dedicate additional resources to cases against Venezuelan nationals.
"These cases are going to continue coming," Ferrer warned bankers during a Thursday webinar hosted by the Florida International Bankers Association.
He sees the Justice Department using "every tool in its toolbox" and collaborating more closely with agencies such as the Securities and Exchange Commission and the Treasury Department's Office of Foreign Assets Control. That could result in a spike of prosecutions charging violations of the Foreign Corrupt Practices Act.
"It's really important for the banks, the financial institutions to have done their homework and make sure that they have their compliance programs ready to protect you," said Ferrer, calling preparation the "super-factor" to protect against prosecution.
In addition to protocols, Ferrer said banks need to show they have allotted the necessary resources and personnel to detect suspect transactions. He noted the failure to put enough resources into money-laundering prevention is what caused regulators to slap Citigroup Inc.'s Banamex USA operation with a $140 million fine in 2015.
"It's not just having a compliance program on paper or having it in the system," he said. "You have to have enough people, enough resources to make sure you are actually making a difference and being able to weed out and identify the money that is suspect that's going through your system."
Ferrer was South Florida's top cop when he served as U.S. attorney for the Southern District of Florida from 2010 to 2017.
Hundreds of thousands of Venezuelans moved to Florida over the past two decades as conditions in their country slowly deteriorated. Much of the wealth allegedly generated from bribes and corruption in Venezuela also appears to have settled in South Florida.
"We have seized a lot of money," U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida said in a March news conference.
Daniel Gutiérrez, chair of FIBA's anti-money laundering committee and regulatory risk manager with Ocean Bank, concurs.
"Venezuela is right here in our backyard," he said.
While many banks are no longer actively seeking business with high-net-worth Venezuelans, plenty of institutions in South Florida have significant portfolios with Venezuelans that require extra due diligence.
Gutiérrez suggested Thursday that banks should evaluate the long-term business potential with their Venezuelan clients to determine the cost-benefit of maintaining those relationships. He also recommended banks should obtain sworn statements from clients saying they have no relationship with the Maduro government.
Banking with Venezuelans requires getting to know not just those clients but also their customers and suppliers. , Gutiérrez said Internet searches that turn up no information should sound alarms.
Andrés Fernández, a partner in Holland & Knight's Miami office and co-leader of the firm's financial services regulatory team, advised bankers to make sure transactions do not violate U.S. sanctions against Venezuela.
Bankers must file suspicious activity reports with Treasury's Financial Crimes Enforcement Network when transactions raise red flags.
"When it comes to Venezuela, the river runs deeper. It's not just about sanctions compliance. It's about this underlying activity whether it's narco-trafficking, whether it's corruption, whether it's other red flags that we need to be mindful of," Fernández said.
Those red flags could include transactions in accounts controlled by the Venezuelan government or are inconsistent with a government employee's salary. Payments that pass through layers of jurisdictions for no apparent reason should also be eyed with suspicion, he said.
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