In BSA, Compliance, Political Corruption, Terror Financing

Decreased U.S. Aid = Increased Terrorism Rates?

Given the wealth of easily accessible information – both credible and “alternative”— available to the majority of individuals residing in most of the adequately-developed countries around the world, it is safe to conclude that the mainstream media can have a somewhat-meaningful effect on our everyday lives. Over the course of the last several years, much has been made by the media of the anti-money laundering and terrorism financing crusades being lead in numerous geographic regions around the world today, and within the financial services sector in general. Yet while international media outlets tend to do an outstanding job of reporting on large-scale fines and sanctions handed down by federal watchdogs and other government bodies, the general public is often left uninformed about key details on how the movements to hinder corruption, terror financing and other unethical practices truly operate.

While many would think that these initiatives are led by countries to address their individual problems alone, many AML/CTF initiatives are in fact joint efforts. These initiatives often depend on mutual assistance and information sharing between multiple countries, as well as the exchange of different resources and significant funds in order to create programs potent enough to stand up to the latest, most pervasive financial threats that emerge on seemingly a daily basis. With that being said, if one country lending support and resources to several others decides that it is no longer in position to offer a helping hand, such an event could have a potentially catastrophic impact on said dependent countries. Such is the current case for multiple Caribbean countries that have relied on funding from the United States for years as a major White House budget cut looms – one that will see a significant cut in the U.S. government’s financial aid to developing countries.

The Miami Herald article “Proposed Trump budget cuts could pose security danger for Caribbean, United States”, cited in BSA News Now on Friday, June 9th, discusses the impact that the reported 28% reduction in the State Department’s budget could have on the Caribbean Basin — an area notorious for its links to terrorism and terror funding — in the coming months. Although longstanding programs such as global health funding and food programs stand to be either cut down or completely cut out, analysts in the financial services sector are most concerned with the security implications posed by the stoppage in anti-terrorism aid to the Caribbean. The sentiments of former Jamaican Ambassador to the United States, Curtis Ward, who believes that “Any cuts, any reduction of current funding levels for the CBSI, would adversely affect the security capacity in the region and the threats to U.S. national security emanating from or transiting the region will increase exponentially”, are currently shared by many who are again questioning the latest in a series of several controversial decisions made by President Trump in his short tenure as President of the United States (Charles, 2017). With militants from Trinidad and Tobago and other Caribbean countries being increasingly recruited by Middle Eastern terror groups such as ISIS, Caribbean nationals fear that the cuts in funding for their anti-terror programs will leave them, and potentially the United States, susceptible to the risk of terrorist attacks and other frightening activities upon the returns of the Caribbean citizens fighting abroad.

The issues do not end there for these Caribbean countries, however. The trend of de-risking – defined as a situation where financial institutions terminate or restrict business relationships and accounts with certain categories of customer based on the risk involved in dealing with said individuals or groups – is likely to sweep through the Caribbean in response to a proposed $800 million Treasury Department budget cut that will likely impact both anti-money laundering and terror financing efforts in the region. With decreased AML funding comes increased financial risks for U.S. banks, thus leaving de-risking as their only viable option. While the banks make out okay, this practice could leave the economies of many of the Caribbean countries in shambles.

President Trump’s budget slashes could have a serious impact on the anti-terror programs of cities across the United States as well. Severe budget cuts to the U.S.’s Urban Area Security Initiative (UASI) have many local officials fearing that they will no longer be able to “address the unique counter-terrorism needs” of highly-populated cities such as Las Vegas and New York City that are often the primary targets of terrorist activities. Trump’s budget plan also reportedly “proposes slashing by 75% the State Homeland Security Grant Program, which provides anti-terrorism funds to schools, museums, stadiums, religious and community centers, as well as eliminating entirely the Nonprofit Security Grant, which gives non-profits and religious institutions money to protect themselves against hate crimes” (Edelman, 2017). Clearly profound changes are on the horizon as a result of the aforementioned budget cuts led by President Trump, and we will simply have to wait and see the result they will have on the domestic and international battles against money laundering and terrorism financing.

Weekly Roundup

BNP Paribas Fined for AML Faults

Of late it seems that a growing number of financial organizations have succumbed to somewhat-avoidable regulatory compliance failures and have suffered the consequences as a result. Earlier this week BNP Paribas became the latest in the lengthening line of financial institutions to be fined for regulatory improprieties in 2017. BNP Paribas, one of the world’s most prominent banking groups, which maintains a presence in 75 countries across the globe, was found to have several compliance shortcomings following a 2015 investigation by France’s banking watchdog, ACPR. These shortcomings reportedly included inadequate methods for detecting suspicious activity, as well as a lack of qualified staff available to monitor such activity, which was likely one of the larger contributing factors to the issues at hand.

The transgressions did not end there however, as it was also discovered that BNP Paribas failed to “tip off the anti-money laundering and terror finance authority of suspicious activities” and other out-of-the-norm operations (RFI, 2017). While the bank did admit to these faults, because of its large global presence, the ACPR believes that BNP Paribas’ compliance failures had a profound effect on the entire money laundering and terrorism financing fight seen in France both in 2015 and beyond. As a result, ACPR handed down its fine of 10 million (US$11.26 mill) and demanded the immediate amelioration of the organization’s compliance procedures.

Qatari Ambassador Speaks Out on CTF Claims

On Monday, June 6th, Qatar’s Ambassador to the United States gave his take on the terrorist-financing allegations brought forth by the United Arab Emirates (UAE) against Qatar at the start of this month. In an interview with CNN, Ambassador Sheikh Meshal Bin Hamad Al-Thani stated, “All these stories about Qatar financing terrorism are fabricated, they are not true” (Hamedy, 2017). While Al-Thani was firm on his stance, and there is not yet any proof of the validity of the UAE’s claims, this has not stopped multiple notable Middle Eastern countries such as Saudi Arabia, Egypt, and Yemen, among others, from cutting ties with Qatar because of the potential terrorist relationships they may hold.

The United Arab Emirates accused Qatar of supporting and directly funding Islamist terrorist groups, including the Muslim Brotherhood – furthering the political and economic instabilities seen in the region. Since the initial claims were made, Qatari citizens were told that “they have 14 days to leave Saudi Arabia, Bahrain and the UAE, and those countries also banned their own citizens from entering Qatar” (Qiblawi, 2017). Additionally, beginning on June 6th, Emirates and other Dubai-based airlines will cease all flights to and from Qatar at the request of the UAE government.

*Global RADAR will provide an update on the relations between Qatar and the aforementioned Middle Eastern countries in the weeks to come.

Political Prisoner Count Rises in Cuba

Following the death of Fidel Castro in November of 2016, many Cuban citizens and Cuban-Americans alike were hopeful that the demise of the island’s great oppressor would lead to a new, great period of lesser political tension and increased economic and social change/expansion in Cuba. However, the article “Number of Political Prisoners in Cuba Doubles as Castro Dictatorship Ramps Up Repression”, cited in BSA News Now on Thursday, June 8th, discusses how little to no positive change has occurred in Cuba in the months since the death of the eldest Castro brother; on the contrary, the political climate seems to have worsened. According to a recent report by the Cuban Commission for Human Rights and National Reconciliation, “the island’s government has increased its number of political prisoners to twice of what it had the previous year” with no signs of any decline in the near future (Martín, 2017).

For years we have heard the rumblings emerging from one of our closest geographic neighbors to the south about Cuban citizens being imprisoned for attempting to defect from the country. These cases have garnered national and international attention over the last several years with the defection of numerous all-star caliber Cuban baseball players who have chosen to leave their troubled homeland to pursue a better life for themselves, and unfortunately being forced to leave their families behind in most cases. The report notes that the majority of the 140 newly imprisoned Cuban citizens were arrested for political reasons, including for simply voicing negative opinions about the Castro regime. These numbers are estimated to potentially be much more drastic in total, as many experts believe that several thousands of innocent Cuban citizens remain serving unwarranted sentences in prisons or work camps around Cuba today for their previous “transgressions”.

A quote from the Commission found within the aforementioned article sums up the current state of political affairs in Cuba perfectly, stating that “Over the last year, political repression has undergone a clear change: it is now more widespread throughout the country, is more selective and less noisy. While avoiding political arrests, the regime is increasingly using preventive repression in the form of police threats and other systematic intimidatory action” (Martín, 2017). As heartbreaking as the circumstances are in Cuba, it seems there is no visible light at the end of the tunnel unless drastic events unfold in the coming months or years.  

 

Citations

Charles, Jacqueline. “Proposed Trump Budget Cuts Could Pose Security Danger for Caribbean, United States.” The Miami Herald. 8 June 2017. Web. 

Edelman, Adam. “Trump’s Budget Cuts Anti-terror Funds That Keep NYC Safe: Schumer.” NY Daily News. 30 May 2017. Web.

Hamedy, Saba. “Qatari Ambassador: ‘Stories about Qatar Financing Terrorism Are Fabricated’.” CNN. Cable News Network, 06 June 2017. Web. 

Martín, Karina. “Number of Political Prisoners in Cuba Doubles as Castro Dictatorship Ramps Up Repression.” PanAm Post. 09 May 2017. Web. 

Rfi. “BNP Paribas Fined for failing to Fight Money Laundering.” RFI. RFI, 03 June 2017. Web. 

Tawfeeq, Mohammed. “Qatar Rift: Saudi, UAE, Bahrain, Egypt Cut Ties.” CNN. Cable News Network, 05 June 2017. Web.

 

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