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U.S. Sanctions War Escalates Amid Maduro Indictment

 In Anti-Money Laundering, BSA, Sanctions, Terror Financing

Not satisfied with the degree of progress seen with regards to foreign policy initiatives with Venezuela to date, President Trump has opted for a new angle that he hopes will see greater results in forcing the socialist leader of Venezuela out of power. The ongoing saga between United States President Donald Trump and the regime of Venezuela’s Nicolás Maduro reached new heights last week, as the U.S. State Department indicted Trump’s South American counterpart and fourteen other top Venezuelan government officials on charges of corruption, narco-terrorism conspiracy and other criminal activity. Announcing the charges on March 26th was U.S. Attorney General William Barr. Among his greater remarks, Barr accused Maduro and his co-defendants of conspiring with the Revolutionary Armed Forces of Colombia (aka the FARC) to support the illicit drug trade and promote the systematic infiltration of narcotics into the United States. The State Department has offered a reward of up to $15 million for information culminating in Maduro’s apprehension. This drastic effort made by the Trump administration comes as the U.S. continues to tighten sanctions on the countries it has deemed its greatest threats, Venezuela and Iran, further constricting their respective economies by increasing sanctions on what is their prime source of revenue: the oil sector.

 

Trump has received significant pushback from international leaders for continuing to intensify punitive measures against these countries in the midst of the global coronavirus pandemic, this with plunging oil prices across the globe already significantly impacting these jurisdictions. Thus far, the Trump administration has not relented in this regard, insisting that its sanctions are directly aimed at crippling the respective governments of Venezuela and Iran rather than negatively affecting their citizens – though it’s difficult to imagine the former occurring independent of the latter. The Guardian questions the economic impact that any additional sanctions could actually have at this point, writing that the two countries are already so heavily sanctioned that there is “precious little income left to cut off”, but noting that if nothing else, “they signal US determination not to relent even in the face of a mounting coronavirus death toll.”2

 

Nicolàs Maduro has been a target of the U.S. since coming into power following the death of his mentor and infamous socialist, Hugo Chavez in 2013. Despite heavy sanctions against himself and several members of his family, various efforts to force him out, and the crumbling of Venezuela’s once prosperous economy, he has managed to remain President — that is, one of the two Presidents that the country currently has. Juan Guaido, whom more than 50 countries have recognized as the legitimate country’s legitimate acting leader after Maduro’s sham reelection in 2018, has had a difficult to create a transitional government in wake of the ongoing political turmoil as Maduro continues to control Venezuela’s state institutions and the national military. Maduro is also weathering the storm with backing from traditional supporters including China, Cuba, Iran and Russia, amongst others. Thus far Maduro has defended himself against these latest accusations in his usual deflective fashion, failing to address their validity at all. Instead, he opted to bizarrely dismiss them as “racist” and criticize the move and the individual behind them, calling Trump a “miserable person.”5 Reuters cites Foreign Minister Jorge Arreaza who claimed these charges “were aimed at benefiting Trump’s 2020 re-election campaign.”5 In another stroke of genius, he also accused the United States of fueling the drug trade because their citizens are consumers of the drugs.

 

It appears the United States latest actions may be more effective in unseating the embattled leader than any before however, as the U.S. has chosen to bring its powerful military into the equation. To combat the drug trade by force, the United States Navy is mobilizing its warships to the Caribbean cut off the cartels’ supply lines. On April 2nd, Trump released the following statement on the military intervention:

 

“Today, the United States is launching enhanced counter-narcotics operations in the Western Hemisphere to protect the American people from the deadly scourge of illegal narcotics…We’re deploying additional Navy destroyers, combat ships, aircraft and helicopters, Coast Guard cutters and Air Force surveillance aircraft, doubling our capabilities in the region.”6

 

Clearly the strategy is for the U.S. military to flex its muscles and finally force Maduro’s regime into backing down. This combined with the effort to arrest him for his alleged ties to the drug trade gives the U.S. two different avenues they could take to reach their desired result. $15 million is quite a sum to provide information leading to his capture, and given the abundance of corruption seen in the Venezuelan political ranks, it would not be surprising to potentially see a member of Maduro’s inner circle come forward to sell him out.

 

 

Weekly Roundup

 

Maduro Accomplice Surrenders to U.S. Authorities

 

Just one day after the above-mentioned indictment of embattled Venezuelan president Nicolás Maduro and multiple other senior Venezuelan governmental officials on March 26th, one of the country’s former military commanders peacefully surrendered to the U.S Drug Enforcement Agency (DEA) in Colombia. Cliver Alcala, a tenured general in the Venezuelan military, waived his right to extradition and was subsequently flown to White Plains, New York to meet with U.S. prosecutors. Reports have indicated that Alcala has agreed to work with the United States government in building cases against other high-ranking Venezuelan governmental officials with alleged ties to drug trafficking and money laundering as part of the latest attempt by President Donald Trump to topple Maduro’s dictatorial regime. Reuters notes that Attorney General William Barr has accused “Maduro and his associates of colluding with a dissident faction of the demobilized Colombian guerrilla group, the FARC, ‘to flood the United States with cocaine.’”1 The “FARC” refers to the Revolutionary Armed Forces of Colombia, a rebel coalition with significant ties to South America’s illicit drug trade that originated in Colombia but has an ongoing presence/operations throughout much of Venezuela.

According to various reports, the indictment alleges that Alcala and several other of the fifteen total current and former officials facing charges took bribes from the FARC to facilitate the safe travel of illicit narcotics both within and across Venezuelan borders. Prior to turning himself in, the U.S. State Department had offered a $10 million reward for information leading to the arrest of Gen. Alcala.

 

 

Standard Chartered Handed Hefty Fine for Sanctions Breaches

 

            Last Tuesday, federal authorities of the United Kingdom handed British multinational financial services firm Standard Chartered PLC two separate penalties amounting to £20.47 million ($25.41 million) total for the violation of European Union sanctions placed on Russia in 2014 following the country’s annexation of Crimea. The largest collective fine handed down by the UK Treasury’s Office of Financial Sanctions Implementation (OSFI) since its inception in 2017 comes in wake of the discovery that the bank issued over 100 loans to a subsidiary of an entity found on the EU sanctions list between April 8, 2015 and January 26, 2018. The OSFI reports that of the 102 total loans issued by Standard Chartered to the bank in question, 70 of the loans worth a reported £266 million ($325.4 million USD) in total) violated EU sanctions. Russia’s Sberbank – an entity previously blacklisted by the European Union dating back to the summer of 2014 – owned the bank in receipt of these advances, Turkish lender Denizbank AŞ.

Compliance Week writes that although Standard Chartered was “aware of the rules on sanctions and the need to comply with them—and had initially ceased all trade finance business with Denizbank—it sought to introduce dispensations so it could still make further loans where the bank considered an exemption was applicable.”3 However, these transactions were found to have no significant link to the European Union, thus making them a serious breach of the sanctions in place. The initial fines levied against the British bank for these faults in 2019 were significantly higher before the OSFI ultimately moved to reduce the bank’s penalties by approximately 30%. This following a ministerial review ruling that Standard’s self-disclosure of their failures and full cooperation with the authority’s investigation aided in making amends for the situation created.

 

 

Coronavirus Saga Forces Changes for UK Financial Watchdog

 

With financial institutions continuing to clamor for rules alterations to help ease the burden that COVID-19 has had on operational efficiency across the financial sector, financial authorities around the globe have been placed in quite a predicament in regards to maintaining order in the realm of regulatory compliance. Given the unprecedented nature of the times, the UK’s watchdog, the Financial Conduct Authority (FCA), has weighed the effects of financial services officials being forced to manage the day-to-day operations of the compliance department from outside of the office, while also attempting to keep consumer protection at the forefront of the discussion, while issuing an a response to adequately suit all parties involved. As such, the FCA has createda new webpage meant to provide British firms with relevant information on the virus, as well as information on updates to current regulatory guidance that may be published. The FCA itself has paused their own operations on strengthening their regulations and guidance on pensions to better address the concerns of its member institutions.

The watchdog has acknowledged the impact that the non-essential travel ban has had on the ability of banks to carry out their anti-money laundering procedures with respect to checking on their customers. As a result, these firms have been informed of several outside the box means to adapt to the situation, including accepting “scanned documentation sent by e-mail”, or asking “clients to submit ‘selfies’ from their smartphone or videos” as proof of identification.4 The FCA also noted that these financial institutions may also send various codes to the home addresses of their clientele in order to validate access to their accounts. Desperate times call for desperate measures, and it appears that Britain’s watchdog is exploring every way possible to keep financial security intact across the their jurisdiction as the coronavirus pandemic wages on.

 

 

Citations

  1. Berwick, Angus, et al. “Alleged Maduro Accomplice Surrenders to U.S. Agents, Will Help Prosecution: Sources.” Reuters, Thomson Reuters, 28 Mar. 2020.
  2. Borger, Julian. “US Ignores Calls to Suspend Venezuela and Iran Sanctions amid Coronavirus Pandemic.” The Guardian, Guardian News and Media, 31 Mar. 2020.
  3. Hodge, Neil. “Standard Chartered Fined $24.9M for Ukraine Sanctions Breaches.” Compliance Week, 31 Mar. 2020.
  4. Jones, Huw. “Ask for a Selfie: UK Financial Watchdog Eases Rules in Pandemic.” Reuters, Thomson Reuters, 1 Apr. 2020.
  5. Spetalnick, Matt, and Sarah N. Lynch. “U.S. Indicts Venezuela’s Maduro, a Political Foe, for ‘Narco-Terrorism’.” Reuters, Thomson Reuters, 27 Mar. 2020.
  6. “US Sends Warships to Caribbean to Stop Illegal Drugs.” BBC News, BBC, 2 Apr. 2020.

 

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