Finding That JSC CredexBank Is a Financial Institution of Primary Money Laundering Concern, 31434-31438 [2012-12742]
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31434
Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Notices
Affairs, Office of Management and
Budget, Attention: Desk Officer for
Treasury, New Executive Office
Building, Room 10235, Washington, DC
20503, or email at OIRA_Submission@
OMB.EOP.GOV and (2) Treasury PRA
Clearance Officer, 1750 Pennsylvania
Ave. NW., Suite 8140, Washington, DC
20220, or at PRA@treasury.gov.
FOR FURTHER INFORMATION CONTACT:
Copies of the submission(s) may be
obtained by calling (202) 927–5331,
email at PRA@treasury.gov, or the entire
information collection request maybe
found at www.reginfo.gov.
Bureau of the Public Debt (BPD)
OMB Number: 1535–0012.
Type of Review: Extension without
change of a currently approved
collection.
Title: Request by Fiduciary for
Reissue of United States Savings Bonds.
Form: PD F 1455.
Abstract: Used by fiduciary to request
distribution of U.S. Savings Bonds to
the person(s) entitled.
Affected Public: Individuals or
Households.
Estimated Total Burden Hours: 8,850.
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OMB Number: 1535–0013.
Type of Review: Revision of a
currently approved collection.
Title: Claim for Lost, Stolen or
Destroyed U.S. Savings Bonds and
Supplemental Statement For U.S.
Securities.
Form: PD F 1048; PD F 2243.
Abstract: Used by owner or others
having knowledge to request substitutes
securities or payment of lost, stolen or
destroyed securities.
Affected Public: Individuals or
Households.
Estimated Total Burden Hours:
24,000.
OMB Number: 1535–0136.
Type of Review: Revision of a
currently approved collection.
Title: Application for Refund of
Purchase Price of United States Savings
Bonds for Organizations.
Form: PD F 5410.
Abstract: Used by an organization to
request refund of purchase price of
United States Savings Bonds.
Affected Public: Private Sector:
Businesses or other for-profits.
Estimated Total Burden Hours: 50.
Dawn D. Wolfgang,
Treasury PRA Clearance Officer.
[FR Doc. 2012–12776 Filed 5–24–12; 8:45 am]
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DEPARTMENT OF THE TREASURY
Finding That JSC CredexBank Is a
Financial Institution of Primary Money
Laundering Concern
The Financial Crimes
Enforcement Network (‘‘FinCEN’’),
Treasury.
ACTION: Notice of finding.
AGENCY:
Pursuant to the authority
contained in 31 U.S.C. 5318A, the
Secretary of the Treasury, through his
delegate, the Director of FinCEN, finds
that reasonable grounds exist for
concluding that JSC CredexBank is a
financial institution of primary money
laundering concern.
DATES: The finding made in this notice
is effective as of May 25, 2012.
FOR FURTHER INFORMATION CONTACT:
Regulatory Policy and Programs
Division, FinCEN, (800) 949–2732.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
A. Statutory Provisions
On October 26, 2001, the President
signed into law the Uniting and
Strengthening America by Providing
Appropriate Tools Required To
Intercept and Obstruct Terrorism Act of
2001 (the ‘‘USA PATRIOT Act’’), Public
Law 107–56. Title III of the USA
PATRIOT Act amends the anti-money
laundering provisions of the Bank
Secrecy Act (‘‘BSA’’), codified at 12
U.S.C. 1829b and 1951–1959, and 31
U.S.C. 5311–5314 and 5316–5332, to
promote prevention, detection, and
prosecution of international money
laundering and the financing of
terrorism. Regulations implementing the
BSA appear at 31 CFR Chapter X. The
authority of the Secretary of the
Treasury (‘‘the Secretary’’) to administer
the BSA and its implementing
regulations has been delegated to the
Director of FinCEN.1
Section 311 of the USA PATRIOT Act
(‘‘section 311’’) added 31 U.S.C. section
5318A to the BSA, granting the
Secretary the authority, upon finding
that reasonable grounds exist for
concluding that a foreign jurisdiction,
institution, class of transactions, or type
of account is of ‘‘primary money
laundering concern,’’ to require
domestic financial institutions and
financial agencies to take certain
‘‘special measures’’ against the primary
money laundering concern. Section 311
identifies factors for the Secretary to
1 Therefore, references to the authority of the
Secretary of the Treasury under section 311 of the
USA PATRIOT Act apply equally to the Director of
FinCEN.
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consider and Federal agencies to consult
before the Secretary may conclude that
a jurisdiction, institution, class of
transaction, or type of account is of
primary money laundering concern. The
statute also provides similar procedures,
i.e., factors and consultation
requirements, for selecting the specific
special measures to be imposed against
the primary money laundering concern.
Taken as a whole, section 311
provides the Secretary with a range of
options that can be adapted to target
specific money laundering and terrorist
financing concerns most effectively.
Through the imposition of various
special measures, the Secretary can gain
more information about the
jurisdictions, institutions, transactions,
or accounts of concern; can more
effectively monitor the respective
jurisdictions, institutions, transactions,
or accounts; or can prohibit U.S.
financial institutions from involvement
with jurisdictions, institutions,
transactions, or accounts that pose a
money laundering concern.
Before making a finding that
reasonable grounds exist for concluding
that a financial institution is of primary
money laundering concern, the
Secretary is required to consult with
both the Secretary of State and the
Attorney General. The Secretary is also
required by section 311, as amended, to
consider ‘‘such information as the
Secretary determines to be relevant,
including the following potentially
relevant factors:’’ 2
• The extent to which such financial
institutions, transactions, or types of
accounts are used to facilitate or
promote money laundering in or
through the jurisdiction, including any
money laundering activity by organized
criminal groups, international terrorists,
or entities involved in the proliferation
of weapons of mass destruction or
missiles;
• The extent to which such
institutions, transactions, or types of
accounts are used for legitimate
business purposes in the jurisdiction;
and
• The extent to which such action is
sufficient to ensure, with respect to
transactions involving the jurisdiction
and institutions operating in the
jurisdiction, that the purposes of this
subchapter continue to be fulfilled, and
to guard against international money
laundering and other financial crimes.3
If the Secretary determines that
reasonable grounds exist for concluding
that a financial institution is of primary
2 31
U.S.C. 5318A(c)(2).
Section II,D below for an additional factor
relevant to this action.
3 See
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money laundering concern, the
Secretary is authorized to impose one or
more of the special measures in section
311 to address the specific money
laundering risks. Section 311 provides a
range of special measures that can be
imposed individually, jointly, in any
combination, and in any sequence.4
Before imposing special measures, the
statute requires the Secretary to consult
with appropriate federal agencies and
other interested parties 5 and to consider
the following specific factors:
• Whether similar action has been or
is being taken by other nations or
multilateral groups;
• Whether the imposition of any
particular special measures would
create a significant competitive
disadvantage, including any undue cost
or burden associated with compliance,
for financial institutions organized or
licensed in the United States;
• The extent to which the action or
the timing of the action would have a
significant adverse systemic impact on
the international payment, clearance,
and settlement system, or on legitimate
business activities involving the
particular jurisdiction; and
• The effect of the action on the
United States national security and
foreign policy.
B. JSC (‘‘Joint Stock Company’’)
CredexBank
JSC CredexBank (‘‘Credex’’) is a
depository institution located and
licensed in the Republic of Belarus that
primarily services corporate entities.6
Originally established on September 27,
2001, as Nordic Investment Bank
Corporation by Ximex Executive
Limited (‘‘Ximex’’),7 8 the bank changed
its name to Northern Investment Bank
on April 5, 2006, and then to the current
name of JSC CredexBank on February
12, 2007. Credex is 96.82% owned by
Vicpart Holding SA, based in Fribourg,
Switzerland.9 With 169 employees 10
and a total capitalization of
approximately $19 million,11 the bank
currently ranks as the 22nd largest in
total assets among 31 commercial banks
in Belarus.12 Credex has six domestic
branches and one representative office
in the Czech Republic.13 While the
majority of its correspondent banking
relationships are with domestic banks,
Credex maintains numerous
correspondent relationships with
Russian banks, and also single
correspondent relationships in Latvia,
Germany, and Austria.14 According to
available public information, Credex
does not have any direct U.S.
correspondent relationships.15
C. Belarus
The concentration of power in the
hands of the Presidency and the lack of
a system of checks and balances among
the various branches of government are
the greatest hindrances to the rule of
law and transparency of governance in
Belarus.16 In particular, economic
decision-making is highly concentrated
within the top levels of government, and
financial institutions have little
autonomy.17
Under Belarusian law, most
government transactions and those
sanctioned by the President are exempt
from reporting requirements.18 This is
particularly worrisome given welldocumented cases of public corruption
in Belarus,19 which has led the United
8 Bankers
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4 Available
special measures include requiring:
(1) Recordkeeping and reporting of certain financial
transactions; (2) collection of information relating to
beneficial ownership; (3) collection of information
relating to certain payable-through accounts; (4)
collection of information relating to certain
correspondent accounts; and (5) prohibition or
conditions on the opening or maintaining of
correspondent or payable-through accounts. 31
U.S.C. 5318A(b)(1)–(5).
5 Section 5318A(a)(4)(A) requires the Secretary to
consult with the Chairman of the Board of
Governors of the Federal Reserve System, any other
appropriate Federal banking agency, the Secretary
of State, the Securities and Exchange Commission
(‘‘SEC’’), the Commodity Futures Trading
Commission (‘‘CFTC’’), the National Credit Union
Administration (‘‘NCUA’’), and, in the sole
discretion of the Secretary, ‘‘such other agencies
and interested parties as the Secretary may find to
be appropriate.’’ The consultation process must also
include the Attorney General if the Secretary is
considering prohibiting or imposing conditions on
domestic financial institutions opening or
maintaining correspondent account relationships
with the targeted entity.
6 Bankers Almanac (2012).
7 ‘‘Belarus on a Roll,’’ Business New Europe, July
22, 2009 (https://www.bne.eu/story1701/
Belarus_on_a_roll).
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Almanac (2012).
CredexBank’s Web site lists Vipcart’s
ownership as 98.82%. See ‘‘Business Card,’’
CredexBank Web site (https://en.credexbank.by/
bank/general/businesscard/).
10 Bankers Almanac (2012).
11 Id.
12 National Bank of the Republic of Belarus,
Information on Banks Functioning in the Republic
of Belarus and Their Branches, as of January 20,
2012 (http:www.nbrb.by/engl/system/banks.asp).
13 Id.
14 Id. See also ‘‘International settlements,’’
CredexBank (https://www.en.credexbank.by/entities/
settlements/).
15 Id.
16 ‘‘2011 International Narcotics Control Strategy
Report (INCSR)—Volume II Money Laundering and
Financial Crimes Country Database,’’ May 20, 2011.
(https://www.state.gov/documents/organization/
164239.pdf), pp. 45–47.
17 Id.
18 ‘‘2010 and 2011 International Narcotics Control
Strategy Reports (INCSR)—Volume II Money
Laundering and Financial Crimes Country
Database,’’ March 1, 2010 and May 2011,
respectively. (https://www.state.gov/documents/
organization/141643.pdf), p. 48.
19 Id. For other example of public corruption in
Belarus, see also Transparency International’s 2011
9 Id.
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31435
States Government (‘‘USG’’) in recent
years to take action to protect the U.S.
financial system from abuse by the
Belarusian government. In 2006, the
President signed Executive Order
(‘‘E.O.’’) 13405, which blocks the
property and interests in property of
Belarusian President Alexander
Lukashenko and nine other individuals
listed in the Annex, as well as
authorizing subsequent designations of
other individuals and entities
determined to be responsible for or to
have participated in public corruption,
human rights abuses, or political
oppression.20 Pursuant to this E.O., the
U.S. Department of the Treasury
(‘‘Treasury’’) in November 2007
designated the state petrochemical
conglomerate, Belneftekhim, for being
controlled by President Lukashenko.21
Separately, Treasury in April 2006
issued an advisory highlighting abuse
and theft of public resources by senior
Belarusian regime elements, including
senior executives in state-owned
enterprises.22 Furthermore, in April
2004, Treasury identified Infobank,
Minsk (later renamed PJSC Trustbank)
as a primary money laundering concern
under section 311 for laundering funds
for the former Iraqi regime of Saddam
Hussein.23 At the time of that action,
Corruption Perception Index (https://
archive.transparency.org/content/download/64426/
1030807). Belarus ranked 143 out of 182 countries,
with 1 being least corrupt.
20 ‘‘Treasury Targets Lukashenko-controlled
Petrochemical Conglomerate,’’ U.S. Department of
the Treasury, 11/13/2007 (https://www.treasury.gov/
press-center/press-releases/pages/hp676.aspx.);
INCSR (2011), p. 46. In June 2006, President Bush
issued Executive Order 13405, ‘‘Blocking Property
of Certain Persons Undermining Democratic
Processes or Institutions in Belarus’’ (https://
www.gpo.gov/fdsys/pkg/FR-2006-06-20/pdf/065592.pdf). E.O. 13405 blocks the property and
interests in property of the ten individuals listed in
the Annex to the E.O. and individuals or entities
determined, inter alia, to be responsible for, or to
have participated in, actions or policies that
undermine democratic processes or institutions in
Belarus; to be responsible for, or have participated
in, human rights abuses related to political
oppression in Belarus; to be senior-level officials,
family members of such officials, or persons closely
linked to such officials, who are responsible for, or
have engaged in public corruption related to
Belarus. To date, there are 16 individuals and 9
entities listed on OFAC’s Specially Designated
Nationals and Blocked Persons (SDN) List as
blocked under the Belarus sanctions program.
21 Id.
22 ‘‘FinCEN Advisory: Guidance to Financial
Institutions on the Provision of Financial Services
to Belarusian Senior Regime Elements Engaged in
Illicit Activities,’’ April 10, 2006 (https://
www.fincen.gov/statutes_regs/guidance/pdf/
advisory_belarus040706.pdf).
23 ‘‘Imposition of Special Measure Against
Infobank as a Financial Institution of Primary
Money Laundering Concern, Notice of Proposed
Rulemaking,’’ Federal Register/Vol. 69, No. 163,
August 24, 2004. Moreover, a publicly available
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Infobank was widely reported to be a
bank specializing in financial
transactions related to arms exports,
including procuring and financing
weapons and military equipment for
several nations deemed by the United
States to be State Sponsors of
Terrorism.24
Since January 2011, in response to the
repression of democratic activists
following fraudulent presidential
elections in Belarus, the European
Union (‘‘EU’’) has imposed a series of
increasingly stiff sanctions against
Belarus, including a travel ban and
assets freeze extending to some 200
Belarusian officials and an assets freeze
of three companies closely associated
with President Lukashenko.25 Most
recently, on March 23, 2012, the EU
reinforced restrictive measures against
the Belarusian government by adding 12
individuals and 29 entities to the
sanctions list for their role in supporting
the regime.26
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II. Analysis of Factors
Based upon a review and analysis of
the administrative record in this matter,
consultations with relevant Federal
agencies and departments, and after
consideration of the factors enumerated
in section 311, the Director of FinCEN
has determined that reasonable grounds
exist for concluding that Credex is a
financial institution of primary money
laundering concern. In addition to the
bank’s location in a high risk
jurisdiction, FinCEN has reason to
believe that Credex (1) has engaged in
high volumes of transactions that are
indicative of money laundering on
behalf of shell corporations; and (2) has
a history of ownership by shell
corporations 27 whose own lack of
source indicates that Trustbank and Credex
maintain a correspondent relationship.
24 Id.
25 ‘‘Council Conclusions on Belarus,’’ January 31,
2011, (https://www.consilium.europa.eu/uedocs/
cms_data/docs/pressdata/EN/foraff/119038.pdf).
26 Press Release: ‘‘Council Reinforces Restrictive
Measures against Belarusian Regime,’’ Council of
The European Union, March 23, 2012, (https://
www.consilium.europa.eu/uedocs/cms_Data/docs/
pressdata/EN/foraff/129230.pdf). Since 2004, the
EU has imposed sanctions against Belarus that
include a travel ban and asset freeze on President
Alexander Lukashenko and other Belarusian
officials. For details on EU’s restrictive measures
against the Belarusian regime, see ‘‘Factsheet: The
European Union and Belarus’’, March 23, 2012,
(https://www.consilium.europa.eu/uedocs/
cms_Data/docs/pressdata/EN/foraff/129232.pdf).
27 The term ‘‘shell corporation,’’ as used herein,
refers to non-publicly traded corporations, limited
liability companies (LLCs), and trusts that typically
have no physical presence (other than a mailing
address) and generate little to no independent
economic value. As noted in the 2005 U.S. Money
Laundering Threat Assessment, shell corporations
have become common tools for money laundering
and other financial crimes, primarily because they
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transparency contributes to considerable
uncertainty surrounding Credex’s
beneficial ownership. Taken as a whole,
the lack of transparency associated with
Credex indicates a high degree of money
laundering risk and vulnerability to
other financial crimes. The factors
relevant to this finding are detailed
below:
A. The Extent to Which Credex Has
Been Used To Facilitate or Promote
Money Laundering in or Through the
Jurisdiction
Information made available to the
USG shows that since 2006, Credex has
engaged in highly questionable patterns
of financial transactions that are
indicative of money laundering. Such
activity includes: high volumes of
transactions involving foreign shell
corporations incorporated and operating
in high risk jurisdictions;
disproportionate and evasive
transactional behavior; and nested
account 28 activity.
The facts surrounding these
transactions are consistent with typical
‘‘red flags’’ regarding shell company
activity identified in most banking
standards, including wire transfer
volumes that are extremely large in
proportion to the asset size of the bank;
transacting businesses sharing the same
address, providing only a registered
agent’s address, or having other address
inconsistencies; and frequent
involvement of multiple jurisdictions or
beneficiaries located in higher-risk
offshore financial centers.29
For example, large-dollar transactions
originated from multiple shell
corporations located at shared formation
are easy and inexpensive to form and operate.
Additionally, ownership and transactional
information on these entities can be concealed from
regulatory and law enforcement authorities. See
‘‘U.S. Money Laundering Threat Assessment’’ U.S.
Money Laundering Threat Assessment Working
Group, December 2005 (https://www.treasury.gov/
resource-center/terrorist-illicit-finance/Documents/
mlta.pdf), pp. 47–49.
28 Nested accounts occur when a foreign financial
institution gains access to the U.S. financial system
by operating through a U.S. correspondent account
belonging to another foreign financial institution.
Thus, these third-party financial institutions can
effectively gain anonymous access to the U.S.
financial system. See ‘‘Correspondent Accounts
(Foreign)—Overview,’’ Federal Financial
Institutions Examination Council Bank Secrecy Act
Anti-Money Laundering Examination Manual,’’
(‘‘FFIEC Manual’’) (https://www.ffiec.gov/
bsa_aml_infobase/pages_manual/OLM_047.htm).
29 See ‘‘Money Laundering Red Flags: Wire
Transfers,’’ Federal Financial Institutions
Examination Council (https://www.ffiec.gov/bsa_
aml_infobase/documents/red_flags/Wire_Trans.pdf)
and ‘‘Appendix F: Money Laundering and Terrorist
Financing ‘Red Flags,’ ’’ FFIEC Manual (https://www.
ffiec.gov/bsa_aml_infobase/pages_manual/OLM_
106.htm). See also ‘‘FinCEN Guidance: Potential
Money Laundering Risks Related to Shell
Companies,’’ November 9, 2006. FIN–2006–G–14.
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addresses were subsequently transferred
through Credex to suspected shell
corporations that also shared the same
formation addresses in various
jurisdictions. Specifically, between June
and July 2007, two shell corporations
located at known company formation
addresses in the United Kingdom
(‘‘UK’’) and the British Virgin Islands
(‘‘BVI’’) made multiple payments
totaling millions of U.S. dollars by
utilizing accounts at Credex and another
foreign financial institution for the
benefit of a separate BVI company.
Overall, numerous suspicious
transactions (1) occurred in spurts for a
brief period, in repetitive patterns, and
then ceased without explanation, (2)
were for unrelated goods and services
that did not correspond to an apparent
business relationship between the
transacting parties, and (3) were
remitted through multiple foreign banks
with U.S. correspondent accounts with
vague payment details. These patterns
strongly suggest a failure of anti-money
laundering/countering the financing of
terrorism (AML/CFT) controls at Credex
and/or willfulness by the bank in
carrying out transactions on behalf of
shell corporations.
Furthermore, Credex has engaged in
high volumes of transactions that are
significantly disproportionate to the
bank’s level of capitalization. For
example, from January to March 2010,
information made available to the USG
shows that Credex transferred nearly $1
billion to shell corporations in multiple
jurisdictions—a substantial amount of
wire activity for a bank of Credex’s size.
From 2007 to 2009, Credex averaged
approximately $10 million in
capitalization.30 In addition, Credex
wire transaction customers during this
period were mostly parties sending
money from Credex accounts. However,
there were no observable corresponding
inflows, which one would expect at a
legitimate commercial bank.
Information made available to the
USG also shows that Credex engages in
evasive conduct in a significant portion
of its financial transactions. In some
instances, critical information
identifying Credex as the originating
financial institution was omitted from
the wire transaction details, or the
stated purpose of the transaction
involving Credex accountholders was
inconsistent with the expected business
profile of those companies. Such
disproportionate volumes of activity
compared to the bank’s size, coupled
with evasive behaviors, strongly suggest
that Credex is vulnerable to money
laundering and other financial crimes.
30 Bankers
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Credex maintains a total of 66
correspondent accounts,31 including
more than 20 U.S. dollar accounts,
almost exclusively with Russian and
Belarusian financial institutions.32 This
number of correspondent accounts is
highly disproportionate relative to
Credex’s size—the bank’s total assets
were approximately $46 million as of
the end of 2010.33 For example, the
largest bank in Belarus—whose assets
number more than $14 billion—only has
a total of 18 correspondent accounts.34
This indicates the intent to obfuscate
the movement of funds; there is no
logical explanation or purpose for
maintaining so many correspondent
accounts while incurring the
operational costs and fees associated
with them.
According to available public
information, Credex does not have
direct correspondent relationships with
U.S. financial institutions.35 However,
information made available to the USG
indicates that transactions involving
U.S. dollars are conducted via multiple
‘‘nested accounts’’ with European banks
and money service businesses 36 that
allowed indirect access to the U.S.
financial system. For example, of 91
wires totaling approximately $10
million conducted through Credex, 69
wires totaling $9 million involved
apparent nesting activity via U.S.
correspondent accounts, and the
remaining 22 wire transfers totaling over
$1 million were sent by order of, or for
the benefit of, shell-like entities, some of
which were also involved in the 69
nested wires.
Given this evasive conduct, U.S.
financial institutions remain
particularly at risk of indirectly
providing Credex with anonymous
access to the U.S. financial system.
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B. The Extent to Which Credex Is Used
for Legitimate Business Purposes in the
Jurisdiction
The lack of transparency—regarding
the jurisdiction, beneficial ownership of
the bank (discussed in Section II (D),
below), and transactional activity with
shell corporations—makes it difficult to
assess the extent to which Credex is
engaged in legitimate business. Thus,
31 These appear to be ‘‘nostro’’ accounts, which
are commonly used for currency settlement.
32 Bankers Almanac (2012).
33 Id.
34 Id.
35 Bankers Almanac (2012).
36 Additionally, according to Credex’s Web site,
the bank performs transfers through international
money transfer services (Anelik, Leader, Western
Union, and Moneygram) without opening an
account. See ‘‘General Information,’’ CredexBank
Web site (https://www.en.credexbank.by/bank/
general).
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any legitimate use of Credex is
significantly outweighed by the
apparent use of Credex to facilitate or
promote money laundering and other
financial crimes.
C. The Extent to Which Such Action Is
Sufficient To Ensure, With Respect to
Transactions Involving Credex, That the
Purposes of the BSA Continue To Be
Fulfilled, and To Guard Against
International Money Laundering and
Other Financial Crimes
As detailed above, FinCEN has
reasonable grounds to conclude that
Credex is being used to promote or
facilitate international money
laundering, and is therefore an
institution of primary money laundering
concern. Currently, there are no
protective measures that specifically
target Credex. Thus, finding Credex to
be a financial institution of primary
money laundering concern, which
would allow consideration by the
Secretary of special measures to be
imposed on the institution under
section 311, is a necessary first step to
prevent Credex from facilitating money
laundering or other financial crime
through the U.S. financial system. The
finding of primary money laundering
concern will bring any criminal conduct
occurring at or through Credex to the
attention of the international financial
community and will further limit the
bank’s ability to be used for money
laundering or for other criminal
purposes.
D. Other Relevant Factor: Lack of
Transparency
As outlined above, the pervasive lack
of transparency surrounding Credex’s
business activities—including its high
volume of suspicious transactions with
shell corporations, the substantial
uncertainty surrounding the transacting
parties and purposes involved in those
transactions, the bank’s evasive
conduct, and its operation in a high risk
jurisdiction—makes it virtually
impossible to discern the extent to
which the bank is engaged in legitimate
business, and most importantly, to
evaluate its capacity to identify and
mitigate risk and illicit finance. This
situation is exacerbated by a similar lack
of transparency in the bank’s
ownership, which has passed from one
shell corporation to another, creating
considerable uncertainty as to the
identity of the true beneficial owner(s).
Credex’s original registered owner,
Ximex,37 displays numerous
37 ‘‘Belarus on a Roll,’’ Business New Europe, July
22, 2009 (https://www.bne.eu/story1701/Belarus_on_
a_roll).
PO 00000
Frm 00148
Fmt 4703
Sfmt 4703
31437
characteristics of a shell corporation.
Listed at 12–16 Clerkenwell Rd,
London, United Kingdom,38 Ximex
shares the same mailing address as
another firm—whose primary activities
are formation and servicing of
international business companies, as
well as tax and financial planning.39
Ximex is owned by ‘‘Imex Executive,
Limited,’’ a company registered to the
address of a BVI company formation
agent.40 Additionally, Ximex is listed by
the UK’s Financial Services Authority
(‘‘FSA’’) among firms and/or individuals
who are not authorized to conduct
regulated investment activities.41 The
FSA is an independent body that
regulates the financial services industry
in the UK.42 43
Since October 2009, Credex has been
owned by Vicpart Holding SA
(‘‘Vicpart’’), based in Fribourg,
Switzerland.44 Publicly available
information about Vicpart reveals
significant inconsistencies and gaps that
raise concerns about the true nature and
purpose of the company. Vicpart shares
the same address with more than 200
other companies, some of which are in
liquidation.45 These companies in
liquidation merit particular scrutiny
because at least one Financial Action
Task Force (‘‘FATF’’) study has
identified the practice of dissolving
companies rapidly after creation as a
risk factor signaling the potential misuse
of corporate vehicles.46 The Vicpart
Web site is currently inaccessible to the
public. Prior to its shutdown, the Web
site stated that the purpose of the
company is the management of
38 See ‘‘Ximex Executive Limited,’’ (https://
www.biz-info.co.uk/ximex+executive+limited_
04605867.html).
39 See ‘‘Carrington Accountancy,’’ (https://
www.freeindex.co.uk/profile(carringtonaccountancy)_277286.htm). See also ‘‘Carrington
Corporate Services Limited,’’ (https://www.bizinfo.co.uk/carrington+corporate+services+limited_
03160163.html).
40 Dun & Bradstreet, Global Reference Solution
(2011) (www.dnb.com).
41 ‘‘Unauthorized firms/individuals,’’ Financial
Services Authority, November 4, 2010 (https://
www.fsa.gov.uk/pages/Doing/Regulated/Law/
Alerts/unauthorised.shtml).
42 ‘‘What We Do,’’ Financial Services Authority
(https://www.fsa.gov.uk/pages/about/what/
index.shtml).
43 ‘‘Warnings & alerts,’’ Financial Services
Authority, November 4, 2010 (https://
www.fsa.gov.uk/Pages/Doing/Regulated/Law/
Alerts/index.shtml).
44 Bankers Almanac (2012).
45 Analyst Search of Dun & Bradstreet, Global
Reference Solution (2012). (www.dnb.com) (search
for ‘‘Rue St Pierre 18 Fribourg Switzerland’’).
46 ‘‘The Misuse of Corporate Vehicles, Including
Trust and Company Service Providers,’’ FATF
(https://www.fatf-gafi.org/media/fatf/documents/
reports/Misuse%20of%20Corporate%20
Vehicles%20including%20Trusts%20and%20
Company%20Services%20Providers.pdf), p. 33.
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Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
financial, industrial, and commercial
participation, as well as real estate
operation.47 Separately, a global
business registry indicates that Vicpart
is registered as a joint stock company
whose primary line of business is
investment management.48 However,
Credex is listed as its only holding.49
Adding to these concerns are
allegations of criminal involvement by
Vicpart’s management. According to
information made available to the USG,
two former Vicpart board members were
charged with criminal activity,
including document forgery. These
individuals may have used companies
registered to Vicpart’s current address as
part of their alleged criminal activity.
Meanwhile, aside from the listing of a
single individual as both a Vicpart
director and the sole authorized
signatory for the company, there is no
other publicly available information on
the current composition of Vicpart’s
board of directors.50
Although the Credex Web site
currently states that the single
individual listed as a Vicpart director is
also the ‘‘beneficial owner’’ of the
company,51 the USG has concerns about
the accuracy of this information.
According to publicly available
information, the individual named as
Vicpart’s beneficial owner has also been
identified by global business registries
as being involved with at least 30
different companies, many of which are
in liquidation and list the individual’s
personal residence as their address.52
This involvement with a large number
of companies, many of which are in
liquidation and/or share the same
address, raises concerns that the
individual may function purely as a
formation agent or nominal owner
whose identification as a company’s
owner in public sources may be
intended to shield the true beneficial
owners from scrutiny.
47 See Vicpart Web site (https://vicpart.ch/en/
about) (accessed 1/19/12, but no longer accessible
as of 5/21/12).
48 Dun & Bradstreet, Global Reference Solution
(2011) (www.dnb.com).
49 See Vicpart Web site (https://vicpart.ch/en/
about) (accessed 1/19/12, but no longer accessible
as of 5/21/12).
50 Dun & Bradstreet, Global Reference Solution
(2012) (https://www.dnb.com).
51 ‘‘Business Card,’’ CredexBank Web site (https://
www.en.credexbank.by/bank/general/
businesscard). See also Dun & Bradstreet, European
Report (2012) (https://www.dnb.com), which does
not provide any indication that the single
individual is the company’s beneficial owner but
indicates that he has been the sole authorized
signatory since June 2009.
52 Dun & Bradstreet, Global Reference Solution
(2012) (https://www.dnb.com). See also
‘‘Moneyhouse’’ (https://www.moneyhouse.ch/en).
VerDate Mar<15>2010
17:55 May 24, 2012
Jkt 226001
The ambiguity surrounding Vicpart’s
ownership is particularly concerning
because the company also exhibits
several indicators of typical shell
corporation activity, and owns a bank
that has been engaged in highly
questionable patterns of transactions
that are indicative of money laundering.
For example, while Vicpart’s Web site
states that the company was
incorporated in 1999,53 it does not
appear to have been active until June
2009—four months prior to acquiring
Credex from another shell corporation,
Ximex in October 2009.54 This long
period of dormancy followed by
involvement in a major transaction
bears the hallmark of Vicpart being a
‘‘shelf company.’’ 55 Additionally,
Vicpart’s financial statements at the
time of acquisition showed no balance
sheet assets except for 100,000 Swiss
Francs (estimated $108,000) in share
capital.56
III. Finding
Based on the foregoing factors, the
Director of FinCEN hereby finds that
Credex is a financial institution of
primary money laundering concern.
Dated: May 22, 2012.
Peter S. Alvarado,
Deputy Director, Financial Crimes
Enforcement Network.
[FR Doc. 2012–12742 Filed 5–24–12; 8:45 am]
BILLING CODE 4810–02–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
Agency Information Collection
Activities: Proposed Information
Collection; Submission for OMB
Review
Office of the Comptroller of the
Currency (OCC), Treasury.
ACTION: Notice and request for comment.
AGENCY:
The OCC, as part of its
continuing effort to reduce paperwork
and respondent burden, invites the
general public and other Federal
SUMMARY:
53 See Vicpart Web site (https://vicpart.ch/en/
about) (accessed 1/19/12, but no longer accessible
as of 5/21/12).
54 Id.
55 The term ‘‘shelf company’’ is typically applied
to a company which, among other things, has
inactive shareholders, directors, and secretary; and
is left dormant—that is, sitting ‘‘on a shelf’’—for the
purpose of being sold. See ‘‘Puppet Masters: How
the Corrupt Use Legal Structures to Hide Stolen
Assets and What to Do About It,’’ The World Bank
and UNODC, 2011, p. 37. (www.worldbank.org).
56 See Vicpart Web site (https://vicpart.ch/en/
about) (accessed 1/19/12, but no longer accessible
as of 5/21/12).
PO 00000
Frm 00149
Fmt 4703
Sfmt 4703
agencies to take this opportunity to
comment on a continuing information
collection, as required by the Paperwork
Reduction Act of 1995. An agency may
not conduct or sponsor, and a
respondent is not required to respond
to, an information collection unless it
displays a currently valid OMB control
number. The OCC is soliciting comment
concerning its information collection
titled, ‘‘Registration of Mortgage Loan
Originators.’’ The OCC is also giving
notice that it has sent this collection to
OMB for review.
DATES: Comments must be received by
June 25, 2012.
ADDRESSES: Communications Division,
Office of the Comptroller of the
Currency, Mailstop 2–3, Attention:
1557–0243, 250 E Street SW.,
Washington, DC 20219. In addition,
comments may be sent by fax to (202)
874–5274 or by electronic mail to
regs.comments@occ.treas.gov. You may
personally inspect and photocopy
comments at the OCC, 250 E Street SW.,
Washington, DC 20219. For security
reasons, the OCC requires that visitors
make an appointment to inspect
comments. You may do so by calling
(202) 874–4700. Upon arrival, visitors
will be required to present valid
government-issued photo identification
and to submit to security screening in
order to inspect and photocopy
comments.
Additionally, please send a copy of
your comments by mail to: OCC Desk
Officer, 1557–0243, U.S. Office of
Management and Budget, 725 17th
Street NW., #10235, Washington, DC
20503, or by fax to (202) 395–6974.
FOR FURTHER INFORMATION CONTACT: You
can request additional information or a
copy of the collection from Mary H.
Gottlieb, OCC Clearance Officer, (202)
874–5090, Legislative and Regulatory
Activities Division, Office of the
Comptroller of the Currency, 250 E
Street SW., Washington, DC 20219.
SUPPLEMENTARY INFORMATION: The OCC
is requesting extension of OMB
approval for this collection. There have
been no changes to the requirements of
the regulations, however, they have
been transferred to the Bureau of
Consumer Financial Protection (CFPB)
pursuant to title X of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act, Public Law 111–203,
124 Stat. 1990, July 21, 2010 (DoddFrank Act), and republished as CFPB
regulations (76 FR 78483 (December 19,
2011)). The burden estimates have been
revised to remove the burden for OCCregulated institutions with over $10
billion in assets, now carried by CFPB
pursuant to section 1025 of the Dodd-
E:\FR\FM\25MYN1.SGM
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Agencies
[Federal Register Volume 77, Number 102 (Friday, May 25, 2012)]
[Notices]
[Pages 31434-31438]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12742]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Finding That JSC CredexBank Is a Financial Institution of Primary
Money Laundering Concern
AGENCY: The Financial Crimes Enforcement Network (``FinCEN''),
Treasury.
ACTION: Notice of finding.
-----------------------------------------------------------------------
SUMMARY: Pursuant to the authority contained in 31 U.S.C. 5318A, the
Secretary of the Treasury, through his delegate, the Director of
FinCEN, finds that reasonable grounds exist for concluding that JSC
CredexBank is a financial institution of primary money laundering
concern.
DATES: The finding made in this notice is effective as of May 25, 2012.
FOR FURTHER INFORMATION CONTACT: Regulatory Policy and Programs
Division, FinCEN, (800) 949-2732.
SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory Provisions
On October 26, 2001, the President signed into law the Uniting and
Strengthening America by Providing Appropriate Tools Required To
Intercept and Obstruct Terrorism Act of 2001 (the ``USA PATRIOT Act''),
Public Law 107-56. Title III of the USA PATRIOT Act amends the anti-
money laundering provisions of the Bank Secrecy Act (``BSA''), codified
at 12 U.S.C. 1829b and 1951-1959, and 31 U.S.C. 5311-5314 and 5316-
5332, to promote prevention, detection, and prosecution of
international money laundering and the financing of terrorism.
Regulations implementing the BSA appear at 31 CFR Chapter X. The
authority of the Secretary of the Treasury (``the Secretary'') to
administer the BSA and its implementing regulations has been delegated
to the Director of FinCEN.\1\
---------------------------------------------------------------------------
\1\ Therefore, references to the authority of the Secretary of
the Treasury under section 311 of the USA PATRIOT Act apply equally
to the Director of FinCEN.
---------------------------------------------------------------------------
Section 311 of the USA PATRIOT Act (``section 311'') added 31
U.S.C. section 5318A to the BSA, granting the Secretary the authority,
upon finding that reasonable grounds exist for concluding that a
foreign jurisdiction, institution, class of transactions, or type of
account is of ``primary money laundering concern,'' to require domestic
financial institutions and financial agencies to take certain ``special
measures'' against the primary money laundering concern. Section 311
identifies factors for the Secretary to consider and Federal agencies
to consult before the Secretary may conclude that a jurisdiction,
institution, class of transaction, or type of account is of primary
money laundering concern. The statute also provides similar procedures,
i.e., factors and consultation requirements, for selecting the specific
special measures to be imposed against the primary money laundering
concern.
Taken as a whole, section 311 provides the Secretary with a range
of options that can be adapted to target specific money laundering and
terrorist financing concerns most effectively. Through the imposition
of various special measures, the Secretary can gain more information
about the jurisdictions, institutions, transactions, or accounts of
concern; can more effectively monitor the respective jurisdictions,
institutions, transactions, or accounts; or can prohibit U.S. financial
institutions from involvement with jurisdictions, institutions,
transactions, or accounts that pose a money laundering concern.
Before making a finding that reasonable grounds exist for
concluding that a financial institution is of primary money laundering
concern, the Secretary is required to consult with both the Secretary
of State and the Attorney General. The Secretary is also required by
section 311, as amended, to consider ``such information as the
Secretary determines to be relevant, including the following
potentially relevant factors:'' \2\
---------------------------------------------------------------------------
\2\ 31 U.S.C. 5318A(c)(2).
---------------------------------------------------------------------------
The extent to which such financial institutions,
transactions, or types of accounts are used to facilitate or promote
money laundering in or through the jurisdiction, including any money
laundering activity by organized criminal groups, international
terrorists, or entities involved in the proliferation of weapons of
mass destruction or missiles;
The extent to which such institutions, transactions, or
types of accounts are used for legitimate business purposes in the
jurisdiction; and
The extent to which such action is sufficient to ensure,
with respect to transactions involving the jurisdiction and
institutions operating in the jurisdiction, that the purposes of this
subchapter continue to be fulfilled, and to guard against international
money laundering and other financial crimes.\3\
---------------------------------------------------------------------------
\3\ See Section II,D below for an additional factor relevant to
this action.
---------------------------------------------------------------------------
If the Secretary determines that reasonable grounds exist for
concluding that a financial institution is of primary
[[Page 31435]]
money laundering concern, the Secretary is authorized to impose one or
more of the special measures in section 311 to address the specific
money laundering risks. Section 311 provides a range of special
measures that can be imposed individually, jointly, in any combination,
and in any sequence.\4\ Before imposing special measures, the statute
requires the Secretary to consult with appropriate federal agencies and
other interested parties \5\ and to consider the following specific
factors:
---------------------------------------------------------------------------
\4\ Available special measures include requiring: (1)
Recordkeeping and reporting of certain financial transactions; (2)
collection of information relating to beneficial ownership; (3)
collection of information relating to certain payable-through
accounts; (4) collection of information relating to certain
correspondent accounts; and (5) prohibition or conditions on the
opening or maintaining of correspondent or payable-through accounts.
31 U.S.C. 5318A(b)(1)-(5).
\5\ Section 5318A(a)(4)(A) requires the Secretary to consult
with the Chairman of the Board of Governors of the Federal Reserve
System, any other appropriate Federal banking agency, the Secretary
of State, the Securities and Exchange Commission (``SEC''), the
Commodity Futures Trading Commission (``CFTC''), the National Credit
Union Administration (``NCUA''), and, in the sole discretion of the
Secretary, ``such other agencies and interested parties as the
Secretary may find to be appropriate.'' The consultation process
must also include the Attorney General if the Secretary is
considering prohibiting or imposing conditions on domestic financial
institutions opening or maintaining correspondent account
relationships with the targeted entity.
---------------------------------------------------------------------------
Whether similar action has been or is being taken by other
nations or multilateral groups;
Whether the imposition of any particular special measures
would create a significant competitive disadvantage, including any
undue cost or burden associated with compliance, for financial
institutions organized or licensed in the United States;
The extent to which the action or the timing of the action
would have a significant adverse systemic impact on the international
payment, clearance, and settlement system, or on legitimate business
activities involving the particular jurisdiction; and
The effect of the action on the United States national
security and foreign policy.
B. JSC (``Joint Stock Company'') CredexBank
JSC CredexBank (``Credex'') is a depository institution located and
licensed in the Republic of Belarus that primarily services corporate
entities.\6\ Originally established on September 27, 2001, as Nordic
Investment Bank Corporation by Ximex Executive Limited
(``Ximex''),7 8 the bank changed its name to Northern
Investment Bank on April 5, 2006, and then to the current name of JSC
CredexBank on February 12, 2007. Credex is 96.82% owned by Vicpart
Holding SA, based in Fribourg, Switzerland.\9\ With 169 employees \10\
and a total capitalization of approximately $19 million,\11\ the bank
currently ranks as the 22nd largest in total assets among 31 commercial
banks in Belarus.\12\ Credex has six domestic branches and one
representative office in the Czech Republic.\13\ While the majority of
its correspondent banking relationships are with domestic banks, Credex
maintains numerous correspondent relationships with Russian banks, and
also single correspondent relationships in Latvia, Germany, and
Austria.\14\ According to available public information, Credex does not
have any direct U.S. correspondent relationships.\15\
---------------------------------------------------------------------------
\6\ Bankers Almanac (2012).
\7\ ``Belarus on a Roll,'' Business New Europe, July 22, 2009
(https://www.bne.eu/story1701/Belarus_on_a_roll).
\8\ Bankers Almanac (2012).
\9\ Id. CredexBank's Web site lists Vipcart's ownership as
98.82%. See ``Business Card,'' CredexBank Web site (https://en.credexbank.by/bank/general/businesscard/).
\10\ Bankers Almanac (2012).
\11\ Id.
\12\ National Bank of the Republic of Belarus, Information on
Banks Functioning in the Republic of Belarus and Their Branches, as
of January 20, 2012 (http:www.nbrb.by/engl/system/banks.asp).
\13\ Id.
\14\ Id. See also ``International settlements,'' CredexBank
(https://www.en.credexbank.by/entities/settlements/).
\15\ Id.
---------------------------------------------------------------------------
C. Belarus
The concentration of power in the hands of the Presidency and the
lack of a system of checks and balances among the various branches of
government are the greatest hindrances to the rule of law and
transparency of governance in Belarus.\16\ In particular, economic
decision-making is highly concentrated within the top levels of
government, and financial institutions have little autonomy.\17\
---------------------------------------------------------------------------
\16\ ``2011 International Narcotics Control Strategy Report
(INCSR)--Volume II Money Laundering and Financial Crimes Country
Database,'' May 20, 2011. (https://www.state.gov/documents/organization/164239.pdf), pp. 45-47.
\17\ Id.
---------------------------------------------------------------------------
Under Belarusian law, most government transactions and those
sanctioned by the President are exempt from reporting requirements.\18\
This is particularly worrisome given well-documented cases of public
corruption in Belarus,\19\ which has led the United States Government
(``USG'') in recent years to take action to protect the U.S. financial
system from abuse by the Belarusian government. In 2006, the President
signed Executive Order (``E.O.'') 13405, which blocks the property and
interests in property of Belarusian President Alexander Lukashenko and
nine other individuals listed in the Annex, as well as authorizing
subsequent designations of other individuals and entities determined to
be responsible for or to have participated in public corruption, human
rights abuses, or political oppression.\20\ Pursuant to this E.O., the
U.S. Department of the Treasury (``Treasury'') in November 2007
designated the state petrochemical conglomerate, Belneftekhim, for
being controlled by President Lukashenko.\21\ Separately, Treasury in
April 2006 issued an advisory highlighting abuse and theft of public
resources by senior Belarusian regime elements, including senior
executives in state-owned enterprises.\22\ Furthermore, in April 2004,
Treasury identified Infobank, Minsk (later renamed PJSC Trustbank) as a
primary money laundering concern under section 311 for laundering funds
for the former Iraqi regime of Saddam Hussein.\23\ At the time of that
action,
[[Page 31436]]
Infobank was widely reported to be a bank specializing in financial
transactions related to arms exports, including procuring and financing
weapons and military equipment for several nations deemed by the United
States to be State Sponsors of Terrorism.\24\
---------------------------------------------------------------------------
\18\ ``2010 and 2011 International Narcotics Control Strategy
Reports (INCSR)--Volume II Money Laundering and Financial Crimes
Country Database,'' March 1, 2010 and May 2011, respectively.
(https://www.state.gov/documents/organization/141643.pdf), p. 48.
\19\ Id. For other example of public corruption in Belarus, see
also Transparency International's 2011 Corruption Perception Index
(https://archive.transparency.org/content/download/64426/1030807).
Belarus ranked 143 out of 182 countries, with 1 being least corrupt.
\20\ ``Treasury Targets Lukashenko-controlled Petrochemical
Conglomerate,'' U.S. Department of the Treasury, 11/13/2007 (https://www.treasury.gov/press-center/press-releases/pages/hp676.aspx.);
INCSR (2011), p. 46. In June 2006, President Bush issued Executive
Order 13405, ``Blocking Property of Certain Persons Undermining
Democratic Processes or Institutions in Belarus'' (https://www.gpo.gov/fdsys/pkg/FR-2006-06-20/pdf/06-5592.pdf). E.O. 13405
blocks the property and interests in property of the ten individuals
listed in the Annex to the E.O. and individuals or entities
determined, inter alia, to be responsible for, or to have
participated in, actions or policies that undermine democratic
processes or institutions in Belarus; to be responsible for, or have
participated in, human rights abuses related to political oppression
in Belarus; to be senior-level officials, family members of such
officials, or persons closely linked to such officials, who are
responsible for, or have engaged in public corruption related to
Belarus. To date, there are 16 individuals and 9 entities listed on
OFAC's Specially Designated Nationals and Blocked Persons (SDN) List
as blocked under the Belarus sanctions program.
\21\ Id.
\22\ ``FinCEN Advisory: Guidance to Financial Institutions on
the Provision of Financial Services to Belarusian Senior Regime
Elements Engaged in Illicit Activities,'' April 10, 2006 (https://www.fincen.gov/statutes_regs/guidance/pdf/advisory_belarus040706.pdf).
\23\ ``Imposition of Special Measure Against Infobank as a
Financial Institution of Primary Money Laundering Concern, Notice of
Proposed Rulemaking,'' Federal Register/Vol. 69, No. 163, August 24,
2004. Moreover, a publicly available source indicates that Trustbank
and Credex maintain a correspondent relationship.
\24\ Id.
---------------------------------------------------------------------------
Since January 2011, in response to the repression of democratic
activists following fraudulent presidential elections in Belarus, the
European Union (``EU'') has imposed a series of increasingly stiff
sanctions against Belarus, including a travel ban and assets freeze
extending to some 200 Belarusian officials and an assets freeze of
three companies closely associated with President Lukashenko.\25\ Most
recently, on March 23, 2012, the EU reinforced restrictive measures
against the Belarusian government by adding 12 individuals and 29
entities to the sanctions list for their role in supporting the
regime.\26\
---------------------------------------------------------------------------
\25\ ``Council Conclusions on Belarus,'' January 31, 2011,
(https://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/119038.pdf).
\26\ Press Release: ``Council Reinforces Restrictive Measures
against Belarusian Regime,'' Council of The European Union, March
23, 2012, (https://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/129230.pdf). Since 2004, the EU has imposed
sanctions against Belarus that include a travel ban and asset freeze
on President Alexander Lukashenko and other Belarusian officials.
For details on EU's restrictive measures against the Belarusian
regime, see ``Factsheet: The European Union and Belarus'', March 23,
2012, (https://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/129232.pdf).
---------------------------------------------------------------------------
II. Analysis of Factors
Based upon a review and analysis of the administrative record in
this matter, consultations with relevant Federal agencies and
departments, and after consideration of the factors enumerated in
section 311, the Director of FinCEN has determined that reasonable
grounds exist for concluding that Credex is a financial institution of
primary money laundering concern. In addition to the bank's location in
a high risk jurisdiction, FinCEN has reason to believe that Credex (1)
has engaged in high volumes of transactions that are indicative of
money laundering on behalf of shell corporations; and (2) has a history
of ownership by shell corporations \27\ whose own lack of transparency
contributes to considerable uncertainty surrounding Credex's beneficial
ownership. Taken as a whole, the lack of transparency associated with
Credex indicates a high degree of money laundering risk and
vulnerability to other financial crimes. The factors relevant to this
finding are detailed below:
---------------------------------------------------------------------------
\27\ The term ``shell corporation,'' as used herein, refers to
non-publicly traded corporations, limited liability companies
(LLCs), and trusts that typically have no physical presence (other
than a mailing address) and generate little to no independent
economic value. As noted in the 2005 U.S. Money Laundering Threat
Assessment, shell corporations have become common tools for money
laundering and other financial crimes, primarily because they are
easy and inexpensive to form and operate. Additionally, ownership
and transactional information on these entities can be concealed
from regulatory and law enforcement authorities. See ``U.S. Money
Laundering Threat Assessment'' U.S. Money Laundering Threat
Assessment Working Group, December 2005 (https://www.treasury.gov/resource-center/terrorist-illicit-finance/Documents/mlta.pdf), pp.
47-49.
---------------------------------------------------------------------------
A. The Extent to Which Credex Has Been Used To Facilitate or Promote
Money Laundering in or Through the Jurisdiction
Information made available to the USG shows that since 2006, Credex
has engaged in highly questionable patterns of financial transactions
that are indicative of money laundering. Such activity includes: high
volumes of transactions involving foreign shell corporations
incorporated and operating in high risk jurisdictions; disproportionate
and evasive transactional behavior; and nested account \28\ activity.
---------------------------------------------------------------------------
\28\ Nested accounts occur when a foreign financial institution
gains access to the U.S. financial system by operating through a
U.S. correspondent account belonging to another foreign financial
institution. Thus, these third-party financial institutions can
effectively gain anonymous access to the U.S. financial system. See
``Correspondent Accounts (Foreign)--Overview,'' Federal Financial
Institutions Examination Council Bank Secrecy Act Anti-Money
Laundering Examination Manual,'' (``FFIEC Manual'') (https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_047.htm).
---------------------------------------------------------------------------
The facts surrounding these transactions are consistent with
typical ``red flags'' regarding shell company activity identified in
most banking standards, including wire transfer volumes that are
extremely large in proportion to the asset size of the bank;
transacting businesses sharing the same address, providing only a
registered agent's address, or having other address inconsistencies;
and frequent involvement of multiple jurisdictions or beneficiaries
located in higher-risk offshore financial centers.\29\
---------------------------------------------------------------------------
\29\ See ``Money Laundering Red Flags: Wire Transfers,'' Federal
Financial Institutions Examination Council (https://www.ffiec.gov/bsa_aml_infobase/documents/red_flags/Wire_Trans.pdf) and
``Appendix F: Money Laundering and Terrorist Financing `Red Flags,'
'' FFIEC Manual (https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_106.htm). See also ``FinCEN Guidance: Potential Money
Laundering Risks Related to Shell Companies,'' November 9, 2006.
FIN-2006-G-14.
---------------------------------------------------------------------------
For example, large-dollar transactions originated from multiple
shell corporations located at shared formation addresses were
subsequently transferred through Credex to suspected shell corporations
that also shared the same formation addresses in various jurisdictions.
Specifically, between June and July 2007, two shell corporations
located at known company formation addresses in the United Kingdom
(``UK'') and the British Virgin Islands (``BVI'') made multiple
payments totaling millions of U.S. dollars by utilizing accounts at
Credex and another foreign financial institution for the benefit of a
separate BVI company. Overall, numerous suspicious transactions (1)
occurred in spurts for a brief period, in repetitive patterns, and then
ceased without explanation, (2) were for unrelated goods and services
that did not correspond to an apparent business relationship between
the transacting parties, and (3) were remitted through multiple foreign
banks with U.S. correspondent accounts with vague payment details.
These patterns strongly suggest a failure of anti-money laundering/
countering the financing of terrorism (AML/CFT) controls at Credex and/
or willfulness by the bank in carrying out transactions on behalf of
shell corporations.
Furthermore, Credex has engaged in high volumes of transactions
that are significantly disproportionate to the bank's level of
capitalization. For example, from January to March 2010, information
made available to the USG shows that Credex transferred nearly $1
billion to shell corporations in multiple jurisdictions--a substantial
amount of wire activity for a bank of Credex's size. From 2007 to 2009,
Credex averaged approximately $10 million in capitalization.\30\ In
addition, Credex wire transaction customers during this period were
mostly parties sending money from Credex accounts. However, there were
no observable corresponding inflows, which one would expect at a
legitimate commercial bank.
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\30\ Bankers Almanac (2012).
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Information made available to the USG also shows that Credex
engages in evasive conduct in a significant portion of its financial
transactions. In some instances, critical information identifying
Credex as the originating financial institution was omitted from the
wire transaction details, or the stated purpose of the transaction
involving Credex accountholders was inconsistent with the expected
business profile of those companies. Such disproportionate volumes of
activity compared to the bank's size, coupled with evasive behaviors,
strongly suggest that Credex is vulnerable to money laundering and
other financial crimes.
[[Page 31437]]
Credex maintains a total of 66 correspondent accounts,\31\
including more than 20 U.S. dollar accounts, almost exclusively with
Russian and Belarusian financial institutions.\32\ This number of
correspondent accounts is highly disproportionate relative to Credex's
size--the bank's total assets were approximately $46 million as of the
end of 2010.\33\ For example, the largest bank in Belarus--whose assets
number more than $14 billion--only has a total of 18 correspondent
accounts.\34\ This indicates the intent to obfuscate the movement of
funds; there is no logical explanation or purpose for maintaining so
many correspondent accounts while incurring the operational costs and
fees associated with them.
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\31\ These appear to be ``nostro'' accounts, which are commonly
used for currency settlement.
\32\ Bankers Almanac (2012).
\33\ Id.
\34\ Id.
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According to available public information, Credex does not have
direct correspondent relationships with U.S. financial
institutions.\35\ However, information made available to the USG
indicates that transactions involving U.S. dollars are conducted via
multiple ``nested accounts'' with European banks and money service
businesses \36\ that allowed indirect access to the U.S. financial
system. For example, of 91 wires totaling approximately $10 million
conducted through Credex, 69 wires totaling $9 million involved
apparent nesting activity via U.S. correspondent accounts, and the
remaining 22 wire transfers totaling over $1 million were sent by order
of, or for the benefit of, shell-like entities, some of which were also
involved in the 69 nested wires.
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\35\ Bankers Almanac (2012).
\36\ Additionally, according to Credex's Web site, the bank
performs transfers through international money transfer services
(Anelik, Leader, Western Union, and Moneygram) without opening an
account. See ``General Information,'' CredexBank Web site (https://www.en.credexbank.by/bank/general).
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Given this evasive conduct, U.S. financial institutions remain
particularly at risk of indirectly providing Credex with anonymous
access to the U.S. financial system.
B. The Extent to Which Credex Is Used for Legitimate Business Purposes
in the Jurisdiction
The lack of transparency--regarding the jurisdiction, beneficial
ownership of the bank (discussed in Section II (D), below), and
transactional activity with shell corporations--makes it difficult to
assess the extent to which Credex is engaged in legitimate business.
Thus, any legitimate use of Credex is significantly outweighed by the
apparent use of Credex to facilitate or promote money laundering and
other financial crimes.
C. The Extent to Which Such Action Is Sufficient To Ensure, With
Respect to Transactions Involving Credex, That the Purposes of the BSA
Continue To Be Fulfilled, and To Guard Against International Money
Laundering and Other Financial Crimes
As detailed above, FinCEN has reasonable grounds to conclude that
Credex is being used to promote or facilitate international money
laundering, and is therefore an institution of primary money laundering
concern. Currently, there are no protective measures that specifically
target Credex. Thus, finding Credex to be a financial institution of
primary money laundering concern, which would allow consideration by
the Secretary of special measures to be imposed on the institution
under section 311, is a necessary first step to prevent Credex from
facilitating money laundering or other financial crime through the U.S.
financial system. The finding of primary money laundering concern will
bring any criminal conduct occurring at or through Credex to the
attention of the international financial community and will further
limit the bank's ability to be used for money laundering or for other
criminal purposes.
D. Other Relevant Factor: Lack of Transparency
As outlined above, the pervasive lack of transparency surrounding
Credex's business activities--including its high volume of suspicious
transactions with shell corporations, the substantial uncertainty
surrounding the transacting parties and purposes involved in those
transactions, the bank's evasive conduct, and its operation in a high
risk jurisdiction--makes it virtually impossible to discern the extent
to which the bank is engaged in legitimate business, and most
importantly, to evaluate its capacity to identify and mitigate risk and
illicit finance. This situation is exacerbated by a similar lack of
transparency in the bank's ownership, which has passed from one shell
corporation to another, creating considerable uncertainty as to the
identity of the true beneficial owner(s).
Credex's original registered owner, Ximex,\37\ displays numerous
characteristics of a shell corporation. Listed at 12-16 Clerkenwell Rd,
London, United Kingdom,\38\ Ximex shares the same mailing address as
another firm--whose primary activities are formation and servicing of
international business companies, as well as tax and financial
planning.\39\ Ximex is owned by ``Imex Executive, Limited,'' a company
registered to the address of a BVI company formation agent.\40\
Additionally, Ximex is listed by the UK's Financial Services Authority
(``FSA'') among firms and/or individuals who are not authorized to
conduct regulated investment activities.\41\ The FSA is an independent
body that regulates the financial services industry in the UK.\42\ \43\
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\37\ ``Belarus on a Roll,'' Business New Europe, July 22, 2009
(https://www.bne.eu/story1701/Belarus_on_a_roll).
\38\ See ``Ximex Executive Limited,'' (https://www.biz-
info.co.uk/ximex+executive+limited--04605867.html).
\39\ See ``Carrington Accountancy,'' (https://www.freeindex.co.uk/profile(carrington-accountancy)--277286.htm).
See also ``Carrington Corporate Services Limited,'' (https://www.biz-
info.co.uk/carrington+corporate+services+limited--03160163.html).
\40\ Dun & Bradstreet, Global Reference Solution (2011)
(www.dnb.com).
\41\ ``Unauthorized firms/individuals,'' Financial Services
Authority, November 4, 2010 (https://www.fsa.gov.uk/pages/Doing/Regulated/Law/Alerts/unauthorised.shtml).
\42\ ``What We Do,'' Financial Services Authority (https://www.fsa.gov.uk/pages/about/what/index.shtml).
\43\ ``Warnings & alerts,'' Financial Services Authority,
November 4, 2010 (https://www.fsa.gov.uk/Pages/Doing/Regulated/Law/Alerts/index.shtml).
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Since October 2009, Credex has been owned by Vicpart Holding SA
(``Vicpart''), based in Fribourg, Switzerland.\44\ Publicly available
information about Vicpart reveals significant inconsistencies and gaps
that raise concerns about the true nature and purpose of the company.
Vicpart shares the same address with more than 200 other companies,
some of which are in liquidation.\45\ These companies in liquidation
merit particular scrutiny because at least one Financial Action Task
Force (``FATF'') study has identified the practice of dissolving
companies rapidly after creation as a risk factor signaling the
potential misuse of corporate vehicles.\46\ The Vicpart Web site is
currently inaccessible to the public. Prior to its shutdown, the Web
site stated that the purpose of the company is the management of
[[Page 31438]]
financial, industrial, and commercial participation, as well as real
estate operation.\47\ Separately, a global business registry indicates
that Vicpart is registered as a joint stock company whose primary line
of business is investment management.\48\ However, Credex is listed as
its only holding.\49\
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\44\ Bankers Almanac (2012).
\45\ Analyst Search of Dun & Bradstreet, Global Reference
Solution (2012). (www.dnb.com) (search for ``Rue St Pierre 18
Fribourg Switzerland'').
\46\ ``The Misuse of Corporate Vehicles, Including Trust and
Company Service Providers,'' FATF (https://www.fatf-gafi.org/media/fatf/documents/reports/Misuse%20of%20Corporate%20Vehicles%20including%20Trusts%20and%20Company%20Services%20Providers.pdf), p. 33.
\47\ See Vicpart Web site (https://vicpart.ch/en/about) (accessed
1/19/12, but no longer accessible as of 5/21/12).
\48\ Dun & Bradstreet, Global Reference Solution (2011)
(www.dnb.com).
\49\ See Vicpart Web site (https://vicpart.ch/en/about) (accessed
1/19/12, but no longer accessible as of 5/21/12).
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Adding to these concerns are allegations of criminal involvement by
Vicpart's management. According to information made available to the
USG, two former Vicpart board members were charged with criminal
activity, including document forgery. These individuals may have used
companies registered to Vicpart's current address as part of their
alleged criminal activity. Meanwhile, aside from the listing of a
single individual as both a Vicpart director and the sole authorized
signatory for the company, there is no other publicly available
information on the current composition of Vicpart's board of
directors.\50\
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\50\ Dun & Bradstreet, Global Reference Solution (2012) (https://www.dnb.com).
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Although the Credex Web site currently states that the single
individual listed as a Vicpart director is also the ``beneficial
owner'' of the company,\51\ the USG has concerns about the accuracy of
this information. According to publicly available information, the
individual named as Vicpart's beneficial owner has also been identified
by global business registries as being involved with at least 30
different companies, many of which are in liquidation and list the
individual's personal residence as their address.\52\ This involvement
with a large number of companies, many of which are in liquidation and/
or share the same address, raises concerns that the individual may
function purely as a formation agent or nominal owner whose
identification as a company's owner in public sources may be intended
to shield the true beneficial owners from scrutiny.
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\51\ ``Business Card,'' CredexBank Web site (https://www.en.credexbank.by/bank/general/businesscard). See also Dun &
Bradstreet, European Report (2012) (https://www.dnb.com), which does
not provide any indication that the single individual is the
company's beneficial owner but indicates that he has been the sole
authorized signatory since June 2009.
\52\ Dun & Bradstreet, Global Reference Solution (2012) (https://www.dnb.com). See also ``Moneyhouse'' (https://www.moneyhouse.ch/en).
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The ambiguity surrounding Vicpart's ownership is particularly
concerning because the company also exhibits several indicators of
typical shell corporation activity, and owns a bank that has been
engaged in highly questionable patterns of transactions that are
indicative of money laundering. For example, while Vicpart's Web site
states that the company was incorporated in 1999,\53\ it does not
appear to have been active until June 2009--four months prior to
acquiring Credex from another shell corporation, Ximex in October
2009.\54\ This long period of dormancy followed by involvement in a
major transaction bears the hallmark of Vicpart being a ``shelf
company.'' \55\ Additionally, Vicpart's financial statements at the
time of acquisition showed no balance sheet assets except for 100,000
Swiss Francs (estimated $108,000) in share capital.\56\
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\53\ See Vicpart Web site (https://vicpart.ch/en/about) (accessed
1/19/12, but no longer accessible as of 5/21/12).
\54\ Id.
\55\ The term ``shelf company'' is typically applied to a
company which, among other things, has inactive shareholders,
directors, and secretary; and is left dormant--that is, sitting ``on
a shelf''--for the purpose of being sold. See ``Puppet Masters: How
the Corrupt Use Legal Structures to Hide Stolen Assets and What to
Do About It,'' The World Bank and UNODC, 2011, p. 37.
(www.worldbank.org).
\56\ See Vicpart Web site (https://vicpart.ch/en/about) (accessed
1/19/12, but no longer accessible as of 5/21/12).
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III. Finding
Based on the foregoing factors, the Director of FinCEN hereby finds
that Credex is a financial institution of primary money laundering
concern.
Dated: May 22, 2012.
Peter S. Alvarado,
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2012-12742 Filed 5-24-12; 8:45 am]
BILLING CODE 4810-02-P