Notice of Finding That Kassem Rmeiti & Co. For Exchange Is a Financial Institution of Primary Money Laundering Concern, 24593-24596 [2013-09783]

Download as PDF Federal Register / Vol. 78, No. 80 / Thursday, April 25, 2013 / Notices DEPARTMENT OF THE TREASURY Financial Crimes Enforcement Network Notice of Finding That Kassem Rmeiti & Co. For Exchange Is a Financial Institution of Primary Money Laundering Concern Financial Crimes Enforcement Network, Treasury (‘‘FinCEN’’). AGENCY: ACTION: Notice of finding. This document provides notice that the Director of FinCEN found on April 22, 2013, that reasonable grounds exist for concluding that Kassem Rmeiti & Co. For Exchange (‘‘Rmeiti Exchange’’) is a financial institution operating outside the United States that is of primary money laundering concern. SUMMARY: The finding referred to in this notice was effective as of April 22, 2013. DATES: FOR FURTHER INFORMATION CONTACT: FinCEN, (800) 949–2732. SUPPLEMENTARY INFORMATION: tkelley on DSK3SPTVN1PROD with NOTICES2 I. 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, 12 U.S.C 1951–1959, and 31 U.S.C. 5311– 5314, 5316–5332, to promote the 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. Section 311 of the USA PATRIOT Act (‘‘Section 311’’), codified at 31 U.S.C. 5318A of the BSA, grants the Secretary the authority, upon finding that reasonable grounds exist for concluding that a foreign jurisdiction, financial institution, class of transaction, or type of account is of ‘‘primary money laundering concern,’’ to require domestic financial institutions and financial agencies to take certain ‘‘special measures’’ to address the primary money laundering concern. VerDate Mar<15>2010 18:10 Apr 24, 2013 Jkt 229001 II. The Extent To Which Kassem Rmeiti & Co. For Exchange Is Used for Legitimate Business Purposes in Lebanon A. Kassem Rmeiti & Co. For Exchange Kassem Rmeiti & Co. For Exchange (‘‘Rmeiti Exchange’’) is a Lebanon-based money exchanger with branches and affiliates in Switzerland and Benin. Rmeiti Exchange, through its owner, Kassem Rmeiti,1 also owns companies including, but not limited to, the Rmaiti Group SAL in Lebanon and Societe Rmaiti SARL (STE Rmeiti) located in Benin. For the purpose of this document and unless expressly stated otherwise, references to Rmeiti Exchange include the aforementioned companies, collectively the ‘‘Rmeiti Exchange companies.’’ Rmeiti Exchange uses accounts held at foreign banks that maintain correspondent relationships with U.S. financial institutions to gain access to the U.S. financial system. Between 2008 and 2011, Rmeiti Exchange transferred at least $27 million to U.S. car dealers from foreign bank accounts. Rmeiti Exchange offers a variety of financial services, primarily currency exchange and transmission of funds. Available information suggests that Rmeiti Exchange, in addition to the activities of concern discussed below, engages in other, unremarkable transactions of a type, volume, and variety typical of Lebanese exchange houses. If these services were offered to U.S. customers and if they took place wholly or substantially in the United States, Rmeiti Exchange would be treated as a money services business under the BSA, a type of financial institution defined at 31 CFR 1010.100(t)(3). Specifically, it offers services that would be defined as money transmission and dealing in foreign exchange, activities defined at 31 CFR 1010.100(ff). B. Lebanon Lebanon is a financial hub for banking activities in the Middle East and eastern Mediterranean and has a sophisticated banking sector.2 There are 72 banks 1 Alternative spellings of individual and business names: Kassem, Kasem, Keassem, Kassim, Kasim, Qasim, Qasem, Qassem; Rmeiti, Rmeiti, Rmeitey Rmaiti, Rmaity, Rmaitey, Rmayty, Rmayti, Rmaytey, Rmeyti, Rmeyty, Rmeytey, Remeity, Remaity, Remayty, Remeyty, Rameiti, Ramayti, Rameyti, Ramaiti, Romeiti, Romeyti, Romayti, Romaiti, Rmaitti, Rmeitti, Rmaytti, Rmeytti; Rmaiti For Exchange Co. 2 ‘‘2012 International Narcotics Control Strategy Report (‘INCSR’),’’ Bureau of International Narcotics and Law Enforcement Affairs, The Department of State, March 7, 2012 www.state.gov/g/inl/rls/nrcrpt/ 2010/vol2/137212.htm). PO 00000 Frm 00001 Fmt 4701 Sfmt 4703 24593 operating in Lebanon,3 and all major banks have correspondent relationships with U.S. financial institutions. The five largest commercial banks account for an estimated 61% of total banking assets for the country, which are estimated at $95 billion.4 The government retains no direct ownership of any commercial banks.5 Despite slowed economic growth following domestic political instability and regional turmoil in 2011, Lebanon’s banking sector continues to rely on significant capital inflows from the Lebanese diaspora community,6 which has been a large contributor to banking sector liquidity and capitalization, estimated by the World Bank at $7.6 billion—18% of GDP—in 2011.7 Banks’ exposure to the heavilyindebted sovereign, with total government debt projected at 132% of GDP in 2012, remains a significant risk to stability and growth of the financial sector.8 Money exchange businesses became a major feature of Lebanon’s financial sector during the Lebanese civil war and have played a key role in providing services such as international funds transfers, currency conversion, and payments and deposits for domestic and expatriate Lebanese clientele since 1990. In 2001, Lebanon’s Central Bank, Banque du Liban (‘‘BdL’’), published a set of circulars expanding regulations for exchange houses operating in the country.9 Since the enactment of the 2001 law, 732 money exchange businesses have registered with BdL, and currently there are 374 active 3 ‘‘Complete List of Operating Banks in Lebanon,’’ Banque du Liban (www.bdl.gov.lb). www.bdl.gov.lb/ bfs/CB/index.htm as of 1/30/2013. 4 Estimated from values in the ‘‘2012 Investment Climate Statement—Lebanon,’’ Bureau of Economic and Business Affairs, June 2012 Report. www.state .gov/e/eb/rls/othr/ics/2012/191182.htm. 5 ‘‘2012 Index of Economic Freedom,’’ The Heritage Foundation. http://www.heritage.org/ index/country/lebanon. 6 ‘‘2012 Investment Climate Statement— Lebanon,’’ Bureau of Economic and Business Affairs, The Department of State, June 2012 Report. www.state.gov/e/eb/rls/othr/ics/2012/191182.htm. 7 The latest available World Bank data estimated in November 2012 that remittances were $7.6bn for 2012. ‘‘Remittances Data: Inflows,’’ Migration and Remittances, The World Bank, November 2012. http://econ.worldbank.org/WBSITE/EXTERNAL/ EXTDEC/EXTDECPROSPECTS/0,,content MDK:21121930∼menuPK:3145470∼pagePK: 64165401∼piPK:64165026∼theSitePK:476883,00. html. 8 ‘‘IMF Executive Board Concludes 2011 Article IV Consultation with Lebanon’’ Public Information Notice (PIN) No. 12/11, ‘‘International Monetary Fund, February 8, 2012. http://www.imf.org/ external/np/sec/pn/2012/pn1211.htm. 9 BdL, Law 347 Regulating the Money Changer Profession in Lebanon, August 6, 2001. E:\FR\FM\25APN2.SGM 25APN2 24594 Federal Register / Vol. 78, No. 80 / Thursday, April 25, 2013 / Notices tkelley on DSK3SPTVN1PROD with NOTICES2 licensed businesses.10 Each of these active licensed businesses must process payments through business accounts established in Lebanese banks.11 Lebanon also faces money laundering and terrorist financing vulnerabilities 12 due to weaknesses in its Anti-Money Laundering/Combating the Financing of Terrorism (‘‘AML/CFT’’) regime, porous borders, ineffective and inconsistent regulation, and a challenging and complex domestic and regional political and security environment, among other factors. Of concern is the possibility that a portion of the substantial flow of remittances could be associated with trade-based money laundering and other illicit finance activities. For example, Lebanon imposes currency reporting requirements on banks and money exchange businesses that undertake cross-border cash and precious metal activity,13 but has no corresponding cross-border declaration requirement for the public at Lebanese points of entry, resulting in a significant cash-smuggling vulnerability. These vulnerabilities have been recently exploited to support tradebased money laundering. FinCEN identified Lebanese Canadian Bank (‘‘LCB’’) as an institution of primary money laundering concern in February 2011 (the ‘‘LCB 311 Action’’),14 which was preceded by the Office of Foreign Assets Control’s (‘‘OFAC’s’’) designation of Lebanese Ayman Joumaa as a Specially Designated Narcotics Trafficker (‘‘SDNT’’), as well as of three Lebanon-based money exchange businesses used by Ayman Joumaa and his organization to launder illicit proceeds, Elissa Exchange Company, Hassan Ayash Exchange, and New Line Exchange Trust Co., under the Foreign Narcotics Kingpin Designation Act in January 2011.15 In the LCB 311 Action, FinCEN determined that LCB was facilitating the money laundering activities of the Joumaa drug trafficking and money laundering network. This network moved illegal drugs from South 10 BdL, List of Exchange Institutions, May 2012, http://www.bdl.gov.lb/bfs/MS/Money_Dealers_ arabic.pdf. 11 BdL, Intermediate BdL Circular 264, dated May 21, 2011, pages 3–4, http://www.bdl.gov.lb/circ/ intpdf/int264_en.pdf. 12 2012 INCSR. 13 Special Investigation Commission, Intermediate BdL Circular 263, dated May 21, 2011, http://www.sic.gov.lb/circular263.shtml. 14 FinCEN, Finding That the Lebanese Canadian Bank SAL Is a Financial Institution of Primary Money Laundering Concern, 76 FR 9403, dated February 17, 2011, http://www.gpo.gov/fdsys/pkg/ FR-2011-02-17/pdf/2011-3346.pdf. 15 Additions to OFAC’s SDN list, dated January 26, 2011, http://www.treasury.gov/resource-center/ sanctions/OFAC-Enforcement/Pages/20110126. aspx VerDate Mar<15>2010 18:10 Apr 24, 2013 Jkt 229001 America to Europe and the Middle East via West Africa and laundered hundreds of millions of dollars monthly through accounts held at LCB, as well as through trade-based money laundering involving consumer goods throughout the world, including through used car dealerships in the United States. Further, the LCB 311 Action exposed the terrorist organization Hizballah’s links to LCB and the fact that Hizballah derived financial support from criminal activities of Joumaa’s network. Following these Treasury actions, two U.S. Attorney’s Offices took actions against Ayman Joumaa, Elissa Exchange, and Hassan Ayash Exchange. In December 2011, a grand jury in the Eastern District of Virginia returned an indictment against Ayman Joumaa for conspiracy to distribute narcotics and conspiracy to commit money laundering related to drug trafficking by Mexican and Colombian drug cartels.16 In August 2012, the U.S. Attorney’s Office for the Southern District of New York (‘‘SDNY’’) seized $150 million as part of a civil money laundering and forfeiture action against Hizballah-linked LCB, Elissa Exchange, and Hassan Ayash Exchange based on money laundering schemes involving Ayman Joumaa, the exchange houses, and U.S. car dealers.17 The ‘‘SDNY Complaint’’ listed, by name, 30 U.S. car dealers and a U.S. shipping company that facilitated the scheme. BdL re-evaluated AML/CFT regulations regarding money exchange businesses following the Treasury actions. In May and August 2011, BdL revised Lebanon’s AML/CFT regulations regarding supervised banks and other non-bank financial institutions by publishing seven decisions 18 modifying Law 347 (dated August 6, 2001). BdL required all of these active licensed money exchangers to maintain business accounts at a formal financial institution, such as a registered Lebanese bank subject to BdL supervision, and prohibited exchangers from operating accounts at Lebanese banks on behalf of their clients.19 16 The United States Attorney’s Office for the Eastern District of Virginia Press Release, ‘‘U.S. Charges Alleged Lebanese Drug Kingpin With Laundering Drug Proceeds For Mexican And Colombian Drug Cartels’’ December 13, 2011, http://www.justice.gov/usao/vae/news/2011/12/ 20111213joumaanr.html. 17 The United States Attorney’s Office for the Southern District of New York press release and civil complaint. 18 In May 2011 Intermediate Decisions 10725, 10726 and 10728 and in August 2011 Intermediate Decisions 10787, 10789, 10791, and 10792 were published regarding AML/CFT regulations of exchange businesses. 19 BdL, Intermediate BdL Circular 264, dated May 21, 2011, pages 3–4, http://www.bdl.gov.lb/circ/ intpdf/int264_en.pdf. PO 00000 Frm 00002 Fmt 4701 Sfmt 4703 Despite some improvements to its financial sector supervision, Lebanon still has not acceded to the UN Convention for the Suppression of the Financing of Terrorism. And Hizballah, an organization which the United States designated as a Foreign Terrorist Organization in October 1997 and a Specially Designated Global Terrorist under Executive Order 13224 in October 2001,20 is a recognized political party with an active role in the Lebanese government. Though it has adopted laws domestically criminalizing any funds resulting from the financing, or contributing to the financing, of terrorism,21 the active participatory role of a designated terrorist group in the Lebanese government and civil society calls into question the broader efficacy of Lebanon’s AML/CFT regime. III. The Extent to Which Rmeiti Exchange Has Been Used To Facilitate or Promote Money Laundering in or Through Lebanon In finding that Rmeiti Exchange is a financial institution of primary money laundering concern, FinCEN reviewed the extent to which Rmeiti Exchange facilitates or promotes money laundering and determined that Rmeiti Exchange, its ownership, management, and associates are involved in illicit activity that includes the same tradebased money laundering activities conducted by U.S.-designated narcotics kingpin Ali Mohamed Kharroubi and Elissa Exchange, facilitate money laundering by other Lebanese exchanges on behalf of drug traffickers, and provide financial services to Hizballah. A. Rmeiti Exchange Engages in TradeBased Money Laundering for U.S.Designated Narcotics Kingpin Ali Mohamed Kharroubi and Elissa Exchange According to information available to the U.S. Government, Rmeiti Exchange engages in auto sale-related financial transactions working with SDNT Ali Mohamed Kharroubi to send funds to U.S. auto dealers as part of a trade-based money laundering scheme. Before and after the January 2011 Treasury designation of Ali Mohamed Kharroubi and Elissa Exchange and FinCEN’s Section 311 Action against LCB which 20 Hizballah is a Lebanon-based terrorist group. Until September 11, 2001, Hizballah was responsible for more American deaths than any other terrorist organization. 21 For additional information about Lebanon’s legal framework and special mechanisms for antimoney laundering and terrorist financing measures, see The Middle East and North Africa Financial Task Force (MENAFATF) Mutual Evaluation Report, Lebanese Republic, November 10, 2009 (www.menafatf.org). E:\FR\FM\25APN2.SGM 25APN2 Federal Register / Vol. 78, No. 80 / Thursday, April 25, 2013 / Notices exposed the use of LCB accounts by Kharroubi and his company, Elissa Exchange, to launder drug proceeds for the Joumaa drug trafficking organization through the purchase and export of used cars from the United States, Rmeiti Exchange and its management processed structured, regular, roundnumber, large-denomination international wire transfers for the purchase of vehicles in the United States. The funds often originated from unknown individuals in high-risk money laundering regions and were sent to auto auction companies and used car dealers, some of which have no physical presence or verifiable address. tkelley on DSK3SPTVN1PROD with NOTICES2 1. Rmeiti Exchange Engages in TradeBased Money Laundering Activity With Narcotics Traffickers Rmeiti Exchange and its management facilitate extensive transactions for known money launderers and drug traffickers. Prior to Treasury’s Kingpin designation and FinCEN’s LCB 311 Action, Kassem Rmeiti, through Rmeiti Exchange, routinely processed structured international wire transfers from its accounts at LCB and other banks to many of the same U.S.-based car dealerships that received funds from Elissa Exchange and were subsequently named in the SDNY Complaint as participants in the Joumaa network’s money laundering scheme. In fact, between 2008 and March 2011, Rmeiti Exchange and its owner, provided at least $25 million in large, round dollar, and repetitive payments to U.S.-based car dealers and exporters, including more than $22 million from accounts it held at LCB. Many of the used car dealers that received payments from Rmeiti Exchange were later named in the SDNY Complaint for receiving funds from the Joumaa network. 2. Rmeiti Exchange Engages in TradeBased Money Laundering Activity With Individuals the U.S. Government Has Designated as Narcotics Traffickers After SDNT Ali Mohamed Kharroubi’s network was exposed in the Treasury and Department of Justice actions, the network adapted its business practices and utilized other exchange houses which they could control or otherwise use to continue sending funds to used car dealerships in the United States, in particular Rmeiti Exchange. After the LCB 311 Action in February 2011, Rmeiti Exchange companies continued to make structured international wire payments to U.S. car dealers and companies for car purchases in a manner representative of trade-based money laundering, and a Rmeiti Exchange company was specifically VerDate Mar<15>2010 18:10 Apr 24, 2013 Jkt 229001 used to facilitate such payments on behalf of Treasury-designated narcotics trafficker Ali Kharroubi. According to U.S. Government information, in February 2011 Ali Mohamed Kharroubi directed Kassem Rmeiti to create the Trading African Group (TAG) in Benin so that Kharroubi could continue making international wire transfers for U.S. car purchases that avoided U.S. Government scrutiny. Further, by the fall of 2011, former Elissa Exchange employees were working for TAG, and Kassem Rmeiti was paying Kharroubi about 30–40% of TAG’s profits. TAG provided more than $1.7 million to U.S. car dealers and exporters between March and October 2011. These payments consisted of structured, regular, large-denomination international wire payments in a manner representative of trade-based money laundering, and included at least one U.S. car dealer named in the SDNY Complaint as receiving car purchase payments from Elissa Exchange as part of the money laundering scheme alleged in the Complaint. The U.S. car dealers also received multiple wire transfers from individuals and businesses in regions considered high-risk for tradebased money laundering, which funded purchases of cars that were then shipped to Lebanon and likely Benin. The sources of some funds were unknown, and the recipients had addresses that could not be verified or appeared to be a residence. 3. Following U.S. Government Actions in 2011, Rmeiti Exchange Adapted Its Trade-Based Money Laundering Activity To Conduct Transactions Through Rmeiti’s Other Businesses, Especially World Car Service LTD Kassem Rmeiti also serves as a board member or executive and represents himself as the owner of World Car Service LTD, a.k.a., World Car Service AG, (WCS AG)—an international transport and shipping business located in Switzerland, which is believed to be an affiliate of World Car Service International Transport and Shipping Company (a.k.a., WCS SA) located in Benin. Between March 2011 and August 2012, WCS SA in Benin processed numerous international wire transfers totaling over $100,000 and referencing auto purchases or vehicles to U.S.-based individuals and businesses and one other individual involved in auto exports or sales. From 2011 to 2012, WCS SA in Benin provided over $2.2 million in large, round-dollar wire transfers to numerous U.S. car dealers and car exporters, one of which was named in the 2011 SDNY Complaint, and many of which had previously PO 00000 Frm 00003 Fmt 4701 Sfmt 4703 24595 received over $2 million in dozens of large, round-dollar wire transfers from Rmeiti Exchange or TAG between early 2007 and mid-2011. This pattern of activity indicates that in 2011 Rmeiti shifted some transactions away from his exchange companies and TAG and began increasingly utilizing his WCS accounts for trade-based money laundering transactions with the same entities through 2012. Additionally, Kassem Rmeiti has engaged in commingling of over $2.5 million among his several businesses, including WCS SA, WCS AG, STE Rmaiti SARL, and Kassem Rmeiti and Co. For Exchange between 2009 and 2012, which is consistent with money laundering indicators and techniques. B. Rmeiti Exchange Facilitates or Promotes Money Laundering Activity With or on Behalf of Other Money Launderers and Drug Trafficking Organizations In addition to involvement in the trade-based money laundering activities described above, Rmeiti Exchange and its management have conducted financial activities for other money laundering and drug trafficking organizations operating in both Europe and Africa. Between March 2011 and October 2012, Rmeiti Exchange, its management, and employees facilitated the movement of at least $1.7 million for known or suspected Beninoise and Lebanese money launderers and drug traffickers. This included Rmeiti Exchange and Kassem Rmeiti taking on large cash deposits, collection of bulk cash currency, issuance of cashier’s checks, and facilitation of cross-border wire transfers on behalf of known and suspected money launderers, drug traffickers, and Hizballah affiliates. 1. Rmeiti Exchange Facilitates Payments for a Money Launderer Known To Be Affiliated With a Colombian Drug Trafficking Organization Since at least 2010, Rmeiti Exchange has transferred funds on behalf of known or suspected money launderers and shared its office space and security resources as part of a large-scale money laundering scheme that involves the purchase and sale of used cars in the United States for export to West Africa. For example, following the seizure of over 8.7 million euro by European authorities related to a Colombian drug trafficking ring that imported cocaine into Europe and laundered the illicit proceeds through Lebanon and South America, a known money launderer of this organization with ties to Hizballah moved his operations to Kassem Rmeiti Exchange in the Dahieh area of Beirut. E:\FR\FM\25APN2.SGM 25APN2 24596 Federal Register / Vol. 78, No. 80 / Thursday, April 25, 2013 / Notices This money launderer continued to wire large dollar amounts to U.S.-based car dealers via a Rmeiti Exchange account prior to the LCB 311 Action. Rmeiti Exchange facilitated money laundering for other entities engaged in trade-based money laundering. Rmeiti processed over $3 million in dozens of large, round-dollar international wire transfers to two entities, whose businesses engaged in transactions typical of used-car trade-based money laundering. The two entities received over $2 million in wire transfers for car purchases from entities in high-risk trade-based money laundering regions, including through another exchange house. tkelley on DSK3SPTVN1PROD with NOTICES2 2. Rmeiti Exchange Actively Seeks Money Laundering Opportunities With Other Lebanese Exchange Houses and Precious Metal Dealers Rmeiti Exchange owner Kassem Rmeiti has also worked with other Lebanese exchange houses, including Halawi Exchange, determined to be a financial institution operating outside of the United States that is of primary money laundering concern on April 22, 2013, to facilitate money laundering activities. For example, Rmeiti Exchange, Halawi Exchange, and other exchange houses sent over $9 million in dozens of round-number, largedenomination international wire transfers from unknown sources to the same U.S. car shipping business from 2007 through 2010. Rmeiti Exchange and Halawi Exchange have facilitated financial activity on behalf of a money launderer involved in collecting illicit drug proceeds. Kassem Rmeiti has worked with a separate Lebanese exchange house to coordinate currency transfers and courier shipments on behalf of various money launderers between mid-2011 and mid-2012. Benin-based suspected money launderer Kassem Rmeiti, the owner of Rmeiti Exchange, continues to actively seek money laundering opportunities in trade transactions. For example, Rmeiti sought the assistance of a Lebanonbased money launderer in April 2012, to begin selling African gold in Lebanon or Dubai. Rmeiti Exchange and its owners’ and employees’ willingness to work for a variety of criminal networks involved in drug trafficking and money laundering suggests that a venture into the import or export of gold, which is a high-risk industry for money laundering, will likely provide another source to commingle illicit funds for Ali Mohamed Kharroubi and others. VerDate Mar<15>2010 18:10 Apr 24, 2013 Jkt 229001 C. Rmeiti Exchange Facilitates or Promotes Money Laundering for Specially Designated Global Terrorist Hizballah Rmeiti Exchange has also conducted money laundering activities for and provided financial services to Hizballah. Rmeiti Exchange used accounts it held at LCB to deposit bulk cash shipments generated by Hizballah through illicit activity in Africa and as of December 2011, Hizballah had replaced U.S.designated Elissa Exchange owner Ali Kharroubi with Haitham Rmeiti—the manager/owner of STE Rmeiti—as a key facilitator for wiring money and transferring Hizballah funds. Rmeiti Exchange, through its owner, Kassem Rmeiti, owns Societe Rmaiti SARL (a.k.a. STE Rmeiti). These steps taken by Hizballah demonstrate its efforts to adapt after U.S. Government disruptive action, and illustrates the need for continued action against its financial facilitators. IV. The Extent to Which This Action Is Sufficient To Guard Against International Money Laundering and Other Financial Crimes FinCEN’s April 22, 2013 finding that Rmeiti Exchange is an institution of primary money laundering concern, along with the Special Measures proposed pursuant to the Finding and published elsewhere in this issue of the Federal Register, will guard against international money laundering and other financial crimes directly by restricting the ability of Rmeiti Exchange to access the U.S. financial system to process transactions, and indirectly by public notification to the international financial community of the risks posed by dealing with Rmeiti Exchange. Dated: April 20, 2013. Jennifer Shasky Calvery, Director, Financial Crimes Enforcement Network. [FR Doc. 2013–09783 Filed 4–23–13; 11:15 am] BILLING CODE 4810–02–P DEPARTMENT OF THE TREASURY Financial Crimes Enforcement Network Notice of Finding That Halawi Exchange Co. Is a Financial Institution of Primary Money Laundering Concern Financial Crimes Enforcement Network, Treasury (‘‘FinCEN’’). ACTION: Notice of finding. AGENCY: This document provides notice that the Director of FinCEN found on April 22, 2013, that Halawi Exchange SUMMARY: PO 00000 Frm 00004 Fmt 4701 Sfmt 4703 Co. (‘‘Halawi Exchange’’) is a financial institution operating outside the United States that is of primary money laundering concern. DATES: The finding referred to in this notice was effective as of April 22, 2013. FOR FURTHER INFORMATION CONTACT: FinCEN, (800) 949–2732. SUPPLEMENTARY INFORMATION: I. 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, 12 U.S.C 1951–1959, and 31 U.S.C. 5311– 5314, 5316–5332, to promote the 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. Section 311 of the USA PATRIOT Act (‘‘Section 311’’), codified at 31 U.S.C. 5318A, grants the Secretary the authority, upon finding that reasonable grounds exist for concluding that a foreign jurisdiction, financial institution, class of transaction, or type of account is of ‘‘primary money laundering concern,’’ to require domestic financial institutions and financial agencies to take certain ‘‘special measures’’ to address the primary money laundering concern. II. The Extent to Which Halawi Exchange Is Used for Legitimate Business Purposes in Lebanon A. Halawi Exchange Halawi Exchange offers a variety of financial services, primarily currency exchange and transmission of funds. Halawi Exchange, along with other related entities, is organized under a holding company known as Halawi Holding SAL, which also owns several other related companies in Lebanon. The Halawi companies are based in Beirut, Lebanon, share key corporate leadership, maintain offices at the same addresses, share common phone numbers and common email addresses, and frequently reference their close connection to one another. They are also regularly displayed together on corporate signage and on public materials, one of which shows them E:\FR\FM\25APN2.SGM 25APN2

Agencies

[Federal Register Volume 78, Number 80 (Thursday, April 25, 2013)]
[Notices]
[Pages 24593-24596]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-09783]



Federal Register / Vol. 78, No. 80 / Thursday, April 25, 2013 / 
Notices

[[Page 24593]]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network


Notice of Finding That Kassem Rmeiti & Co. For Exchange Is a 
Financial Institution of Primary Money Laundering Concern

AGENCY: Financial Crimes Enforcement Network, Treasury (``FinCEN'').

ACTION: Notice of finding.

-----------------------------------------------------------------------

SUMMARY: This document provides notice that the Director of FinCEN 
found on April 22, 2013, that reasonable grounds exist for concluding 
that Kassem Rmeiti & Co. For Exchange (``Rmeiti Exchange'') is a 
financial institution operating outside the United States that is of 
primary money laundering concern.

DATES: The finding referred to in this notice was effective as of April 
22, 2013.

FOR FURTHER INFORMATION CONTACT: FinCEN, (800) 949-2732.

SUPPLEMENTARY INFORMATION:

I. 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, 12 U.S.C 1951-1959, and 31 U.S.C. 5311-5314, 5316-
5332, to promote the 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.
    Section 311 of the USA PATRIOT Act (``Section 311''), codified at 
31 U.S.C. 5318A of the BSA, grants the Secretary the authority, upon 
finding that reasonable grounds exist for concluding that a foreign 
jurisdiction, financial institution, class of transaction, or type of 
account is of ``primary money laundering concern,'' to require domestic 
financial institutions and financial agencies to take certain ``special 
measures'' to address the primary money laundering concern.

II. The Extent To Which Kassem Rmeiti & Co. For Exchange Is Used for 
Legitimate Business Purposes in Lebanon

A. Kassem Rmeiti & Co. For Exchange

    Kassem Rmeiti & Co. For Exchange (``Rmeiti Exchange'') is a 
Lebanon-based money exchanger with branches and affiliates in 
Switzerland and Benin. Rmeiti Exchange, through its owner, Kassem 
Rmeiti,\1\ also owns companies including, but not limited to, the 
Rmaiti Group SAL in Lebanon and Societe Rmaiti SARL (STE Rmeiti) 
located in Benin. For the purpose of this document and unless expressly 
stated otherwise, references to Rmeiti Exchange include the 
aforementioned companies, collectively the ``Rmeiti Exchange 
companies.'' Rmeiti Exchange uses accounts held at foreign banks that 
maintain correspondent relationships with U.S. financial institutions 
to gain access to the U.S. financial system. Between 2008 and 2011, 
Rmeiti Exchange transferred at least $27 million to U.S. car dealers 
from foreign bank accounts.
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    \1\ Alternative spellings of individual and business names: 
Kassem, Kasem, Keassem, Kassim, Kasim, Qasim, Qasem, Qassem; Rmeiti, 
Rmeiti, Rmeitey Rmaiti, Rmaity, Rmaitey, Rmayty, Rmayti, Rmaytey, 
Rmeyti, Rmeyty, Rmeytey, Remeity, Remaity, Remayty, Remeyty, 
Rameiti, Ramayti, Rameyti, Ramaiti, Romeiti, Romeyti, Romayti, 
Romaiti, Rmaitti, Rmeitti, Rmaytti, Rmeytti; Rmaiti For Exchange Co.
---------------------------------------------------------------------------

    Rmeiti Exchange offers a variety of financial services, primarily 
currency exchange and transmission of funds. Available information 
suggests that Rmeiti Exchange, in addition to the activities of concern 
discussed below, engages in other, unremarkable transactions of a type, 
volume, and variety typical of Lebanese exchange houses. If these 
services were offered to U.S. customers and if they took place wholly 
or substantially in the United States, Rmeiti Exchange would be treated 
as a money services business under the BSA, a type of financial 
institution defined at 31 CFR 1010.100(t)(3). Specifically, it offers 
services that would be defined as money transmission and dealing in 
foreign exchange, activities defined at 31 CFR 1010.100(ff).

B. Lebanon

    Lebanon is a financial hub for banking activities in the Middle 
East and eastern Mediterranean and has a sophisticated banking 
sector.\2\ There are 72 banks operating in Lebanon,\3\ and all major 
banks have correspondent relationships with U.S. financial 
institutions. The five largest commercial banks account for an 
estimated 61% of total banking assets for the country, which are 
estimated at $95 billion.\4\ The government retains no direct ownership 
of any commercial banks.\5\ Despite slowed economic growth following 
domestic political instability and regional turmoil in 2011, Lebanon's 
banking sector continues to rely on significant capital inflows from 
the Lebanese diaspora community,\6\ which has been a large contributor 
to banking sector liquidity and capitalization, estimated by the World 
Bank at $7.6 billion--18% of GDP--in 2011.\7\ Banks' exposure to the 
heavily-indebted sovereign, with total government debt projected at 
132% of GDP in 2012, remains a significant risk to stability and growth 
of the financial sector.\8\
---------------------------------------------------------------------------

    \2\ ``2012 International Narcotics Control Strategy Report 
(`INCSR'),'' Bureau of International Narcotics and Law Enforcement 
Affairs, The Department of State, March 7, 2012 www.state.gov/g/inl/rls/nrcrpt/2010/vol2/137212.htm).
    \3\ ``Complete List of Operating Banks in Lebanon,'' Banque du 
Liban (www.bdl.gov.lb). www.bdl.gov.lb/bfs/CB/index.htm as of 1/30/
2013.
    \4\ Estimated from values in the ``2012 Investment Climate 
Statement--Lebanon,'' Bureau of Economic and Business Affairs, June 
2012 Report. www.state.gov/e/eb/rls/othr/ics/2012/191182.htm.
    \5\ ``2012 Index of Economic Freedom,'' The Heritage Foundation. 
http://www.heritage.org/index/country/lebanon.
    \6\ ``2012 Investment Climate Statement--Lebanon,'' Bureau of 
Economic and Business Affairs, The Department of State, June 2012 
Report. www.state.gov/e/eb/rls/othr/ics/2012/191182.htm.
    \7\ The latest available World Bank data estimated in November 
2012 that remittances were $7.6bn for 2012. ``Remittances Data: 
Inflows,'' Migration and Remittances, The World Bank, November 2012. 
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/
0,,contentMDK:21121930~menuPK:3145470~pagePK:64165401~piPK:64165026~t
heSitePK:476883,00.html.
    \8\ ``IMF Executive Board Concludes 2011 Article IV Consultation 
with Lebanon'' Public Information Notice (PIN) No. 12/11, 
``International Monetary Fund, February 8, 2012. http://www.imf.org/external/np/sec/pn/2012/pn1211.htm.
---------------------------------------------------------------------------

    Money exchange businesses became a major feature of Lebanon's 
financial sector during the Lebanese civil war and have played a key 
role in providing services such as international funds transfers, 
currency conversion, and payments and deposits for domestic and 
expatriate Lebanese clientele since 1990. In 2001, Lebanon's Central 
Bank, Banque du Liban (``BdL''), published a set of circulars expanding 
regulations for exchange houses operating in the country.\9\ Since the 
enactment of the 2001 law, 732 money exchange businesses have 
registered with BdL, and currently there are 374 active

[[Page 24594]]

licensed businesses.\10\ Each of these active licensed businesses must 
process payments through business accounts established in Lebanese 
banks.\11\
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    \9\ BdL, Law 347 Regulating the Money Changer Profession in 
Lebanon, August 6, 2001.
    \10\ BdL, List of Exchange Institutions, May 2012, http://www.bdl.gov.lb/bfs/MS/Money_Dealers_arabic.pdf.
    \11\ BdL, Intermediate BdL Circular 264, dated May 21, 2011, 
pages 3-4, http://www.bdl.gov.lb/circ/intpdf/int264_en.pdf.
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    Lebanon also faces money laundering and terrorist financing 
vulnerabilities \12\ due to weaknesses in its Anti-Money Laundering/
Combating the Financing of Terrorism (``AML/CFT'') regime, porous 
borders, ineffective and inconsistent regulation, and a challenging and 
complex domestic and regional political and security environment, among 
other factors. Of concern is the possibility that a portion of the 
substantial flow of remittances could be associated with trade-based 
money laundering and other illicit finance activities. For example, 
Lebanon imposes currency reporting requirements on banks and money 
exchange businesses that undertake cross-border cash and precious metal 
activity,\13\ but has no corresponding cross-border declaration 
requirement for the public at Lebanese points of entry, resulting in a 
significant cash-smuggling vulnerability.
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    \12\ 2012 INCSR.
    \13\ Special Investigation Commission, Intermediate BdL Circular 
263, dated May 21, 2011, http://www.sic.gov.lb/circular263.shtml.
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    These vulnerabilities have been recently exploited to support 
trade-based money laundering. FinCEN identified Lebanese Canadian Bank 
(``LCB'') as an institution of primary money laundering concern in 
February 2011 (the ``LCB 311 Action''),\14\ which was preceded by the 
Office of Foreign Assets Control's (``OFAC's'') designation of Lebanese 
Ayman Joumaa as a Specially Designated Narcotics Trafficker (``SDNT''), 
as well as of three Lebanon-based money exchange businesses used by 
Ayman Joumaa and his organization to launder illicit proceeds, Elissa 
Exchange Company, Hassan Ayash Exchange, and New Line Exchange Trust 
Co., under the Foreign Narcotics Kingpin Designation Act in January 
2011.\15\ In the LCB 311 Action, FinCEN determined that LCB was 
facilitating the money laundering activities of the Joumaa drug 
trafficking and money laundering network. This network moved illegal 
drugs from South America to Europe and the Middle East via West Africa 
and laundered hundreds of millions of dollars monthly through accounts 
held at LCB, as well as through trade-based money laundering involving 
consumer goods throughout the world, including through used car 
dealerships in the United States. Further, the LCB 311 Action exposed 
the terrorist organization Hizballah's links to LCB and the fact that 
Hizballah derived financial support from criminal activities of 
Joumaa's network.
---------------------------------------------------------------------------

    \14\ FinCEN, Finding That the Lebanese Canadian Bank SAL Is a 
Financial Institution of Primary Money Laundering Concern, 76 FR 
9403, dated February 17, 2011, http://www.gpo.gov/fdsys/pkg/FR-2011-02-17/pdf/2011-3346.pdf.
    \15\ Additions to OFAC's SDN list, dated January 26, 2011, 
http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20110126.aspx
---------------------------------------------------------------------------

    Following these Treasury actions, two U.S. Attorney's Offices took 
actions against Ayman Joumaa, Elissa Exchange, and Hassan Ayash 
Exchange. In December 2011, a grand jury in the Eastern District of 
Virginia returned an indictment against Ayman Joumaa for conspiracy to 
distribute narcotics and conspiracy to commit money laundering related 
to drug trafficking by Mexican and Colombian drug cartels.\16\ In 
August 2012, the U.S. Attorney's Office for the Southern District of 
New York (``SDNY'') seized $150 million as part of a civil money 
laundering and forfeiture action against Hizballah-linked LCB, Elissa 
Exchange, and Hassan Ayash Exchange based on money laundering schemes 
involving Ayman Joumaa, the exchange houses, and U.S. car dealers.\17\ 
The ``SDNY Complaint'' listed, by name, 30 U.S. car dealers and a U.S. 
shipping company that facilitated the scheme.
---------------------------------------------------------------------------

    \16\ The United States Attorney's Office for the Eastern 
District of Virginia Press Release, ``U.S. Charges Alleged Lebanese 
Drug Kingpin With Laundering Drug Proceeds For Mexican And Colombian 
Drug Cartels'' December 13, 2011, http://www.justice.gov/usao/vae/news/2011/12/20111213joumaanr.html.
    \17\ The United States Attorney's Office for the Southern 
District of New York press release and civil complaint.
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    BdL re-evaluated AML/CFT regulations regarding money exchange 
businesses following the Treasury actions. In May and August 2011, BdL 
revised Lebanon's AML/CFT regulations regarding supervised banks and 
other non-bank financial institutions by publishing seven decisions 
\18\ modifying Law 347 (dated August 6, 2001). BdL required all of 
these active licensed money exchangers to maintain business accounts at 
a formal financial institution, such as a registered Lebanese bank 
subject to BdL supervision, and prohibited exchangers from operating 
accounts at Lebanese banks on behalf of their clients.\19\
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    \18\ In May 2011 Intermediate Decisions 10725, 10726 and 10728 
and in August 2011 Intermediate Decisions 10787, 10789, 10791, and 
10792 were published regarding AML/CFT regulations of exchange 
businesses.
    \19\ BdL, Intermediate BdL Circular 264, dated May 21, 2011, 
pages 3-4, http://www.bdl.gov.lb/circ/intpdf/int264_en.pdf.
---------------------------------------------------------------------------

    Despite some improvements to its financial sector supervision, 
Lebanon still has not acceded to the UN Convention for the Suppression 
of the Financing of Terrorism. And Hizballah, an organization which the 
United States designated as a Foreign Terrorist Organization in October 
1997 and a Specially Designated Global Terrorist under Executive Order 
13224 in October 2001,\20\ is a recognized political party with an 
active role in the Lebanese government. Though it has adopted laws 
domestically criminalizing any funds resulting from the financing, or 
contributing to the financing, of terrorism,\21\ the active 
participatory role of a designated terrorist group in the Lebanese 
government and civil society calls into question the broader efficacy 
of Lebanon's AML/CFT regime.
---------------------------------------------------------------------------

    \20\ Hizballah is a Lebanon-based terrorist group. Until 
September 11, 2001, Hizballah was responsible for more American 
deaths than any other terrorist organization.
    \21\ For additional information about Lebanon's legal framework 
and special mechanisms for anti-money laundering and terrorist 
financing measures, see The Middle East and North Africa Financial 
Task Force (MENAFATF) Mutual Evaluation Report, Lebanese Republic, 
November 10, 2009 (www.menafatf.org).
---------------------------------------------------------------------------

III. The Extent to Which Rmeiti Exchange Has Been Used To Facilitate or 
Promote Money Laundering in or Through Lebanon

    In finding that Rmeiti Exchange is a financial institution of 
primary money laundering concern, FinCEN reviewed the extent to which 
Rmeiti Exchange facilitates or promotes money laundering and determined 
that Rmeiti Exchange, its ownership, management, and associates are 
involved in illicit activity that includes the same trade-based money 
laundering activities conducted by U.S.-designated narcotics kingpin 
Ali Mohamed Kharroubi and Elissa Exchange, facilitate money laundering 
by other Lebanese exchanges on behalf of drug traffickers, and provide 
financial services to Hizballah.

A. Rmeiti Exchange Engages in Trade-Based Money Laundering for U.S.-
Designated Narcotics Kingpin Ali Mohamed Kharroubi and Elissa Exchange

    According to information available to the U.S. Government, Rmeiti 
Exchange engages in auto sale-related financial transactions working 
with SDNT Ali Mohamed Kharroubi to send funds to U.S. auto dealers as 
part of a trade-based money laundering scheme. Before and after the 
January 2011 Treasury designation of Ali Mohamed Kharroubi and Elissa 
Exchange and FinCEN's Section 311 Action against LCB which

[[Page 24595]]

exposed the use of LCB accounts by Kharroubi and his company, Elissa 
Exchange, to launder drug proceeds for the Joumaa drug trafficking 
organization through the purchase and export of used cars from the 
United States, Rmeiti Exchange and its management processed structured, 
regular, round-number, large-denomination international wire transfers 
for the purchase of vehicles in the United States. The funds often 
originated from unknown individuals in high-risk money laundering 
regions and were sent to auto auction companies and used car dealers, 
some of which have no physical presence or verifiable address.
1. Rmeiti Exchange Engages in Trade-Based Money Laundering Activity 
With Narcotics Traffickers
    Rmeiti Exchange and its management facilitate extensive 
transactions for known money launderers and drug traffickers. Prior to 
Treasury's Kingpin designation and FinCEN's LCB 311 Action, Kassem 
Rmeiti, through Rmeiti Exchange, routinely processed structured 
international wire transfers from its accounts at LCB and other banks 
to many of the same U.S.-based car dealerships that received funds from 
Elissa Exchange and were subsequently named in the SDNY Complaint as 
participants in the Joumaa network's money laundering scheme. In fact, 
between 2008 and March 2011, Rmeiti Exchange and its owner, provided at 
least $25 million in large, round dollar, and repetitive payments to 
U.S.-based car dealers and exporters, including more than $22 million 
from accounts it held at LCB. Many of the used car dealers that 
received payments from Rmeiti Exchange were later named in the SDNY 
Complaint for receiving funds from the Joumaa network.
2. Rmeiti Exchange Engages in Trade-Based Money Laundering Activity 
With Individuals the U.S. Government Has Designated as Narcotics 
Traffickers
    After SDNT Ali Mohamed Kharroubi's network was exposed in the 
Treasury and Department of Justice actions, the network adapted its 
business practices and utilized other exchange houses which they could 
control or otherwise use to continue sending funds to used car 
dealerships in the United States, in particular Rmeiti Exchange. After 
the LCB 311 Action in February 2011, Rmeiti Exchange companies 
continued to make structured international wire payments to U.S. car 
dealers and companies for car purchases in a manner representative of 
trade-based money laundering, and a Rmeiti Exchange company was 
specifically used to facilitate such payments on behalf of Treasury-
designated narcotics trafficker Ali Kharroubi. According to U.S. 
Government information, in February 2011 Ali Mohamed Kharroubi directed 
Kassem Rmeiti to create the Trading African Group (TAG) in Benin so 
that Kharroubi could continue making international wire transfers for 
U.S. car purchases that avoided U.S. Government scrutiny. Further, by 
the fall of 2011, former Elissa Exchange employees were working for 
TAG, and Kassem Rmeiti was paying Kharroubi about 30-40% of TAG's 
profits.
    TAG provided more than $1.7 million to U.S. car dealers and 
exporters between March and October 2011. These payments consisted of 
structured, regular, large-denomination international wire payments in 
a manner representative of trade-based money laundering, and included 
at least one U.S. car dealer named in the SDNY Complaint as receiving 
car purchase payments from Elissa Exchange as part of the money 
laundering scheme alleged in the Complaint. The U.S. car dealers also 
received multiple wire transfers from individuals and businesses in 
regions considered high-risk for trade-based money laundering, which 
funded purchases of cars that were then shipped to Lebanon and likely 
Benin. The sources of some funds were unknown, and the recipients had 
addresses that could not be verified or appeared to be a residence.
3. Following U.S. Government Actions in 2011, Rmeiti Exchange Adapted 
Its Trade-Based Money Laundering Activity To Conduct Transactions 
Through Rmeiti's Other Businesses, Especially World Car Service LTD
    Kassem Rmeiti also serves as a board member or executive and 
represents himself as the owner of World Car Service LTD, a.k.a., World 
Car Service AG, (WCS AG)--an international transport and shipping 
business located in Switzerland, which is believed to be an affiliate 
of World Car Service International Transport and Shipping Company 
(a.k.a., WCS SA) located in Benin. Between March 2011 and August 2012, 
WCS SA in Benin processed numerous international wire transfers 
totaling over $100,000 and referencing auto purchases or vehicles to 
U.S.-based individuals and businesses and one other individual involved 
in auto exports or sales. From 2011 to 2012, WCS SA in Benin provided 
over $2.2 million in large, round-dollar wire transfers to numerous 
U.S. car dealers and car exporters, one of which was named in the 2011 
SDNY Complaint, and many of which had previously received over $2 
million in dozens of large, round-dollar wire transfers from Rmeiti 
Exchange or TAG between early 2007 and mid-2011. This pattern of 
activity indicates that in 2011 Rmeiti shifted some transactions away 
from his exchange companies and TAG and began increasingly utilizing 
his WCS accounts for trade-based money laundering transactions with the 
same entities through 2012.
    Additionally, Kassem Rmeiti has engaged in commingling of over $2.5 
million among his several businesses, including WCS SA, WCS AG, STE 
Rmaiti SARL, and Kassem Rmeiti and Co. For Exchange between 2009 and 
2012, which is consistent with money laundering indicators and 
techniques.

B. Rmeiti Exchange Facilitates or Promotes Money Laundering Activity 
With or on Behalf of Other Money Launderers and Drug Trafficking 
Organizations

    In addition to involvement in the trade-based money laundering 
activities described above, Rmeiti Exchange and its management have 
conducted financial activities for other money laundering and drug 
trafficking organizations operating in both Europe and Africa. Between 
March 2011 and October 2012, Rmeiti Exchange, its management, and 
employees facilitated the movement of at least $1.7 million for known 
or suspected Beninoise and Lebanese money launderers and drug 
traffickers. This included Rmeiti Exchange and Kassem Rmeiti taking on 
large cash deposits, collection of bulk cash currency, issuance of 
cashier's checks, and facilitation of cross-border wire transfers on 
behalf of known and suspected money launderers, drug traffickers, and 
Hizballah affiliates.
1. Rmeiti Exchange Facilitates Payments for a Money Launderer Known To 
Be Affiliated With a Colombian Drug Trafficking Organization
    Since at least 2010, Rmeiti Exchange has transferred funds on 
behalf of known or suspected money launderers and shared its office 
space and security resources as part of a large-scale money laundering 
scheme that involves the purchase and sale of used cars in the United 
States for export to West Africa. For example, following the seizure of 
over 8.7 million euro by European authorities related to a Colombian 
drug trafficking ring that imported cocaine into Europe and laundered 
the illicit proceeds through Lebanon and South America, a known money 
launderer of this organization with ties to Hizballah moved his 
operations to Kassem Rmeiti Exchange in the Dahieh area of Beirut.

[[Page 24596]]

This money launderer continued to wire large dollar amounts to U.S.-
based car dealers via a Rmeiti Exchange account prior to the LCB 311 
Action.
    Rmeiti Exchange facilitated money laundering for other entities 
engaged in trade-based money laundering. Rmeiti processed over $3 
million in dozens of large, round-dollar international wire transfers 
to two entities, whose businesses engaged in transactions typical of 
used-car trade-based money laundering. The two entities received over 
$2 million in wire transfers for car purchases from entities in high-
risk trade-based money laundering regions, including through another 
exchange house.
2. Rmeiti Exchange Actively Seeks Money Laundering Opportunities With 
Other Lebanese Exchange Houses and Precious Metal Dealers
    Rmeiti Exchange owner Kassem Rmeiti has also worked with other 
Lebanese exchange houses, including Halawi Exchange, determined to be a 
financial institution operating outside of the United States that is of 
primary money laundering concern on April 22, 2013, to facilitate money 
laundering activities. For example, Rmeiti Exchange, Halawi Exchange, 
and other exchange houses sent over $9 million in dozens of round-
number, large-denomination international wire transfers from unknown 
sources to the same U.S. car shipping business from 2007 through 2010. 
Rmeiti Exchange and Halawi Exchange have facilitated financial activity 
on behalf of a money launderer involved in collecting illicit drug 
proceeds. Kassem Rmeiti has worked with a separate Lebanese exchange 
house to coordinate currency transfers and courier shipments on behalf 
of various money launderers between mid-2011 and mid-2012. Benin-based 
suspected money launderer Kassem Rmeiti, the owner of Rmeiti Exchange, 
continues to actively seek money laundering opportunities in trade 
transactions. For example, Rmeiti sought the assistance of a Lebanon-
based money launderer in April 2012, to begin selling African gold in 
Lebanon or Dubai. Rmeiti Exchange and its owners' and employees' 
willingness to work for a variety of criminal networks involved in drug 
trafficking and money laundering suggests that a venture into the 
import or export of gold, which is a high-risk industry for money 
laundering, will likely provide another source to commingle illicit 
funds for Ali Mohamed Kharroubi and others.

C. Rmeiti Exchange Facilitates or Promotes Money Laundering for 
Specially Designated Global Terrorist Hizballah

    Rmeiti Exchange has also conducted money laundering activities for 
and provided financial services to Hizballah. Rmeiti Exchange used 
accounts it held at LCB to deposit bulk cash shipments generated by 
Hizballah through illicit activity in Africa and as of December 2011, 
Hizballah had replaced U.S.-designated Elissa Exchange owner Ali 
Kharroubi with Haitham Rmeiti--the manager/owner of STE Rmeiti--as a 
key facilitator for wiring money and transferring Hizballah funds. 
Rmeiti Exchange, through its owner, Kassem Rmeiti, owns Societe Rmaiti 
SARL (a.k.a. STE Rmeiti). These steps taken by Hizballah demonstrate 
its efforts to adapt after U.S. Government disruptive action, and 
illustrates the need for continued action against its financial 
facilitators.

IV. The Extent to Which This Action Is Sufficient To Guard Against 
International Money Laundering and Other Financial Crimes

    FinCEN's April 22, 2013 finding that Rmeiti Exchange is an 
institution of primary money laundering concern, along with the Special 
Measures proposed pursuant to the Finding and published elsewhere in 
this issue of the Federal Register, will guard against international 
money laundering and other financial crimes directly by restricting the 
ability of Rmeiti Exchange to access the U.S. financial system to 
process transactions, and indirectly by public notification to the 
international financial community of the risks posed by dealing with 
Rmeiti Exchange.

    Dated: April 20, 2013.
Jennifer Shasky Calvery,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2013-09783 Filed 4-23-13; 11:15 am]
BILLING CODE 4810-02-P