Notice of Finding That Kassem Rmeiti & Co. For Exchange Is a Financial Institution of Primary Money Laundering Concern, 24593-24596 [2013-09783]
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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.
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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).
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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. https://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.
https://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. https://www.imf.org/
external/np/sec/pn/2012/pn1211.htm.
9 BdL, Law 347 Regulating the Money Changer
Profession in Lebanon, August 6, 2001.
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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,
https://www.bdl.gov.lb/bfs/MS/Money_Dealers_
arabic.pdf.
11 BdL, Intermediate BdL Circular 264, dated May
21, 2011, pages 3–4, https://www.bdl.gov.lb/circ/
intpdf/int264_en.pdf.
12 2012 INCSR.
13 Special Investigation Commission,
Intermediate BdL Circular 263, dated May 21, 2011,
https://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, https://www.gpo.gov/fdsys/pkg/
FR-2011-02-17/pdf/2011-3346.pdf.
15 Additions to OFAC’s SDN list, dated January
26, 2011, https://www.treasury.gov/resource-center/
sanctions/OFAC-Enforcement/Pages/20110126.
aspx
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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,
https://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, https://www.bdl.gov.lb/circ/
intpdf/int264_en.pdf.
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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).
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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.
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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
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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
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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.
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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.
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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:
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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.
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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.
---------------------------------------------------------------------------
\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.
https://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.
https://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. https://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, https://www.bdl.gov.lb/bfs/MS/Money_Dealers_arabic.pdf.
\11\ BdL, Intermediate BdL Circular 264, dated May 21, 2011,
pages 3-4, https://www.bdl.gov.lb/circ/intpdf/int264_en.pdf.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\12\ 2012 INCSR.
\13\ Special Investigation Commission, Intermediate BdL Circular
263, dated May 21, 2011, https://www.sic.gov.lb/circular263.shtml.
---------------------------------------------------------------------------
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, https://www.gpo.gov/fdsys/pkg/FR-2011-02-17/pdf/2011-3346.pdf.
\15\ Additions to OFAC's SDN list, dated January 26, 2011,
https://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, https://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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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, https://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