This week’s newsletter includes:

1. Extortion For Dummies?
Rabbi Allegedly Targeted Hedge Fund.  As we mentioned last week, prosecutors at U.S. attorney’s office for the the Southern District of New York get their fair share of interesting cases, and one could imagine that they get some pretty unusual phone calls from tipsters about alleged fraud.

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2. FinCEN issued final ruling on Section 314(a)
Requests authorizing foreign law enforcement to make requests from financial institutions.  You should be prepared to receive such requests from FinCEN and don’t forget the steps you should be taking if there is a positive hit in your financial institution.  I am also attaching an article which lays out the steps FinCEN will go through before you see the request.

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3. Financial Crime Global News Overview
NEW YORK — US prosecutors on Monday charged Guatemala's fugitive former president, Alfonso Portillo, with laundering millions of dollars he embezzled while in office. Portillo, who was president from 2000-2004, "embezzled tens of million of dollars worth of public funds, a portion of which he then laundered through bank accounts located, among other places, in the United States and Europe," the grand jury indictment reads. The grand jury indicted Portillo, 58, in New York. The United States has requested Portillo's extradition..

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4. FATF Grey List
As part of its ongoing review of compliance with the AML/CFT standards, the FATF has to date identified the following jurisdictions which have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF. While the situations differ among each jurisdiction, each jurisdiction has provided a written high-level political commitment to address the identified deficiencies. FATF welcomes these commitments.

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5. FATF Black List
The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In order to protect the international financial system from ML/FT risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and, along with the FATF-style regional bodies (FSRBs), works with them to address those deficiencies that pose a risk to the international financial system. The FATF and the relevant FSRBs will continue to work with the jurisdictions below and report on their progress in addressing the identified deficiencies.

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6. Found money? FINRA says not
The Financial Industry Regulatory Authority has sanctioned a broker-dealer and its financial and operations principal over an inadequate supervisory system for handling uncashed customer checks and violating the Securities and Exchange Commission customer protection rule.

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7.  Senate Permanent Committee on Investigations releases investigative report.
I am attaching the full investigative report so you can read it if you have time.  It is a very interesting read and shows many ties to the West Coast and Southern California relating to supporting corrupt foreign governments, Politically Exposed Persons (PEPs) and trade finance to support money laundering and arms dealers.  Combine that with last night’s 60 Minutes segment on trade finance programs being used to support terrorists in Iraq and Afghanistan.  They found that terrorists are using US-made parts to build Improvised Explosive Devices (IED or road side bombs) and there are going to be some red faced people in Washington.  What that spells for all of us is increased regulatory pressure.  I would be re-visiting my PEP and Trade Finance programs if you have them.

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8. Seized North Korean Weapons 
South Africa told the United Nations in a confidential report that it seized arms traveling from North Korea by way of China, marking at least the third time a government interdicted North Korean weapons shipments since the U.N. last summer adopted harsher sanctions against Pyongyang.

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9. White Collar Crime
As you know, in the wake of the economic crisis, pursuing financial fraud is one of the Department's top priorities. That means stepped up resources and focus on financial fraud in all its forms – corporate, securities, and commodities fraud; mortgage fraud; health care fraud; foreign bribery; and fraud in connection with the massive amounts of taxpayer funds that have been devoted to the rescue and recovery of our economy from the brink of economic collapse.

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Jim Dowling, CFS

Managing Director

Dowling Advisory Group

Office 626-585-0321

Cell 626-319-1369

www.dowlingadvisorygroup.com

3579 E. Foothill Blvd., Suite 651

Pasadena, CA 91107