Pandora Papers and Anti-Money Laundering Procedures And Controls

‘’The Pandora Papers: How Anti-Money Laundering Procedures And Controls Should Have Flagged $300 Million Earlier ”

A trove of leaked documents reviewed by the International Consortium of Investigative Journalists and 150 media partners provide an unprecedented view of how millions of dollars are secretly moved around the world by individuals and entities under investigation by law enforcement agencies or other designated authorities. Those records are part of the Pandora Papers, a cache of more than 11.9 million documents obtained by the International Consortium of Investigative Journalists. The investors revealed in the leaked documents include offshore trusts holding three hundred million dollars for the Legion of Christ in the wake of the Vatican investigation. The trusts holding money for the Legion in New Zealand maintained four Swiss bank accounts, including one at a Geneva-based bank, Lombard Odier, that the U.S. Justice Department later found had helped American clients conceal assets from U.S. tax authorities. In statements to International Consortium of Investigative Journalists, the Legion acknowledged it had set up one of the three trusts, but distanced itself from the other two, which held the majority of the funds designated for the Legion. The Legion said it had no knowledge of the other two trusts’ operations.

The two trusts were funded by scions of a prominent industrialist family in Mexico, including Father Luis Garza Medina, one of the Legion’s top leaders. In civil litigation that began in 2011, Luis Garza and other Legion members were accused of defrauding an elderly Catholic woman out of $60 million in charitable donations to the order. While attention has been on offshore structures who hide and move millions of funds around the world, little attention is paid to the banksthat willingly transferred these fundsfrom the bank accounts domiciled with them to the bank accounts of offshore structures, especially at a time when those Bank customers were under investigation. This act runs contrary to anti-money laundering (AML) laws and regulations which require Banks to implement an effective system of internal controls reasonably designed to ensure compliance with AML laws and regulations.  While details of the banks’ compliance efforts remain unknown, what institutions should do when handling such high-risk clients is clear. What follows is guidance on how a bank could’ve prevented the movement of funds to the bank accounts of offshore structures

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by Author: Ehi Eric Esoimeme, January 2022, published on Sanction Scanner

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