Big story about how @MorganStanley and @IBKR are under investigation for handling the suspicious money of corrupt Venezuelan officials.
It's striking how the dirty money hopped from one financial institution to another w/o signs of triggering reporting. 🧵wsj.com/articles/morga…
This pattern reminds me of how the dirty money of kleptocrat Teodorin Obiang of Equatorial Guinea played hopscotch across 6 US banks over 4 years, moving to the next bank every time compliance officers caught on.
Below is an excerpt from my recent report: securingdemocracy.gmfus.org/regulating-the…
In the case reported today, when @MorganStanley realized it was holding the Venezuelans' dirty money, the account simply moved to another U.S. brokerage (Capital Guardian, later Avenir Private Advisors), which was kicked out of FINRA, at which point the money moved on to @IBKR.
It seems like these financial institutions either declined to file suspicious activity reports (SARs) with @USTreasury, or federal investigators weren't able to notice and utilize the SARs to advance the longstanding case, which required a whistleblower complaint in 2019.
By the time the whistleblower started asking questions, the $107.5 million (amount received by @MorganStanley) had been spent down to $70 million, and the investment advisors—seemingly tipped off—started liquidating the remaining funds held at @IBKR.
One policy implication is that when financial institutions close accounts b/c they think something is fishy, they should have to file a SAR.
Separately, FinCEN needs a lot more resources to make good usage of the two million SARs they get per year. ⬇️ foreignpolicy.com/2021/04/01/fin…
Another policy implication is that investment advisors (like Avenir Private Advisors, which got fees 2-3x the market rate) should have to establish anti-money laundering programs. This is the #1 recommendation in my new report on the enablers of corruption.securingdemocracy.gmfus.org/regulating-the…
And while Avenir Private Advisors may have had AML obligations because it was also a broker, if not for that, it would have been exempt even under the rule for investment advisors proposed by @USTreasury in 2015, because Avenir was a "family office." The rule need to be expanded.
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