World-Check: Alert on US$4bn to Venezuela - $2bn to Cuba

World-Check | Reducing Risk Through Intelligence.:

"Alert on US$4bn to Venezuela
14 December 2007

The government of Venezuela has illegally entered into a petroleum contact that has resulted in receiving $4bn in advance. This agreement, signed with China, did not have the required consent of the Parliament of Venezuela. Venezuela has already taken possession of these funds, and has distributed $2bn to the government of the Republic of Cuba. Compliance officers at banks in the United States, whose companies are barred from trading with Cuba by virtue of OFAC sanctions, should be alert for clients who place large orders for goods that traditionally are sent to the Caribbean, for they may be third-party covert acquisitions by Cuba. Cuba has had a major hard currency shortage of late, and this infusion of capital should show up in purchases immediately.

The other important issue is whether the balance of the funds held by Venezuela constitute the proceeds of crime, and whether money laundering occurs under US law, if companies and financial institutions are exposed. Whilst it is too early to predict the position of the United States, prudence would dictate that MLROs and compliance officers be alert to any signs of US displeasure with this chain of events."