Here are the Red Flags, or indicia of money laundering activity involving the importation of counterfeit goods, as listed in the latest issue of the Cornerstone Report, which is regularly published by ICE, Immigration & Customs Enforcement, which is part of the department of Homeland Security (DHS). You may find one or two in there not known to you.

Israel conducted bombing raids yesterday against suspected Hamas smuggling tunnels, after a command-detonated explosive resulted in Israeli casualties on the border between Gaza and Israel. Active tunnels in operation have been shown in the world's media, and since bulk-cash smuggling of US Dollars is a primary activity there, expect additional demands for greenbacks, in the coming weeks, from Middle Eastern financial institutions. The risk is that the cash will be traced back to the bank that distributed it, ultimately, to Hamas. Given that Hamas is a designated global terrorist organisation under US law, the threat of Draconian regulatory sanctions and penalties should trump any possible political sympathies. This is not about where one stands on the Palestinian issue, but about risk management. Losing access to US financial markets, or an OFAC designation, of any type, may prove fatal to a financial institution, no matter how healthy its financial statement. 

Will the current American "take-no-prisoners"  policy towards European financial institutions with high net-worth American clients, in which indictments for failure to disclose depositor information appear to be likely , extend to the offshore financial centres of the Caribbean and Latin America? What we once thought impossible, aggressive US action against major European banks, has become the posture of US law enforcement and regulatory agencies. Given the anti-tax haven legislative history of the new US President, can actions to uncover account information from financial centres in the Western Hemisphere be far behind?

Today I received an e-mail purporting to come from the Federal Reserve Bank Administration, at a domain name of: ustreasurydepartment.net. Since we all should know that government websites generally have .gov domains, this one would only fool those who are not paying attention to details. I have quoted the entire text for our readers; note the grammatical errors and obvious mistakes. The domain, (according to the Whois website) comes back to an apartment at 1655 East Sahara Avenue in Las Vegas. Nevada is unfortunately the operational base of a large number of white-collar criminals. Now at least one of them is obviously trying to defraud the American financial community. We trust that they have not succeeded.

Multiple media reports have surfaced, to the effect that Hamas intends to pay $52m, in cash, to aid Gaza residents who have sustained property damage, or loss of life of a relative, due to the recently-ended conflict with Israel. This begs the question: where did a long-sanctioned and designated global terrorist organisation get that kind of cash? The recovery funds pledged by Middle East donor countries have not yet been disbursed, because the technical details of payment are not yet settled to the satisfaction of all parties. So where did all these US Dollars come from, and will US regulators sanction the financial institution or institutions involved, if they are identified?

Statements made this week by staffers from the newly-installed Obama administration, as well as from ranking Democratic Congressmen and Senators, have confirmed that hedge fund regulation, under the supervision of the Securities & Exchange Commission (SEC), is coming, sooner rather than later. Whilst this is welcome news for the global financial community, one group of hedge fund investors, and their personal advisers, do not share this view: criminal organisations who have placed illicit funds there, and their money launderers. What they do with their funds is of major interest to onshore financial institutions, for dirty money seeking a safe haven will be, if it has not already been, coming home in disguise. Watch for it, and be prepared to repel.

The recenrt progress made by Sri Lankan forces against the LTTE Tamil Tigers could ultimately result in a total military victory against the designated terrorist organisation. If that happens, LTTE leadership might choose to leave the country, rather than face possible arrests for war crimes or terrorism. Will you be able to identify them, and to decline their financial business, especially since LTTE fundraising abroad generally involves  extortion, intimidation, and sundry other criminal acts, and thus the source of those funds he wants to deposit are probably illicit?

The Ministry of Justice of Brazil has announced that it has frozen more than $2bn in overseas accounts in connection with a major ongoing money laundering investigation involving telecommunications. Approximately $500m was seized with the cooperation of the US Government. It is reported to be the largest seizure of suspected illicit funds in Brazilian history.

The Asset Managers' Committee of the President's Working Group on Financial Markets (PWG) has released its report on hedge fund best practices. Compliance at hedge funds is an important part of the report  (pp.42-51), and it is recommended reading for compliance officers at financial institutions who provide banking services to this industry.

Readers who need details about FinCEN operations can find this information in the agency's annual 2008 report, which is available on the website. It can be accessed here: