By Kenneth Rijock From Caribbean News Now

MIAMI, USA — Statistics released in Panama show that there has been a decline in the number of new incorporations, ever since the Panama Papers offshore scandal broke in global media. Though Panama’s civic boosters have tried to put a spin on this news, by claiming that it is actually due to declining economic factors in Latin America, clearly the effect of the disclosures has been felt.

News articles, some apparently planted to suggest that the government is rushing to cooperate with foreign jurisdictions, do not have a true basis in fact, but indicate a serious effort at damage control by the present leadership.

The annual fees government collects on active and existing corporations are estimated to be as high as $90 million, and any decline in new company formation, which offsets the losses represented by defunct corporations, will have a major effect on the national budget of Panama, which has suffered greatly from the effects of massive corruption by the former Martinelli government.

The Varela administration has a cash crisis on its hands, but an extradition order directed at its former president, available since December, has still not been issued, confirming that reform efforts have been ineffective in Panama City.

Reports that a number of Panama’s banks have declined to accept new corporations as clients indicate that the Panama Papers scandal is having an effect, but whether this will become a widespread practice is not known. There have been no moves in the National Assembly to revoke the existing bearer share laws, which effectively obstruct transparency in both beneficial ownership, and source of funds.

Kenneth Rijock is a banking lawyer turned-career money launderer (10 years), turned-compliance officer specialising in enhanced due diligence, and a financial crime consultant who publishes a Financial Crime Blog. The Laundry Man, his autobiography, was published in the UK on 5 July 2012.

For more on this story go to: http://www.caribbeannewsnow.com/headline-New-incorporations-decline-in-Panama-30258.html

IMAGE: news.bbc.co.uk

Related story:

Confessions of a money launderer

By Paul Burnell From BBC News

Kenneth Rijock now tries to stop money laundering

Kenneth Rijock’s first venture into money laundering could almost have come from a B-movie.

He dressed his clients in business suits carrying attache cases full of millions of dollars with a cover story they were inspecting potential factory premises in the British Dependent Territory of Anguilla.

They chartered a small jet from Fort Lauderdale, piloted by a World War Two vet who carried cash but drew the line at drugs.

“The customs officers told us to close our cases quickly in case we were spotted,” recalls Mr Rijock, 59.

Then it was off to form bogus companies in a tax haven with 300 banks and a population of 8,000 people at that time.

His contact was prominent lawyer Peter Hendrix – constitutional advisor to Her Majesty’s government in the British Dependent Territory – who over the years held several government posts in neighbouring St Kitts.

“It was like having Henry Kissinger as your personal attorney,” he says.

Interesting offer

How had a twice decorated Vietnam vet working as a banking lawyer found himself on the wrong side in his country’s war against drugs?

In the aftermath of a broken marriage he ended up staying with a friend of a friend who had extensive Latin American connections and many nocturnal visitors.

I always spent my money as I never expected to live beyond 40
Kenneth Rijock

It turned out the man was dealing in cannabis and cocaine.

With legitimate expertise in dealing with Caribbean tax havens, Rijock found himself being asked to help clean up dirty money.

He had no criminal experience, but contacted a cousin who recently served a jail term for a major scam in Castro’s Cuba.

It was then he was introduced to Mr Hendrix.

The money deposited in the Caribbean bank did not stay there, as the cash was transported with other deposits to a major New York bank, into a correspondent account the bank maintained there.

The US bank paid more interest to the Caribbean bank than my clients received, and that evening the money was lent out, at a higher rate still, to a Fortune 500 company.

“My clients were actually receiving interest on their drug profits,” says Rijock.

“Everyone made money that day, except the American tax man.”

“These clients,” he says, “who had started their drug smuggling business with a borrowed $5,000 and a borrowed sailboat, would go on make $200m in the next decade, and my job was to assist them.”

More business followed, with drug profits ploughed into a whole series of legitimate businesses from a high-class restaurant to fine art and antiques. It helped if the businesses worked on a cash basis.

Money generic
‘Dirty’ money was cleaned in a variety of legitimate businesses

One client even wanted to use his cash to make a movie about legendary blues musician Robert Johnson.

All the time Rijock kept his day job as a straight lawyer keeping a low profile and normal business hours.

Clean cases were restricted to clients who would not interfere with his need to suddenly fly abroad at the request of his drug clients.

Consultant career

Rijock never personally laundered money in the US, kept all of his criminal transactions cash and always travelled on a Friday or Monday when many people might think he had gone on a weekend break.

“I always spent my money as I never expected to live beyond 40,” he says.

Rijock spent most of the 80s as a “laundryman”, until one day two special agents barged into his office and arrested him on charges of racketeering (which carried a 20 year sentence) and conspiracy to defraud the internal revenue service.

One of Rijock’s clients, who was facing a 30-year sentence, had implicated him in money laundering to get the sentence reduced.

In turn Rijock got his sentence cut by telling the authorities about the cash he had laundered but not his clients, who could have had him killed.

Released penniless from jail in 1992 he found himself in demand from law enforcement agents wanting to learn the tricks of the trade so they could launch sting operations on money laundering.

This career change now sees him a consultant to financial institutions, advising on compliance, and as a trainer/lecturer to law enforcement agents and the intelligence services of both the United States and Canada.

Junior staff

In demand as a speaker, Rijock went on a spring tour in Europe last week, with speeches to the Institute of Money Laundering Protection Officers in Manchester, followed by addresses in the Isle of Man, London and Gibraltar.

Money launderers, says Rijock, will often look to exploit the weaknesses of conventional business and officialdom.

This might include banking money at 4.49pm on Friday – a time when junior staff are already thinking about the weekend or making hazardous trips through customs on the day of the US Superbowl final.

Now on the side of the angels, he scours the world for latest examples of money laundering trade craft.

“I get up at 5am each day,” he says. “Money launderers work 24/7 and so do I.”

For more on this story go to: http://news.bbc.co.uk/2/hi/business/6668879.stm