Narco-terror, soccer, & the power of OFAC


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James Rodriguez and his fellow Los Cafeteros on the Colombian national soccer team thrilled World Cup fans over the last month and created hopes for a bright future for a national team mired in a two-decades-long rebound from the ‘narco-soccer’ years of the 1980s and 1990s.

Career banking professionals likely remember those dangerous narco-terror days. For though AML Compliance and cornerstone CDD solutions are now commonplace, during the narco-terror years of Pablo Escobar and the various cartels in Colombia, money laundering ran amok, and politicians, bankers, and businesses targeted by cartel launderers faced extreme and often deadly pressure to participate. One of the targeted industries in Colombia was sport, and especially professional soccer, then a national passion.

For a blast from the past, check out “The Two Escobars,” one of ESPN’s highly acclaimed “30-for-30” documentaries. The film documents the deadly intersection between Colombia’s vicious drug cartels and the easy money-laundering opportunities in Colombian professional soccer at the time.  Laundering activities included manipulated all-cash gate receipts, manipulated purchase and sales agreements for players traded among teams, falsified salary payments, manipulated gambling proceeds, and on and on. It’s a powerful case study of the ways in which criminals infiltrate legitimate industries in order to launder their proceeds through front companies on a large scale, and it’s a grim reminder of the toll taken on those caught up in the maelstrom of criminal threat and manipulation.

And while the documentary doesn’t touch explicitly on the OFAC element, those of us with a history in Compliance and financial services will remember when OFAC was in its power-player infancy as a relatively minor list relevant mainly in the U.S.

In fact, it was the early use of the OFAC list that helped reign in elements of Pablo Escobar’s criminal enterprise. Immediate and extended family and all associates and even acquaintances of Escobar were added to the list and effectively barred from the financial system, the impact of which is described in this Impact Report from the U.S. Treasury. This sanctions pressure contributed greatly to two Escobar brothers finally surrendering to U.S. authorities in Miami. And in the years since, the OFAC list has taken on a major role both in the U.S. and around the world in choking off access to the international banking system by criminals and terrorists and also by their extended connections.

In fact, a key element built directly into the best CDD and KYC solutions is a screening feature so that all PEPs, beneficial owners, and related parties may be screened against negative news services and the all-important OFAC list. No Compliance program or CDD solution would be considered complete today without assiduous attention to OFAC and other sanctions screening.

It’s an interesting footnote to the “Two Escobars” and Colombia’s incredible World Cup run that the U.S. has completed some notable sanctions de-listings in Colombia recently. Cali-America, once one of Colombia’s premier professional teams, was delisted last year after 14 years on the sanctions list due to being used as a front company for the Cali cartel. And in June of 2014 the U.S. Department of the Treasury announced it was removing 308 individuals and entities from the Specially Designated and Blocked Persons (SDN) list, many of whom were affiliated with the significantly reduced drug cartels so prominent in Colombia in the 1980s and 1990s.

That is not to say, of course, that Colombia’s drug trafficking problems have disappeared. Colombia remains the world’s largest producer of cocaine, and the government particularly struggles with FARC rebels, who have also made the OFAC sanctions list. But concerted efforts from the Colombian government and extensive support from the U.S. war on drugs, which includes the sanctions listings, has significantly decreased the violence and impact of drug trafficking in Colombia.