Venezuela: An AML Case Study in PEPs


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Venezuela has been making the news a lot this year—often for charges of government corruption and for drug trafficking and money laundering by top government officials. That storyline continued this week with the announcement that U.S. agents arrested step-nephews of President Nicolas Maduro on allegations of trafficking cocaine.

Faced with a shrinking economy, runaway inflation, and widespread accusations of government corruption, various leaders in the country have allegedly escalated their reliance on criminal enterprises and money laundering. According to the Wall Street Journal, numerous bankers and financiers are among those whose U.S. visas have been revoked in the last year due to suspected criminality and money laundering.

Politically Exposed Persons Abound

The arrest this week of relatives of the president highlights yet again the importance of due diligence related to Politically Exposed Persons. According to the Journal report, Cilia Flores, the longtime partner and now wife of Maduro, commands significant power in the nation and has installed her relatives in various high-level government positions. The New York Times cited Venezuelan sources that Ms. Flores has moved at least 40 relatives into prime government positions.

The issue of nepotism is an old one in Venezuela. Past President Hugo Chavez had placed two brothers and a cousin in top ministerial positions, and Ms. Flores, who was president of the National Assembly from 2006-2011, was known to use her considerable power to do the same.

The latest U.S. charges of trafficking and money laundering have not implicated Cilia Flores or Nicolas Maduro, but others in the government are receiving considerable attention. A May 2015 feature in the Journal detailed ongoing efforts by U.S. federal prosecutors to build drug-trafficking and money-laundering cases against Venezuelan leaders like National Assembly head Diosdado Cabello, who denies the allegations. Federal prosecutors assert that as Colombia fought its war against drug production and trafficking, those cartels moved their trafficking operations to Venezuela where they found many officials friendly to their operations.

Tensions between the U.S. and Venezuela have been high for years due to the clash between the leftist stance of now-deceased president Hugo Chavez and U.S. positions contrary to those aims.


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