Venezuela: Foreign banks more exposed to laundering risk

Banks are increasingly at risk of being ensnared in criminal investigations for handling funds belonging to Venezuelan parties as US authorities intensify measures targeting Venezuelans involved in money-laundering, drugs-trafficking or corruption - especially if these individuals are suspected of acting as fronts for government officials.

Following a DEA sting operation, two nephews of Venezuela’s first lady, Cilia Flores, were arrested in Haiti last week and flown to the US, where the US Attorney for SD-NY indicted them on narcotics-trafficking charges.

Efraín Antonio Campo Flores and Franqui Francisco Flores de Freitas are the first individuals directly related to President Nicolás Maduro to be indicted for alleged serious criminal offences in the US.

Other top figures such as Diosdado Cabello, chairman of the legislature, and Rafael Ramírez, until recently chairman of oil giant PDVSA, are under investigation for involvement in drugs-trafficking and corruption, respectively.

Financial fronts, or testaferros, for corrupt Venezuelan officials are fond of using accounts in the names of entities domiciled in offshore jurisdictions such as Panama, Aruba, Curaçao, BVI, Monaco and Hong Kong to squirrel away or launder the proceeds of their activities.

Campo Flores is a director of a Panamanian company set up in March 2014 called Transportes Herfra, as is Hernes Melquíades Flores, a brother-in-law of Maduro.

How the two nephews eventually plea in court may have implications for another top official (and a cousin): Carlos Erick Malpica Flores, who is national treasurer and VP for finance at PDVSA.