Our correspondent Andreas Frank reports;  If Afghanistan does not do more to combat corruption in its financial sector by June, the country risks being “blacklisted” by an inter-governmental task force — which the U.S. watchdog for Afghan reconstruction (SIGAR) said would would be “devastating” for the sector and the overall economy.

In the most dangerous country in the world for aid workers and where armed insurgents still control large swathes of territory, the reconstruction effort’s number one enemy should be corruption, John Sopko, the special inspector general for Afghanistan reconstruction, said.

Attracting and maintaining foreign investment is vital to sustaining Afghanistan’s economy as U.S. assistance funding – which has totalled over $102 billion so far – declines.

Sopko criticized U.S. government agencies for failing to produce a comprehensive anti-corruption strategy, claiming that unless corruption is specifically targeted and combated it could be the “spoiler” that “will jeopardize every gain we have made over the last 12 years.”

Corruption in Afghanistan’s financial sector presents a particular threat to the country’s ability to attract foreign investment: “Failure to sufficiently reform and regulate the banking sector is putting the country’s immediate future development at risk.”

Sopko reported that the Financial Action Task Force, an inter-governmental body that sets the standards required to combat money laundering, terrorist financing, and other threats to the integrity of the international financial system, recently downgraded Afghanistan’s status based on the country’s lack of progress implementing its much-touted anti-money laundering and terrorist financing action plan.

If Afghanistan continues to fall short on these measures, the FATF could “blacklist” the country as early as June, an outcome the SIGAR chief said would be “devastating” for the country.   Atlantic Council Remarks

Our correspondent Andreas Frank reports:  International criminal enterprises follow the money, and a report being released Thursday says they are increasingly focusing on California because of its wealth and innovation. The report by California Attorney General Kamala Harris says criminals are turning to cybercrime to target businesses and financial institutions.

It calls California the top target in the U.S. for organizations that often operate from safe havens in Eastern Europe, Africa and China.

California leads all states in the number of computer systems hacked or infected by malware, the number of victims of Internet crimes, the amount of financial losses suffered as a result and the number of victims of identity fraud. The report says the state also is particularly vulnerable to thefts of intellectual property because of its leading role in developing new technologies and mass-media entertainment.

“Not surprisingly, transnational organized crime has tapped into this new criminal frontier,” the report says. “Many of these breaches have been tied to transnational criminal organizations operating from Russia, Ukraine, Romania, Israel, Egypt, China, and Nigeria, among other places.” Hackers are becoming ever more sophisticated. People should have a “multi-layered” type of protection.

California’s gross domestic product of $2 trillion, significant foreign trade activity and border with Mexico also makes the state an easy target for international money-laundering schemes, the report says. It estimates that more than $30 billion is laundered through California’s economy each year.

Some is filtered through legitimate businesses or by using virtual currencies such as bitcoin. But the report says backpacks and duffel bags stuffed with cash have been seized more frequently since Mexico began toughening its money-laundering laws in 2010.Seizures of bulk cash increased 40 percent by 2011 in California, which now leads the nation in the number of currency seizures.

California should alter state law to make it easier for prosecutors to crack down on money laundering, the report says.  The report also recommends that the Legislature change state law to let prosecutors temporarily freeze the assets of transnational criminal organizations and associated gangs before they seek an indictment.

It also calls for the state to devote more money to the state Department of Justice, which Harris leads. That would include $7.5 million to fund five new teams that would target international criminals.   California’s Fight Against Transnational Crime

All money trails lead to Switzerland.  Despite clamp downs by the US government and some other nations, the Swiss continue to provide safe havens for oligarchs’ money.

At 7 Bahnhofstrasse in Zug, there are companies listed in 194 Post Office Boxes.  One of these belongs to Firtash.  Arrested in Austria on a warrant from the FBI, Firtash is off on 125 million dollars bail, peanuts to this Russian oligarch, a pal of Putin’s who has enriched himself through gas deals.

Companies with post office boxes is Switzerland.

Firtash Company Switzerland

Steueroasenbuch (Tax Haven Report, Page 29)

WASHINGTON – California attorney Christopher M. Rusch was sentenced to serve 10 months in prison for helping his clients Stephen M. Kerr and Michael Quiel, both businessmen from Phoenix, hide millions of dollars in secret offshore bank accounts at UBS AG and Pictet & Cie in Switzerland, the Justice Department and the Internal Revenue Service (IRS) announced today. U.S. District Judge James A. Teilborg also ordered Rusch to serve three years of supervised release following his prison sentence. On Feb. 6, 2013, Rusch pleaded guilty to conspiracy to defraud the government and failing to file a Report of Foreign Bank and Financial Accounts (FBAR). Kerr and Quiel were sentenced in September 2013 to each serve 10 months in prison after both were tried and convicted of filing false income tax returns for 2007 and 2008. The jury also convicted Kerr of failing to file FBARs for 2007 and 2008.  Hiding Money in Swiss Accounts

The Senate Committee chaired by Carl Levin forcefully supported by Senator John McCain has accused the Justice Department of dragging its feet in the prosecution of Swiss bankers who have aided and abetted US citizens in evading taxes.  Keneally at Justice struck back yesterday in Washington.  Keneally Defends

U.S. lawmakers push authorities to seek extradition against Swiss residents who were charged with helping Americans evade taxes.

Our correspondent Andreas Frank reports: In an open letter, Sen. Carl Levin and Sen. John McCain, who lead the Senate’s Permanent Subcommittee on Investigations, urged the Justice Department to “at least attempt” extradition proceedings against indicted Swiss bankers. The U.S. Senators seek extradition of about 30 Swiss bankers and others who are charged with enabling offshore tax evasion and haven’t appeared in federal courts. Most of them “apparently live openly in Switzerland, having avoided trial on their alleged crimes for years,” Messrs. McCain and Levin said.

A Justice Department official said extradition proceedings would be a poor use of resources. Because aiding tax evasion is not considered a crime in Switzerland, the country is unlikely to honor U.S. extradition requests, the official said. Instead, the department is focused on other ways of pursuing tax evasion cases, the official said citing the October arrest in Italy of former UBS AG banker Raoul Weil.

Weil, who was arrested Oct. 19 after checking into a hotel in Bologna, Italy, waived extradition. Raoul Weil was released on $10.5 million bail in December after appearing in a Florida courtroom to face a 2008 indictment.

Even if the extradition request is denied, Messrs. McCain and Levin wrote, “it will inform both Switzerland and its citizens that the United States is ready to make full use of available legal tools to stop facilitation of U.S. tax evasion and hold alleged wrongdoers accountable.”

The letter is the latest criticism from lawmakers, who say they’ve grown impatient with the pace of U.S. investigations against Swiss banks. At a Senate hearing last month, Mr. McCain faulted the Justice Department for being “incredibly slow” in pursuing Swiss bankers. In 2011, the Justice Department indicted seven Credit Suisse Group AG bankers on tax evasion charges, but none had yet faced trial until very recently.

There are signs that the Justice Department is preparing to get tougher with Swiss banks. Last week, in a surprise development, former Credit Suisse banker Andreas Bachmann returned to the U.S. to face a 2011 tax evasion indictment. Mr. Bachmann admitted to helping Americans hide their assets, in exchange for leniency and being allowed to return to Switzerland before sentencing.
Senate Levin & McCain Letter