Venezuela-probe firm cleared millions for clients to bypass banks, FIAU says

A Maltese wealth management firm suspected of being used in a high-profile money laundering scheme, has been fined €370,000 by the Financial Intelligence Analysis Unit over its scant due diligence on its politically exposed clients (PEPs).   

Portmann Capital Management is contesting the fine after the financial regulator (MFSA) ordered that the company, owned by Swiss banker Kurt Portmann, ceases taking on new clients. 

A police investigation has now taken control of the company’s computer servers.   

More seriously, the company has been revealed to have processed a total of €553 million in 735 transactions for its small clientele of just 53 clients between 2011 and 2018 without a payments services licence, a breach that has already cost it a €63,000 fine by the MFSA.  

BACK STORY Laundering the Bolichicos’ cash: how a Malta firm assisted the Venezuelan elites 

The MFSA and FIAU suspect that the company’s core business was carrying out unlicensed payments services for its select clients, of significantly high values not related to investment operations but as a substitute for banking or payment accounts.  

But both the MFSA’s and FIAU’s fines were only finally imposed in August 2018, after Portmann was implicated in the Venezuelan money laundering probe.  

While the MFSA discovered the unlicensed payments during a site visit in June 2016, the company is accusing both the regulator and the FIAU of acting belatedly in response to press attention. 

Indeed, the FIAU carried out its own site visit in November 2016, in which it discovered major breaches of financial rules on due diligence and client on-boarding, but again only fined the company €370,250 on 24 August 2018, 13 days after the Maltese press reported the Venezuelan money laundering investigation by United States investigators in Miami.  

Portmann is now claiming the FIAU’s and MFSA’s actions were only spurred by the press reports, since the two authorities were “silent for 10 months” after their follow-up requests on their 2016 site visits.   

“The FIAU was pushed into action by what emerged in the media as they referred to ‘the possible impact... on Malta’s reputation’ in their sanction letter,” Portmann’s lawyers said in a court document contesting the fines. “It is unfair that the company has been judged by what was published in the media... if nothing had happened, or had timely adjudication taken place before, the outcome would have been different.”   

However, Portmann Capital Management is being implicated in a $600-million money laundering investigation reaching up to the Venezuelan presidency of Nicolas Maduro, on embezzlement of the country’s petroleum profits.   

The news broke on 25 July when a criminal complaint was filed in Miami, Florida, but Portmann only communicated with the MFSA on 12 August when the Maltese press reported the US investigation. It admitted that it learnt of the case in July and froze the accounts of the conspirators.   

Portmann’s clients include Venezuelan national Jose Vincente Amparan Croquer, aka ‘Chente’, described by the US investigators as a “professional money launderer” who uses a Spanish real estate firm as his front. According to the criminal complaint, “Amparan also maintains relationships with ‘European Financial Institution 1’ in Malta” now suspected to be Portmann Capital Management.   

US investigators used email search warrants to confirm the flow of funds from Ven  

ezuela’s state petroleum company PVDSA, to conspirators through ‘European Financial Institution 1’. One email, carrying an attachment titled ‘Operation 600k’, contained worksheets detailing the illicit cash flows from Venezuela to Malta: which included €20.4 million assigned to the Maltese ‘European Financial Institution 1’ as a 4% fee.   

Portmann told the MFSA that apart from Amparan, it had knowledge of the other clients, but not three others suspected to be Maduro’s stepsons, or Swiss banker Matthias Krull, who recently admitted to his role in the ploy.   

“PCML has never accepted any bribes,” Portmann told the MFSA in its first email on the case, referring to the €20-million fee it is alleged to have been paid for its services. “None of PCML representatives have ever come across Mr Krull, not to mention having any contacts with him, thus we are wondering whether there might be another Maltese firm involved.”   

In its reply, the MFSA ordered the company to cease taking on new clients and outgoing transactions.   

FIAU finds major breaches   

The FIAU communicated its findings to Portmann on 20 April 2018, in which it found serious breaches of money laundering rules.   

The company operates a Swiss ‘private banking’ model where wealth managers meet clients personally. According to Portmann’s own representations to the FIAU, this allows them to be “fully aware of the risks the clients wish to take with their investment... how the client is making his money and from which sources.”   

But by the company’s own admission, it failed to do “a better job at documenting this information.”   

In its compliance review, the FIAU said it had found multi- layered complex corporate structures, of which the company did not retain information on their structure.   

In five cases where beneficial owners were PEPs, the company also failed to apply enhanced due diligence for these clients, while the FIAU claimed it had found several other PEPs in the list of Portmann’s 66 active and inactive clients that were not declared to the authority. “The company provided misleading information to the FIAU which could have prejudiced the compliance review.”   

The FIAU also found:   

• Undated and uncertified copies of original documents for clients who were on-boarded on a face-to-face basis;  
• No translations of Spanish documents of certain clients, with the money laundering reporting officer relying on an online translation system;  
• The company had not obtained the necessary information on certain clients’ risk profiles in 16 out of 17 files reviewed, with a lack of information on business activity, source of wealth and funds, and anticipated level of business activity;  
• Portmann was providing unlicensed money remittance services, which meant investment accounts had been opened at the company to be used as a substitute for banking accounts.  
• No system in place to monitor the transactions carried out by their clients, such as million-dollar transfers for the acquisition of aircrafts, yachts, and real estate, and no backing information on these transactions.  
• No assessments conducted on Argentinian and Venezuelan beneficial owners and the reputability of these non-EU jurisdictions.