Accurate International Trading Fzco

[Reuquen Boyett]

After three years of digging, investigators in the United States had accumulated a mountain of evidence that they believed sealed the case against Kaloti Jewellery Group, one of the largest gold traders and refiners in the world.

But the Treasury Department never took action against Kaloti. Former Treasury officials said a decision on whether to move ahead was deferred for fear of angering the United Arab Emirates, a key U.S. ally in the Middle East. When attempts to convince the UAE to act on its own against Kaloti fizzled, the investigation was mothballed.

Investigators told the International Consortium of Investigative Journalists they were baffled and disappointed. Money laundering cases are extraordinarily difficult to crack and the U.S. has struggled to police the murky gold trade. With Kaloti they thought they had a rare opportunity to send a message to the entire gold industry.

The U.S. investigation of Kaloti has not been previously reported. The outcome points to challenges common to money laundering cases: Investigators must follow money across borders and through companies based in secrecy havens, like Dubai, that have shown little interest in cracking down. Bringing cases against powerful actors also requires political will and agreement among different U.S. agencies with competing priorities.

The documents, called suspicious activity reports, or SARs, were obtained by BuzzFeed News and shared with ICIJ and 108 media partners as part of the FinCEN Files investigation. SARs reflect the concerns of bank compliance officers and are not necessarily indicative of any criminal conduct or other wrongdoing. Some of the documents in the FinCEN Files were gathered as part of U.S. Senate committee investigations into Russian interference in the 2016 U.S. presidential election while others were gathered following requests to FinCEN from law enforcement agencies.

ICIJ confirmed additional details about the government inquiry into Kaloti with nine current or former law enforcement and other officials with knowledge of the investigation, who agreed to discuss it on the condition that their names not be used. They are not authorized to speak publicly about the case and fear repercussions for discussing it.

U.S. investigators said they never questioned Kaloti directly. Because the case did not result in charges or a Treasury designation, Kaloti never had a chance to see or challenge any of the evidence investigators had gathered.

Kaloti has managed to maintain business ties with major corporations, including the Swiss refiner Valcambi, according to Global Witness, an anti-corruption advocacy group. Kaloti recently opened a new refinery in Dubai.

General Electric, Amazon, General Motors and dozens of other U.S. companies reported that Kaloti may have processed or provided gold as part of their supply chains in 2019, according to paperwork filed with the Securities and Exchange Commission.

GE and General Motors said they do not source gold directly from Kaloti. GE said it had asked the supplier who reported using Kaloti to remove the company from its supply chain. Amazon, GE and General Motors said they are committed to having an ethical supply chain.

Gold courses through the global economy. Investors trade contracts pegged to future deliveries on major commodities exchanges in London, Chicago and Shanghai. Banks buy it from mining companies and other suppliers to resell to manufacturers, which turn it into wedding bands and iPhone circuits. Middlemen hawk it in late-night infomercials.

Al Kaloti fled Jerusalem to what is now the UAE in the 1960s, when it was still a dusty backwater with few paved roads. He got his start scavenging scrap metal and later imported goats for the then-ruler of Dubai, he said in a 2013 interview with a local news site.

Over the next quarter-century, Dubai grew into a major financial and business center. It also became an important hub in the gold trade, aided by low tax rates, proximity to Africa and Asia, and a reputation for secrecy.

In late 2010, a DEA-led task force in central Florida started getting calls from DEA agents investigating a money laundering scheme that spanned five continents as part of a law enforcement campaign called Project Cassandra.

An international criminal network was piping illicit cash from Colombian cocaine sales in Europe to Africa, where it was combined with proceeds from used-car sales in Benin, prosecutors later alleged. Cash couriers connected to Hezbollah, a Shiite militant group and Lebanese political party backed by Iran, allegedly moved the cash to Beirut in exchange for a cut.

The Lebanese Canadian Bank, based in Beirut, and money exchange businesses allegedly wired hundreds of millions of dollars to the U.S. for the criminal network to purchase still more used cars, completing the money laundering cycle. The network also sent funds through the bank to consumer goods companies in Asia to buy products that were shipped to South America and sold to pay cocaine suppliers.

A DEA-led task force scouring bank records at its central Florida office soon noticed that money sent to some of the used-car companies implicated in the Lebanese Canadian Bank case now appeared to be passing through Kaloti, a gold trader that at the time they knew little about.

Investigators were especially interested in two Kaloti clients that they suspected were involved in laundering drug money through gold: Salor DMCC, based in Dubai, and a business in Benin called Trading Track Company.

Also a red flag for investigators: Kaloti made cash payments worth millions of dollars to suppliers. Cash is difficult to trace, making it a preferred payment method for criminal groups. Documents viewed by ICIJ show that Kaloti paid Salor $414 million in cash for gold in 2012. It paid Trading Track $28 million in cash for the precious metal that same year.

Salor and Trading Track have the same owner, a lawyer for the companies said. He would not reveal who it is. Neither company has ever taken part in money laundering or other illegal or unethical conduct, the lawyer said. The companies were not informed of the U.S. investigation and have not been charged with wrongdoing in the United States or elsewhere, the lawyer added. Salor said that all of its activities in Dubai were subject to regulatory oversight and approval.

The United States is the top global enforcer of anti-money-laundering laws. The reason has a lot to do with the primacy of the U.S. dollar in global financial transactions and with the leading role major Wall Street banks play in processing payments that zip around the world.

In 2012, Kaloti began transferring large sums from its Deutsche Bank accounts to its Emirates NBD bank account in Dubai. Agents for the company then began withdrawing so much cash from Emirates NBD that the money had to be moved in wheelbarrows, a former Deutsche Bank employee later claimed.

Deutsche Bank also reported its concerns to authorities in the UAE, including the fact that the bank had learned U.S. authorities were investigating Kaloti. One of the UAE authorities, the Dubai Financial Services Authority, told ICIJ it did not have jurisdiction to investigate the allegations against Kaloti. The other, the UAE Central Bank, did not respond to requests for comment.

The auditors shared their concerns with the Dubai Multi Commodities Centre, which runs the accreditation program and was set up in 2002 as part of a grand plan to make the emirate a world-leading hub for gold trading.

The Treasury Department conducted its own investigation of Kaloti. Before freezing Kaloti out of the financial system, U.S. authorities felt it was important for diplomatic reasons to talk to officials in the UAE to see if they would handle the issue internally, according to interviews with former Treasury officials with knowledge of the investigation.

One of those banks, Deutsche Bank, had actually kept its Kaloti accounts open longer than it likely would have otherwise; the Justice Department wanted them open for monitoring purposes, according to a witness in the Rihan lawsuit.

The Treasury Department, the Department of Justice and the UAE did not respond to questions about the Kaloti investigation. A spokesperson for the Special Operations Command said it could not comment on specific investigations. The DEA would only say that the case is now closed.

Kaloti had been a target of a multiyear U.S. investigation into alleged money laundering. EY was embroiled in a public relations crisis, accused of helping Kaloti cover up its alleged misdeeds. Major banks had closed company accounts. And an influential Dubai industry group revoked its seal of approval.

In the vast tapestry of global trade, the movement of goods across borders and oceans fuels economies, builds bridges between cultures, and shapes how we interact with the world. As the backbone of international commerce, shipping is indispensable in connecting producers and consumers across continents. However, amidst this bustling exchange of goods, a pressing concern looms large: cargo security during its journey.

Cargo security encompasses a spectrum of measures and practices to safeguard shipments against various threats. These threats go beyond the traditional notion of theft and extend to tampering, unauthorized access, and transporting hazardous or contraband materials. The objective is clear: to ensure that the integrity of cargo remains intact throughout its journey, preserving its value, reliability, and safety.

The challenges to cargo security are diverse, each presenting its own set of risks. Cargo theft, for instance, is a persistent concern, with criminals seeking opportunities to intercept shipments, pilfer valuable goods, and disappear before detection. On the other hand, tampering involves unauthorized alterations to cargo that can compromise its quality, safety, or contents. In hazardous material cases, mishandling can lead to catastrophic consequences, endangering lives, ecosystems, and the environment.

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