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A senior compliance officer whom federal prosecutors accused last month of funneling more than $1 billion in suspicious funds through the New York credit union that employed him appears to have a history of facilitating high-risk transactions linked to Mexico.

In April, prosecutors in the Eastern District of New York accused Gyanendra Asre, 54, of tricking the now-defunct New York State Employees Federal Credit Union, or NYSEFCU, into taking on the high-risk business of accepting hundreds of millions of dollars in bulk cash and checks from Mexico while conducting little to no due-diligence.

Asre, who filled senior business and compliance roles at NYSEFCU from November 2014 to April 2016, allegedly orchestrated the scheme with the help of an associate, Hanan Ofer, and two money services businesses, or MSBs, that the pair secretly ran on the side.

One of the firms, New York State Employees Federal Credit Union – Credit Union Service Organization, or NYSEFCU-CUSO, registered as an MSB with the Treasury Department, while the second, DDH Group, neither registered nor obtained a state license, prosecutors claimed in an indictment last month.

HSBC

Asre and Ofer allegedly met in the early-2000s while working at a different financial institution.

The 18-page indictment does not identify their earlier employer by name, but public and congressional records show that Asre worked as senior vice president of bulk cash operations at HSBC’s U.S. subsidiary, while Ofer, whom prosecutors charged with failing to register as an MSB, worked as a logistics manager for the same department, from 1999 through 2010.

In December 2012, HSBC agreed to pay $1.9 billion in fines and forfeitures to settle egregious violations of U.S. sanctions and anti-money laundering rules from 2006 to 2009, including failures to vet nearly $700 billion of potentially illicit wire transfers and purchases of U.S. currency by its Mexican affiliate, HSBC Mexico.

Prosecutors said at the time that HSBC Mexico became the “preferred” bank of drug cartels, and accepted hundreds of thousands of dollars in cash deposits from them daily during the three years covered by the settlement.

A 339-page report on the scheme published by the Senate’s Permanent Subcommittee on Investigations, or PSI, in July 2012 cites a series of emails between bank officials, including Hanan Ofer and Gyanen Kumar, an alternate name that Gyanen Asre allegedly used.

The emails broadly reflect discussions by senior managers in the U.S. over the handling of U.S. currency in Mexico. Several follow the decision by HSBC Mexico, also known as HBMX, to shutter its bulk-cash department under pressure from its domestic regulator, the Comision Nacional Bancaria y de Valores, or CNBV.

“On Dec. 22, 2008, an HBMX employee alerted the HBUS regional head of Banknotes, Gyanen Kumar, to HBMX’s plan to stop buying and selling U.S. dollars in the new year,” PSI found. “HBMX apparently did not explain, leaving HBUS uninformed about the compliance and regulatory pressures and AML risks behind HBMX’s decision to end its U.S. dollar business.”

According to evidence cited in the report, Kumar forwarded the December 2008 email to his superior, noting in his message: “I have not been told anything firm as to why this decision is being taken as much as it is a drastic change. My instincts tell me that perhaps this has something to do with compliance.”

Last month’s indictment does not draw a link between HSBC’s previous currency operations in Mexico and the bulk-cash business that Asre and Ofer subsequently steered to NYSEFCU, nor mentions their earlier career at the global bank.

A spokesperson for the U.S. Attorney’s Office for the Eastern District of New York, which is prosecuting the case, confirmed that the pair worked for HSBC but declined to provide further information.

“I’d have to say that the PSI report really didn’t raise any red flags,” Elise Bean, the congressional panel’s former chief counsel, told ACAMS moneylaundering.com in an email. “We never picked up on Kumar as a wrongdoer. He was just one of many HSBC employees working on AML issues.”

Public records identify Gyanendra Asre, also known as Gyanendra, or Gyanen, Kumar, as a resident of Greenwich, Connecticut, who was born in April 1967 and worked for Republic National Bank of New York until its acquisition by HSBC in May 1999, and was subsequently employed by the U.K.-headquartered lender until December 2010.

Kumar and Ofer’s departure from HSBC appears to correspond to the lender’s exit from the U.S. dollar-repatriation business more than a decade ago. Neither were accused of involvement in the lender’s violations.

After leaving HSBC, the records show that Asre worked for a company specializing in transporting valuables across the world, Ghi Group LLC, or Ghi Financial, and more recently for NYSEFCU, including through NYSEFCU-CUSO, the similarly named organization he controlled.

Publicly available records separately confirm 67-year-old Hanan Ofer’s employment at HSBC, and his subsequent stint at IBI International, a limited liability company with no clearly apparent business model and a limited online presence.

CBW

Prosecutors said last month that Asre intermittently held certifications from the early 2000s to the mid-2010s from the Association of Certified Financial Crime Specialists, or ACFCS, and the Associations of Certified Anti-Money Laundering Specialists, or ACAMS, which owns moneylaundering.com.

Internal records from 2015 show that a person named Gyanendra Asre registered with ACAMS as a senior compliance executive for GHI Group, using an email address with a domain name that appears affiliated with IBI International, the limited liability company that public records link to Ofer, his alleged business partner.

Gyanendra Kumar appears in public records as well as internal ACAMS records from 2015 to 2018 as vice president of correspondent banking for CBW Bank in Weir, Kansas. He appears to have ended his training activities with ACAMS three years ago.

Moneylaundering.com did not obtain additional records linking the Gyanendra Asre-Kumar who worked for HSBC and NYSEFCU to the Gyanendra Kumar who worked for CBW.

In August 2020, the Federal Deposit Insurance Corp. directed CBW in a consent order to immediately halt services for foreign financial institutions, including remote deposit capture, U.S. currency repatriation, money services businesses, ACH transactions and fund transfers to or from central banks, and also cease “all activity pertaining to domestic MSB transfers.”

Former Google engineer Suresh Ramamurthi and his wife, Suchitra Padmanabhan, a former banker, acquired CBW Bank in 2009, when the institution, then called Citizens Bank of Weir, was struggling to stay afloat amid the global financial crisis and egregious management failures.

Months before the change in ownership, Martha Thompson, a former vice president for CBW, received a three-year probationary sentence after embezzling more than $230,000 from the lender. The FDIC permanently barred Thompson from the financial services industry for engaging in unsafe and unsound practices that put the bank’s viability at risk.

Ramamurthi and Padmanabhan turned the flailing institution around by embracing the latest technological innovations to bolster its cross-border payment, foreign-correspondent and MSB lines of business, and attract a clientele of financial technology-centric firms, or fintechs. The couple have received wide praise for those efforts over the years.

Sample trade data from subscription-based website Panjiva shows that from April 2014 to March 2020, CBW processed millions of dollars in shipments of U.S. banknotes from at least two Mexican banks, Banco Azteca and Cibanco, into an account at the Federal Reserve Bank of San Francisco’s branch in Los Angeles.

Banco Axteca and Cibanco serve low-income, cash-dependent customers in Mexico and Central America, and do not have the ability to clear U.S. dollar-denominated transactions on their own.

Both felt the impact of the U.S. banking industry’s retreat from offering correspondent services south of the border after federal regulators issued enforcement actions against Wachovia, now owned by Wells Fargo, in March 2010, and HSBC in December 2012.

U.S. banks should stay mindful of the potential regulatory danger associated with repatriating banknotes from Mexico, bolster their compliance resources before re-entering the business and ensure that AML staff’s appetite for risk aligns with that of the broader institution, said Braddock Stevenson, former deputy associate director of FinCEN’s enforcement division.

“We’ve been in a pandemic for over a year and are coming from a U.S. administration that significantly cracked down on activity across the U.S.-Mexico border,” Stevenson, now counsel at the O’Melveny law firm in Washington, D.C., said. “If bulk cash going to Mexico is from tourism and migrant workers, it should have drastically fallen.”

Asre-Kumar pleaded not guilty in April to failures to maintain an AML program, file SARs and register an MSB as required by law, while Ofer pleaded not guilty to running an unlicensed money transmission business.

Ofer’s attorneys declined to speak for this story. Requests for comments to Asre-Kumar’s lawyers, CBW Bank and GHI Group were not returned by press time.

Contact Valentina Pasquali at vpasquali@acams.org