GTO COMPETENCE ASSURED Strictly Private and Con?dential Legal Privileged Investigation Plan - 'Project Waxwing' Client: The Shareholders of FBME Bank kgoub Farid M. Saab Mr Fau?i Saab "cm; In Glbraltar No.111345] Investigafion P|an CONFIDENTIAL Project". Contents Dangate Cons King Page 2 12125 31 October 2014 . CONFIDENTIAL Project Waxwing of recent developments of the investigation process and the shareholders We fennally instructed the US Law Firm; Quinn Emanuel Urquhart 8. Sullivan (QE) to provide the shareholders with legal representation, it has been ween that Dangate prepare a formal investigation plan outlining the numerous currently being pursued as well as other proposed lines of enquiry - the legal team consider should be pursued. 13 motion re the Reaper: in Notice of Findings document are, in the main. in some instances, appear to be intentionally vague which has a and 0E to be able to specifically identity the individual concern. :gso made it dif?cult for Dangate to be able to Jiview to taking remedial action and for GE to be .their clients and prepare any form of defence in Project Waxwing FBME has weak AML Controls in FBME took active steps to evade oversight by the Cypriot regulatory .. ?umorities (in relation to alleged violations of capital controls) whats been used to facilitate or promote Money Laundering, Terrorist .- any I .. if: transnational organised crime. fraud, sanctions evasion. and activities, internationally and through the US financial system 3 its weak AML controls, FBME attracts shell companies engage in any legitimate business actiyity ?ea; the activities of international terrorist financiers, organized money launderers alleged that: Raf an international narcotics traf?cking and money shell company accounts at FBME to engage in ?v hundreds of thousands of dollars from j; .15 maintained a relationship with a a 519 anised crime figure who banked perpetrate fraud and 2 networks Investigation Plan STRICTLY CONFIDENTIAL Project Waxwing . offshore business banking allows sanctioned entities to circumvent sanctions imposed by the International Emergency Economic Powers Act - At least one FBME customer is a front company for a US sanctioned Syrian entity. the Scienti?c Studies Research Center (SSRC) which has been designated a proliferator of weapons of mass destruction . FBME is also popular with online gamblers, particularly US gamblers that seek to engage in unlawful internet gambling in And other allegations 31 October 2014 STRICTLY CONFIDENTIAL Project Waxwing lnithl Background Enquiries in an afiortto attempt to identify and understand the 'broad--bmsh' allegations made MEN, the Bengals investigation team members have consulted with and ed alongside OE and other lawyers and professronal experts employed by and the Shareholders. spent many hours scrulin ing. renewing and analysing numerous have beat published by professional auditors such as Kroll and FBMECS. We have also spent a considerable and consulting the Shareholders, senior staff members departments 0' the bank and FBMECS lubatlon cases and disputes involving the bank \nveshgatwon P'an 4.0 Suggested Specific Lines of Enquiry Page 7 of 25 31 October 2014 \nveshgahon P'an L'v F'm'ect Dangate Consulting 31 October 2014 Investigalion Plan CONHDENTML Prorect Waxwmg Cleany FBMECS made strong efforts to get MOKAS to prosecute the case and a'so made great efforts to avoid allowing the return af rhe illicitly acqurred funds berng relumed to the apparent offenders. Investigation Plan STRICTLY CONFIDENTIAL Project Waxwing Although the bank's efforts were commendable, and were agalnst all odds, there are still some unresolved issues that could still lead to FBMECS being considered to have been complicit in the illegal processes that were operated. In order to properly exonerate FBMECS or to mitigate their involvement in the illegality that clearly resulted, we consider that it is necessary to Iurlher investigate and to compile the evidence to prove the conspiracy between: much an Investigation has been conducted and completed satisfactorily then it that the shareholders consult with their legal representatives and Hogan Lovell: LLP in order to assess the bank's exposure at mum an Investigation into this Issue With a view to self- oontinues it is quickly becoming apparent part ofthe allegations that allowed them to conduct highly staff assisted the- systems that were setup by bat such criminal activities. lacklustre, tick-box due VFBMECS at the time. Investigation Plan STRICTLY ProjectWaXWing allowed the criminals operating the high risk actrVities to create entirely opaque merchant companies With entirely false UBO's. The system that operated at FBMECS (and FBME bank prewously) was a flagrant and wholesale disregard oi the fundamental principles of any form of compliance procedure or compliance program The 'promo' systems were devised to transact thousands of 'phantom transactions each month in order to circumvent or outrmanoeuvre the preventative processes and measures that were designed to identify excessive chargeback actIVlty. much of which resulted from fraudulent transactions and other traudulent methodologies Whether the illegal systems were devised' created and implemented by FBMECS employees themselves or by external actors working in concert With FBMECS employees, is not yet entirely clear '1 investigation will be able to uncover was a victim of rogue 31 October 2014 Investigation Plan STRICTLY CONFIDENTIAL Project Waxwing _that were introduced to them by their competitors and operated by people intent on committing erCommerce fraud with the assistance of renegade employees Within FBMECS Those FBMECS employees who were identified or suspected of haying been Involved in a criminal conspiracy have either been sacked or have left the company before the criminal activity was identified There are some current employees who could be considered to have been "acting in concert' With the main perpetrators but this will only be confirmed either way by further Investigation It has been suggested by the shareholders lawyers that it could be to FBME's and FBMECS advantage to be able to prowde with an evidential package to demonstrate that the potential 'source' of the problem may be with MasterCard and not FBMECS because of the apparent involvement of a senior MasterCard employee in the criminal activities The Dangate investigation team feel confident that if such eVIdence exists then they would be able to collect. collate and prepare the necessary information eVIdence and intelligence against the MasterCard employee as well as the former FBMECS employees and any other persons identified as being engaged in a conspiracy to defraud Omewd'i evidence has been collected, the lawyers w'l we able to evaluate it and sufficient evidential value and suitable for presentation to ent of Justice in an effort to mitigate and minimise - such as the 'fifth special measure', _1 October 2014 \vweshgamn Man PrometWammvg Dangate Consulting Page 13 of 25 31 October 2014 lnvestlganon Plan STRICTLY CONFIDENTIAL PrOJectWaxwmg I mu LE Il-qal [cam and anaIySIS of [he notice It IS com eren I . mm. - acmmy forms a consrderable pan of the Issues. Outlined LI < x" CH Dangata Consulting 31 October 2014 Investrgatron Wan STRIC LY CONFIDENTIAL Project The invesfigamrs have had 01 an emau Cr'lnll' we um Khachatryan na that made reference to the aco m- 4 uncem :encies It seems that Lulus merm'v 01 law enforcement nerve Sloane as he robusily responded to the emau medialely culiofl commumcanon on the subject thereafter the circumstances 31 Oc'ober 2014 Investiganon Plan STRICTLY CONFIDENTIAL Project Waxwmg 31 October 2014 1.2mm 47 I 4.8 Email Ravlew Based on the understanding that the bank l5 Conmdemlg gnll'g (10ml reporting route, it is our opinion that we must explore every area of poleMM vulnerability lhal may exist before 'bearrng our soul lo Emails have always been rich sources of lnformauon rmellrgence and evrdence prosecution cases, It is therefore very important lhat unfettered ucmss ls 9mm lo the invesfigalors and the legal team to enable them lo all emarl malerral my order to assess and quanlify any potential exposure that may exrsl order lo avurd any subsequent misinlerpretau'on. Dangale Consulting P119318 of25 31 October 2014 Investigatiun Plan 4.5 STRICTLY onjem Waxwmg Experience leiis us (nai. in a seii~repomng environmeni. it 15 (av better to anaiyse the Informanon and to prepare any explanations or nniigatron in advance oi any misunterpveianon or misapprehensions becoming 'cast in sinne' by our accusers and thereby becoming more diflicuii to mmga|e or SSRC - OFAC Allegations important in investigate the indivldual lnorwgniy in order bank's exposure, IS our experience (he: hmdsugnl is a law enforcement agencies have a tendency to make heavily based upon hindsight, 5 October 2014 7'5" WM, r-J'w we: I.) Dangale Consumng Page 20 of 25 31 October 2014 investigation Plan STRICTLY CONFIDENTIAL Project Waxwing 5.0 Conclusion The enquiry lines outlined above are not an exhaustive list of all of the issues that the bank faces. There are surely other additional areas of investigation required- Although the allegations in the Notice of Finding are very serious, there are eeThe positives that may be drawn. Much depends upon whether the allegations .. EWOOG and interpreted correctly. An important point to remember is bank had already identi?ed problem areas and weaknesses ted in the Notice of Findings Evidence exists to k. had commenced making reparation and implemented "of the problem areas and weaknesses that were EN notice. rily follow that Euros such as fifth mvestrgallon Plan STRICTLY CONFIDENTIAL Prolect Waxwmg 5.0 Methad "mm" mu; rum Dangata Consumng Lad Page 23 of25 31 Ouubev 2014 Weshgallan Plan STRICTLY CONFVDENTIAL Prolecl Waxwmg 7,0 Potential Costs. 31 October 2014 mvasligaiion Plan STRICTLY CONFIDENTIAL Projecl Waxwing 8.0 Notes: Nigel Brawn will be the Projecl Manager and point of contact throughout this enquiry if it is decided to formally Instruct us to proceed I Yours falthlullyi Nigel Brown Managing Director 31 October 2014