Ann: Appendix 4C - 3Q FY19, page-282

Sure. If you want the articles in both English and Danish where I found this info then you'll need to search my post history in the ISX forum (which is what I would need do to in order to get them). Also, if you want more details then you'll need to search as I'm recalling this from memory and doing it quick. There may be an error or two in the numbers and details I recall.

First, background. When KAB was busted they had only 19 employees total. Their books were so bad that they didn't even know how much money legit depositors had in the bank. They had been so poorly managed that the regulator had forced the complete turnover of the board (bar one member) and the executives in the year before they were shut down. When they were finally shut down they had 183 foreign depositors, including ISX, which triggered quite a few thousand money laundering alerts. They were busted for laundering approximately EU1.2 billion in cahoots with two notorious digital ID companies (one definitely from the Isle of Mann and the other from, I think, the British Virgin Islands or Cyprus).

So my first concern is guilt by association. Of the hundreds of banks, thousands even, where ISX could deposit funds they picked the one tiny, hopelessly mismanaged outfit that was busted for laundering money with companies that provide the same KYC service (if a different technique, of course)? Too close for comfort and ASIC will need to look closely.

Second, ISX triggered about 26 foreign transaction money laundering alerts at KAB, as we learned from the AFR. This rate appears to be 2.5x the average rage for a foreign depositor at KAB. Again, smokey.

My third (and last) KAB concern is that the list of issues KAB has been charged with (from a Danish article) was exactly the same list, in the same order, as the transaction types asked in the last ASX query. Binaries, porn, gambling, etc. ISX said they don't do any of that, nice to hear, but we didn't see the transaction data they had to supply and we don't know where else investigators are getting data to cross check what ISX provides.

So my concerns with KAB can be summarised that perhaps ISX was knowingly participating (as per the two other KYC vendors busted with KAB) or unknowingly participating, ie, they confirmed false identities by mistake. Those are what I assume are the queries being investigated and I reckon it will take a long time to figure them out and either clear or otherwise. I've got no idea if ISX is clean or not, I just reckon this is the issue being looked at.

Compounding my concerns was JK's too clever by half claim that ISX was not "privy" to the ownership of Red5. Of course, that ownership included his brother, major early investors in ISX and JK's own sister-in-law was Red5's secretary. He knew exactly who owned Red5 but played coy that he didn't. He didn't break any rules by his games with the AFR but he certainly didn't instil any trust by demonstrating he's willing to parse words and play smart to obfuscate obvious truths.

Lastly, the loan to the company with a common board member. Again, may be clean and at arms length but appears to be on the edge. One more indicator that ISX will play close to the boundary.


So I have no idea if ISX are clean or not. And let me be clear, I am definitely NOT saying they are dirty. I am saying, however, that I've found enough publicly available information (all posted here previously) to make me think this is not going to be an easy "no worries, mate" exercise. I could be and the information I've presented is not relevant at all. But I wouldn't bet my own money on that. I'd rather watch and miss out if it turns out good.