Andorra’s Banco Privada de Andorra: A Hotbed of Money-Laundering Allegations Sparks U.S. Crackdown
By John Doe, Senior Reporter
FinCEN Designates Banco Privada de Andorra as a Financial Institution of “Primary Money Laundering Concern”
In a major blow to the Pyrennean microstate, the U.S. Financial Crimes Enforcement Network (FinCEN) has classified Banco Privada de Andorra (BPA), the fourth largest bank in Andorra, as a financial institution of “primary money laundering concern.” This designation, announced on March 6, 2015, led to a downgrade of Andorra’s credit rating by Standard & Poor’s in May 2015.
Consequences of Designation
The downgrade follows Andorra’s heavy reliance on its banking sector, which makes up about 20% of its GDP. Andorra’s economy might face significant international repercussions due to the money-laundering scandal surrounding BPA.
Following the designation, the U.S. government is considering imposing the “fifth special measure” outlined in section 5318A(b)(5) of the U.S. Criminal Code. If implemented, this measure would prohibit American financial institutions from opening or maintaining correspondent accounts for BPA.
Inside a Money-Laundering Shop
Founded in 1962, Banco Privada de Andorra is a privately-held entity providing services in private banking, corporate banking, and small-scale personal banking. With €1.79 billion in assets, the bank operates seven domestic branches and five foreign branches, including a Panamanian outlet that functions as an offshore bank, serving high-risk customers.
Facilitating Financial Transactions for Money-Launderers
FinCEN’s investigative report revealed several instances of BPA staff facilitating financial transactions for third-party money-launderers (TPMLs) involved in organized crime, corruption, smuggling, and fraud. These TPMLs established close relationships with complicit bank staff, enabling them to process illicit transactions discreetly.
Case Studies
1. High-Level Manager A - Andorra’s Money-Launderer’s Helper
Between 2011 and February 2013, a high-level manager at BPA in Andorra, now known as High-Level Manager A, collaborated with Andrey Petrov, a TPML linked to Russian criminal organizations specializing in corruption and money laundering. Using his illicit profits, Petrov bribed Spanish officials to secure zoning rights and lucrative contracts.
Manager A’s assistance was crucial in Petrov’s operation, allowing him to bypass potential financial scrutiny by obtaining a line of credit from a Spanish bank.
2. Venezuela’s Corrupt TPML 2
TPML 2, a Venezuelan TPML, relied on BPA to deposit the proceeds of public corruption in Panamanian shell companies. Working closely with high-ranking Venezuelan officials, an Andorran lawyer, and Panamanian resident agents, their network owned hundreds of shell companies and employed other money laundering methods such as false contracts, mis-characterised loans, over- and under-invoicing, and trade-based maneuvers. The money laundering process involved moving approximately $4.2 billion through various Venezuelan shell company accounts at BPA.
High-Level Manager B at BPA maintained a close relationship with TPML 2, providing false contracts and opening a shell company on his behalf. BPA facilitated transactions totaling over $2 billion, some of which moved through the United States.
3. Bulk Cash Transfers for Chinese Criminal Gao Ping
From 2011 to October 2012, High-Level Manager C at BPA accepted bribes to process bulk cash transfers for Chinese TPML Gao Ping. Belonging to a transnational criminal organization engaged in trade-based money laundering and human trafficking, Ping also established relationships with Andorran banks to launder illicit funds and assist Spanish businessmen. Using his associate, Ping bribed Andorran bank officials to accept cash deposits into less scrutinized accounts and transfer the funds to suspected shell companies in China.
Ping was arrested in September 2012 by Spanish law enforcement for money laundering.
A Marketing Success & Scandal
Despite BPA’s weak anti-money laundering (AML) controls, the bank gained a reputation for providing high-risk services to shell companies, attracting various criminal networks. “Third-party money-launderers” marketed the bank’s services to each other. For example, TPML 4, with a history of working with the Sinaloa cartel and trafficking large sums in cash, actively cultivated BPA to attract money laundering clients. He instructed his clients to send small transfers through accounts at other banks and reserve large transactions for BPA.
In communications with TPML 4, he boasted of his relationship with BPA and other government officials to attract potential money laundering deals. Despite the risks, TPML 4 continued to expand operations during the U.S. government shutdown in 2013. He utilized multiple Panamanian, Spanish, and Swiss shelf corporations, several of which maintained accounts at BPA.
Nearly Caught by the Correspondents
BPA’s lack of oversight extended beyond merely failing to identify suspicious transactions. The bank often listed its own Andorran address for the originator or beneficiary, knowingly providing services to unlicensed money transmitters. This led one U.S. correspondent bank to request BPA to sign an agreement ceasing to process transactions for unlicensed transmitters through its account, which was eventually closed.
Between approximately 2007 and 2012, BPA used its U.S. correspondents to send or receive over $50 million in transfers for Panamanian shell companies sharing common directors, agents, and addresses. These transfers involved large, round dollar amounts with unclear transaction purposes. When U.S. correspondent banks requested further information, BPA either failed to respond or provided insufficient information. However, the U.S. correspondent banks could have been more diligent in their dealings with the Andorran bank.