US Treasury Identifies Banca Privada d’Andorra as Money Laundering Concern
The Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury, has identified Banca Privada d’Andorra (BPA) as a foreign financial institution of primary money laundering concern. This designation, made under Section 311 of the USA PATRIOT Act, was accompanied by a Notice of Proposed Rulemaking (NPRM).
BPA’s Money Laundering Activities
BPA’s designation was based on evidence of high-level managers at the bank knowingly facilitating transactions for criminal organizations. According to FinCEN Director Jennifer Shasky Calvery:
BPA’s corrupt high-level managers and inadequate anti-money laundering controls have made the bank an attractive conduit for third-party money launderers to move proceeds of organized crime, corruption, and human trafficking through the US financial system.
The threat posed by third-party money launderers to financial institutions is significant. They allow criminal organizations to overcome challenges in accessing financial institutions directly. BPA’s suspicious activity occurred mainly at its Andorra headquarters. The bank is one of five Andorran banks and a subdivision of the privately-held BPA Group.
- Andrei Petrov and Russian Criminal Organizations: A high-level manager at BPA assisted Andrei Petrov, a third-party money launderer working on behalf of Russian criminal organizations involved in corruption. Petrov was arrested by Spanish law enforcement in February 2013 for money laundering and is suspected of having ties to Semion Mogilevich, an FBI’s “Ten Most Wanted” fugitive.
- Venezuelan Third-party Money Launderers: Another high-level manager accepted exorbitant commissions to process transactions for Venezuelan third-party money launderers. They involved the development of shell companies and complex financial products to siphon off funds from Petroleos de Venezuela (PDVSA), totaling around $2 billion.
- Gao Ping and Human Trafficking: A third high-level manager at BPA accepted bribes in exchange for processing bulk cash transfers for Gao Ping, a third-party money launderer. Ping acted on behalf of a transnational criminal organization engaged in trade-based money laundering and human trafficking.
Consequences of BPA’s Actions
NPRM Provisions
The NPRM, if adopted as a final rule, would prohibit US financial institutions from maintaining correspondent or payable-through accounts for BPA, as well as foreign banks processing transactions involving BPA. Furthermore, it proposes to require covered financial institutions to apply enhanced due diligence to their correspondent accounts on behalf of foreign banks, aimed at preventing any transactions related to BPA.
Global Collaboration
FinCEN acknowledged the vital cooperation from various US and foreign law enforcement agencies. Their efforts included:
- Departments of Justice, Criminal Division, Asset Forfeiture and Money Laundering Section
- US Attorney’s Office for the Eastern District of Texas
- US Immigration and Customs Enforcement’s Homeland Security Investigations
- Internal Revenue Service Criminal Investigation
Implications
Third-party money launderers play a crucial role in transferring funds on behalf of a third party. By leveraging their relationship with financial institutions, they grant criminal organizations access to the international financial system and lend a veneer of legitimacy to the criminal actors who utilize their services. Financial institutions that enable third-party money laundering undermine the overall integrity of the financial system and contribute to the circumvention of anti-money laundering/countering the financing of terrorism (AML/CFT) controls both in the US and abroad.
To read the Notice of Finding against BPA, please click here. To read the Notice of Proposed Rulemaking, please click here.