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Friday
Mar132015

FinCEN: Andorra bankers took bribes to launder money for China, Russia, Venezuela criminals

The U.S. Treasury Department's Financial Crimes Enforcement Network said senior managers at Banca Privada d'Andorra took bribes for several years to help launder money for organized crime groups.

FinCEN designated the bank, known as BPA, as a foreign financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act.

Andorra is a tiny, landlocked sovereign country in the eastern Pyrenees mountains bordered by Spain and France.

Andorra regulators Tuesday seized BPA. The government fired the bank's chairman and board.

In Spain, the central bank seized a BPA subsidiary, Banco de Madrid.

The Wall Street Journal reported Wednesday that four big banks had correspondent banking relationships with BPA.

The U.S. unit of HSBC Holdings PLC provided access for BPA to the American financial system, along with Bank of America NA and Citibank NA.

Deutsche Bank Trust Co. Americas had a correspondent relationship with Banco de Madrid, the BPA subsidiary in Spain, the WSJ said.

HSBC reportedly terminated its correspondent banking relationship with BPA after FinCEN's action Tuesday. In 2012, HSBC paid $1.92 billion in fines to U.S. authorities for money laundering involving the Mexico drug trade.

Both Citigroup and Bank of America said they would take appropriate action.

Correspondent banking relationships allow customers of foreign banks to access the U.S. financial system.

BPA is one of five Andorran banks. It's a subsidiary of the privately-held BPA Group.

FinCEN said Tuesday concerns about money laundering focused mainly on BPA's Andorra headquarters. 

A BPA high-level manager there helped Andrei Petrov open and run accounts. FinCEN described Petrov as a third-party money launderer working for Russian criminal organizations engaged in corruption.

Spanish police arrested Petrov in 2013 for money laundering. He's also suspected to have links to Semion Mogilevich, one of the FBI's “ Ten Most Wanted” fugitives, FinCEN said.

Another BPA manager in Andorra helped Venezuelan money launderers. FinCEN said the manager accepted exorbitant commissions to set up shell companies and structure convoluted transactions used to siphon about $2 billion from Venezuela's public oil company Petroleos de Venezuela (PDVSA).

A third manager, also in Andorra, took bribes to process bulk cash transfers for Gao Ping. He was part of a criminal organization known in Spain and China for money laundering and human trafficking.

“BPA's corrupt high–level managers and weak anti–money laundering controls have made BPA an easy vehicle for third–party money launderers to funnel proceeds of organized crime, corruption, and human trafficking through the U.S. financial system,” FinCEN director Jennifer Shasky Calvery said.

FinCEN's notice of findings against Banca Privada d'Andorra is here (pdf).

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here