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Tuesday
Feb232016

FinCEN withdraws Andorra bank money laundering finding, owners claim ‘momentous victory’

The U.S. Treasury Department's Financial Crimes Enforcement Network withdrew a finding against Banca Privada d’Andorra Friday because the bank “no longer operates in a manner that poses a threat to the U.S. financial system.”

In March last year, FinCEN said senior managers at Banca Privada d'Andorra, known as BPA, took bribes for several years to help launder money for organized crime groups.

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

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

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

The majority owners of BPA are Ramon and Higini Cierco. They issued a statement Friday calling FinCEN's withdrawal of its Section 311 notices a "momentous victory for BPA's customers, employees, and all of its shareholders, including the majority shareholders, the Cierco family."

They said,

Since FinCEN issued its illegal notices nearly one year ago, the Ciercos have fought vigorously to clear their name, bringing suit in federal court against the U.S. Department of Treasury and FinCEN to force the withdrawal the notices. FinCEN's announcement that they have withdrawn the notices vindicates the Ciercos and BPA.

Eric Lewis, a lawyer in the District of Columbia representing the Ciercos, said last year that regulators in Andorra failed to keep FinCEN informed about BPA's compliance efforts, and that's what triggered FinCEN's action against the bank.

"This was a dispute between regulators and BPA paid the ultimate price," Lewis said. "FinCEN failed to consider that BPA was one of the premier banks in Europe with industry standard money laundering controls in place."

Lewis has been critical of FinCEN, saying the agency denies due process to foreign banks it targets.

Once FinCEN designates a bank as a primary money laundering concern, other banks won't process its transactions in the U.S. -- which Lewis called "the lifeblood of BPA's international banking business."

In October 2015, the Ciercos sued FinCEN and its senior officials in the United States to withdraw the notices.

The Ciercos said Friday that FinCEN withdrew the 311 notices "in a blatant effort to avoid any judicial scrutiny of the legality of its actions."  

On Friday, FinCEN said the steps taken by the Andorran authorities "sufficiently protect the U.S. financial system from the money laundering risks previously associated with BPA."

FinCEN said,

Authorities in Andorra assumed control of BPA management and operations, arrested the chief executive officer on money laundering charges, and are in the final stages of implementing a resolution plan that is isolating the assets, liabilities, and clients of BPA that raise money laundering concerns.

FinCEN also said Friday it withdrew Section 311 findings against Liberty Reserve SA based in Costa Rica and Belarus-based JSC CredexBank. Liberty Reserve no longer exists as a foreign financial institution, FinCEN said, and JSC CredexBank no longer operates as a foreign financial institution or in a manner that poses a threat to the U.S. financial system

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