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Riggs bank laundering probe { May 13 2004 } Original Source Link: (May no longer be active)
http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5139618http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5139618
Riggs Fined $25 Mln in Laundering Probe
Thu May 13, 2004 09:00 PM ET
By Mark Felsenthal
WASHINGTON (Reuters) - U.S. bank regulators on Thursday announced a $25 million civil penalty against Washington, D.C.-based Riggs Bank for failing to put safeguards against money laundering in place.
Riggs, a unit of Riggs National Corp. (RIGS.O: Quote, Profile, Research) , did not detect or investigate suspicious activities or collect adequate information about its foreign banking customers, the Office of the Comptroller of the Currency said in a statement.
The regulator said it had found "a number of problems" with the bank's handling of accounts with foreign governments, including Saudi Arabia and Equatorial Guinea. The bank has been a dominant force in diplomatic banking in the capital.
"Riggs failed to properly monitor, and report as suspicious, transactions involving tens of millions of dollars in cash withdrawals, international drafts that were returned to the bank, and numerous sequentially numbered cashier's checks," the OCC said in a statement.
Riggs announced last month it would exit most of its international banking business, and that its former longtime chief executive, Joe Allbritton, would not seek reelection to the board.
The company said in a statement it had agreed to the civil money penalty without admitting or denying any wrongdoing. Even after paying the penalty and taking pre-tax charges of between $15 million and $21 million as it sheds its international business, the bank will remain well capitalized by regulatory standards, it said.
"Riggs is 100 percent committed to fulfilling all of our regulatory responsibilities and to doing our part to protect the financial system, and we will hasten our efforts toward these goals," the bank said.
In addition to the fine, regulators gave the bank's board 60 days to decide whether to make staff or management changes. The bank may only pay dividends to shareholders after it meets anti-money laundering law guidelines.
The Bank Secrecy Act, passed in 1970, requires banks to report large cash transactions and to maintain records of such things as deposits and checks paid. Aimed at fighting money laundering, it gained renewed prominence amid worries about terrorist financing after the Sept. 11, 2001, attacks.
The United States has tightened controls on the U.S. financial system, including reporting and transparency requirements after the attacks. Officials worry that militants could use banks or other financial institutions to move, store and hide funds for use in future attacks.
Lawmakers expressed concern in hearings in April that U.S. regulators had been failing to catch potential financial crimes such as money laundering.
Saudi Arabian Ambassador Prince Bandar bin Sultan said last month the bank and the Saudi embassy had decided to end their relationship through mutual agreement.
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