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Friday, February 23, 2024 | Back issues
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Andorran Bank Fights Laundering Claim

(CN) - A U.S. Treasury investigation finding a foreign bank involved in money laundering had a "Keystone Kops quality" and resulted in a "death sentence" for the bank, shareholders claim in court.

Ramon and Higini Cierco filed a derivative action against the U.S. Treasury, Secretary Jacob Lew, the Financial Crimes Enforcement Network (FinCEN), and FinCEN Director Jennifer Calvery in D.C. Federal Court on Wednesday.

"On March 10, 2015, a bureau of the U.S. Department of the Treasury, the Financial Crimes Enforcement Network, sounded the death knell for Banca Privada d'Andorra S.A. (BPA), instantly triggering the government seizure of a healthy, solvent bank with no warning whatsoever," the complaint begins.

That day, FinCEN issued a notice claiming that BPA was found to be of "primary money laundering concern," but the finding was allegedly made without considering the bank's internal audits. The bank is based in Andorra, Europe's sixth-smallest nation.

The bank's majority shareholders claim FinCEN's decision "was based on cherry-picked incidents of suspicious activity that BPA had detected and reported a year earlier in a detailed letter to Andorran authorities and which BPA had addressed."

The notice prompted U.S. banks to immediately end their relationship with BPA, effectively expelling the bank from the U.S. financial system - a "death sentence" to its business, the lawsuit states.

FinCEN issued a similar notice against the Federal Bank of the Middle East last year, but a federal judge blocked the rule from becoming effective, finding that FinCEN did not give the bank an adequate chance to respond to the charges.

The Ciercos seek a similar ruling in their case.

"Because a significant amount of BPA's business consists of U.S. dollar transactions, the notices made BPA's business untenable. The notices further destroyed BPA's reputation as well as that of its majority shareholders, the Ciercos," according to the complaint.

FinCEN's action also prompted regulators in Andorra, Panama, and Spain to seize BPA and its subsidiaries, court records show.

The Ciercos claim that prodding international governments to respond to FinCEN was the primary motivation behind the notice.

"The international investigative process had a Keystone Kops quality, with FinCEN initially demanding reforms of the Andorran system, the Andorran regulators failing to answer requests and refusing to make requested systemic changes, and FinCEN issuing the NOF [Notice of Finding] and NPRM [Notice of Proposed Rulemaking] to send a message to the Andorran government about the need for reform," the complaint states. "BPA was simply a convenient scapegoat, which FinCEN punished for conduct which BPA had already detected and reported just as it was supposed to do."

Keystone Kops were incompetent policemen featured in silent film comedies in the early 1900s.

The Ciercos ask the court to rescind the notice for having deprived the bank of due process, or order FinCEN to provide evidence supporting its decision to label BPA a money laundering concern.

The majority BPA shareholders are represented by Eric Lewis of Lewis Baach PLLC in Washington, D.C.

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