(CN) – A Russian bank owned by a former North Carolina congressman had its license stripped Friday by regulators in that country based on claims that it regularly violated anti-money laundering rules.
The Commercial Bank of Ivanovo, a small Russian financial institution majority owned by Charles Taylor of western North Carolina, was accused of systematically exaggerating its value in a fraudulent effort to improve the bank’s financial indicators and conceal its actual financial standing, according to a statement from the Central Bank of the Russian Federation about its decision to revoke the bank’s license.
Regulators said the Bank of Ivanovo’s lending and finance reporting practices put consumers at risk, a primary reason for its investigation into the matter.
Taylor, who was a Republican congressman for North Carolina’s mountainous 11th District between 1991 to 2007, bought the bank located in an industrial hub about 100 miles northeast of Moscow in 2003.
Taylor owns an 80% stake in the bank, which allegedly provided regulators with incomplete and unreliable information about the credit risks it took and conducted a scheme to make it falsely appear that the bank’s capital complied with federally required ratios.
The Bank of Ivanovo’s main activity was providing corporate and retail loans and 70% of those loans were “low quality,” according to the Bank of Russia’s statement. About 90% of the loans provided by Taylor’s bank were raised through in-house bank deposits.
The bank is a participant in a government deposit insurance system that allows accountholders to be compensated for their money held in the now-unlicensed bank.
Before and during the congressman’s years in office, Taylor had created exchange programs and internships for Russian students and advocated these programs heavily, leading some constituents in the Tar Heel State to criticize his focus on foreign issues rather than domestic ones.
In November 2008, the Federal Deposit Insurance Corporation ordered the Asheville-based Blue Ridge Savings Bank, which was chaired by Taylor at the time, to stop a variety of “unsafe and unsound” banking practices, including operating with a large volume of poor-quality loans.
The Asheville bank had also failed to comply with provisions of the Bank Secrecy Act, a U.S. federal law that requires banks to help the government detect and prevent money laundering, according to a 2008 cease and desist order from the FDIC and the North Carolina Commissioner of Banks.
The Blue Ridge Savings Bank worked to reform its methods, but was closed by state regulators in October 2011.
Taylor could not be reached for comment on Friday.