US regulators relied on incomplete and inaccurate evidence when it “sounded the death knell” for Banca Privada d’Andorra by accusing it of money laundering, according to a lawsuit against the US government.
BPA has been on financial life support since the March allegations by US authorities, prompting brothers Ramon and Higini Cierco, who are the controlling shareholders of BPA, to sue the Treasury department and its unit, the Financial Crimes Enforcement Network.
It follows a recent successful legal challenge by Tanzanian bank FBME, which won a rare temporary injunction last month from a US district court against a proposed money laundering designation for the bank by FinCEN.
The lawsuits by FBME and BPA, both filed in the US District Court for Washington DC, are examples of small international banks fighting back against US regulators when traditionally such challenges have been avoided.
FinCEN last week volunteered to remand the FBME case to address concerns raised by judge Christopher Cooper, who said the agency failed to review the situation in a proper manner. The remand would allow FinCEN to share non-classified evidence with FBME and consider the bank’s response.
BPA makes similar arguments, saying it was not allowed to see the evidence against it or argue its case to FinCEN, which it says has been unresponsive to BPA’s reasoning. BPA says that violated the bank’s due process rights and the Administrative Procedure Act, and it is asking the court to consider FinCEN’s money laundering designation to be unlawful.
FinCEN declined to comment.
“If FinCEN nonetheless was justified in imposing the maximum penalty, then banks around the world should be extremely concerned they will be singled out arbitrarily, suddenly and irrevocably,” Eric Lewis, a lawyer for the Cierco brothers, said in the lawsuit filed Wednesday. “Overnight and without notice to BPA, FinCEN destroyed BPA’s reputation so thoroughly that it de facto shut it down.”
BPA’s Spanish subsidiary filed for bankruptcy less than a week after the FinCEN proposal to designate BPA as a “primary money laundering concern”.
Large banks including HSBC and BNP, which have been accused of money laundering and sanctions violations, respectively, have managed to survive after paying billions in fines. BPA said many infractions of the Wall Street banks were far greater in scope and in some cases, raised national security concerns.
The accusations against BPA have rattled the small principality of Andorra nestled between France and Spain, where the banking sector accounts for 20 per cent of gross domestic product.
BPA asserts it was targeted by FinCEN because the agency was frustrated by the Andorran government’s unresponsiveness to calls to crack down on money laundering.
“With respect to Andorra, last year we noted our concern because of an official report directing the attention of the authorities to some weaknesses,” said Anton Smith, economic counsellor for the US Embassy in Madrid, about a month after the FinCEN action against BPA. “They have not acted with the fluidity we were expecting and so we have taken out the hammer in the end.”
The US Embassy and the Andorran government did not immediately respond to a request for comment.
BPA also said it is the one that informed Andorran regulators of the three transactions cited in the FinCEN notice, including a BPA manager helping an alleged money launderer working for Russian organised crime, who was later arrested by Spanish authorities.
The bank noted it had used KPMG and Deloitte to audit BPA since 2002 and those reports were submitted to the Andorran government regulator, which is now headed by Maria Cosan, formerly of KPMG.*
*This article has been amended since first publication
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