Riggs May Be fined Over Bank Secrecy Act.
Federal banking and law enforcement authorities may fine Riggs Bank N.A., as well as officers and directors of the Washington institution, for allegedly failing to live up to a July agreement to improve its anti-money-laundering procedures, according to securities filings.
An investigation, which focused on Riggs's longtime relationships with the diplomatic community in Washington, led the bank to cut ties to one of its largest customers -- the Saudi Arabian Embassy and that country's ambassador, Prince Bandar bin Sultan -- and the tiny African country of Equatorial Guinea and its dictator.
In recent filings with the Securities and Exchange Commission, Riggs said the Office of the Comptroller of the Currency (OCC) and the Financial Crimes Enforcement Network told bank officials on March 2 that regulators were considering fining the bank for failing to comply with the agreement Riggs signed last summer to adhere to the Bank Secrecy Act. That law requires banks to report any deposit or withdrawal of more than $10,000, or any other suspicious activity, to regulators.
Riggs said the OCC and law enforcement authorities are "reviewing the involvement of employees, officers, and directors."
Mark Hendrix, spokesman for Riggs, said the bank has taken the matter seriously and worked closely with regulators to improve its compliance with the Bank Secrecy Act.
When asked whether the bank or its directors might face civil penalties, Hendrix said: "Riggs Bank, its board of directors and its employees would never knowingly violate . . . regulatory laws."
"Riggs has never acted willfully in violation of the BSA or other laws," Hendrix said in a statement. "We have taken and continue to take proactive and decisive steps to reduce risk."
Last month, Riggs decided to terminate its relationship with the Saudi Arabian Embassy, the ambassador and his family, a knowledgeable source who spoke on condition of anonymity said. The bank is in the process of closing those accounts, which are worth tens of millions of dollars, because of a series of suspicious deposits and withdrawals since January. The Wall Street Journal reported Thursday that the Saudi relationship, one of Riggs's oldest and biggest accounts, had ended.
In late February, according to a Riggs securities filing, the bank informed a large customer it was "terminating its depositary relationship." A source who has been briefed on the matter and spoke on the condition of anonymity said the relationship was with officials of Equatorial Guinea, a destitute but oil-rich sub-Saharan African country, including its president, Teodoro Obiang Nguema. Human rights and anti-corruption groups have charged Obiang with profiting from his country's vast oil wealth while Equatorial Guinea's citizens remain among the poorest in the world. Equatorial Guinea officials could not be reached for comment.
In a written statement, Exxon Mobil Corp. said the oil company's affiliate in Equatorial Guinea has made "payments in U.S. dollars to an account of the General Treasury of Equatorial Guinea at the Riggs Bank in Washington, D.C. for required tax and legal obligations in that country. These payments are made as required under our contracts with the government of Equatorial Guinea."
[Source:By Kathleen Day and Terence O'Hara, The Washington Post, Washington 02Apr04].
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