[Senate Prints 109-25]
[From the U.S. Government Publishing Office]


109th Congress                                                  
 1st Session                     SENATE                         S. Prt.
                                                                 109-25
_______________________________________________________________________

                                     



                      MONEY LAUNDERING AND FOREIGN
                      CORRUPTION: ENFORCEMENT AND
                    EFFECTIVENESS OF THE PATRIOT ACT

                               ----------                              

                      SUPPLEMENTAL STAFF REPORT ON
                 U.S. ACCOUNTS USED BY AUGUSTO PINOCHET

                            prepared by the

                PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

                                 of the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE



[GRAPHIC] [TIFF OMITTED] TONGRESS.#13


                             MARCH 16, 2005
                MONEY LAUNDERING AND FOREIGN CORRUPTION:

            ENFORCEMENT AND EFFECTIVENESS OF THE PATRIOT ACT

  SUPPLEMENTAL STAFF REPORT ON U.S. ACCOUNTS USED BY AUGUSTO PINOCHET
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
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109th Congress 
 1st Session                     SENATE                         S. Prt.
                                                                 109-25
_______________________________________________________________________

                                     



                      MONEY LAUNDERING AND FOREIGN

                      CORRUPTION: ENFORCEMENT AND

                    EFFECTIVENESS OF THE PATRIOT ACT

                               __________

                      SUPPLEMENTAL STAFF REPORT ON

                 U.S. ACCOUNTS USED BY AUGUSTO PINOCHET

                            prepared by the

                PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

                                 of the

                              COMMITTEE ON

               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE



[GRAPHIC] [TIFF OMITTED] TONGRESS.#13


                             MARCH 16, 2005
                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          THOMAS R. CARPER, Delaware
TOM COBURN, Oklahoma                 MARK DAYTON, Minnesota
LINCOLN D. CHAFEE, Rhode Island      FRANK LAUTENBERG, New Jersey
ROBERT F. BENNETT, Utah              MARK PRYOR, Arkansas
PETE V. DOMENICI, New Mexico
JOHN W. WARNER, Virginia

           Michael D. Bopp, Staff Director and Chief Counsel
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                      Amy B. Newhouse, Chief Clerk

                                 ------                                

                PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

                   NORM COLEMAN, Minnesota, Chairman
TED STEVENS, Alaska                  CARL LEVIN, Michigan
TOM COBURN, Oklahoma                 DANIEL K. AKAKA, Hawaii
LINCOLN D. CHAFEE, Rhode Island      THOMAS R. CARPER, Delaware
ROBERT F. BENNETT, Utah              MARK DAYTON, Minnesota
PETE V. DOMENICI, New Mexico         FRANK LAUTENBERG, New Jersey
JOHN W. WARNER, Virginia             MARK PRYOR, Arkansas

       Raymond V. Shepherd, III, Staff Director and Chief Counsel
                      Leland B. Erickson, Counsel
        Elise J. Bean, Minority Staff Director and Chief Counsel
    Robert L. Roach, Counsel and Chief Investigator to the Minority
                Laura E. Stuber, Counsel to the Minority
      Zachary I. Schram, Professional Staff Member to the Minority
                     Mary D. Robertson, Chief Clerk


                            C O N T E N T S

                                 ------                                
                                                                   Page

  I. INTRODUCTION................................................     1

 II. EXECUTIVE SUMMARY...........................................     3

 III. FINDINGS AND RECOMMENDATIONS...............................     7

 IV. SUPPLEMENTAL INFORMATION ON RIGGS RELATIONSHIP WITH AUGUSTO 
  PINOCHET.......................................................     8

     A. Additional Riggs Accounts................................     9

        Additional Personal Accounts.............................    10
        Pinochet Family Accounts.................................    12
        Third Party Accounts.....................................    12

     B. Role of Riggs Senior Officials...........................    17

        1986-2002 Delegations....................................    18

  V. PINOCHET RELATIONSHIPS AT OTHER FINANCIAL INSTITUTIONS 
  OPERATING IN THE UNITED STATES.................................    26

     A. Citigroup................................................    27

        Personal Accounts........................................    28
        Pinochet Family Accounts.................................    29
        Third Party Accounts.....................................    31
        Account Secrecy..........................................    33
        Due Diligence............................................    34
        Transactions of Interest.................................    39
        Regulatory Oversight.....................................    40

     B. Banco de Chile...........................................    41

        Personal Accounts........................................    43
        Pinochet Family Accounts.................................    43
        Third Party Accounts.....................................    44
        Brokerage Accounts.......................................    45
        Account Secrecy and Due Diligence........................    45
        Transactions of Interest.................................    46
        Pinochet Foundation......................................    53
        Regulatory Oversight.....................................    55

     C. Espirito Santo Bank......................................    57

        Pinochet Accounts........................................    58
        Account Secrecy..........................................    59
        Due Diligence............................................    60
        Transactions of Interest.................................    60
        Regulatory Oversight.....................................    62

     D. Other Financial Institutions.............................    62

        Banco Atlantico..........................................    63
        Bank of America..........................................    65
        Coutts & Co. (USA) International.........................    66
        Ocean Bank...............................................    69
        PineBank.................................................    69
        Other Financial Institutions.............................    70
     E. A Secret Web of Accounts.................................    70

        Moving Money from Gibraltar to Washington to Santiago...    71
        Moving Money from New York, the Bahamas and Gibraltar to
          Washington.............................................    72
        Uncovering the Web.......................................    73
        Section 314(b) Inquiries.................................    75

                                APPENDIX

1. Pinochet Accounts and U.S. Anti-Money Laundering Laws, chart 
  prepared by the Permanent Subcommittee on Investigations.......    79

2. Disguised Pinochet Account Names, chart prepared by the 
  Permanent Subcommittee on Investigations.......................    80

3. Pinochet Account Identification: Riggs Bank Miami; Riggs Bank 
  London; Citibank New York, compiled by the Permanent 
  Subcommittee on Investigations.................................    81

4. Documents relating to Footnotes found in Money Laundering and 
  Foreign Corruption: Enforcement and Effectiveness of the 
  Patriot Act--Supplemental Staff Report on U.S. Accounts Used By 
  Augusto Pinochet:

    [Note: Footnotes not listed are explanative, reference 
  Subcommittee interviews for which records are not available to 
  the public, or reference a widely available public document.]
  
    Footnote No. 4, See Attachments (2)..........................82, 87
    Footnote No. 5, See Attachment...............................    96
    Footnote No. 6, See Attachment...............................   102
    Footnote No. 8, See Attachment...............................   103
    Footnote No. 19, See Attachment..............................   104
    Footnote No. 22, See Footnote No. 19 (above).................   104
    Footnote No. 25, See Attachments (2).......................108, 109
    Footnote No. 26, See Attachment..............................   111
    Footnote No. 28, See Attachments (2).......................112, 113
    Footnote No. 29, See Attachment..............................   114
    Footnote No. 30, See Attachment..............................   119
    Footnote No. 31, See Footnote No. 6 (above)..................   102
    Footnote No. 32, See Attachment..............................   123
    Footnote No. 33, See Attachment..............................   124
    Footnote No. 34, See Attachments (2).......................125, 126
    Footnote No. 36, See Attachment..............................   127
    Footnote No. 37, See Footnote No. 36 (above) and See
      Attachment...............................................127, 165
    Footnote No. 38, See Attachment..............................   182
    Footnote No. 39, See Footnote No. 38 (above).................   182
    Footnote Nos. 40-43, See Footnote Nos. 37 and 38 (abov127, 165, 182
    Footnote No. 44, See Attachment..............................   187
    Footnote No. 45, See Attachment..............................   188
    Footnote No. 46, See Attachment..............................   191
    Footnote No. 47, See Attachment..............................   192
    Footnote No. 48, See Attachment..............................   193
    Footnote No. 49, See Footnote No. 48 (above).................   193
    Footnote No. 50, See Attachment..............................   200
    Footnote No. 51, See Attachment..............................   203
    Footnote No. 52, See Attachment..............................   209
    Footnote No. 53, See Attachment..............................   211
    Footnote No. 54, See Footnote No. 53 (above).................   211
    Footnote No. 55, See Attachments (2).......................212, 213
    Footnote No. 56, See Attachment..............................   217
    Footnote No. 57, See Attachment..............................   218
    Footnote No. 58, See Attachment..............................   219
    Footnote No. 59, See Attachment..............................   220
    Footnote No. 61, See Attachment..............................   221
    Footnote No. 62, See Attachment..............................   226
    Footnote No. 70, See Attachment..............................   227
    Footnote No. 75, See Attachment..............................   228
    Footnote No. 76, See Footnote No. 4 (above)..................82, 87
    Footnote No. 78, See Attachment..............................   229
    Footnote No. 79-80, See Footnote No. 78 (above)..............   229
    Footnote No. 83, See Attachment..............................   231
    Footnote No. 84, See Footnote No. 36 (above).................   127
    Footnote No. 87, See Attachments (2).......................249, 250
    Footnote No. 93, See Attachment..............................   251
    Footnote No. 94, See Attachments (2).......................252, 257
    Footnote No. 95, See Attachments (2).......................258, 259
    Footnote No. 96, See Attachments (2).......................260, 261
    Footnote No. 97, See Attachment..............................   262
    Footnote No. 98, See Attachment..............................   263
    Footnote No. 99, See Attachments (3)..................267, 279, 282
    Footnote No. 100, See Footnote No. 99 (above).........267, 279, 282
    Footnote No. 101, See Footnote No. 99 (above) and See
      Attachments (2)...........................267, 279, 282, 285, 295
    Footnote No. 102, See Attachment.............................   296
    Footnote No. 105, See Attachment.............................   301
    Footnote No. 106, See Attachment.............................   303
    Footnote No. 112, See Attachments (2)......................305, 306
    Footnote No. 114, See Footnote No. 83 (above)................   231
    Footnote No. 115, See Attachment.............................   307
    Footnote No. 117, See Attachment.............................   308
    Footnote No. 118, See Attachment.............................   313
    Footnote No. 119, See Attachment.............................   314
    Footnote No. 120, See Attachment.............................   317
    Footnote No. 125, See Attachment.............................   318
    Footnote No. 127, See Attachment.............................   319
    Footnote No. 128, See Attachments (3).................321, 322, 323
    Footnote No. 130, See Attachment.............................   325
    Footnote No. 131, See Footnote No. 128 (above) and See
      Attachment.....................................321, 322, 323, 326
    Footnote No. 133, See Attachment.............................   329
    Footnote No. 134, See Attachment.............................   330
    Footnote No. 135, See Footnote No. 128 (above) and See
      Attachment.....................................321, 322, 323, 331
    Footnote No. 141, See Footnote No. 83 (above)................   231
    Footnote No. 148, See Attachment.............................   336
    Footnote No. 149, See Attachment.............................   337
    Footnote No. 150, See Attachment.............................   338
    Footnote No. 151, See Attachment.............................   339
    Footnote No. 152, See Footnote No. 151 (above)...............   339
    Footnote No. 153, See Attachment.............................   340
    Footnote No. 156, See Footnote No. 83 (above)................   231
    Footnote No. 157, See Attachment.............................   341
    Footnote No. 158, See Attachment.............................   342
    Footnote No. 159, See Attachment.............................   343
    Footnote No. 160, See Attachment.............................   348
    Footnote No. 161, See Attachment.............................   349
    Footnote No. 162-163, See Footnote No. 161 (above)...........   349
    Footnote No. 164, See Attachment.............................   350
    Footnote No. 165, See Footnote No. 164 (above)...............   350

5. Miscellaneous documents......................................351-398

 
                      MONEY LAUNDERING AND FOREIGN
                      CORRUPTION: ENFORCEMENT AND
                    EFFECTIVENESS OF THE PATRIOT ACT

                      Supplemental Staff Report On



                 U.S. Accounts Used By Augusto Pinochet

                              ----------                              


                             March 16, 2005

I. INTRODUCTION

    From 1999 to 2001, the U.S. Senate Permanent Subcommittee 
on Investigations of the Committee on Governmental Affairs, at 
the request of Senator Carl Levin, Ranking Minority Member, 
conducted a detailed investigation into money laundering 
activities in the U.S. financial services sector, including in-
depth examinations of money laundering activities in private 
banking, correspondent banking, and the securities industry. 
Two Minority Staff Reports were issued, and Subcommittee 
hearings were held in November 1999 and March 2001.\1\ This 
investigative work provided the foundation for many of the 
anti-money laundering provisions in Title III of the USA 
Patriot Act enacted in October 2001. Among other key 
provisions, the Patriot Act obligated U.S. financial 
institutions to exercise due diligence when opening and 
administering accounts for foreign political figures, and 
established corrupt acts by foreign officials as an allowable 
basis for U.S. money laundering prosecutions.
---------------------------------------------------------------------------
    \1\ See ``Private Banking and Money Laundering: A Case Study of 
Opportunities and Vulnerabilities,'' S. Hrg.106-428 (November 9 and 10, 
1999), and Minority Staff Report reprinted in the hearing record 
beginning at 872 (hereinafter ``1999 Subcommittee Private Banking 
Hearings''); ``Role of U.S. Correspondent Banking in International 
Money Laundering,'' S. Hrg.107-84 (March 1, 2, and 6, 2001), and 
Minority Staff Report reprinted in the hearing record beginning at 273.
---------------------------------------------------------------------------
    In February 2003, at Senator Levin's request and with the 
support of Subcommittee Chairman Norm Coleman, the Subcommittee 
initiated a bipartisan follow-up investigation to evaluate the 
enforcement and effectiveness of key anti-money laundering 
provisions in the Patriot Act, using Riggs Bank as a case 
history. During the course of this investigation, the 
Subcommittee issued numerous subpoenas and document requests. 
The Subcommittee staff reviewed over 100 boxes, folders, and 
electronic compact disks containing hundreds of thousands of 
pages of documents, including bank statements, account opening 
materials, wire transfers, correspondence, electronic mail, 
contracts, board minutes, materials related to specific bank 
accounts and transactions, bank examination materials, audit 
reports, legislative materials, and legal pleadings. The 
Subcommittee staff also conducted numerous interviews with 
representatives from financial institutions, the Office of the 
Comptroller of the Currency (OCC), the Federal Reserve, oil 
companies, various experts, and other persons with relevant 
information.
    The investigation culminated in a Subcommittee hearing on 
July 15, 2004, and the issuance of a Minority Staff Report in 
conjunction with the hearing.\2\ The hearing and report 
presented evidence showing systematic failures by Riggs Bank to 
uphold its anti-money laundering (AML) obligations and by 
federal regulators charged with ensuring bank compliance. To 
illustrate the problems, the 2004 hearing and report focused in 
detail on two sets of Riggs accounts, one involving former 
Chilean President Augusto Pinochet and the other involving the 
West African nation Equatorial Guinea.
---------------------------------------------------------------------------
    \2\ See ``Money Laundering and Foreign Corruption: Enforcement and 
Effectiveness of the Patriot Act, Case Study Involving Riggs Bank,'' S. 
Hrg.108-633 (July 15, 2004) (hereinafter ``2004 Hearing Record'') and 
Minority Staff Report which is reprinted in the 2004 Hearing Record 
beginning at 126.
---------------------------------------------------------------------------
    Among other matters, the Subcommittee investigation 
determined that Riggs had served as a long-standing personal 
banker for Mr. Pinochet and deliberately assisted him in the 
concealment and movement of his funds while he was under 
investigation and the subject of a Spanish court order 
directing a worldwide freeze of his assets. Riggs opened 
multiple accounts for Mr. Pinochet with the knowledge and 
support of the Bank's leadership; accepted millions of dollars 
in deposits from him with no serious inquiry into the source of 
his wealth; set up offshore shell corporations and opened 
accounts in the names of those corporations to disguise Mr. 
Pinochet's ownership of the account funds; altered the names of 
his personal account to disguise his ownership; transferred 
$1.6 million from London to the United States while Mr. 
Pinochet was in detention in the United Kingdom and under a 
Spanish court order freezing his assets; conducted transactions 
through Riggs's own administrative accounts to hide Mr. 
Pinochet's involvement in some cash transactions; and delivered 
over $1.9 million in four batches of cashiers checks to Mr. 
Pinochet in Chile to enable him to obtain substantial cash 
payments in that country. The Subcommittee investigation also 
determined that Riggs Bank had concealed the existence of the 
Pinochet accounts from OCC bank examiners for 2 years, resisted 
OCC requests for information, failed to identify or report 
suspicious account activity, and closed the Pinochet accounts 
only after a detailed OCC examination in 2002.\3\
---------------------------------------------------------------------------
    \3\ See 2004 Hearing Record at 140.
---------------------------------------------------------------------------
    Shortly after the July 2004 Subcommittee hearing, 
representatives of Riggs Bank informed the Subcommittee that an 
internal inquiry by its Security & Investigations Group, which 
the bank first established in the summer of 2003, was beginning 
to identify additional Pinochet-related accounts in Washington, 
Miami, and London that should have been, but were not, 
identified in response to Subcommittee subpoenas. These 
additional accounts were controlled by Mr. Pinochet, members of 
his immediate family, or third parties whose accounts served as 
conduits for Pinochet funds. In addition, the Riggs office had 
located documents that should have been, but were not, produced 
in response to earlier Subcommittee subpoenas. Over the ensuing 
months, the Riggs Security & Investigations Group conducted a 
detailed review of these accounts and documents. The 
Subcommittee reviewed the new documentation, analyzed the 
information, and met with bank representatives.
    In addition, the Subcommittee's ongoing investigation 
determined that Riggs Bank was not alone in the United States 
in helping Mr. Pinochet gain access to the U.S. financial 
system. Beginning with transactions detailed in Riggs account 
records, the Subcommittee identified numerous accounts and 
transactions at other financial institutions involving Pinochet 
funds. The Subcommittee obtained and reviewed about 15 
additional boxes of documents from other financial 
institutions, including bank statements, account opening 
materials, wire transfers, correspondence, checks, electronic 
mail, contracts, and other materials. The Subcommittee met with 
numerous representatives of financial institutions about the 
materials. This new information produced substantial evidence 
of additional, hidden bank and securities accounts that had 
been used by Mr. Pinochet in the United States.
    During this phase of the Subcommittee's investigation, 
additional civil and criminal proceedings related to the 
Pinochet accounts were initiated. In January 2005, Riggs Bank 
pled guilty to one U.S. felony count for failing to report 
suspicious activity to law enforcement, and paid a criminal 
fine of $16 million.\4\ In February 2005, to settle civil and 
criminal charges filed by Spanish authorities for the alleged 
violation of the 1998 Spanish court order directing financial 
institutions to freeze Pinochet assets, Riggs Bank, Joseph 
Allbritton, and Robert Allbritton paid about $1 million in 
court costs and legal expenses and another $8 million to a 
foundation established to assist victims of the Pinochet 
regime. In return, the Spanish court dismissed the pending 
criminal and civil actions against officers and directors of 
Riggs Bank.\5\
---------------------------------------------------------------------------
    \4\ See United States of America v. Riggs Bank N.A., Case No. Cr. 
05-35 (RMU) (D. D.C., filed 2005), Plea Agreement and Statement of 
Offense (1/27/05).
    \5\ See court order issued by Magistrate-Judge Baltasar Garzon 
Real, Investigating Court No. 5 (Madrid), Case No. 28079-27-2-1996-
0007036-78300 (2/25/05), with a translation provided by the Court; 
``Allbrittons, Riggs to Pay Victims of Pinochet,'' The Washington Post, 
2/26/05.
---------------------------------------------------------------------------

II. EXECUTIVE SUMMARY

    This supplemental Report describes the additional 
information obtained by the Subcommittee related to Pinochet 
accounts administered by Riggs and other financial institutions 
operating in the United States.
    Newly identified Riggs documents and accounts establish 
that the relationship between Riggs Bank and Augusto Pinochet 
was more extensive than had been described to the Subcommittee 
prior to its 2004 hearing and Minority Staff Report. Instead of 
maintaining nine accounts and certificates of deposit (CDs), as 
indicated to the Subcommittee earlier, Riggs actually had 28 
Pinochet-related accounts and CDs. And instead of an 8-year 
relationship from 1994 to 2002, as earlier indicated, Riggs 
actually had a 25-year relationship with Mr. Pinochet and his 
family, from 1979 to 2004.
    The newly identified Riggs accounts include seven personal 
accounts for Mr. Pinochet, four of which were opened under a 
disguised variant of his name, and three of which were opened 
under an alias. Three additional accounts had been opened for 
members of Mr. Pinochet's immediate family. Nine accounts had 
been opened in the name of third parties, all but one of whom 
were Chilean military officers. Bank records show that these 
military officer accounts were used at times as conduits to 
transfer Pinochet funds. One 1996 Riggs trip report described a 
Chilean military officer account holder as ``one of several 
front-men of General Pinochet.'' \6\
---------------------------------------------------------------------------
    \6\ Riggs document, ``Extract From Trip Report,'' undated, Bates 
RNB033416, describing a Riggs business trip to Chile from 8/24/96 to 9/
1/96.
---------------------------------------------------------------------------
    The newly identified documents also demonstrate that Riggs 
senior officials played a more significant role in the Pinochet 
relationship than was made known to the Subcommittee prior to 
its 2004 hearing. For example, prior to the hearing, Riggs 
personnel disagreed over how many times Riggs personnel had 
traveled to Chile, who went on specific trips, who met with Mr. 
Pinochet, and who actually asked him to open a Riggs account in 
Washington.\7\ In interviews, Riggs personnel consistently 
downplayed or could not recall the extent of personal 
interactions that took place between Riggs senior officials and 
Mr. Pinochet. The newly produced documents, which are 
contemporaneous with the events described, provide more 
information. They show, for example, that Riggs senior 
officials began visiting Chile as early as 1986, and met with 
Chilean military and government leaders on at least seven 
occasions in 1986, 1994, 1996, 1997, 1999, 2000, and 2002. On 
at least five of these trips, Riggs senior officials met with 
Mr. Pinochet in Chile, participated with him in social as well 
as business events, corresponded with him from Washington, and 
presented him with gifts on behalf of Riggs Bank.
---------------------------------------------------------------------------
    \7\ See, e.g., 2004 Hearing Record at 142.
---------------------------------------------------------------------------
    Riggs documents also show that the efforts of Riggs senior 
officials to solicit business from Mr. Pinochet were part of a 
wider bank strategy to develop and strengthen the bank's 
relationship with the Chilean military during the 1990s. Riggs 
had enjoyed a profitable relationship with the Chilean military 
during the 1960s and 1970s. In 1979, however, according to a 
memorandum written by Mr. Pinochet's private banker at Riggs, 
the Chilean Military Mission closed most of its official 
accounts at Riggs and moved them to the Bank of Nova Scotia in 
Canada, in response to the 1976 assassination of Chilean 
Ambassador Orlando Letelier in Washington, D.C.\8\ During the 
1990s, Riggs officials decided to try to restore the earlier 
relationship. In 1994, Riggs senior officials traveled to 
Chile, met with senior military and government officials, 
including Mr. Pinochet who was then Commander-in- Chief of the 
Army, and were successful in convincing the Chilean military to 
return many of their accounts to Riggs Bank in Washington, 
where they remained until 2004.
---------------------------------------------------------------------------
    \8\ Riggs ``Call Memorandum'' from Carol Thompson to File, 11/3/94, 
Bates RNB035426. See also ``Documents Link Chile's Pinochet to Letelier 
Murder,'' The Washington Post (11/14/2000).
---------------------------------------------------------------------------
    Recently obtained material shows that Riggs was not the 
only U.S. financial institution that gave Mr. Pinochet access 
to the U.S. financial system. The evidence shows that, over the 
past 25 years, due to inadequate due diligence and, at times, 
actual facilitation of unusual transactions, U.S. financial 
institutions enabled Mr. Pinochet to construct an extensive and 
largely hidden network of U.S. bank and securities accounts, 
involving millions of dollars, which he used to move funds and 
transact business. Three financial institutions examined by the 
Subcommittee, Citigroup, Banco de Chile-United States, \9\ and 
Espirito Santo Bank in Florida, maintained years-long U.S. 
relationships with and provided multiple financial accounts and 
services to Mr. Pinochet. Other financial institutions also 
helped Mr. Pinochet and his family move funds and transact 
business in the United States, including Banco Atlantico which 
is now part of Banco de Sabadell; Bank of America; Coutts & Co. 
(USA) International which is now part of Banco Santander; Ocean 
Bank in Miami; and PineBank N.A. in Miami. Evidence exists of 
still additional U.S. accounts related to Mr. Pinochet, but 
limited Subcommittee resources prevent an exhaustive analysis 
of all of the U.S. accounts used to assist Mr. Pinochet.
---------------------------------------------------------------------------
    \9\ Banco de Chile is headquartered in Santiago, Chile and operates 
primarily in that country, although it also has offices in other 
countries. It is the Subcommittee's understanding that the only country 
outside of Chile in which Banco de Chile accepts deposits is the United 
States. To make clear that this Report examines only Banco de Chile's 
operations in the United States, the Report refers to ``Banco de Chile-
United States.''
---------------------------------------------------------------------------
    In addition to the 28 Riggs accounts and CDs, the 
Subcommittee has now identified nearly 100 U.S. financial 
accounts and CDs benefiting Mr. Pinochet or his immediate 
family over the past 25 years, several of which were only 
recently closed. For example, in response to Subcommittee 
inquiries, Citigroup has identified 63 U.S. accounts and CDs 
that it maintained for Mr. Pinochet and his family at various 
times from 1981 to 2005. All of the Citigroup personal accounts 
for Mr. Pinochet were opened under disguised variants of his 
name, such as Jose P. Ugarte or J. Ramon Ugarte, and were 
closed during the mid-1990s. Accounts and CDs were also opened 
in the name of Mr. Pinochet's son, Marco Antonio Pinochet 
Hiriart; his daughters, Ines Lucia and Maria Veronica Pinochet; 
and offshore entities that Marco or Ines Lucia Pinochet 
controlled, including Meritor Investments, Trust MT-4964, and 
Redwing Holdings. While most of these accounts were closed in 
2000 or 2001, a few closed in 2003 or 2004, and one is frozen 
but still open. Altogether these accounts handled millions of 
dollars.
    The Subcommittee has also identified 24 U.S. accounts and 
CDs at Banco de Chile-United States benefiting Mr. Pinochet and 
his family from 1995 to 2004. These accounts were opened in the 
name of Mr. Pinochet, an immediate family member, or one of six 
offshore corporations controlled by Oscar Custodio Aitken 
Lavanchy, a Chilean attorney with ties to Mr. Pinochet.\10\ 
These offshore corporations, each of which served at times as a 
conduit for Pinochet funds, maintained accounts at both Banco 
de Chile-United States and U.S. securities firms. Altogether, 
over a 9-year period, these Pinochet-related accounts received 
deposits totaling more than $7 million, including $6 million 
which had been transferred in 2002 from Riggs Bank, after Riggs 
closed its Pinochet accounts, and another $1.1 million 
transferred over time from accounts in Chile.
---------------------------------------------------------------------------
    \10\ The six offshore corporations are Abanda Finance, Belview 
International, Sociedad de Inversiones Belview, Eastview Finance, 
G.L.P. Ltd., and Tasker Investments, Ltd.
---------------------------------------------------------------------------
    In addition, the Subcommittee has identified at least six 
U.S. accounts and CDs at Espirito Santo Bank in Florida that 
benefited Mr. Pinochet and his family from 1991 to 2000. These 
accounts were opened in the name of Mr. Pinochet and his wife; 
an offshore corporation controlled by Mr. Pinochet called 
Trilateral International Trading Ltd.; an offshore trust 
controlled by Mr. Pinochet called the Santa Lucia Trust; and 
Mr. Pinochet's daughter, Jacqueline Pinochet, who allowed her 
account to be used to send funds to Mr. Pinochet's assistant, 
Monica Ananias Kuncar. Over an 8-year period, these Pinochet-
related accounts received deposits totaling about $3.9 million.
    Due to the many transactions, accounts, and financial 
institutions that the Subcommittee has identified, the 
Subcommittee investigation has been unable to calculate the 
total amount of Pinochet funds that were deposited into or 
moved through U.S. accounts, except to say that it involves 
millions of dollars. At a minimum, the total exceeds the $8 
million found in Riggs accounts as of September 2001, \11\ and 
the total is likely much higher. At Banco de Chile-United 
States, for example, records show that the Pinochet-related 
accounts received about $1.1 million in deposits over time from 
various sources in Chile. At Espirito Santo Bank, records show 
another $3.9 million in Pinochet funds deposited over time. At 
Citigroup, due to the many transactions and accounts involved 
and repeated transfers to and from other financial 
institutions, the Subcommittee was unable to determine the 
total amount of Pinochet funds held by that bank; Citigroup 
representatives were able to offer only a very rough estimate 
that at least $5 million and perhaps millions more flowed 
through the accounts during the years they remained open.
---------------------------------------------------------------------------
    \11\ See Riggs document, ``Resumen,'' (9/20/01), Bates RNB029982-
85; 2004 Hearing Record at 147. The Subcommittee investigation 
determined that, from 1981 to 2000, overseas Banco Atlantico affiliates 
sent more than $5.4 million to Pinochet-related accounts at Riggs, 
thereby contributing to the nearly $8 million total identified in 
September 2001. Virtually all of that $8 million was subsequently 
disbursed either to Mr. Pinochet in the form of cashiers checks or to 
Banco de Chile-United States by wire transfer after Riggs closed its 
Pinochet accounts in July 2002. The cashiers checks were issued by 
Riggs from August 2000 until April 2002, were cashed in Chile, and 
provided Mr. Pinochet with $1.9 million from his Riggs accounts. For 
more information about these cashiers checks, see 2004 Hearing Record 
at 151-52.
---------------------------------------------------------------------------
    This Report focuses on the 28 Pinochet-related accounts and 
CDs at Riggs and the nearly 100 accounts and CDs at other 
financial institutions in the United States. It is important to 
note, however, that many of the financial institutions examined 
by the Subcommittee also maintained one or more accounts for 
Mr. Pinochet and his family in countries other than the United 
States. These accounts were located in Argentina, the Bahamas, 
Cayman Islands, Chile, Gibraltar, Spain, Switzerland, and the 
United Kingdom. An examination of these non-U.S. accounts is 
beyond the scope of this Report.
    Prior to 2004, it appears that U.S. regulators and law 
enforcement were generally unaware that Augusto Pinochet had 
constructed a web of largely hidden accounts in the United 
States and was using these accounts on a regular basis to move 
funds and transact business. His secretive opening of multiple 
accounts at multiple U.S. financial institutions over the years 
presents a cautionary tale about the ease with which a 
determined individual can manipulate the U.S. financial system, 
and the importance of transparency, due diligence, and 
information sharing by financial institutions, regulators, and 
law enforcement to guard against possible money laundering and 
foreign corruption.

III. FINDINGS AND RECOMMENDATIONS

    Based upon its investigation, the Subcommittee staff makes 
the following findings of fact.

    (1) More Extensive Pinochet Relationship. The relationship 
between Riggs Bank and Augusto Pinochet was more extensive than 
previously disclosed, encompassing 28 accounts instead of 9, 
spanning 25 years instead of 8, including secret accounts 
opened under misleading names, and involving more personal, 
high-level contact between Riggs officials and Mr. Pinochet 
than previously described.

    (2) Military Officer Accounts. From 1981 to 2004, eight 
Riggs accounts, opened in the names of Chilean military 
officers, served as occasional conduits for Pinochet funds and, 
over time, transmitted more than $1.7 million to Pinochet-
related accounts.

    (3) Web of 125 U.S. Accounts. Over the past 25 years, 
multiple financial institutions operating in the United States, 
including Riggs Bank, Citigroup, Banco de Chile-United States, 
Espirito Santo Bank in Miami, and others, enabled Augusto 
Pinochet to construct a web of at least 125 U.S. bank and 
securities accounts, involving millions of dollars, which he 
used to move funds and transact business. In many cases, these 
accounts were disguised by using a variant of the Pinochet 
name, an alias, the name of an offshore entity, or the name of 
a third party willing to serve as a conduit for Pinochet funds.

    (4) Transferring Suspect Funds. After U.S. bank regulators 
raised money laundering concerns about the Pinochet funds at 
Riggs Bank, the bank closed the accounts and transferred the 
funds to another financial institution operating in the United 
States, without notice that the funds were suspect. The U.S. 
regulators failed to follow the suspect funds when they left 
Riggs to determine whether they went to another U.S. financial 
institution.

    Based upon its investigation, the Subcommittee staff makes 
the following recommendations.

    (1) Section 314(b) Warning. A financial institution that 
closes or asks a client to close an account due to money 
laundering concerns, including a concern the account may 
contain the proceeds of foreign corruption, should, before 
transferring the funds to another financial institution, warn 
that financial institution under Section 314(b) of the Patriot 
Act that the transfer is the result of an account closure due 
to possible money laundering or foreign corruption concerns.

    (2) Stopping Suspect Funds. Once U.S. financial regulators 
identify a suspect account, they should take reasonable steps 
to prevent suspect funds from being sent to another U.S. 
financial institution without an appropriate warning, identify 
related accounts at other financial institutions operating in 
the United States, and, if necessary, dismantle any network of 
suspect U.S. accounts.

    (3) Section 314(b) Guidance. To increase the usefulness of 
Section 314(b), U.S. financial regulators should consider 
issuing guidance clarifying that the legal protections afforded 
by that section permit financial institutions to respond to 
requests for information, including by offering information 
about accounts and transactions that may help expose or prevent 
money laundering or terrorist activities.

    (4) Intrabank Disclosures. The United States should work 
with the European Union to enable financial institutions with 
U.S. and E.U. affiliates to exchange client information across 
international lines to safeguard against money laundering and 
terrorist financing.

IV. SUPPLEMENTAL INFORMATION ON RIGGS RELATIONSHIP WITH AUGUSTO 
                    PINOCHET

    As explained in the 2004 report, Augusto Jose Ramon 
Pinochet Ugarte, former President of Chile, is a controversial 
political figure whose name is known world wide. After taking 
power in a 1973 coup, he served as President of Chile until 
1990, and as Commander-in-Chief of the Chilean Army until 1998. 
After stepping down from the army, he became a ``Senator for 
life.'' \12\ In court filings, press accounts, and other 
reports, Mr. Pinochet has been accused of involvement with 
human rights abuses, torture, assassinations, death squads, 
drug trafficking, arms sales, and corruption, but never 
convicted in a court of law.\13\ Since 1996, he has been the 
subject of repeated litigation in Spain, \14\ the United 
Kingdom, \15\ Chile, \16\ and other countries \17\ by persons 
seeking to hold him accountable for crimes committed during his 
presidency. In each case prior to the Subcommittee's 2004 
hearing, Mr. Pinochet had been found by the presiding court to 
be unavailable, unfit, or immune to prosecution.\18\
---------------------------------------------------------------------------
    \12\ See ``Pinochet Extradition Case: Selected Legal Issues,'' 
Congressional Research Service (CRS Report No. RL-30117, 3/3/00), at 1-
2, reprinted in 2004 Hearing Record at 907.
    \13\ See, e.g., ``Chile: Political and Economic Conditions and U.S. 
Relations,'' Congressional Research Service (CRS Report No. RL-300035, 
8/5/03) at 2, reprinted in 2004 Hearing Record at 923; ``Crime Without 
Punishment: Impunity in Latin America,'' Amnesty International (AMR 01/
08/96) at http://web.amnesty.org/library/index/ENGAMR010081996 (as of 
1/26/05).
    \14\ See, e.g., complaint filed by the Union of Progressive 
Prosecutors before Spain's highest criminal court (7/4/96), http://
www.derechos.org/nizkor/chile/juicio/denu.html (as of 1/26/05).
    \15\ See, e.g., Regina v. Bartle, (Lords of Appeal, 3/24/99), 
http://www.parliament.the-stationery-office.co.uk/pa/ld199899/ldjudgmt/
jd990324/pino1.htm (as of 1/26/05); CRS Report on ``Pinochet 
Extradition Case,'' at 2-12.
    \16\ For a list of the 66 criminal complaints filed against Mr. 
Pinochet between January 1998 and March 2000 in the Santiago Court of 
Appeals, see http://www.memoriayjusticia.cl/english/en--home.html (as 
of 1/26/05).
    \17\ Litigation against Mr. Pinochet has also been filed, for 
example, in Argentina, Belgium, France, and Switzerland. See CRS Report 
on ``Pinochet Extradition Case,'' at footnote 2.
    \18\ See, e.g., CRS Report on ``Pinochet Extradition Case,'' at 
footnote 2 and page 11; ``Chilean Supreme Court Upholds Suspension of 
Legal Proceedings Against Pinochet,'' http://www.elmostrador.cl/c--
pais/pino--casacion.htm (as of 1/26/05).
---------------------------------------------------------------------------
    On August 26, 2004, the Chilean Supreme Court held that Mr. 
Pinochet was not immune to prosecution in the ``Operation 
Condor'' case, involving the disappearance of certain political 
figures during the mid-1970s.\19\ On December 13, 2004, the 
relevant trial court found Mr. Pinochet fit for trial in that 
case. In addition, a Chilean Judge ordered an investigation of 
the funds in Mr. Pinochet's accounts at Riggs, located some of 
those funds, and froze them. On October 1, 2004, the Chilean 
Internal Tax Service filed a complaint against Mr. Pinochet for 
allegedly filing false tax returns.\20\ In November 2004, the 
Chilean Judge located and froze another $4 million in Pinochet 
assets.\21\ Mr. Pinochet apparently offered to pay $5 million 
in back taxes to free his assets, but on February 7, 2005, 
Chilean officials rejected the offer, apparently in part 
because some of the frozen assets were attached pursuant to 
criminal proceedings.\22\
---------------------------------------------------------------------------
    \19\ See, e.g., ``Pinochet: Latest Developments in Prosecutions for 
Human Rights Crimes,'' report prepared by the Law Library of Congress, 
LL File No. 2005-01585 (3/15/05) at 1. On January 4, 2005, the Chilean 
Supreme Court upheld Mr. Pinochet's indictment in this case. Id. at 2-
3.
    \20\ See, e.g., ``Pinochet Faces Tax Evasion Charge,'' BBC News 
(10/1/04).
    \21\ See, e.g., ``Asset Freeze As Pinochet Turns 89,'' BBC News 
(11/24/04).
    \22\ See, e.g., ``Pinochet: Latest Developments in Prosecutions for 
Human Rights Crimes,'' report prepared by the Law Library of Congress, 
LL File No. 2005-01585 (3/15/05) at 4.
---------------------------------------------------------------------------
    Information obtained after the Subcommittee's 2004 hearing 
shows that the relationship between Riggs Bank and Augusto 
Pinochet was more extensive than was previously indicated, 
encompassing a total of 28 accounts rather than nine accounts, 
and spanning a total of 25 years rather than 8 years.\23\ In 
addition to the nine accounts described in the 2004 Minority 
Staff report, \24\ Riggs has identified 19 more Pinochet 
related accounts located in its Washington, Miami, and London 
offices and affiliates. The oldest account was opened in 
Washington in July 1979, and the most recent accounts remained 
active in London until July 2004, when they were frozen by the 
bank.\25\ Riggs senior officials also had more extensive 
business and personal interactions with Mr. Pinochet and his 
family than previously disclosed.
---------------------------------------------------------------------------
    \23\ The additional information about Riggs Bank is taken from 
public filings, subpoenaed documents, interviews with bank 
representatives, employees, and former employees, and information 
supplied by other financial institutions. The relevant documents are 
maintained in Subcommittee files.
    \24\ The 2004 Minority Staff Report identified three personal 
accounts, three corporate accounts, and three sets of certificates of 
deposit at Riggs relative to Mr. Pinochet. See 2004 Hearing Record at 
145-151.
    \25\ Riggs located the London accounts, both held by Mr. Pinochet's 
daughter, Ines Lucia Hiriart, soon after the Subcommittee hearing in 
July 2004. See, e.g., account statements for Account Nos. 75256032 and 
75256035 (7/30/2004), Bates RNB033047 and RNB033050-51.
---------------------------------------------------------------------------
    Riggs Bank has fully cooperated with all Subcommittee 
inquiries and produced all requested documentation, including 
documentation related to the extensive internal review of the 
Pinochet-related accounts conducted by the Riggs Security & 
Investigations Group. The Riggs Security & Investigations Group 
is to be commended for its thorough work and willingness to 
share its analysis with this Subcommittee. The information it 
provided was of great assistance in the Subcommittee's 
supplemental investigation.

  A. Additional Riggs Accounts

    The newly identified Riggs accounts include seven personal 
accounts and CDs for Mr. Pinochet, four of which were opened 
under a disguised variant of his name, and three of which were 
opened under an alias. Riggs also maintained three accounts for 
members of Mr. Pinochet's immediate family. Nine additional 
accounts were opened in Miami in the name of ostensibly 
unrelated third parties, all but one of whom has been 
identified as a Chilean military officer. Bank records show 
that, at times, these accounts served as conduits for Pinochet 
funds.
    When asked why these accounts were not disclosed earlier, 
Riggs identified a number of factors that had contributed to 
the delay in identifying them. Riggs first explained that it 
had given the Subcommittee the same records it had provided the 
OCC in 2002, without realizing they were incomplete. Riggs 
explained that the Miami and Washington accounts were more than 
10 years old, some were in the name of an alias or a third 
party, relevant documents had been lost or destroyed, most of 
the individuals familiar with the accounts had left the bank, 
and the various Riggs affiliates that opened the accounts had 
not fully communicated with each other. Riggs indicated that 
another important factor was that a senior Riggs official who 
was aware of many of the accounts did not identify them when 
asked. Peter Fowler, who was President and Chief Operating 
Officer of Riggs Bank International Corporation in Miami from 
October 1994 to July 2000, and then Senior Vice President of 
the Latin American Embassy Banking Division in Washington, had 
failed to disclose the military officer accounts when the bank 
was collecting information in response to OCC inquiries in 
2002, and in response to regulatory and Subcommittee inquiries 
in 2003 and 2004. After the Subcommittee hearing in July 2004, 
the Riggs Security & Investigations Group discovered the 
additional accounts when researching a check that had been sent 
from one of the military officer accounts to a Pinochet 
account. In August 2004, the bank fired Mr. Fowler.

    Additional Personal Accounts. Of the seven newly identified 
Riggs accounts that were opened for Mr. Pinochet, four were 
opened under a disguised variant of Mr. Pinochet's name and 
three under the alias, Daniel Lopez.\26\ The accounts are the 
following.
---------------------------------------------------------------------------
    \26\ Mr. Pinochet's son, Marco Pinochet, sent an email to Riggs 
Bank on November 5, 2004, confirming that ``Daniel Lopez'' is an alias 
and refers to his father, Augusto Pinochet, Bates RNB040496.

    (1) Account No. 413799878 was opened in the name of Jose 
---------------------------------------------------------------------------
Ugarte in Washington on July 20, 1979, and closed in July 1981.

    (2) Account No. 350082 was opened in the name of Jose 
Ramon Ugarte in Miami on July 13, 1981, and closed on June 8, 
1984.

    (3) Account No. 76077573 was opened in the name of Daniel 
Lopez in Washington on January 8, 1985 and closed on an unknown 
date sometime after August 1993.\27\
---------------------------------------------------------------------------
    \27\ Riggs was able to locate only some of the account statements 
for this account. The latest account statement was for August 1993.

    (4) Account No. 450858 was opened in the name of Jose R. 
Ugarte in Miami on January 14, 1985, and closed on March 15, 
---------------------------------------------------------------------------
1990.

    (5) Account No. 707547 was opened in the name of Augusto 
P. Ugarte or Lucia Hiriart P. in trust for Maria Veronica 
Pinochet, Maria Jose Martinez P. and Lucia Amunategui P., in 
Miami on April 4, 1990, and closed on October 10, 1991.

    (6) Account No. 710053 was opened in the name of Daniel 
Lopez, in trust for Augusto J. Pinochet, in Miami on August 5, 
1993, and closed on March 14, 1996.

    (7) Account No. 808691, a CD, was opened in the name of 
Daniel Lopez in Miami on an unknown opening and closing date, 
but which includes at least the period from August 1994 until 
January 1996.

    Because these accounts were opened under a disguised 
variant of Mr. Pinochet's name or under his Daniel Lopez alias, 
the extent to which they were known to Riggs senior officials 
in Washington is unclear. Several Riggs officials in Miami, 
however, were well aware of them, and even a cursory review of 
the account statements shows that they were carrying Pinochet 
funds.
    The Lopez accounts are instructive. On March 22, 1990, for 
example, a $410,000 check made payable to ``Augusto P. Ugarte'' 
was drawn on the Daniel Lopez account in Washington, and used 
on April 4, 1990, to open Miami Account No. 707547 for 
``Augusto P. Ugarte'' and ``Lucia Hiriart P.'' in trust for the 
Pinochet children (hereinafter ``Ugarte/Hiriart Miami 
account'').\28\ On July 31, 1990, a $302,000 check made payable 
to Augusto P. Ugarte was drawn on the same Lopez account and 
deposited into the same Ugarte/Hiriart Miami account.\29\ In 
December 1990, a $11,520 check withdrew funds from the Lopez 
account and deposited them into the Ugarte/Hiriart Miami 
account. In December 1991, two checks totaling $79,626 withdrew 
funds from the Washington Lopez account and deposited them into 
the third party account of Jose Maguel LaTorre Pinochet.
---------------------------------------------------------------------------
    \28\ Riggs National Bank check and Riggs Bank Miami account opening 
information, 3/22/90, Bates RNB033809 and RNB033773.
    \29\ Riggs National Bank check, 7/17/90, Bates RNB034279-83 at 80.
---------------------------------------------------------------------------
    Additional transactions involving the Daniel Lopez account 
in Miami, Account No. 710053, shows that this account also 
served as a conduit for Pinochet funds. For example, the Miami 
Lopez account was initially funded in August 1993, with a 
$22,696.23 check drawn on the Lopez account in Washington. 
Additional deposits into the Miami Lopez account came from 
accounts at Chilean banks, including a $303,000 transfer in 
December 1993, and two transfers of $15,000 and $40,000 in 
January 1994. Two more deposits were sent by ``M. Hiriart,'' 
from accounts at Banco Atlantico, including a transfer of 
$250,000 in July 1994, and $627,000 in November 1994. Over the 
next 2 years, the Miami Lopez account sent significant sums to 
the Augusto Pinochet's primary account in Washington, Account 
No. 76750393, including $300,000 in April 1995, $627,000 in 
January 1996, and $374,629.72 in March 1996. In addition, on 
one day, February 21, 1996, the Miami Lopez account sent three 
checks, for $44,000, $75,000 and $82,000, to an account held in 
the name of Mr. Pinochet's assistant, Monica Ananias Kuncar. On 
September 1, 1994, a $56,000.25 check made payable to ``J. 
Ugarte'' withdrew funds from the Lopez account and deposited 
them into an account at Banco de Chile.\30\
---------------------------------------------------------------------------
    \30\ In addition, in January 1995, an account Mr. Pinochet had 
opened at Espirito Santo Bank in Miami sent three checks totaling about 
$214,000, to accounts at Banco de Chile. Two checks were made payable 
to ``D. Lopez.'' The third check appears to have been made payable to a 
different name, but the endorsement on all three checks reference the 
same Banco de Chile account number.
---------------------------------------------------------------------------
    The Miami Lopez account also provided funds to purchase 
various CDs. The account documentation indicates that funds in 
the Lopez Miami account were used to purchase a $483,000 CD in 
March 1994. In July 1994, a $250,000 wire transfer sent by ``M. 
Hiriart'' from a Banco Atlantico account was used, in part, to 
purchase a $150,000 CD. On August 1, 1994, these two CDs were 
cashed and the funds combined to purchase a larger CD in the 
amount of $640,000, assigned to Lopez Account No. 808691. In 
November 1994, a $627,000 wire transfer sent by ``Marco P. 
Hiriart'' from Banco Atlantico was deposited into the Lopez 
Miami account. On May 1, 1995, the $627,000 was combined with 
the funds from the $640,000 CD, which had matured, and the 
funds were used to purchase a still larger CD in the amount of 
$1.1 million. Over time, this and other CDs associated with the 
Lopez account matured, were reconfigured, and used to buy other 
CDs. In January 1996, the Lopez Miami account sent a $627,000 
wire transfer to the Pinochet account in Washington, Account 
No. 76750393.
    These and other transactions make it clear that the Lopez 
accounts were conduits for Pinochet funds used in multiple, 
complex transactions.

    Pinochet Family Accounts. The three newly identified Riggs 
accounts that were opened in the name of Mr. Pinochet's 
immediate family members are the following. None included the 
name ``Pinochet'' in the name of the account holder.

    (1) Account No. 404276139 was opened in the name of Mr. 
Pinochet's son, Marco Antonio Hiriart, in Washington on 
September 30, 1981, and closed on June 1, 2001.

    (2) Account No. 75256035 was opened in the name of Mr. 
Pinochet's daughter, Ines Lucia Hiriart, in London on May 31, 
2000, and frozen on July 30, 2004, by Riggs.

    (3) Account No. 75256032 was opened in the name of Ines 
Lucia Hiriart in London on May 21, 2001, and frozen on July 30, 
2004, by Riggs.

    Third Party Accounts. The nine newly identified Riggs 
accounts that were opened in the name of third parties, but 
used at times as conduits for Pinochet funds are the following. 
All but one of the account holders was a Chilean military 
officer.

    (1) Account No. 350413 was opened in the names of Jorge 
Ballerino Sanford and/or Ramon Castro Ivanovic in Miami on 
November 23, 1981, and closed on July 2, 1984. At the time the 
account was open, Mr. Ballerino was a Chilean Army general, and 
Mr. Castro was an Army officer. Funds were used to purchase a 
CD. The maximum amount of funds in this account at one time was 
about $1.8 million.

    (2) Account No. 350512 was opened in the name of Jorge 
Ballerino Sanford and/or Ramon Castro Ivanovic in Miami on 
January 11, 1982, and closed on January 21, 1985. Funds were 
used to purchase a CD. The maximum amount of funds in this 
account at one time was about $2.3 million.

    (3) Account No. 450528 was opened in the name of John Long 
in Miami on June 11, 1984, and closed in 1985. Mr. Long was not 
a Chilean military officer, and his relationship to Mr. 
Pinochet, reasons for opening the account, and current status 
are unknown. The account was opened with a $287,381.80 check 
drawn on Riggs Miami Account No. 350413 opened for Mr. 
Ballerino and Mr. Castro. Funds were used to purchase a CD. 
More than $1.7 million passed through this account.

    (4) Account No. 450874 was opened in the name of Guillermo 
Garin Aguirre in Miami on January 21, 1985, and closed on 
January 4, 1988. At the time the account was open, Mr. Garin 
was the Army Chief Vice-Commander, the second most senior 
command position in the Chilean Army. The account was opened 
with a $15,000 check drawn on the Riggs Miami account opened 
for John Long. Funds were used to purchase a CD. The maximum 
amount of funds in this account at one time was about $547,000.

    (5) Account No. 451385 was opened in the name of Gustavo 
Collao Mira in Miami on January 4, 1988, and closed on April 
10, 1989. At the time the account was open, Mr. Collao was a 
Chilean Army colonel. In 2004, Chilean press reports described 
him as one of Mr. Pinochet's legal counsel. The account was 
opened with $43,715 transferred from the Riggs Miami account 
opened for Guillermo Garin Aguirre. Funds were used to purchase 
a CD. The maximum amount of funds in this account at one time 
was about $200,000.

    (6) Account No. 451666 was opened in the name of Jose 
Miguel Latorre Pinochet in Miami on April 10, 1989, and closed 
on April 3, 1992. At the time of the account, Mr. Latorre was a 
Chilean Army lieutenant colonel. The account was opened with 
$47,000 transferred from the Riggs Miami account opened for 
Gustavo Collao Mira. Two weeks later, on April 29, 1989, 
another $116,868.73 was transferred from the Collao account. 
Funds were used to purchase two CDs. The maximum amount of 
funds in this account at one time was about $330,000.

    (7) Account No. 709345 was opened in the name of Gabriel 
Vergara Cifuentes in Miami on December 13, 1991, and closed on 
May 25, 1995. At the time the account was open, Mr. Vergara was 
Director of the Chilean Army. The account was opened with 
$55,000 transferred from the Riggs Miami account opened for 
Jose Miguel Latorre Pinochet. Funds were used to purchase a CD. 
The maximum amount of funds in this account at one time was 
about $385,000.

    (8) Account No. 710467 was opened in the name of Juan 
Ricardo Mac-Lean Vergara in Miami on December 27, 1994, and 
closed on February 14, 1997. At the time the account was open, 
Mr. Mac-Lean was Director of the Chilean Army Purchasing 
Office. The account was opened with a $45,000 check drawn on 
the Riggs Miami account opened for Gabriel Vergara Cifuentes. 
No funds were used to purchase a CD. The maximum amount of 
funds in this account at one time was about $678,000.

    (9) Account No. 711762 was opened in the name of Eugenio 
F. Castillo Cadiz, in trust for Juan Mac-Lean, in Miami on 
February 14, 1997, and closed on April 29, 2004. At the time 
the account was open, Mr. Castillo was Director of the Chilean 
Army Purchasing Office, having replaced Mr. Mac-Lean. The 
account was opened with $41,667.70 transferred from the Riggs 
Miami account opened for Juan Ricardo Mac-Lean Vergara. No 
funds were used to purchase a CD. The maximum amount of funds 
in this account at one time was about $42,000.

    These third party accounts were all opened in Miami by 
Riggs International Banking Corporation (RIBC) and collectively 
extended over more than 23 years, from 1981 until April 2004. 
All but one was controlled by a Chilean military official 
stationed in Santiago. The former head of RIBC, who held this 
position from 1981 to 1990, told the Subcommittee that it was 
his understanding that the military officer account was first 
established to enable the Chilean government to contract with 
U.S. businesses to help build a new Presidential residence in 
Chile. He explained that each account holder was a military 
officer assigned to work with the Chilean President's staff. He 
thought that each account holder held the post for 2 to 3 years 
in Chile, was replaced, and Riggs then closed the existing 
account and transferred the balance to a new account opened for 
the replacement officer. According to the Riggs Security & 
Investigations Group, the Miami relationship manager who 
established the first few military officer accounts was the 
same employee who opened the first Pinochet accounts in Miami. 
That relationship manager referred to the military officer 
accounts as the ``Casa Militar'' or Military House accounts.
    Bank records indicate that these military officer accounts 
were used at times as conduits for Pinochet funds, and that 
several Riggs officials in Miami were aware of this use. For 
example, a 1996 trip report written by a Riggs relationship 
manager in Miami described Mr. Mac-Lean, a military officer 
account holder, as ``one of several front-men of General 
Pinochet.'' \31\ A call report from February 1997, written by 
the same relationship manager, stated: ``As per my supervisor's 
comment, Mr. Juan Mac Lean is actually a front to General 
Pinochet (who holds an account at Riggs). Therefore, I am 
accepting Mr. Mac Lean's introduction of Mr. Eugenio Castillo 
Cadiz as the continuation of the indirect relationship to 
General Pinochet.'' \32\ The head of RIBC wrote in a separate 
call report from 1996, that Mr. Mac-Lean ``discreetly said he 
represents a third party,'' meaning Augusto Pinochet.\33\ Riggs 
told the Subcommittee that Peter Fowler, head of RIBC from 1994 
to 2000, was aware of the military officer accounts.
---------------------------------------------------------------------------
    \31\ Riggs document, ``Extract From Trip Report,'' undated, Bates 
RNB033416, describing a Riggs business trip to Chile from 8/24/96 to 9/
1/96.
    \32\ Riggs document, ``Call Report,'' (2/14/97), Bates RNB032959.
    \33\ Riggs document, ``RIBC-Miami Call Report,'' undated, Bates 
RNB033402.
---------------------------------------------------------------------------
    Based on the records made available to the Subcommittee, at 
least $1.774 million was transferred from the military officer 
accounts into accounts controlled by Mr. Pinochet, his 
immediate family members, or his assistant. In addition, about 
$650,000 was deposited into the military officer accounts from 
accounts controlled by Mr. Pinochet or his family. Account 
records indicate that the largest individual transfers of funds 
took place from 1992 through 1996.
    Two accounts provide examples of the transactions involving 
Mr. Pinochet. The first is Account No. 709345, opened for 
Gabril Vergara Cifuentes from December 1991 to May 1995. The 
maximum amount of funds in the account at any one time was 
about $385,000, but more flowed through the account over the 
nearly 4-year period it was open. In total, about $617,000 was 
transferred from this account to accounts controlled by Mr. 
Pinochet, his family, or his assistant. Examples of 
transactions involving Mr. Pinochet include the following.

    --On June 24, 1992, the military officer account accepted 
a $280,000 wire transfer from an unspecified Citibank account, 
believed to be one of the 63 Pinochet-related accounts.

    --On August 31, 1992, the military officer account issued 
two checks, for $175,420 and $82,325, which were deposited into 
Espirito Santo Bank Account No. 115391494 opened for A.P. 
Ugarte and M. Lucia Hiriart.

    --On November 13, 1992, the military officer account 
accepted a $185,000 wire transfer from an unspecified Citibank 
account, believed to be one of the 63 Pinochet-related 
accounts.

    --On November 25, 1992, the military officer account 
issued a $142,000 check which was deposited into Espirito Santo 
Bank Account No. 115391494 opened for A.P. Ugarte and M. Lucia 
Hiriart.

    --On March 17, 1993, the military officer account issued a 
$43,000 check which was deposited into Espirito Santo Bank 
Account No. 115391494 opened for A.P. Ugarte and M. Lucia 
Hiriart.

    --In September 1993, the military officer account issued 
three checks, for $20,000, $5,000 and $5,000, which were made 
payable to Mr. Pinochet's assistant, Monica Ananias Kuncar, and 
cashed or deposited.

    --On December 7, 1993, the military officer account issued 
a $2,000 check, which was made payable to Ines Lucia Hiriart, 
Mr. Pinochet's daughter, and cashed or deposited.

    --On July 25, 1994, the military officer account accepted 
a $147,000 wire transfer from a Banco Atlantico account in 
Zurich, Switzerland.\34\
---------------------------------------------------------------------------
    \34\ The originator of this wire transfer is not disclosed on the 
wire transfer documentation, but the Zurich account is believed to be a 
Pinochet account. See, e.g., account statement for Account No. 70934-5, 
7/31/94, Bates RNB034929; Riggs money transfer document, 7/25/94, Bates 
RNB034928. See later section of this Report discussing the Pinochet 
accounts at Banco Atlantico.

    --On August 30, 1994, the military officer account issued 
an $82,000 check which was deposited into Espirito Santo Bank 
Account No. 115391494 opened for A.P. Ugarte and M. Lucia 
---------------------------------------------------------------------------
Hiriart.

    --On September 19, 1994, the military officer account 
issued a $65,000 check which was deposited into Banco de Chile 
Account No. 50006257104 in Chile for Jose Ugarte.

    The second illustrative account is Account No. 710467, 
opened for Juan Ricardo Mac-Lean Vergara from December 1994 
until February 1997. The maximum amount of funds in the account 
at any one time was about $678,000, but more flowed through it 
over the more than 2-year period it was open. In total, about 
$840,000 was transferred from this account to accounts 
controlled by Mr. Pinochet, his family, or his assistant. 
Examples of transactions involving Mr. Pinochet include the 
following.

    --On March 2, 1995, the military officer account cleared a 
$117,000 check which was made payable to J. Ugarte and 
deposited into Banco de Chile Account No. 50006257104 in Chile.

    --On March 10, 1995, the military officer account cleared 
an $87,000 check which was made payable to J. Ugarte and 
deposited into Banco de Chile Account No. 50006257104 in Chile.

    --On September 25, 1995, the military officer account 
accepted a $417,000 wire transfer from a Banco Atlantico 
Gibraltar account. The originator of the transfer is identified 
as ``Mario P. Hiriart.''

    --On February 22, 1996, the military officer account 
accepted a $225,985 wire transfer from a Banco Atlantico 
Gibraltar account. The originator of the transfer is identified 
as ``Marco P. Hiriart.''

    --On March 1, 1996, the military officer account cleared a 
$287,000 check which was made payable to Mr. Pinochet's 
assistant, Monica Ananias Kuncar, and deposited into Banco de 
Chile Account No. 60069158 in Chile. The same day, four Banco 
de Chile cashiers checks totaling $287,000 were deposited into 
Riggs Account No. 76750393 in Washington D.C. for Augusto 
Pinochet Ugarte and Lucia Hiriart Rodriguez.

    --On March 1, 1996, the military officer account cleared a 
$36,000 check which was made payable to Monica Ananias Kuncar 
and deposited into Banco de Chile Account No. 50006257104 in 
Chile.

    --On March 28, 1996, the military officer account cleared 
two checks, for $107,000 and $200,536, which were made payable 
to ``M. Hiriart'' and deposited into Riggs Account No. 76750393 
in Washington D.C. opened for Augusto Pinochet Ugarte and Lucia 
Hiriart Rodriguez.

    --On April 2, 1996, the military officer account cleared a 
$6,227 check which was made payable to Monica Ananias Kuncar 
and deposited into Banco de Chile.

These and other transactions show that, at times, the military 
officer accounts served as conduits for Pinochet funds.
    The account opened for John Long, who has not otherwise 
been identified by Riggs Bank, raises similar issues. This 
account was open for about a year. It was initially funded on 
June 11, 1984, with a $287,381.80 check from the military 
officer account opened for Jorge Ballerino Sanford and Ramon 
Castro Ivanovich, Account No. 350413. One month later, on July 
2, 1984, the Ballerino-Castro account transferred another 
$840,194.29 into the Long account for a total of more than $1.1 
million. The Long account used the $1.1 million to purchase a 
CD, subsequently renewed on at least four occasions. In January 
1985, the Long account sent $15,000 to the military officer 
account that had just been opened for Guillermo Garin; $30,000 
to a Bank of America account opened for the wife of Mr. 
Pinochet's son, Augusto P. Hiriart; and another $30,000 to a 
Security Pacific Bank account opened for a Pinochet 
administration official, Patricio Madariaga. Account statements 
after January 1985 have not been located, including records 
related to a $400,000 transaction in December 1984, and 
disposition of the $650,000 remaining in the account at the end 
of January 1985. Records related to the $1.1 million CD have 
also not been located, and the disposition of these funds is 
currently unknown.
    Most of the newly-disclosed accounts at Riggs, including 
the eight military officer accounts, the John Long account, two 
of the Daniel Lopez accounts, and two accounts opened for 
``Jose'' Pinochet, were opened in Miami by Riggs International 
Banking Corporation (RIBC). As an Edge Act Corporation, RIBC 
was regulated by the Federal Reserve Bank of Atlanta (``FRB''). 
FRB examination reports going back to 2000 do not mention AML 
concerns at RIBC, except in passing. In June 2003, however, 
after Riggs Bank began attracting negative press attention, the 
FRB initiated a targeted examination of RIBC which identified 
major AML deficiencies, including poor due diligence 
documentation, inadequate monitoring of accounts, and 
inadequate procedures to identify and report suspicious 
activity. A follow-up FRB examination in April 2004, found 
ongoing serious AML deficiencies and criticized RIBC for its 
failure to take corrective action on the problems identified a 
year earlier. In May, Riggs National Corporation announced 
plans to close RIBC which ceased operations in late 2004. 
Neither of the FRB examinations identified any of the Pinochet-
related accounts discussed in this Report, even though each of 
the accounts was linked to Chile and many experienced multiple, 
large transactions. These Pinochet-related accounts were 
instead uncovered by the Riggs Security & Investigations Group.

  B. Role of Riggs Senior Officials

    Documents recently located by the Riggs Security & 
Investigations Group demonstrate that Riggs senior officials 
were well aware of the Pinochet relationship, and played a more 
significant role in maintaining the relationship than was made 
known to the Subcommittee prior to its 2004 hearing. For 
example, in interviews held prior to the hearing, Riggs 
personnel agreed that senior Riggs officials visited Chile, met 
with Mr. Pinochet, and explicitly asked Mr. Pinochet to open a 
Riggs account in 1994. They disagreed, however, as to exactly 
which Riggs officials went on the 1994 trip, who made the 
actual account solicitation, who went on other trips to Chile, 
and the extent to which the bank's most senior officials 
cultivated the Pinochet relationship.\35\ Newly provided 
documents indicate that Riggs senior officials, in fact, met 
with Mr. Pinochet in Chile on at least five separate occasions, 
participated with him in social as well as business events, 
corresponded with him from Washington, and presented him with 
gifts on behalf of Riggs Bank.
---------------------------------------------------------------------------
    \35\ See, e.g., 2004 Minority Staff Report at 15, reprinted in the 
2004 Hearing Record at 142.
---------------------------------------------------------------------------
    Riggs documents show that the efforts of senior Riggs 
officials on behalf of Mr. Pinochet were part of a wider bank 
strategy to develop and strengthen the bank's relationship with 
the Chilean Armed Forces during the 1990s. Riggs documents show 
that the bank had longstanding relationships with the Chilean 
Navy, Air Force, Astilleros y Maestranzas de la Armada (the 
Navy Shipyard), the Direccion Aeronautica Civil (the civil 
aviation directorate), and the Military Mission to the United 
States, as well as the Chilean Embassy. While many of the 
military accounts left Riggs in 1979, Riggs was able to 
reestablish a number of those accounts in 1994. By 2002, Riggs 
maintained deposits for the Chilean military and embassy 
totaling about $100 million.\36\
---------------------------------------------------------------------------
    \36\ See Riggs memorandum, ``International Business Development 
Activities, Mr. Joe Allbritton, 1992-2002,'' Bates RNB035083-120 at 
110.
---------------------------------------------------------------------------
    Internal Riggs documents show that senior Riggs officials 
met with Chilean military and government officials on a regular 
basis, including during trips taken by Riggs officials to Chile 
in 1994, 1996, 1997, 1999, 2000, and 2002.\37\ In addition, one 
trip report was discovered showing a trip by Riggs senior 
officials to Chile as early as 1986. At least five of these 
trips included meetings between senior Riggs officials and Mr. 
Pinochet. Recently provided documents containing information 
about these meetings offer additional evidence related to the 
relationship between the bank and Mr. Pinochet.
---------------------------------------------------------------------------
    \37\ See e.g., Riggs memorandum, ``International Business 
Development Activities, Mr. Joe Allbritton, 1992-2002,'' Bates 
RNB035083-120; Riggs memorandum, ``Timothy C. Coughlin, Paul Cushman 
III and Maria Carol Thompson Business trip to Chile and Argentina 
(October 23 through October 28, 1994),'' (``Itinerary'') Bates 
RNB035420-59.

    1986 Delegation. In August and September 1986, Riggs 
International Banking Division officials traveled to Ecuador 
and Chile for a series of high level business meetings. Riggs 
Chairman Joseph Allbritton joined the Riggs delegation for at 
least a week, including during its stay in Santiago, Chile, 
from August 19 until August 24.\38\ While in Santiago, the 
Riggs delegation met with government and industry leaders, 
including Mr. Pinochet who was then President of Chile and 
Commander-in-Chief of the Army.\39\ The meeting with Mr. 
Pinochet took place at ``la Moneda,'' Chile's Presidential 
Palace.
---------------------------------------------------------------------------
    \38\ Riggs memorandum, ``Report of Travel Expenses,'' Bates 
RNB040513-21 at 17. The documents are unclear as to whether Mr. 
Allbritton remained with the delegation after August 24, 1986.
    \39\ Riggs memorandum, ``RE: Business Meetings During Trip to Chile 
& Ecuador,'' 9/25/86, Bates RNB040520. While in Santiago, the Riggs 
delegation also met with Chile's Minister of Finance; the President and 
Managing Director of the Central Bank; the U.S. Ambassador; a prominent 
Chilean lawyer; a Citicorp manager; representatives of a Chilean 
brewery, Compania Cervecerias Unidas; and the Chief Executive Officer 
of a prominent weapons manufacturer, Industrias Cardoen.

    1994 Delegation. The President of Riggs, Timothy C. 
Coughlin, led a Riggs delegation to Chile and Argentina from 
October 23 through October 28, 1994. He was accompanied by Paul 
Cushman III, then head of the bank's International Banking 
Group, and Carol Thompson, then Senior Vice President of Latin 
America in the bank's Embassy Banking Division. Their itinerary 
included visits with government, military, and banking 
officials. On October 25, the Riggs delegation met with Mr. 
Pinochet at the Chilean Armed Forces Building in Santiago.\40\ 
The purpose of the visit was detailed in a November 3, 1994 
Riggs memorandum written by Ms. Thompson and recently produced 
to the Subcommittee. That memorandum states:
---------------------------------------------------------------------------
    \40\ Riggs Memorandum, ``Itinerary,'' Bates RNB035420.

    ``LOn October 25, 1994, Timothy Coughlin, Paul Cushman and 
I called on General Pinochet in order to express our gratitude 
for returning the official Chilean Military's accounts from 
Bank of Nova Scotia to Riggs. During the late 1970's the 
Chilean Military Mission in Washington moved their official 
deposits to Canada. This was directly related to the 
assassination of Chilean Ambassador Letelier in 1976. In July 
1994, the official accounts were brought back to Riggs. . . . 
We also offered our personal banking services to General 
Pinochet and stated that we would also be pleased to make our 
---------------------------------------------------------------------------
services available to officers of the Chilean Military.

    L As a follow up, we will send him documentation in order 
to open a personal account.'' \41\
---------------------------------------------------------------------------
    \41\ Id. at Bates RNB035426. At the time Ms. Thompson wrote this 
memorandum, Mr. Pinochet had two accounts in Miami opened under the 
Daniel Lopez alias. Neither Ms. Thompson nor other Riggs personnel in 
Washington appeared to be aware of these accounts at the time.

The November 3, 1994 memorandum confirms the direct 
solicitation of Mr. Pinochet's personal account by Riggs senior 
officers.
    The next day, on November 4, 1994, the bank President, Mr. 
Coughlin, wrote to Mr. Pinochet expressing appreciation for his 
interest in the bank and its relationship with the Chilean 
Military Mission. Mr. Coughlin repeated the bank's offer to 
open a personal account for Mr. Pinochet: ``It would be an 
honor for us to open an account for you and to assist you with 
any banking services you may require outside of Chile.'' Mr. 
Coughlin noted that Ms. Thompson would be sending the relevant 
account opening materials.\42\ Mr. Coughlin concluded by 
writing: ``I also want you to know that I have prominently 
displayed the very handsome medallion you presented me in my 
office at Riggs, and I will be pleased to show it to you if you 
ever decide to visit Washington D.C. and of course Riggs 
Bank.'' \43\
---------------------------------------------------------------------------
    \42\ Letter from Timothy C. Coughlin to Augusto Pinochet Ugarte, 
11/4/94, Bates RNB035443.
    \43\ Id.

    1996 Delegation. In November 1995, General Ricardo 
Izurieta, at the time a military attache stationed in 
Washington and subsequently Commander-in-Chief of the Chilean 
Army, relayed an invitation from Mr. Pinochet to the Chairman 
of Riggs Bank, Joseph Allbritton, to attend the Derby in Vina 
del Mar, the most prestigious horse race in Chile.\44\ Mr. 
Allbritton accepted the invitation, attended the Derby in 
February 1996, and was ``received by General Augusto Pinochet 
Ugarte at the Chilean Army Calvary School in Quillota for a 
special calvary review followed by a ceremony and luncheon.'' 
\45\
---------------------------------------------------------------------------
    \44\ Riggs memorandum, 11/1/95, Bates RNB035784.
    \45\ Riggs memorandum, 3/1/96, Bates RNB035745-47.
---------------------------------------------------------------------------
    On February 14, 1996, Mr. Allbritton sent the following 
letter to Mr. Pinochet.

    ``LDear General Pinochet:

      I would like to express my profound thanks to you for 
according me and my associates such a magnificent reception at 
the Calvary School in Quillota on my visit to Chile. As a horse 
enthusiast, your fine young calvary officers, their horses and 
the superb performance they put on was excellent. It was indeed 
a personal pleasure to spend the day with you in Quillota and 
to have an opportunity to personally convey our appreciation 
for the longstanding relationship between the Chilean Armed 
Forces and the Riggs Bank. We attach great importance to our 
relationship with you and the Chilean Military and look forward 
to expanding our cooperation in the future.

      Chile is clearly a very impressive country with an 
excellent future thanks to you and the policies and reforms you 
instituted. As I expressed to you, I will be only too pleased 
to be of assistance to you and your country in anyway I can in 
Washington, D.C.

      I would like to thank you for the superb cufflinks you 
presented to me and please know that you would be most welcome 
to visit my wife Barby and me at our house in Middleburg, 
Virginia where we raise our thoroughbred race horses.

    Sincerely,
    [Joe]'' \46\
---------------------------------------------------------------------------
    \46\ Letter from Joe L. Allbritton to Captain General Augusto 
Pinochet Ugarte, 2/14/96, Bates RNB035769.

    The following day, Mr. Allbritton sent a letter to General 
Izurieta, the Chilean military attache in Washington, thanking 
him for arranging the visit. The letter stated that Mr. 
Allbritton would brief him about the meetings in Chile, and 
that Mr. Pinochet now had a ``standing invitation to visit our 
Lazy Lane Farm in Virginia, should he decide to visit the 
United States.'' \47\
---------------------------------------------------------------------------
    \47\ Letter from Joe L. Allbritton to Brigadier General Ricardo 
Izurieta, 2/15/96, Bates RNB035775.

    1997 Delegation. Documents show that, in the spring of 
1997, prior to a visit to Chile, Riggs made a $5,000 donation 
to the Augusto Pinochet Ugarte Foundation (hereinafter 
``Pinochet Foundation''). A general request for a donation to 
this Foundation had been made by General Izurieta, according to 
a memorandum dated March 3, 1997, from Ms. Thompson to her 
superior, Raymond Lund, then head of the International Banking 
Division.\48\ The following day Mr. Lund wrote to Riggs 
Chairman recommending a donation in the amount of $5,000.\49\ 
Both the Chairman and the President of Riggs apparently 
approved of the donation. On April 22, 1997, the Pinochet 
Foundation President wrote to Mr. Allbritton thanking him for 
the donation.\50\
---------------------------------------------------------------------------
    \48\ ``General Ricardo Izurieta has asked if Riggs Bank would be so 
gracious as to contribute to this worthy cause.'' Riggs Memorandum, 3/
3/97, Bates RNB035735-41 at 37. According to a brochure provided to the 
bank, the stated objective of the foundation was to cooperate in the 
development of the free society and cultural heritage of Chile. See 
brochure for Pinochet Foundation, Bates RNB035735-41 at 39.
    \49\ Note from Ray Lund to Joe Allbritton, 3/4/97, Bates RNB035735-
41 at 35.
    \50\ Letter from Hernan Briones Gorostiaga to Joe Allbritton, 4/22/
97, Bates RNB035742-44 at 43.
---------------------------------------------------------------------------
    On October 27, 1997, a delegation of senior Riggs 
officials, including Mr. Allbritton, Mr. Coughlin, and senior 
officials from the bank's international private banking and 
embassy banking divisions traveled to Chile.\51\ Two weeks 
prior to the trip, Ms. Thompson prepared an overview of Riggs 
relationship with Chile for Mr. Allbritton. The overview 
included a survey of the Chilean agencies then doing business 
with Riggs and notes that as of the time of the trip, the Chile 
relationship represented more than $65 million in deposits and 
$600,000 in annual profit for the bank.\52\
---------------------------------------------------------------------------
    \51\ Itinerary, ``Chairman's Trip, South America 1997,'' Bates 
RNB035552-57.
    \52\ See, e.g., Riggs memorandum, ``Chile Country Overview,'' 10/
14/97, Bates RNB035674-75 at 74.
---------------------------------------------------------------------------
    On the morning of October 29, 1997, the Riggs delegation 
met with Mr. Pinochet at the Armed Forces building in Santiago. 
According to a Riggs call report, ``the purpose of this visit 
was to personally greet the Commander-in-Chief and to thank him 
for the longstanding and profitable relationship that the 
Chilean Army maintains with Riggs Bank.'' \53\ That afternoon, 
Mr. Pinochet and his son Marco hosted a tea in honor of Mr. and 
Mrs. Joseph Allbritton at the Lo Curo Military Club in 
Santiago.\54\ At some point during the visit, the Riggs 
delegation presented Mr. Pinochet with a Confederate Bond and 
two computer games.\55\
---------------------------------------------------------------------------
    \53\ Riggs Call Report, ``Chilean Army Mission,'' 11/6/97, Bates 
RNB035567.
    \54\ Id.
    \55\ See, e.g., Riggs document, ``Gift List, October 1997, South 
America,'' Bates RNB035616. The Confederate Bond was apparently a 
historic document originally issued by the Confederate Congress in an 
attempt to raise money for the Southern forces during the American 
Civil war. Riggs had a description of the bond translated into Spanish 
for the benefit of Mr. Pinochet. Bates RNB035656-59.
---------------------------------------------------------------------------
    Upon returning to Washington, several Riggs senior 
officials sent letters to Mr. Pinochet disclosing a deepening 
relationship between him and the bank. On November 14, 1997, 
for example, the bank Chairman wrote:

    ``Dear General Pinochet:

    Just having returned from South America, Barby and I 
wanted to express our sincere appreciation for the warm 
reception accorded to us during our recent visit to Santiago. 
Please be assured that you and you Government have a strong 
advocate in the Riggs Bank and I earnestly share your views 
concerning enhanced trade and economic ties between our two 
countries.

    I am pleased to report the business relationship between 
Riggs and the Chilean Military is prospering. I am also 
grateful for our thriving personal friendship, which you have 
demonstrated through your gracious hospitality and stalwart 
support of The Riggs.

    As I mentioned to you in our discussions, the long-term 
prospects for Chile's adherence to democratic, free market 
principles are strong, which is the direct result of your 
leadership. You have rid Chile from the threat of totalitarian 
government and an archaic economic system based on state-owned 
property and centralized planning. We in the United States and 
the rest of the Western hemisphere owe you a tremendous debt of 
gratitude and I am confident your legacy will have been to 
provide a more prosperous and safer world for your children and 
grandchildren.

    I thank you for the marvelous gifts extended to both Barby 
and myself, including the history books, which I have found 
fascinating. I ask that you convey our best wishes to Marco 
Antonio and the rest of your family. I look forward to 
continuing our discussion and would be most pleased to 
reciprocate your gracious hospitality the next time you are in 
the United States.

      Warmest personal regards . . .'' \56\
---------------------------------------------------------------------------
    \56\ Unsigned letter from Joe L. Allbritton to Captain General 
Augusto Pinochet Ugarte, 11/14/97, Bates RNB037440. Although the letter 
is unsigned, Riggs has informed the Subcommittee that the bank has no 
reason to believe that the letter was not sent.

    On October 31, 1997, the Chairman's wife, Barbara 
Allbritton, then a longstanding member of the Riggs board of 
---------------------------------------------------------------------------
directors, wrote the following to Mr. Pinochet:

    ``My dear General Pinochet:

    It was a great pleasure and honor to be with you on 
Wednesday at tea at the Military Club. You were so very 
gracious to allow us this time with you and I was extremely 
pleased to have this appointment to meet and be with your son 
Marco Antonio.

    The elegant lapis lazuli box you so kindly gave to me 
shall be used and displayed with a great deal of pride and 
pleasure. It shall be a reminder of this special time we spent 
with you during our trip to Santiago.

    I do hope that you will come to visit us when your 
schedule allows. I shall look forward to receiving Mrs. 
Pinochet and having the pleasure of knowing her.

    I am so appreciative of the book you sent to me that your 
daughter Lucia did on your life. After reviewing it I feel I 
know you and your family, and now I am excited about the 
possibility of meeting more of your family and having our 
friendship develop more.

    With appreciation and respect for you and all you have 
done for our world.

      Sincerely. . . .'' \57\
---------------------------------------------------------------------------
    \57\ Unsigned letter from a file containing Mrs. Allbritton's 
papers, 10/31/97, Bates RNB037212. Riggs Bank has informed the 
Subcommittee that the bank has no reason to believe that this letter 
was not sent.

    On November 10, 1997, the bank President wrote to Mr. 
Pinochet a letter expressing appreciation for the hospitality 
---------------------------------------------------------------------------
shown during the trip.

    ``Dear General Pinochet:

    Your gracious reception of the delegation from Riggs Bank 
during my Chairman's recent visit to Chile is much appreciated. 
. . .

    Riggs is privileged to serve Chile's banking requirements, 
and we will do everything within our power to promote economic 
trade and military alliance between our two countries. . . .

    The opportunity for all of us including our wives to meet 
with you and your son, Marco Antonio, was a particular 
pleasure. . . .

    Of the books that you have given me, I am just finishing 
my reading of `The Crucial Day.' The factual objectivity with 
which you tell the story of Chile in the early 1970s is both 
fascinating and instructive. History provides for fair and 
proper judgement only when the true facts are know[n]. . . .

    Sincerely,
    [Timothy C. Coughlin]
    Timothy C. Coughlin
    President'' \58\
---------------------------------------------------------------------------
    \58\ Letter from Timothy C. Coughlin to Captain General Augusto 
Pinochet Ugarte, 11/10/97, Bates RNB035590.

    On November 25, 1997, the bank President sent Mr. Pinochet 
a note via the Chilean Military Mission in Washington to 
---------------------------------------------------------------------------
commemorate his birthday.

    ``Dear General Pinochet:

    On the occasion of your birthday today, all of your 
friends and supporters at Riggs Bank send you our appreciation 
and congratulations for all you have done for Chile. Please 
accept our best wishes for every success in your continuing 
service to Chile in 1998 and many happy returns to the date of 
your birth in the years to come.

      Sincerely,
      [Tim]
      Timothy C. Coughlin
      President'' \59\
---------------------------------------------------------------------------
    \59\ Letter from Timothy C. Coughlin to Captain General Augusto 
Pinochet Ugarte, 11/25/97, Bates RNB035602.

    1998 Delegation. On March 10, 1998, Mr. Pinochet stepped 
down as Commander-in-Chief of the Chilean Army, and the 
following day was sworn in as ``Senator for life'' in 
Chile.\60\ Mr. Coughlin and Ms. Thompson traveled to Chile less 
than 2 weeks later to meet with senior Chilean military 
officials, including General Izurieta, the newly promoted 
Commander-in-Chief. On March 24, 1998, Mr. Coughlin and Ms. 
Thompson attended a luncheon with Mr. Pinochet.\61\ After 
returning to Washington, the bank President wrote to Mr. 
Pinochet, thanking him for the reception and a gift of Chilean 
Army cuff links, ``which my Chairman and I are proud to wear.'' 
\62\
---------------------------------------------------------------------------
    \60\ ``Chile's Pinochet Steps Aside; Symbol of Repression 
Relinquishes Command of Army,'' The Washington Post, 3/11/98.
    \61\ Riggs itinerary, ``Timothy C. Coughlin, Maria Carol Thompson, 
Business Trip to Chile,'' 3/24/98, Bates RNB035124-28 at 26.
    \62\ Letter from Timothy C. Coughlin to Captain General Augusto 
Pinochet Ugarte, 4/23/98, Bates RNB037225.
---------------------------------------------------------------------------
    Later in 1998, as described in the 2004 Minority Staff 
Report released by the Subcommittee, \63\ a Spanish magistrate 
issued two international arrest warrants for Mr. Pinochet for 
murder, torture, hostage-taking, and genocide.\64\ On October 
17, 1998, pursuant to those warrants, Mr. Pinochet was arrested 
at a London hospital where he was recuperating from back 
surgery. On October 19, the Spanish magistrate issued an 
attachment order against all bank accounts held directly or 
indirectly by Mr. Pinochet, his family members, or third 
parties in any country.\65\ On November 5, Spain's highest 
criminal court affirmed jurisdiction over Mr. Pinochet, and on 
December 10, ratified the attachment order against Pinochet 
bank accounts.\66\ In the United Kingdom, on November 25, 1998, 
the British Law Lords denied Mr. Pinochet's claim of diplomatic 
immunity, and then set aside that determination on December 
17.\67\
---------------------------------------------------------------------------
    \63\ See 2004 Hearing Record at 145.
    \64\ See copies of the two international arrest warrants at 
www.derechos.org/nizkor/chile/juicio/dili.html (as of 3/4/05); and 
www.derechos.org/nizkor/chile/juicio/recurso6.html (as of 3/4/05).
    \65\ See attachment order, Auto del Juzgado Central de Instruccion 
No. 5 (10/19/98), reprinted in 2004 Hearing Record at 1044.
    \66\ For a copy of the court decisions, see www.derechos.org/
nizkor/chile/juicio/audi.html (as of 3/4/05); and www.derechos.net/doc/
pino/proceso.html (as of 3/4/05). The attachment order does not, 
however, seem to have been domesticated in the United States.
    \67\ Regina v. Bartle, 37 I.L.M. 1302 (U.K. House of Lords, 11/25/
98); In re Pinochet, 237 N.R. 201 (U.K. House of Lords, 12/17/98).
---------------------------------------------------------------------------
    The arrest of Mr. Pinochet in London was widely carried by 
the international, Chilean, and United States news media and 
was followed by violent demonstrations in Chile.\68\ The 
subsequent legal and diplomatic disputes kept the story in 
telecasts and newspapers for months.\69\
---------------------------------------------------------------------------
    \68\ See, e.g., ``Angry Mob Besieges British Embassy Over Arrest of 
Pinochet,'' Evening Standard, 10/19/98.
    \69\ A Lexis/Nexis search for news stories containing the word 
``Pinochet'' and the word ``trial'' in the same sentence, limited to 
the dates between Mr. Pinochet's arrest in London, 10/17/98, and the 
date Mr. Allbritton arrived in Chile, 3/13/99, returns 2,822 results.

    1999 Delegation. For the first 3 months of 1999, Mr. 
Pinochet remained under house arrest in London. On March 13, 
1999, a Riggs delegation, including bank Chairman Joseph 
Allbritton, traveled to Chile for 3 days of meetings with 
senior Chilean military officials.\70\ On March 24, 1999, the 
British Law Lords authorized an extradition hearing to 
determine whether Mr. Pinochet should be transferred to 
Spain.\71\ Two days later, on March 26, Riggs allowed Mr. 
Pinochet to terminate a =1 million CD held in the name of his 
offshore corporation, Althorp, at the Riggs branch in London, 
and transfer the funds, totaling about $1.6 million in U.S. 
dollars, to a new CD in the United States. Riggs did not file 
any suspicious activity reports that would have alerted 
British, Spanish, or U.S. law enforcement to the existence of 
the Pinochet funds.\72\
---------------------------------------------------------------------------
    \70\ Riggs memorandum, ``Chairman's trip to Latin America, March 
1999, Gift Ideas,'' Bates RNB036159.
    \71\ Regina v. Bartle, 37 I.L.M. 1302 (U.K. House of Lords, 3/24/
99) at 582.
    \72\ See 2004 Hearing Record at 149.

    2000 Delegation. On March 2, 2000, the United Kingdom 
determined that Mr. Pinochet was unfit to stand trial and 
should not be extradited to Spain.\73\ Mr. Pinochet was 
released and immediately flew to Chile, arriving on March 
3.\74\ A Riggs delegation, which included bank Chairman Joseph 
Allbritton, was then visiting Chile on a trip that had begun on 
February 25 and ended March 4, 2000, and included multiple 
meetings with senior Chilean military and banking officials. 
Internal Riggs memoranda addressing this trip do not mention 
Mr. Pinochet. A letter dated March 21, 2000, from Mr. 
Allbritton to General Izurieta, however, makes clear that Mr. 
Allbritton had been aware of Mr. Pinochet's detention in the 
United Kingdom and return to Chile. The letter states: ``Where 
do I begin to thank you? You graced our suite with the sweet 
smell of beautiful flowers and Chilean wine. You gave us your 
time on the very eve of the General's return.'' \75\
---------------------------------------------------------------------------
    \73\ ``Pinochet Set Free,'' BBC News, 3/2/00.
    \74\ According to Riggs' internal investigation, at some point 
during Mr. Pinochet's detention, an official with the Chilean Air Force 
Mission in London telephoned the head of Riggs' London operations and 
asked if the Riggs corporate jet was capable of flying non-stop from 
London to Chile and might be made available for General Pinochet's use 
upon his release. It is unclear how Riggs responded, but the Riggs jet 
was not used to return Mr. Pinochet to Chile.
    \75\ Unsigned letter from Joe Allbritton to Lieutenant General 
Ricardo Izurieta, 3/21/00, Bates RNB 036517. Riggs has informed the 
Subcommittee that the bank has no reason to believe that this letter 
was not sent.
---------------------------------------------------------------------------
    Legal proceedings against Mr. Pinochet did not abate after 
his return to Chile. By March of 2000, ``nearly 60 human rights 
cases had been filed in Chile against Pinochet and were under 
active investigation.'' \76\ On August 8, 2000, the Chilean 
Supreme Court upheld an appeals court ruling that stripped Mr. 
Pinochet of his parliamentary immunity in the ``Caravan of 
Death'' trial.\77\
---------------------------------------------------------------------------
    \76\ See United States v. Riggs Bank N.A., Case No. Cr. 05-35(RMU) 
(D. D.C., filed 2005), Plea Agreement and Statement of Offense (1/27/
05).
    \77\ http://www.derechos.org/nizkor/chile/juicio/desafuero2.html 
(as of 2/3/05).
---------------------------------------------------------------------------
    A document recently provided by the Riggs Security & 
Investigations Group shows that Riggs had been following these 
legal proceedings closely. The day after the ruling, on August 
9, 2000, Michael Cantacuzene of the Riggs Advisory Services 
Group issued a memorandum regarding a ``Prominent International 
Private Banking Client.'' The client is plainly Mr. Pinochet, 
although the memorandum never names him. The memorandum makes a 
series of strategic recommendations regarding the bank's 
relationship with Mr. Pinochet in light of his loss of immunity 
from prosecution. It states: ``Recent developments in Chile 
require Riggs to develop alternative strategies for working 
with our prominent client.'' It predicts that Mr. Pinochet will 
``increasingly call on his assets outside of Chile,'' and 
points out that ``any draft requires the bank to complete payee 
information and to arrange delivery. These two requirements are 
fraught with potential, but surmountable, challenges. (e.g., 
KYC, BSA and customs).'' \78\
---------------------------------------------------------------------------
    \78\ Riggs memorandum to File, by Michael Cantacuzene, 8/9/00, 
Bates RNB035297-98 at 97.
---------------------------------------------------------------------------
    The memorandum recommends informing Riggs senior 
management, public relations officials, and legal counsel of 
the potential for Riggs to receive subpoenas, legal and 
regulatory requests, and press inquiries, and developing an 
approval process for responding to them.\79\ The memorandum 
also states:
---------------------------------------------------------------------------
    \79\ Id. at 98.

    ``Reports indicate that very senior Riggs executives might 
be considering a trip to Chile and Latin America. A trip by 
senior Riggs executives to Chile and Latin America at this time 
poses significant risks to Riggs and our client. Riggs 
extensive relationships and contact with senior Chilean 
Military officials and departments is well known. The arrival 
of a senior Riggs executive delegation is a noteworthy event 
certain to be noticed. (The media and our client's opponents 
are not unaware of the potential for a Riggs relationship with 
the client.) The Chilean military (including some Riggs 
clients) is actively supporting our client regardless of the 
civilian government's strict instructions.'' \80\
---------------------------------------------------------------------------
    \80\ Id.

The memorandum accordingly recommends against senior Riggs 
officials visiting Chile for 4 to 5 months, suggesting instead 
that Mr. Pinochet's personal banker meet with him 
``discreetly'' within 30 days.
    The report released by the Subcommittee in 2004, details 
how Riggs was able to ``surmount'' the ``KYC, BSA and customs'' 
``challenges'' warned about in the Cantacuzene memorandum. Just 
9 days after the memorandum was prepared, Riggs issued eight 
cashiers checks, each in the amount of $50,000 and each made 
payable to Augusto Pinochet, and flew a Riggs banker to Chile 
to personally deliver them to Mr. Pinochet. It was the first of 
four deliveries of Riggs cashiers checks to Mr. Pinochet, as 
described in the Subcommittee's earlier Minority Staff Report. 
These deliveries took place between August 18, 2000 and April 
8, 2002, and provided Mr. Pinochet with $1.9 million from his 
Riggs accounts.\81\ When asked why the bank had not simply wire 
transferred the funds to Chile, which would have been faster, 
less expensive, and more secure than physically transporting 
the checks, Riggs personnel did not provide a satisfactory 
explanation.\82\ According to a Chilean appeals court finding, 
the checks ``were cashed at Banco de Chile and Bank Boston by a 
third party, despite the fact that they were nominative. Then 
various amounts of the cash in dollars were changed to cash in 
Chilean pesos on the informal market so that said transaction 
would not be reported to the Central Bank.'' \83\
---------------------------------------------------------------------------
    \81\ The cashiers checks were cashed in Chile, over time, between 
September 2000 and July 2003.
    \82\ See 2004 Hearing Record at 152.
    \83\ Case No. 1649-2004, Court of Appeals of Santiago, 12/10/04, at 
7, with translation provided by CRS.

    2002 Delegation. In March 2002, a Riggs delegation, led by 
bank Chairman Joseph Allbritton, returned to Chile for a series 
of meetings with senior military, government, and financial 
officials. As part of that trip, the Chilean Air Force hosted 
Mr. Allbritton on a tour of the Antarctic. A Riggs memorandum 
prepared for Mr. Allbritton for this trip observed that, when 
the Chilean accounts were viewed together, ``average balances 
exceed $100 million.'' \84\ The internal Riggs documents do not 
mention Mr. Pinochet.
---------------------------------------------------------------------------
    \84\ Riggs memorandum, ``International Business Development 
Activities, Mr. Joe Allbritton, 1992-2002,'' Bates RNB035083-120 at 
110.
---------------------------------------------------------------------------

V. PINOCHET RELATIONSHIPS AT OTHER FINANCIAL INSTITUTIONS OPERATING IN 
                    THE UNITED STATES

    Information obtained by the Subcommittee indicates that 
Riggs Bank was not alone in helping Augusto Pinochet gain 
access to the U.S. financial system and, in some cases, conceal 
or move funds while he was subject to a 1998 Spanish court 
order directing financial institutions to freeze his assets. 
Working with Riggs documents that detail Pinochet transactions 
involving other financial institutions, the Subcommittee has 
been able to identify nearly 100 U.S. financial accounts and 
CDs, in addition to the 28 Riggs accounts, that were opened for 
Mr. Pinochet, members of his immediate family, offshore 
entities controlled by Mr. Pinochet or his immediate family, or 
third parties who allowed their accounts to serve as conduits 
for Pinochet funds. The evidence shows that the earliest of 
these accounts was opened in 1981, and a few are still open in 
2005.
    The evidence associated with these accounts establishes 
that, over the past 25 years, due to inadequate due diligence, 
and, at times, the facilitation of unusual transactions, U.S. 
financial institutions enabled Augusto Pinochet to establish an 
extensive network of U.S. bank and securities accounts, 
involving millions of dollars, which he used to move funds and 
transact business. In addition to Riggs Bank, the largest 
Pinochet relationships identified by the Subcommittee in the 
United States were at Citigroup, Banco de Chile-United States, 
and Espirito Santo Bank in Florida. Additional Pinochet-related 
transactions or accounts were handled by Banco Atlantico which 
is now part of Banco de Sabadell; Bank of America; Coutts & Co. 
(USA) International which is now part of Banco Santander; Ocean 
Bank; and PineBank N.A. Evidence exists of still additional 
U.S. accounts related to Mr. Pinochet, but limited Subcommittee 
resources prevent an exhaustive analysis of all the U.S. 
accounts that have been used to assist Mr. Pinochet.

  A. Citigroup

    Citigroup is one of the largest financial institutions in 
the United States, managing assets in excess of $520 billion 
and reporting net income in 2004 of about $17 billion.\85\ 
Citigroup is a publicly traded corporation which, through 
numerous branches and affiliates, offers a wide range of 
financial services to its clients, including retail banking, 
private banking, brokerage, and investment services. It 
maintains branches and affiliates in more than 100 countries.
---------------------------------------------------------------------------
    \85\ Information about Citigroup is taken from its website, public 
filings, subpoenaed documents, interviews with bank representatives, 
and information supplied by other financial institutions. The relevant 
documents are maintained in Subcommittee files.
---------------------------------------------------------------------------
    The Subcommittee investigation has determined that 
Citigroup had a substantial, years-long relationship with 
Augusto Pinochet and his family, which began in at least 
1981.\86\ In response to Subcommittee requests, Citigroup has 
identified 63 U.S. accounts and certificates of deposit (CDs) 
that were opened for Mr. Pinochet and his family in New York 
and Miami at various points in time from 1981 to 2004.
---------------------------------------------------------------------------
    \86\ Some Citigroup employees recall that Mr. Pinochet may have had 
a Citibank account as early as the 1960s, but no bank records have been 
retained for such old accounts.
---------------------------------------------------------------------------
    Of these 63 accounts and CDs, 15 were opened for Mr. 
Pinochet personally over a 15-year period, from 1981 to 1996. 
Another 19 were opened in the name of other Pinochet family 
members, such as Mr. Pinochet's son, Marco Antonio Pinochet 
Hiriart; Mr. Pinochet's daughter, Ines Lucia Pinochet Hiriart, 
and her husband Hernan Ubaldo Garcia Barzelatto; and Mr. 
Pinochet's daughter, Maria Veronica Pinochet. In addition, 
Marco and Ines Lucia Pinochet opened 29 accounts and CDs in the 
name of offshore entities that Citigroup had established or 
arranged at their request, including Meritor Investments, Trust 
MT-4964N, and Redwing Holdings.
    Over the years, Citigroup has provided individual Pinochet 
family members with many types of financial assistance, from 
arranging international wire transfers, to establishing 
offshore entities, to offering investment advice. Citigroup 
also issued credit cards to several family members and provided 
several with substantial loans. These loans included a 1993 
loan of $2 million to Mr. Pinochet and his son; a 1993 loan of 
$195,000 to Redwing Holdings; a 1994 loan of $385,000 to Marco 
Pinochet; and 1996 loan of $500,000 to Meritor Investments. 
These loans were apparently repaid in full.
    Moreover, since at least 1988, Citigroup has provided some 
Pinochet family members with financial accounts, CDs, and lines 
of credit in other countries, including Argentina, the Bahamas, 
Chile, Switzerland and the United Kingdom. Citigroup has 
informed the Subcommittee that each of its non-U.S. 
relationships with the Pinochet family has now ended, some 
within the last 6 months. The services provided and the total 
amount of funds involved in these non-U.S. relationships remain 
unclear and are outside the scope of this Report.
    Overall, Citigroup's relationship with the Pinochet family 
in the United States extended over at least 24 years. The first 
set of accounts to be closed were the Augusto Pinochet personal 
accounts, the last of which closed in 1996, in part due to 
requests made by the client and in part due to a Citigroup 
initiative, as explained below. In 2000, at the request of 
Citigroup, Ines Lucia Pinochet began to close her accounts, the 
last of which actually closed in January 2001. In 2000, 
Citigroup asked Marco Pinochet to close his accounts, but his 
personal accounts did not actually close until 2 years later in 
2003, and the final Meritor Investments account closed in 2004. 
Several accounts opened for Mr. Pinochet's other daughter, 
Maria Veronica Pinochet, also closed in 2004. One family member 
account is still in the process of closing.
    Citigroup has fully cooperated with Subcommittee inquiries 
about these accounts, and produced all requested documentation 
and related information in the United States. Citing bank 
secrecy laws, however, Citigroup produced very limited 
information about accounts and transactions involving its 
foreign affiliates in Argentina, the Bahamas, Chile, 
Switzerland and the United Kingdom. Information about some 
transactions involving these foreign affiliates have been 
reconstructed from records produced by other financial 
institutions.
    The 63 U.S. accounts and CDs provided by Citigroup to the 
Pinochet family, from 1981 to 2004, can be summarized as 
follows.

    Personal Accounts. The 15 Citigroup accounts opened for Mr. 
Pinochet in the United States from 1981 to 1996, are the 
following. Six of these accounts were in New York, and nine 
were in Miami. Each account was opened under a disguised 
variant of Augusto Pinochet's name, with ``J. Ramon'' accounts 
in New York and ``Jose'' accounts in Miami.

    (1) Account No. 10801792 was opened in the name of J. 
Ramon Ugarte in New York in on November 15, 1981, and closed on 
November 22, 1995. In April 1984, the account was changed to 
add Marco P. Hiriart.

    (2) Account No. 12032544 was opened in the name of Jose 
Pinochet and Lucia P. Hiriart in Miami on February 25, 1985, 
and closed around July 1992. In May 1989, the name Jose 
Pinochet was changed to Jose P. Ugarte.

    (3) Account No. CF11077601 was opened in the name of J. 
Ramon Ugarte and Marco P. Hiriart in New York on an unknown 
date and closed by no later than September 1994.

    (4) Account No. CF11077602 was opened in the name of J. 
Ramon Ugarte and Marco P. Hiriart in New York on an unknown 
date and closed by no later than September 1994.

    (5) Account No. 34000259, a CD, was opened in the name of 
J. Ramon Ugarte and Marco P. Hiriart in New York on a date 
prior to March 25, 1985, and closed on September 23, 1996.

    (6) Account No. 38803825 was opened in the name of Jose 
Pinochet in Miami on August 4, 1986, and closed on a date prior 
to June 4, 1993. In May 1989, the name Jose Pinochet was 
changed to Jose P. Ugarte.

    (7) Account No. 37010063, a CD, was opened in the name of 
Jose P. Ugarte in Miami on September 13, 1989, and closed on 
May 11, 1992.

    (8) Account No. 37011621, a CD, was opened in the name of 
Jose P. Ugarte in Miami on May 13, 1991, and closed on June 21, 
1991.

    (9) Account No. 39316662, a CD, was opened in the name of 
Jose P. Ugarte in Miami on December 20, 1991, and closed on May 
11, 1992.

    (10) Account No. 32110270, a CD, was opened in the name of 
Jose P. Ugarte in Miami on June 3, 1992 and closed on June 23, 
1992.

    (11) Account No. 32110294, a CD, was opened in the name of 
Jose P. Ugarte in Miami on June 23, 1992 and closed on July 16, 
1992.

    (12) Account No. 38810821 was opened in the name of Jose 
P. Ugarte in Miami on an unknown date and closed on a date 
prior to June 4, 1993.

    (13) Account No. 38811297 was opened in the name of Jose 
P. Ugarte in Miami on an unknown date and closed on a date 
prior to June 4, 1993.

    (14) Account No. 39293300 was opened in the name of J. 
Ramon Ugarte and Marco P. Hiriart in New York on November 17, 
1993, and closed on October 7, 1994.

    (15) Account No. 40008200 was opened in the name of J. 
Ramon Ugarte and Marco P. Hiriart in New York on July 29, 1994, 
and closed on December 5, 1995.

    Pinochet Family Accounts. The 19 Citigroup accounts opened 
in New York and Miami in the name of Mr. Pinochet's immediate 
family members are the following.

    (1) Account No. 10040217 was opened in the name of Mr. 
Pinochet's son, Marco P. Hiriart, in New York on June 7, 1985. 
In October 1989, the account name changed to Marco P. Hiriart 
in trust for J. Ramon Ugarte. In May 1999, the account name 
changed again, to Marco P. Hiriart in trust for his wife Maria 
Soledad Olave Gutierrez. The account closed on October 27, 
2003.

    (2) Account No. CF15597701 was opened in the name of Marco 
P. Hiriart in New York on October 2, 1986, and closed by 
September 1994.

    (3) Account No. CF11077603 was opened in the name of Marco 
P. Hiriart in New York on August 11, 1987, and closed by 
September 1994.

    (4) Account No. 39195900, a custody account, was opened in 
the name of Marco P. Hiriart on February 18, 1993. At some 
point, the account name changed to Marco P. Hiriart in trust 
for J. Ramon Ugarte. The account closed on March 12, 1996.

    (5) Account No. 930018138001, a letter of credit, was 
opened in the name of Marco P. Hiriart in trust for Maria 
Soledad Olave Gutierrez on October 27, 1995, and closed on 
October 28, 1996.

    (6) Account No. 38517601 was opened in the name of Marco 
P. Hiriart in trust for Maria Soledad Olave Gutierrez in Miami 
on January 13, 1997, and closed on April 29, 1999.

    (7) Account No. 38020732 was opened in the name of Marco 
P. Hiriart in trust for Maria Soledad Olave Gutierrez in New 
York on February 6, 2001, and closed on May 15, 2003.

    (8) Account No. 12015488 was opened in the name of Mr. 
Pinochet's daughter, Lucia Pinochet Hiriart, in Miami on May 
23, 1983, and closed on June 10, 1996.

    (9) Account No. 38800186 was opened in the name of Lucia 
Pinochet Hiriart in Miami on May 24, 1983, and closed on 
November 6, 1995.

    (10) Account No. 3100519634 was opened in the name of Mr. 
Pinochet's daughter, Maria Veronica Pinochet, in trust for her 
children Francisca Lucia and Daniela Veronica Ponce, in 
September 1994, and closed on September 29, 2004.

    (11) Account No. 6057055 was opened in the name of Maria 
Veronica Pinochet on November 7, 1995, and closed on April 26, 
1996.

    (12) Account No. 2600157858, a CD, was opened in the name 
of Maria Veronica Pinochet prior to July 1997, and closed in 
September 1999.

    (13) Account No. 2600453426, a CD, was opened in the name 
of Maria Veronica Pinochet prior to July 1997, and closed in 
July 1999.

    (14) Account No. 2605256372, a CD, was opened in the name 
of Maria Veronica Pinochet in trust for Francisca and Daniela 
Ponce in April 2000, and closed in October 2003.

    (15) Account No. 3107620283 was opened in the name of 
Maria Veronica Ponce in trust for Daniela Veronica Ponce and 
Francesca Lucia Ponce in October 2002, and closed on September 
29, 2004.

    (16) Account No. 5978 was opened in the name of Mr. 
Pinochet's son-in-law, Hernan Garcia B., whose full name is 
Hernan Ubaldo Garcia Barzelatto, on June 16, 1988, and closed 
on December 14, 1999.

    (17) Account No. 77165321 was opened in the name of Mr. 
Pinochet's daughter-in-law, Maria Soledad Olave Gutierrez, on 
April 3, 2001, and closed on September 27, 2004.

    (18) Account No. 54214877, an investment account, was 
opened in the name of Marco Pinochet's wife, Maria Soledad 
Olave Gutierrez, on April 9, 2001, and closed in September 24, 
2004.

    (19) A brokerage account, opened for a family member in 
October 2002, was frozen by the bank in 2004, and is awaiting 
closure.

    Third Party Accounts. The 29 Citigroup accounts or CDs 
opened in the name of offshore corporations or trusts 
associated with Marco and Ines Lucia Pinochet are the 
following. They include five opened in the name of Meritor 
Investments; seven opened in the name of Trust MT-4964N; and 17 
opened in the name of Redwing Holdings.

    (1) Account No. 10328149 was opened in the name of Meritor 
Investments Ltd. in New York on July 20, 1994, and closed on 
April 6, 2004.

    (2) Account No. 394116, a custody account, was opened in 
the name of Meritor Investments Ltd. in New York on July 21, 
1994, and closed on October 28, 2003.

    (3) Account No. 25F01376, an investment account, was 
opened in the name of Meritor Investments Ltd. in New York on 
August 24, 2001, and closed on July 9, 2004.

    (4) Account No. 403435, a brokerage account, was opened in 
the name of Meritor Investments Ltd. in New York on September 
30, 1994, and closed on March 4, 2004.

    (5) Account No. CF98307701 was opened in the name of 
Meritor Investments Ltd. in New York on an unknown date and 
closed by September 1994.

    (6) Account No. 39315502, a CD, was opened in the name of 
Trust MT-4964N in Miami on May 20, 1991, and closed on February 
22, 1993.

    (7) Account No. CF97851201 was opened in the name of Trust 
MT-4964N in New York on May 21, 1992, and closed by September 
1994.

    (8) Account No. CF97653601 was opened in the name of Trust 
MT-4964N in New York on July 21, 1992, and closed by September 
1994.

    (9) Account No. 38811628 was opened in the name of Trust 
MT-4964N in Miami on November 23, 1992, and closed on February 
27, 1995.

    (10) Account No. 35007623, a CD, was opened in the name of 
Trust MT-4964N on February 22, 1993, and closed on August 27, 
1993.

    (11) Account No. 12102143 was opened in the name of Trust 
MT-4964N in Miami on April 30, 1993, and closed on February 28, 
1994.

    (12) Account No. 38202470 was opened in the name of Trust 
MT-4964 on January 26, 2000, and closed on April 3, 2000.

    (13) Account No. 38810860 was opened in the name of 
Redwing Holdings Inc. in Miami on October 30, 1991, and closed 
on March 1, 1999.

    (14) Account No. CF97713301 was opened in the name of 
Redwing Holdings Inc. in New York on November 22, 1991, and 
closed by September 1994.

    (15) Account No. 12094294 was opened in the name of 
Redwing Holdings Inc. in Miami on February 18, 1992, and closed 
on August 29, 2000.

    (16) Account No. 37012132, a CD, was opened in the name of 
Redwing Holdings Inc. in Miami on May 26, 1992, and closed on 
December 7, 1994.

    (17) Account No. 5931310314, a letter of credit, was 
opened in the name of Redwing Holdings Inc. on May 6, 1993, and 
closed on an unknown date.

    (18) Account No. 731105851 was opened in the name of 
Redwing Holdings Inc. on August 9, 1993, and closed on 
September 7, 1994.

    (19) Account No. 39325000, a custody account, was opened 
in the name of Redwing Holdings Inc. on December 28, 1993, and 
closed on June 25, 1996.

    (20) Account No. 40300400, an investment fund, was opened 
in the name of Redwing Holdings Inc. on September 20, 1994, and 
closed on November 29, 1999.

    (21) Account No. 38813416 was opened in the name of 
Redwing Holdings Inc. in Miami on June 4, 1996, and closed on 
June 13, 1996.

    (22) Account No. 35012702, a CD, was opened in the name of 
Redwing Holdings Inc. on June 11, 1996, and closed on September 
13, 1996.

    (23) Account No. 38813509 was opened in the name of 
Redwing Holdings Inc. in Miami on September 13, 1996, and 
closed on March 11, 1997.

    (24) Account No. 37021765, a CD, was opened in the name of 
Redwing Holdings Inc. in Miami on September 13, 1996, and 
closed on March 28, 1997.

    (25) Account No. 38813689 was opened in the name of 
Redwing Holdings Inc. in Miami on March 27, 1997, and closed on 
April 17, 1997.

    (26) Account No. 37025678, a CD, was opened in the name of 
Redwing Holdings Inc. in Miami on January 7, 1999, and closed 
on May 1, 2000.

    (27) Account No. 32004246, a CD, was opened in the name of 
Redwing Holdings Inc. in Miami on December 13, 1999, and closed 
on April 12, 2000.

    (28) Account No. 38814373 was opened in the name of 
Redwing Holdings Inc. in Miami on April 7, 2000, and closed on 
August 28, 2000.

    (29) Account No. 38812080 in the name of Redwing Holdings 
Inc. was opened and closed in Miami on unknown dates.

    Account Secrecy. Citigroup took a number of steps that 
helped to keep the existence of the Pinochet accounts secret. 
For example, none of the 15 personal accounts opened for 
Augusto Pinochet over a 14-year period ever carried his given 
name, in either New York or Miami. Instead, the six New York 
accounts used ``J. Ramon Ugarte'' or ``Jose Ramon Ugarte.'' The 
nine Miami accounts used ``Jose Ugarte'' or ``Jose Pinochet 
Ugarte,'' later shortened to ``Jose P. Ugarte.''
    Some Pinochet family member names were also disguised. For 
example, all six of the New York accounts opened for Augusto 
Pinochet began or were converted to joint accounts with his 
son, but none of them used the son's full name, instead 
identifying him as ``Marco P. Hiriart.'' The one Citigroup 
account opened for Mr. Pinochet and his wife styled his wife's 
name as ``Lucia P. Hiriart.'' In contrast, Mr. Pinochet's two 
daughters were named on their personal accounts as either 
``Lucia Pinochet Hiriart'' or ``Maria Veronica Pinochet.''
    Citigroup also opened 29 accounts and CDs in New York or 
Miami in the name of offshore entities established or arranged 
by Citigroup at the request of Marco or Ines Lucia Pinochet. 
For example, Meritor Investments Ltd. is an offshore 
corporation which was established in the Bahamas in 1994, by 
Cititrust (Bahamas) td. (hereinafter ``Cititrust'') at the 
request of Marco Pinochet. Citigroup documents indicate that 
Meritor Investments Ltd. is owned by Trust FT-5994N, a numbered 
trust which Cititrust had established in the Bahamas at the 
same time and for which Cititrust acts as the Trustee.\87\ 
Citigroup documentation indicates that the sole beneficial 
owner of both Trust FT-5994N and Meritor Investments Ltd. is 
Marco Pinochet. Cititrust and its affiliates have administered 
both the corporation and the trust since their inception.\88\
---------------------------------------------------------------------------
    \87\ Some account documentation seems to indicate that the numbered 
trust was the true owner of the funds in the Meritor accounts and 
loaned these funds to the corporation for its use. The purpose of such 
an arrangement is unclear, but may have been a tax motivated device to 
enable Meritor to claim it had no funds subject to taxation--only 
loans. See, e.g., ``Meritor Investments Ltd. Unaudited Schedule of Loan 
Payable to Trustee for the Period July 20, 1994 to June 30, 1995,'' 
undated, Bates C002273; untitled Citigroup document regarding ``Marxx 
Hiriaxx--Meritxx,'' undated, Bates C001713 (``PACT is a fiduciary 
product we used to sell to clients which is a structure in which a 
Trust owns a PIC [Private Investment Company]. . . . [I]t allows 
various tax benefits and administration benefits to the client. . . 
.'').
    \88\ Cititrust established still another offshore trust in the 
Bahamas, Trust IT-5978N, to hold insurance assets for the benefit of 
Marco Pinochet, but this trust apparently never acquired any assets.
---------------------------------------------------------------------------
    Citigroup also arranged for an offshore trust and 
corporation for Ines Lucia Pinochet. Trust MT-4964N is a 
numbered trust in the Bahamas established by Cititrust in 1991. 
Citigroup documentation indicates that Ms. Pinochet is this 
trust's beneficial owner, and Cititrust and its affiliates have 
managed the affairs of this trust since its inception. 
Citigroup also arranged for Ines Lucia Pinochet to acquire 
control of an offshore corporation known as Redwing Holdings 
Inc., a bearer-share corporation in the British Virgin Islands 
(BVI).\89\ According to Citigroup documentation, Ms. Pinochet 
is the beneficial owner of this corporation, which has been 
managed since her acquisition of it by Torman Ltd., rather than 
Citigroup. Although Citigroup does not normally establish 
bearer share corporations for its clients or open accounts for 
offshore corporations managed by third parties, it made an 
exception for Redwing Holdings and agreed to provide financial 
services to this bearer share corporation beginning in 1991.
---------------------------------------------------------------------------
    \89\ A bearer share corporation is a corporation that is owned by 
whomever has physical possession of the corporation's shares. Such 
corporations are generally viewed as posing increased risks of money 
laundering due to the difficulty of determining who has physical 
possession of the shares. Cititrust apparently asked a BVI company 
formation agent called Torman Ltd. to obtain a BVI corporation for its 
client, because Citigroup does not itself have a BVI affiliate that 
could perform the work. The incorporation papers indicate that Redwing 
Holdings was actually formed in 1989. It is not clear whether this 
corporation was active prior to its association with the Pinochet 
family.
---------------------------------------------------------------------------
    From 1998 until March 2000, Augusto Pinochet was the 
subject of numerous civil and criminal proceedings in Spain, 
the United Kingdom, and Chile, including issuance of a 1998 
Spanish court order directing financial institutions to freeze 
Mr. Pinochet's assets on a worldwide basis. These proceedings 
and issuance of the freeze order were repeatedly described in 
international, Chilean, and U.S. news media reports. Throughout 
this period, Citigroup failed to alert any court or law 
enforcement entity to the accounts it had held for Mr. Pinochet 
personally until 1996, to the account held by Marco Pinochet in 
trust for ``Ramon Ugarte'' until 1999, or to the accounts the 
bank continued to manage for his children.

    Due Diligence. Citigroup began its relationship with the 
Pinochet family more than 20 years ago, at a time when anti-
money laundering (AML) aws were relatively new and a due 
diligence culture requiring banks to ``know your customer'' had 
not yet taken hold. Over time, U.S. banking regulations and 
laws increased due diligence and AML requirements, particularly 
for private banking accounts and accounts held by public 
figures, their immediate family members, and close associates. 
Most of the Pinochet accounts at Citigroup were handled by 
Citibank Private Bank and treated as public figure accounts 
requiring enhanced due diligence.
    Over the past 10 years, despite having excellent anti-money 
laundering policies and procedures on paper, Citibank Private 
Bank has undergone repeated criticism for poor due diligence 
practices, lax implementation of its AML controls, and failure 
to close accounts for foreign public figures who appear to be 
depositing the proceeds of foreign corruption into their 
private banking accounts. For example, in 1996, as part of an 
industry-wide review of anti-money laundering controls in the 
private banking industry, the Federal Reserve Bank of New York 
examined Citibank Private Bank and found so many AML 
deficiencies that it conducted three major audits, from 1996 to 
1998, to compel the bank to correct identified problems. In 
1997, the Federal Reserve Bank and the OCC, Citigroup's primary 
regulator, informed Citigroup's Board of Directors of the 
Private Bank's AML problems and asked for corrective action. In 
response, the Board initiated a ``fundamental review'' of the 
bank and, in 1998, announced a new strategy to move Citibank 
Private Bank away from providing clients with ``secrecy'' and 
toward providing them with good investment returns.
    In November 1999, this Subcommittee held a hearing and 
issued a Minority Staff Report presenting extensive evidence of 
Citibank Private Bank's ongoing poor due diligence and AML 
practices, using four examples of private banking accounts held 
by public figures with millions of dollars in questionable 
funds, including nearly $90 million that had been deposited by 
Raul Salinas, brother of the then President of Mexico.\90\ 
Citibank Private Bank committed to further reforms, especially 
for public figure accounts. In 2001, after the 9-11 tragedy, 
Congress enacted the Patriot Act which, among other provisions, 
imposed a statutory requirement on U.S. financial institutions 
to conduct enhanced due diligence of private banking accounts 
for foreign public figures, their family members, and close 
associates. In 2004, however, in an indication of ongoing AML 
deficiencies within the Private Bank, the Financial Services 
Agency of Japan determined that, due to poor AML practices and 
other misconduct, Citibank Private Bank had engaged in improper 
transactions and harmed customers, and ordered it to leave the 
country. In response, Citigroup closed down its Japanese 
private banking operations, apologized to Japan, and fired the 
head of Citibank Private Bank.\91\
---------------------------------------------------------------------------
    \90\ See 1999 Subcommittee Private Banking Hearings and Minority 
Staff Report.
    \91\ See, e.g., ``Citi's Compliance Collapse,'' Securities Industry 
News, 10/25/04; ``A Bad Week in Japan for the Giant American Bank,'' 
The Economist, 9/25/04.
---------------------------------------------------------------------------
    Citigroup's due diligence practices regarding the Pinochet 
accounts, while they improved over time, were marked by 
misinformation and substantial gaps. Citigroup's most 
significant due diligence failures occurred with respect to the 
accounts opened for Augusto Pinochet.

    --Augusto Pinochet Accounts. Citigroup opened its first 
account for Augusto Pinochet in New York in 1981, and its first 
account for him in Miami in 1985. Citigroup has limited records 
regarding the bank employees who opened and managed these 
accounts for the first few years, but records show that, from 
1987 until the accounts closed in 1996, the New York accounts 
were handled by a single relationship manager in the New York 
branch. The Miami accounts were handled by a different 
relationship manager in the Miami branch from 1984 until the 
accounts closed in 1993. Apparently, the two relationship 
managers were not aware of their respective sets of Pinochet 
accounts. In addition, according to Citigroup, for many years, 
neither of these relationship managers realized that she was 
handling accounts for Augusto Pinochet, then the President of 
Chile; instead, each thought she was handling accounts for 
Augusto Pinochet's brother.
    Citigroup told the Subcommittee that, during the 9 years 
she handled his accounts, the Miami relationship manager never 
met her client, and was under the impression that ``Jose 
Pinochet'' was the brother of Augusto Pinochet and the uncle of 
Ines Lucia and Marco Pinochet. Citigroup told the Subcommittee 
that the relationship manager dealt primarily with Ms. Pinochet 
when handling the Miami accounts. Citigroup indicated that it 
was not until 1992, that the Miami relationship manager learned 
from Ms. Pinochet that ``Jose'' was, in fact, her father, 
Augusto Pinochet. Citigroup indicated that upon learning this 
information, the relationship manager promptly informed the 
head of the Citigroup Florida branch who, in turn, decided that 
his branch did not want to handle accounts for Augusto 
Pinochet. Over the course of about a year, the Florida branch 
closed all of its Augusto Pinochet accounts, with the last 
three closing sometime before June 1993.
    Citigroup told the Subcommittee that the Miami relationship 
manager apparently did not communicate her discovery or the 
decision to close the Miami accounts to her counterpart in New 
York. Citigroup indicated that the Miami relationship manager 
may not have been aware of the New York accounts, since, during 
the early 1990s, relationship managers did not normally 
disclose their clients to each other, Citigroup did not then 
track all of the accounts associated with a particular client, 
and the New York accounts carried a different name, ``J. Ramon 
Ugarte,'' than the ``Jose P. Ugarte'' accounts in Miami.
    Citigroup has indicated that the New York relationship 
manager handled the Pinochet New York accounts for about 9 
years, from about 1987 to 1996, without ever meeting her 
client. Citigroup told the Subcommittee that, throughout this 
period, the relationship manager thought that ``J. Ramon 
Ugarte'' was the brother of Augusto Pinochet. Citigroup 
indicated that the relationship manager learned the true 
identity of her client for the first time when informed by the 
bank earlier this year.
    The New York branch gradually closed Mr. Pinochet's six New 
York accounts over a 2-year period, from September 1994 to 
September 1996, acting each time in response to a request by 
Mr. Pinochet to close the relevant account. For 3 more years, 
until 1999, Mr. Pinochet was the beneficiary of a New York 
checking account opened in the name of ``Marco P. Hiriart in 
trust for Ramon Ugarte.'' \92\
---------------------------------------------------------------------------
    \92\ In May 1999, Marco Pinochet changed the account title, 
replacing ``Ramon Ugarte'' with his wife, ``Maria Soledad Olave 
Gutierrez.''
---------------------------------------------------------------------------
    During the years the Augusto Pinochet accounts were open in 
New York and Miami, the account documentation does not contain 
any substantive analysis of the source of his wealth or the 
source of the funds in his accounts, despite hefty balances 
that reached $3.1 million.\93\ The New York account opening 
documentation in 1981 consists of a one-page application form 
with minimal information, documents showing that ``Jose Ramon 
Ugarte'' had accounts with two banks in Chile, and a copy of a 
passport for ``Jose Ramon Ugarte,'' bearing the signature, ``J. 
Ramon Ugarte.'' \94\ The Miami account opening documentation in 
1985, contains even less information.\95\ It describes ``Jose 
Pinochet Ugarte'' as a retiree or ``Empleado-Jubilado'' and 
waives the requirement for two references. The form incorrectly 
describes ``Lucia P. Hiriart'' as his ``niece.'' In April 1990, 
a memorandum notes that the client changed the title on his 
accounts from ``Jose Pinochet'' to ``Jose P. Ugarte,'' without 
providing any explanation.\96\ In 1994, the New York branch 
grants a ``Documentation Waiver Request'' for one of the 
accounts, relieving the relationship manager of an obligation 
to obtain written bank references for the client, since ``J. 
Ramon Ugarte'' had been an ``excellent client since 1982.'' 
\97\
---------------------------------------------------------------------------
    \93\ See, e.g., memorandum dated 5/12/92, from Emilie O'Neil to 
Saraminta Perez, Bates C000277 (``Please confirm . . . you have opened 
cash reserve account with $974,791. . . . Also sweep $56,000 more on 5/
15.'').
    \94\ See New York account opening documentation, Bates C003069-73; 
C000057.
    \95\ See Miami account opening documentation, Bates C004523; 
C000271.
    \96\ Memorandum dated 4/13/90, from Emilie Judd O'Neil to Maria 
Cuneo, ``Jose Pinochet/Jose P. Ugarte,'' Bates C004531. Other documents 
indicate that this name change actually took place in May 1989. See, 
e.g., email dated 4/9/90, from Cristine Sikto to Zoila Doria, 
``Pinochet/Ugarte'' Bates C004532.
    \97\ Memorandum dated 2/15/94, to Josephine Piazza, Documentation 
Control Unit, ``RE: Documentation Waiver Request,'' Bates C002215.
---------------------------------------------------------------------------
    In short, according to Citigroup, for the bulk of the 14 
years Mr. Pinochet's accounts were open in New York and Miami, 
the two relationship managers handling his accounts never met 
their client and did not know his true identity. In addition, 
neither ever evaluated the source of the funds in his accounts.

    --Marco Pinochet Accounts. Citigroup's due diligence 
analysis of Mr. Pinochet's son, consistently styled as ``Marco 
P. Hiriart'' on Citigroup accounts, was also marked by 
deficiencies. Marco was closely associated with many of the 
accounts opened by his father at Citigroup. For example, all 
six of Augusto Pinochet's New York accounts began or were 
converted to a joint account with Marco. Marco also held two 
New York accounts ``in trust for J. Ramon Ugarte,'' a checking 
account opened for 14 years, from 1985 to May 1999, and a 
custody account opened for 3 years, from February 1993 until 
February 1996. Marco and Augusto took out a joint $2 million 
loan from Citigroup in 1993. Marco also opened multiple 
Citigroup accounts under his own name, with his wife, or in the 
name of his offshore corporation, Meritor Investments.
    Citigroup's account opening documentation for the first 
account opened under Marco's own name, in June 1985, describes 
him as a ``diplomat'' and identifies his ``business'' as the 
``Embassy of Chile'' in Washington, D.C.\98\ Account opening 
documentation for subsequent accounts during the 1980s and the 
first half of the 1990s provide little or no additional 
information about his employment or business interests. In 
contrast, beginning in 1996 and extending to 2004, Citigroup 
prepared increasingly detailed analyses of his business 
interests in documentation associated with his personal 
accounts and the accounts opened for Meritor Investments. These 
analyses appear in a variety of documents over the years, 
entitled as client profiles, know-your-customer forms, or 
financial questionnaires. Some of these documents provide 
estimates of his net worth, estimates which varied from $9.1 
million in an undated document, to $15 million in a 1998 client 
profile, to $5.3 million in a 2000 profile, which is the figure 
generally used in the final 4 years his accounts are open at 
Citigroup.\99\ The documents dated 1996 and later describe the 
source of his funds as deriving from his ownership of several 
Chilean businesses, including a real estate investment company, 
a chain of clothing stores, a motorcycle and small boat import 
business, and a business that provides aeronautical equipment 
advisory services.\100\ The documents also cite earlier bank 
loans that were used to generate investment returns and a 
portfolio of marketable securities. Several of the account 
documents mention confidentiality concerns. For example, a 1998 
client profile states that Marco is ``very concerned about 
confidentiality,'' while another states that he ``does not want 
contact from Chilean Citibank employees.'' \101\
---------------------------------------------------------------------------
    \98\ Citigroup document, ``Banking Account Application'' for Marco 
P. Hiriart, 6/7/85, Bates C002111-14.
    \99\ See, e.g., Citigroup ``Financial Questionnaire'' for Marco P. 
Hiriart and his wife, undated, Bates C002396-98; Citigroup ``Client 
File [110776 UGARTE 2] Client Profile Form,'' 10/23/98, Bates C001688-
99, at 1693; Citigroup untitled document, 2/11/00, Bates C002614.23-25.
    \100\ See, e.g., Citigroup untitled document, 2/11/00, Bates 
C002614.23-25 at 24.
    \101\ Citigroup ``Client File [983077 MERITOR 1] Client Profile 
Form,'' 10/23/98, Bates C001663-72 at 67; Citigroup ``Client File 
[110776 UGARTE 2] Client Profile Form,'' 10/23/98, Bates C001688-99 at 
95. See also Citigroup memorandum dated 1/26/93, from Maureen Ruggiero, 
Marco Pinochet's private banker, to ``PMS/IIS/Banking Products 
Documentation Unit,'' Bates C002416.
---------------------------------------------------------------------------
    In mid-2000, the account documentation indicates that 
Citigroup made a decision to exit the relationship with Marco 
Pinochet.\102\ This decision may have been part of a larger 
bank review of public figure accounts within the Private Bank. 
The decision was carried out very slowly over the following 3 
years. The account documentation cites various reasons over 
time for exiting the relationship, including that Marco was not 
within the Private Bank's target market, his accounts did not 
present sufficient business opportunities, and, in 2004, that 
negative information had surfaced about his father. Marco's 
last personal account closed in October 2003. Three accounts 
held by Meritor Investments Ltd. and two held by his wife 
closed in 2004.\103\
---------------------------------------------------------------------------
    \102\ See, e.g., Citigroup ``KYC Individual Report,'' 4/16/01, 
Bates C002614.58-62 at 58. (``We plan to terminate this relationship . 
. .'').
    \103\ Citigroup explained that it had delayed closing one or more 
of the accounts, because Marco Pinochet had invested in a proprietary 
Citigroup investment account that had lost money and was not 
transferable to another bank. After waiting for a period for the fund 
to recover, Citigroup closed his accounts.

    --Ines Lucia and Maria Veronica Pinochet Accounts. 
Beginning in 1983, Ines Lucia Pinochet opened multiple accounts 
at Citigroup under her own name; the name of her offshore 
corporation, Redwing Holdings; and the name of her offshore 
numbered trust, Trust MT-4964N. From 1983 until 1993, she was 
also the primary contact for Citibank Private Bank personnel in 
Miami on matters involving her father's Miami accounts. Her 
sister, Maria Veronica Pinochet, opened her first accounts at 
Citigroup 10 years later, beginning in 1995, all under her own 
name.
    As with the Marco Pinochet accounts, the due diligence 
analysis of the Ines Lucia Pinochet accounts is very limited at 
first and becomes progressively more detailed. During the 1980s 
and early 1990s, virtually no analysis of deposits or 
transactions appears in the account documentation; beginning in 
1998, increasingly detailed analyses are provided. The account 
documents identify the main sources of her wealth as real 
estate investments and marital assets. The documentation notes 
that her accounts were generally in six figures, and that her 
father had not played any apparent role in the banking 
relationship. On occasion, Ines Lucia Pinochet also obtained 
extensions of credit from Citigroup, which she repaid. In 1998, 
Citigroup began negotiations to close her accounts, because her 
assets were below the Private Bank's minimum. In late 1999 or 
early 2000, the bank formed an exit strategy to end the 
relationship. The last of her personal, trust, and Redwing 
Holdings accounts closed in January 2001. Account documentation 
for Maria Veronica Pinochet is very limited. Several of her 
accounts closed in 2004.
    For at least the first 13 years that the Marco and Ines 
Pinochet accounts were open, from 1983 to 1996, the Citigroup 
account documentation contains virtually no due diligence 
information on the source of their wealth or the source of the 
funds in their accounts, despite the deposit of millions of 
dollars into the Marco accounts and hundreds of thousands of 
dollars into the Ines accounts. Beginning in 1996, the bank's 
due diligence analyses grow increasingly detailed, identifying 
specific assets and businesses that support the level of funds 
in the accounts. These later records do not attempt, however, 
to go back in time to explain how Marco and Ines Lucia Pinochet 
acquired their wealth prior to 1996.

    Transactions of Interest. Bank records show that the 63 
U.S. accounts and CDs opened by Citigroup for Mr. Pinochet and 
his immediate family members were used in a variety of ways. 
Some of the Pinochet accounts experienced numerous deposits and 
withdrawals, and contained substantial sums, at times in the 
millions of dollars. A number of the Pinochet accounts 
transferred funds to or from other Pinochet accounts at 
Citigroup, creating internal funding shifts which make it 
difficult to track the flow of funds. For example, in 1992, one 
Augusto Pinochet account contained more than $3 million; the 
same $3 million later appears to have been shifted to a Meritor 
account. At the same time, other Pinochet accounts saw 
relatively little activity and contained relatively modest 
amounts. In July 1995, based upon available records, it appears 
there was a minimum of $3.6 million in the Pinochet-related 
accounts in the United States open at that time.
    While an exhaustive analysis is beyond the scope of this 
Report, a few transactions illuminate how Mr. Pinochet used the 
Citigroup accounts to move funds within the United States and 
across international lines, transact business, and construct an 
international web of secret accounts.

    --In March 1990, Mr. Pinochet closed Riggs Bank Account 
No. 450858, which had been opened in the name of Jose R. 
Ugarte, and withdrew the remaining funds in the account, 
totaling $96,378.22, using a Riggs cashiers check. On March 15, 
1990, that cashiers check was deposited into Miami Citigroup 
Account No. 12032544, which was then open in the name of Jose 
P. Ugarte and Lucia P. Hiriart.

    --On June 24, 1992, an unidentified Citigroup account, 
believed to be one of the 63 Pinochet-related accounts, sent a 
$280,000 wire transfer to a military officer account at Riggs, 
Account No. 709345 in the name of Gabriel Vergara. A similar 
transaction took place on November 13, 1992, with a wire 
transfer for $185,000. In less than 6 months, then, these two 
transfers had moved a total of $465,000 from Citigroup to the 
Vergara account at Riggs.

    --On April 25, 1996, Meritor Investments, the offshore 
corporation controlled by Marco Pinochet, sent a $403,000 wire 
transfer from Citigroup Account No. 10328149 in New York, 
through a Bahamas clearing account, to Washington Riggs Account 
No. 76750393 which was opened in the name of Augusto Pinochet 
Ugarte and Lucia Hiriart Rodriguez. These funds later 
contributed to a $1 million wire transfer to a Bahamas Riggs 
account opened in the name of Ashburton Co. Ltd., an offshore 
corporation controlled by Augusto Pinochet.

    --On May 18, 2000, Citigroup closed accounts associated 
with Ines Lucia Pinochet and provided her with a $390,000 
Citibank cashiers check made payable to Redwing Holdings Inc. 
On May 25, 2000, she deposited that check into her newly opened 
Riggs Account No. 75256035 in London.

    Regulatory Oversight. From 1996 through 1998, U.S. bank 
regulators audited a number of aspects of Citibank Private 
Bank, but apparently never examined any of the Pinochet 
accounts, perhaps because the last Augusto Pinochet personal 
account closed in 1996, and the Marco P. Hiriart account held 
in trust for ``Ramon Ugarte'' did not carry his father's given 
name.
    As mentioned earlier, from October 1998 until March 2000, 
Augusto Pinochet was the subject of multiple civil and criminal 
proceedings and numerous international news media stories, 
including the issuance of a 1998 Spanish court order seeking to 
freeze his assets on a worldwide basis. Throughout this period, 
Citigroup failed to alert its U.S. regulators, or any court or 
law enforcement entity, to the accounts it had held for Mr. 
Pinochet until 1996, to the account held by Marco Pinochet in 
trust for ``Ramon Ugarte'' until 1999, or to the accounts the 
bank continued to hold for his children.\104\
---------------------------------------------------------------------------
    \104\ On several occasions, the news media has reported that Marco 
Pinochet denied allegations that his father had bank accounts outside 
of Chile. See, e.g., ``Lagos asegura que Pinochet no esta sobre la ley 
y pide informe a Congreso de EEUU,'' UPI Chile, 7/15/04; ``Rights-
Chile: Embattled Pinochet Scores Small Victory,'' IPS-Inter Press 
Service/Global Information Network, 5/17/01 (``Marco Antonio Pinochet . 
. . denied that his father held any accounts abroad.''). Marco Pinochet 
apparently made these statements even though, for a 15-year period from 
1984 to 1999, he shared eight joint accounts with his father at 
Citigroup in New York.
---------------------------------------------------------------------------
    On June 26, 2002, the OCC contacted Citigroup and asked 
whether Citibank Private Bank had any accounts for Mr. Pinochet 
or his wife, including accounts opened under a list of 
disguised variants of their names.\105\ On June 27, 2002, an 
internal OCC email reports that the head of Citigroup's global 
anti-money laundering group responded that an earlier global 
search had not turned up any Pinochet accounts at the bank.
---------------------------------------------------------------------------
    \105\ The OCC made this inquiry to Citigroup in connection with its 
then ongoing review of the Pinochet accounts at Riggs Bank. Facsimile 
dated 6/26/02, from OCC to Citibank, Bates C010408-09.

---------------------------------------------------------------------------
    ``Citibank indicates that:

    1) After a search of its comprehensive data base, the 
Private Banking unit did not identify any accounts relating to 
any of the specified names.

    2) On the possibility that an account may exist in 
Citibank but outside of the Private Banking unit, [the head of 
Citigroup's global anti-money laundering group] indicated that 
a global search for Pinochet had been conducted when the 
adverse publicity first arose = no accounts found. . . . He 
stated Citibank would be happy to conduct additional follow-up 
if [account numbers or other detailed information] was 
available.'' \106\
---------------------------------------------------------------------------
    \106\ Email dated 6/27/02, from an OCC examiner to multiple OCC 
officials, ``RE: Request for Information on Pinochet,'' Bates 
OCC0000045716-17 at 16.

Based upon this information, the OCC did not pursue the matter 
further at Citigroup and did not learn of Citigroup's 
relationship with the Pinochet family until 2004.
    When asked about the 2002 OCC inquiry, Citigroup told the 
Subcommittee that, although it had records showing it received 
the inquiry, it had no record showing that the bank ever 
conducted any search in response to the request or provided the 
described information to the agency. The bank said that none of 
the bank personnel named in the emails recalled either 
conducting a search or responding to the OCC in this matter. 
The bank noted that its alleged response was provided less than 
24 hours after the request was first made, which would have 
been highly unlikely and would not have permitted sufficient 
time for an electronic search of the bank's records.
    Citigroup also pointed out that, as of June 2002, Mr. 
Pinochet and his wife's personal accounts had been closed for 6 
years, and the bank was in the process of closing accounts for 
other Pinochet family members. Citigroup indicated that, even 
so, its normal practice would have been to inform its regulator 
of the closed and related accounts. Citigroup could not explain 
why this information was not conveyed to the OCC in 2002. It 
was not until July 2004, 2 years later, that Citigroup first 
alerted the OCC to its years-long relationship with the 
Pinochet family.

  B. Banco de Chile

    Banco de Chile is one of the oldest and largest banks in 
Chile.\107\ With total assets in 2004 of $15.8 billion, it 
offers a wide range of financial services, including retail 
banking, private banking, and investment services. It is a 
publicly traded corporation, with headquarters in Santiago, 
Chile, and more than 240 branch offices throughout the country. 
Banco de Chile also operates in several other countries, but 
apparently accepts deposits only in Chile and the United 
States. A Chilean subsidiary of the bank, Banchile Corresdores 
de Bolsa S.A. (``Banchile''), provides the bank's clients with 
brokerage and investment services.
---------------------------------------------------------------------------
    \107\ Information about Banco de Chile is taken from its website, 
public filings, subpoenaed documents, interviews with bank 
representatives, and information supplied by other financial 
institutions. The relevant documents are maintained in Subcommittee 
files.
---------------------------------------------------------------------------
    Banco de Chile-United States maintains two offices in the 
United States, a branch office in New York first established in 
1982, and an agency office in Miami, which was established in 
1994 and upgraded to a branch office in early 2004. These U.S. 
branches primarily provide international banking services for 
the bank's Chilean clients. In addition, Banchile acts as an 
introducing broker to help Banco de Chile clients open 
brokerage accounts in the United States. For a number of years, 
Banchile helped Banco de Chile clients open brokerage accounts 
at Lehman Brothers, a U.S. licensed broker-dealer. In 2004, 
Banchile began doing business with Pershing Securities, another 
U.S. licensed broker-dealer and a subsidiary of The Bank of New 
York. Banchile then moved the Banco de Chile client accounts 
from Lehman Brothers to Pershing Securities.\108\
---------------------------------------------------------------------------
    \108\ Lehman Brothers and Pershing Securities acted as clearing 
brokers for the brokerage accounts introduced by Banchile. According to 
all parties involved, the contracts related to these accounts were 
clear that Banchile and Banco de Chile-United States were responsible 
for conducting all needed due diligence for clients wishing to open 
U.S. brokerage accounts. Banchile and Banco de Chile-United States were 
also responsible for initiating all buy and sell orders and monitoring 
account activity. At Pershing Securities, clients were not allowed to 
circumvent Banchile and the bank and go directly to the securities firm 
to conduct transactions for their accounts. At Lehman Brothers, clients 
could go directly to the securities firm to conduct transactions for 
their accounts, but there is no evidence that Banchile clients relevant 
to this Report did so. Lehman Brothers and Pershing Securities fully 
cooperated with all Subcommittee inquiries and produced all requested 
information.
---------------------------------------------------------------------------
    Banco de Chile's relationship with the Pinochet family 
began in 1973, when Mr. Pinochet opened his first account at 
the bank's headquarters in Santiago, Chile. At the time, 
providing banking services to the country's President was 
considered a great honor, particularly since Mr. Pinochet had a 
reputation for honest dealing. The number of Banco de Chile 
accounts opened by Mr. Pinochet and his family in Chile, the 
amount of funds, and the source of the funds in these accounts, 
have not been disclosed to the Subcommittee due to Chilean bank 
secrecy laws and are outside the scope of this Report. What is 
known is that the bank continued its relationship with the 
Pinochet family for 32 years, until questions arose about the 
Pinochet funds at Riggs Bank. In response, Banco de Chile re-
evaluated the relationship and, in 2004, closed all Pinochet 
accounts in Chile and the United States. The bank's decision to 
close the Pinochet accounts was controversial and has attracted 
both support and criticism in Chile.
    The Subcommittee investigation has determined that Banco de 
Chile-United States maintained a 9-year relationship with 
Augusto Pinochet and his family, which began in 1995 and ended 
in 2004. Banco de Chile-United States has identified 24 New 
York and Miami accounts and CDs that were opened for Mr. 
Pinochet, members of his immediate family, and ostensibly 
unrelated third parties whose accounts served at times as 
conduits for Pinochet funds. These third parties were primarily 
offshore corporations controlled by a Chilean attorney, Oscar 
Custodio Aitken Lavanchy, who allowed them to serve as conduits 
for Pinochet funds. In addition, one account was opened in the 
name of a Chilean nonprofit organization, the Fundacion 
Presidente Pinochet Ugarte (hereinafter ``Pinochet 
Foundation'').\109\
---------------------------------------------------------------------------
    \109\ In addition to the 24 accounts, the bank identified six U.S. 
accounts opened for Mr. Pinochet's assistant, Monica Ananias Kuncar, or 
members of her immediate family. At least one of these accounts 
contains funds exceeding $250,000. Because the Subcommittee has not 
subpoenaed account documentation to determine the extent to which this 
and other Kuncar accounts may have served as conduits for Pinochet 
funds, this Report does not address them further.
---------------------------------------------------------------------------
    In addition to opening these accounts, Banco de Chile-
United States has provided individual Pinochet family members 
with various types of financial services, from arranging 
international wire transfers, to opening investment accounts, 
to providing a substantial loan to Mr. Pinochet. This 1997 loan 
for $500,000 was repaid in full in 1999, as explained below.
    In total, excluding loan proceeds, the U.S. accounts and 
CDs benefiting Mr. Pinochet appear to have accumulated funds in 
excess of $7 million. The vast bulk of these funds, about $6 
million, was transferred into Banco de Chile-United States 
accounts by Riggs Bank in 2002, after Riggs ended its 
relationship with the Pinochet family. The remaining $1 million 
was deposited into the U.S. accounts over several years, 
primarily from Pinochet-related accounts in Chile at Banco de 
Chile. The source of the funds in the Chilean accounts has not 
been disclosed to the Subcommittee due to Chilean bank secrecy 
laws.
    Banco de Chile fully cooperated with all Subcommittee 
inquiries and produced all requested documentation and 
information in the United States, including documentation 
related to an extensive internal review of the Pinochet-related 
accounts conducted at the request of the bank by outside legal 
counsel. Citing bank secrecy laws, however, Banco de Chile did 
not produce any information about Pinochet-related accounts and 
transactions in Chile. Information about accounts and 
transactions involving its Chilean operations have been 
reconstructed from Banco de Chile's U.S. wire transfer records 
and records produced by other financial institutions.
    The 24 U.S. accounts and CDs provided by Banco de Chile-
United States to the Pinochet family, from 1995 to 2004, can be 
summarized as follows.

    Personal Accounts. The three Banco de Chile-United States 
accounts opened for Mr. Pinochet in the United States are the 
following.

    (1) Account No. 442506/321 was opened in the name of Maria 
Lucia Hiriart Rodriguez and Augusto Jose Ramon Pinochet Ugarte 
in New York on August 29, 1995, and closed on March 18, 1999.

    (2) Account No. 401892/321 was opened in the name of Maria 
L. Hiriart Rodriguez and Augusto Jose R. Pinochet Ugarte in 
Miami on June 24, 1996, and closed on March 23, 1999.

    (3) Account No. 401892/331/001/002/01 was opened in the 
name of ``Pinochet Joint Miami TD,'' establishing a CD, in 
Miami on May 29, 1998, and closed on November 9, 1998.

    Pinochet Family Accounts. The five Banco de Chile accounts 
opened in the United States for members of the immediate family 
of Mr. Pinochet are the following. Several of these accounts 
contained modest amounts, and it is unclear whether or the 
extent to which each account may have been used as a conduit 
for transactions benefiting Mr. Pinochet.

    (1) Account No. 401323/321 was opened in the name of Mr. 
Pinochet's daughter, Jacqueline Marie Pinochet Hiriart, in 
Miami on September 27, 1995, and closed on December 14, 2000.

    (2) Account No. 401323/301 was opened in the name of 
Jacqueline Marie Pinochet Hiriart in Miami on December 14, 
2000, and closed on January 14, 2002.

    (3) Account No. 340/204013231 was opened in the name of 
Jacqueline Marie Pinochet Hiriart in Miami on December 14, 
2000, and closed in early 2005.

    (4) Account No. 23000690 was opened in the name of Mr. 
Pinochet's grandson, Alejandro Ponce Pinochet, in Miami on 
January 2, 2003, and closed in early 2005.

    (5) Account No. 21014466 was opened in the name of Mr. 
Pinochet's granddaughter, Francisca Lucia Ponce Pinochet, in 
Miami on August 30, 2004, and closed in early 2005.

    Third Party Accounts. Between November 1997 and July 2003, 
Banco de Chile-United States opened 11 U.S. accounts in the 
name of third parties which served at times as conduits for 
Pinochet funds. All but one of these accounts were opened in 
the name of an offshore corporation controlled by Mr. Aitken. 
These corporations are Abanda Finance Ltd., which was 
incorporated in the British Virgin Islands (``BVI''); Belview 
International Inc., another BVI corporation; Sociedad de 
Inversiones Belview Int S.A., a Chilean corporation; Eastview 
Finance S.A., a BVI corporation; G.L.P. Ltd., a BVI 
corporation; and Tasker Investments Ltd., a BVI corporation. 
The final account was opened for the Pinochet Foundation.

    (1) Account No. 101136/345/001/002/01-04, for four CDs, 
was opened in the name of Eastview Finance S.A. in Miami on 
November 10, 1997, and closed on March 24, 1999.

    (2) Account No. 101136/335/001/002/01-04 was opened in the 
name of Eastview Finance S.A. in Miami on November 10, 1997, 
and closed on August 9, 1999.

    (3) Account No. 101136/335/001/003/01 was opened in the 
name of Eastview Finance S.A. in Miami on July 10, 1998, and 
closed on August 31, 1998.

    (4) Account No. 310/105033261 (503326/325) was opened in 
the name of Eastview Finance S.A. in New York on November 5, 
1998, and closed on January 8, 2003.

    (5) Account No. 503326/335/001/002/01 was opened in the 
name of Eastview Finance S.A. in New York on January 7, 1999, 
and closed on August 30, 2001.

    (6) Account No. 310/105033831 (503383/324) was opened in 
the name of the Pinochet Foundation in New York on January 8, 
1999, and closed on December 14, 2004.

    (7) Account No. 310/102114411 (211441/305) was opened in 
the name of Abanda Finance Ltd. in New York on November 15, 
1999, and closed on December 31, 2002.\110\
---------------------------------------------------------------------------
    \110\ Although the Abanda New York account was used on only one 
day, November 15, 1999, and had a zero balance thereafter, it 
apparently was not closed for several years.

    (8) Account No. 310/011001328 was opened in the name of 
Sociedad de Inversiones Belview Int S.A. in New York on July 
---------------------------------------------------------------------------
17, 2002, and closed on November 8, 2002.

    (9) Account No. 310/012002183 was opened in the name of 
Belview International Inc. in New York on July 23, 2002, and 
closed on September 20, 2004.

    (10) Account No. 310/011004478 was opened in the name of 
GLP Ltd. in New York on November 19, 2002, and closed on 
September 16, 2004.

    (11) Account No. 310/021005635 was opened in the name of 
Tasker Investment Ltd. in Miami on July 26, 2003, and closed on 
September 15, 2004.

    Brokerage Accounts. In addition to opening bank accounts, 
Banco de Chile, through its affiliate Banchile acting as the 
introducing broker, helped Mr. Aitken open five brokerage 
accounts at U.S. securities firms for his offshore corporations 
Belview International Inc.; Eastview Finance S.A.; G.L.P. Ltd.; 
and Tasker Investments Ltd.

    (1) Account No. 743-13165-17-765 was opened in the name of 
Belview International Inc. at Lehman Brothers in Miami on 
August 29, 2002, and closed on November 26, 2002.

    (2) Account No. 743-13374-14-765 was opened in the name of 
GLP Ltd. at Lehman Brothers in Miami on November 21, 2002, and 
closed on May 18, 2004.

    (3) Account No. 0AJ 002418 was opened in the name of GLP 
Ltd. at Pershing Securities in New York on February 24, 2004, 
and closed on February 11, 2005.

    (4) Account No. 743-15017 was opened in the name of Tasker 
Investments Ltd. S.A. at Lehman Brothers in Miami on July 30, 
2003, and closed on April 19, 2004.

    (5) Account No. 0AJ 002392 was opened in the name of 
Tasker Investments Ltd. S.A. at Pershing Securities in New York 
on February 24, 2004, and closed on January 3, 2005.

    Account Secrecy and Due Diligence. When opening U.S. 
accounts for Mr. Pinochet and his family, Banco de Chile-United 
States dealt openly with Mr. Pinochet, a former President and 
respected figure in Chile. The bank clearly knew him and his 
family members. The first three accounts the bank opened for 
Mr. Pinochet in the United States bore his name in an open and 
transparent manner. So did the five accounts opened for 
Pinochet family members. In general, these eight accounts held 
relatively modest amounts, that attracted little concern.
    The same cannot be said about the 15 U.S. bank and 
securities accounts that the bank opened or helped to open for 
offshore corporations controlled by Mr. Aitken. Oscar Aitken 
was known to Banco de Chile-United States as a Chilean attorney 
with ties to Mr. Pinochet and a principal partner in the law 
firm of Aguero, Aitken, Frias, and Henriquez. He was also a 
longstanding client of the bank in Chile, having opened his 
first account there in 1973.
    Mr. Aitken opened his first personal account at Banco de 
Chile-United States in 1990. Four years later, in 1994, he 
opened his first U.S. account at Banco de Chile-United States 
for an offshore corporation. Banco de Chile told the 
Subcommittee that it did not help Mr. Aitken establish or 
manage any of his offshore corporations. In fact, the bank 
indicated that it does not have an offshore affiliate that 
routinely establishes or manages offshore entities for its 
clients, and only a limited number of its U.S. clients ever use 
an offshore corporation as a named account holder. The bank 
told the Subcommittee that its internal review discovered that 
Mr. Aitken was associated with eight or nine such offshore 
corporations and had many more than any other client at Banco 
de Chile-United States.\111\
---------------------------------------------------------------------------
    \111\ Banco de Chile told the Subcommittee that, in 2004, it closed 
all Chilean and U.S. accounts associated with Mr. Aitken.
---------------------------------------------------------------------------
    The bank's internal review determined that both Mr. 
Pinochet and Mr. Aitken were treated as important clients by 
Banco de Chile-United States and by the head of the bank's New 
York branch, the New York general manager, who often handled 
matters for these clients. The New York general manager was a 
longterm, well regarded employee of the bank, served as head of 
the New York branch from 1987 to 2002, and in November 2002, 
was promoted to country manager of U.S. operations. The bank's 
internal review determined that he was well acquainted with Mr. 
Aitken and knew of Mr. Aitken's ties to Mr. Pinochet whom the 
New York general manager greatly respected. The bank's internal 
review further determined that, in some cases, the New York 
branch had known that bank accounts opened in the name of 
Aitken corporations were being used to hold or transfer 
Pinochet funds. The branch had also, at times, facilitated 
transactions involving these accounts. The bank's internal 
review found that, in several instances, the New York general 
manager had failed to inform his superiors in Chile of 
important matters related to these accounts, as explained 
below. In 2004, the bank terminated his employment with the 
bank.
    From 1998 until March 2000, Augusto Pinochet was the 
subject of numerous civil and criminal proceedings in Spain, 
the United Kingdom, and Chile, including issuance of a 1998 
Spanish court order directing financial institutions to freeze 
Mr. Pinochet's assets on a worldwide basis. These proceedings 
and issuance of the freeze order were repeatedly described in 
international, Chilean, and United States news media reports. 
Throughout this period, Banco de Chile-United States failed to 
alert any court or law enforcement entity to the accounts it 
had held for Mr. Pinochet personally, in the United States, 
from 1995 until 1999.

    Transactions of Interest. The Subcommittee investigation 
has examined four sets of transactions involving Banco de 
Chile, Pinochet funds, and the United States. The first 
involves cashiers checks issued by Banco de Chile that moved 
Pinochet funds from Chile to the United States; the second 
involves Riggs cashiers checks that moved Pinochet funds from 
the United States to Chile; the third involves funds transfers 
that moved Pinochet funds from the military officer accounts at 
Riggs Bank in the United States to Banco de Chile accounts in 
Chile; and the fourth involves Pinochet-related transactions 
that utilized the offshore corporate accounts opened by Mr. 
Aitken at Banco de Chile-United States. These transactions 
illustrate how Augusto Pinochet took advantage of various 
banking services to move funds across international lines, 
often leaving a minimal audit trail for investigators to 
follow.

    --Banco de Chile Cashiers Checks. The first category of 
transactions involves Banco de Chile cashiers checks used to 
move Pinochet funds from Chile to the United States. Bank 
records show that, on at least 13 occasions from 1990 until 
1997, cashiers checks issued by Banco de Chile were used to 
transfer funds from Chile to Pinochet accounts at Riggs Bank in 
the United States. Each of these cashiers checks was issued by 
a branch of the bank in Chile, and drew upon the bank's U.S. 
dollar account in New York to enable the check amount to be 
paid out in U.S. dollars. According to the bank, in every case, 
the funds for the cashiers checks were initially provided by 
someone in Chile who purchased the cashiers check from the 
Chilean branch. The bank told the Subcommittee that it could 
not identify any of the persons who provided the underlying 
funds for the cashiers checks due to Chilean bank secrecy laws. 
The end result is that use of these cashiers checks has, in 
effect, enabled the true originators of the funds to hide their 
identities from the Subcommittee.
    Over 7 years, the 13 Banco de Chile cashiers checks moved 
about $1.3 million in Pinochet-related funds from Chile to the 
United States. The transactions are as follows.

    --On October 17, 1990, a $50,020 Banco de Chile cashiers 
check was deposited into Miami Riggs Account No. 707547 opened 
in the name of Augusto P. Ugarte and Lucia Hiriart.

    --On October 17, 1990, a $29,739 Banco de Chile cashiers 
check was deposited into a Miami Riggs account in the name of 
J.R. Pinochet.

    --On December 9, 1993, a $303,000 Banco de Chile cashiers 
check made payable to Daniel Lopez in trust for Augusto J. 
Pinochet was deposited into Miami Riggs Account No. 710053 
opened in the name of Daniel Lopez in trust for Augusto J. 
Pinochet.

    --On January 14, 1994, a $15,000 Banco de Chile cashiers 
check made payable to Daniel Lopez in trust for Augusto J. 
Pinochet was deposited into Miami Riggs Account No. 710053 
opened in the name of Daniel Lopez in trust for Augusto J. 
Pinochet.

    --On March 21, 1995, a $50,800 Banco de Chile cashiers 
check was deposited into Washington Riggs Account No. 76750393 
opened in the name of Augusto Pinochet Ugarte and Lucia Hiriart 
Rodriguez (hereinafter ``Mr. Pinochet and his wife'').

    --On February 21, 1996, two Banco de Chile cashiers checks 
totaling $232,450 were deposited into Washington Riggs Account 
No. 76750393 opened in the name of Mr. Pinochet and his wife.

    --On March 1, 1996, four Banco de Chile cashiers checks 
totaling $287,000, two made payable to ``J. Pinochet'' and two 
made payable to ``M.L. Hiriart,'' were deposited into 
Washington Riggs Account No. 76750393 opened in the name of Mr. 
Pinochet and his wife.

    --On May 20, 1997, a $193,000 Banco de Chile cashiers 
check was deposited into Washington Riggs Account No. 76750393 
opened in the name of Mr. Pinochet and his wife.

    --On August 27, 1997, a $155,000 Banco de Chile cashiers 
check was deposited into Washington Riggs Account No. 76750393 
opened in the name of Mr. Pinochet and his wife.\112\
---------------------------------------------------------------------------
    \112\ The same system was also used on one occasion to move 
Pinochet funds from Chile to London. This transaction took place on 
September 29, 1997, when a Banco de Chile cashiers check for about 
=122,000 (about $200,000) was deposited into London Riggs Account No. 
74041013 (formerly numbered 25005393) opened in the name of Augusto 
Pinochet Ugarte. See Bates RNB032282-83.

    In addition, the Subcommittee identified two occasions on 
which personal checks written on Banco de Chile accounts were 
used to transfer funds to Pinochet accounts at Riggs. These 
---------------------------------------------------------------------------
transactions are as follows.

    --On March 16, 1998, a $243,000 Banco de Chile personal 
check, made payable to M. Lucia Hiriart, was drawn on New York 
Banco de Chile Account No. 442506 and deposited into Washington 
Riggs Account No. 76750393 opened in the name of Augusto 
Pinochet Ugarte and Lucia Hiriart Rodriguez.

    --On September 23, 1998, a $147,000 Banco de Chile 
personal check, made payable to A. Pinochet, was drawn on New 
York Banco de Chile Account No. 442506 and deposited into 
London Riggs Account No. 74041013 (formerly numbered 25005393) 
opened in the name of Augusto Pinochet Ugarte.

Together, these two personal checks deposited about $390,000 
into Pinochet accounts in Washington, D.C. and London.

    --Riggs Cashiers Checks. The second category of 
transactions involves cashiers checks issued by Riggs Bank 
which were used to move Pinochet funds from the United States 
to Chile. Bank records show that Riggs Bank issued 38 cashiers 
checks, each for $50,000, in four batches from August 2000 
until April 2002, as described earlier.\113\ The first batch 
was made payable to ``Augusto Pinochet''; the second batch to 
``Maria Hiriart and/or Augusto P. Ugarte''; the third batch to 
``Augusto Pinochet Ugarte and/or Lucia Hiriart De Pinochet''; 
and the fourth batch to ``L. Hiriart and/or A.P. Ugarte.'' Each 
batch was paid for by funds from a Pinochet account or CD at 
Riggs.
---------------------------------------------------------------------------
    \113\ See 2004 Hearing Record at 151-152. Riggs issued the 38 
cashiers checks to Mr. Pinochet in the four batches as follows: 8 
checks in August 2000; 10 checks in May 2001; 10 checks in October 
2001; and 10 checks in April 2002. Two of the 38 checks were cashed by 
BankBoston; the rest were cashed by Banco de Chile in Chile.
---------------------------------------------------------------------------
    From August 2000 until August 2003, Chilean branches of 
Banco de Chile cashed 36 of the Riggs cashiers checks, for a 
total of $1.8 million. Due to Chilean bank secrecy laws, Banco 
de Chile has told the Subcommittee that it cannot provide 
documentation from Chile showing who presented each cashiers 
check and whether that person was paid in cash. According to a 
Chilean appeals court finding, the checks were cashed at Banco 
de Chile ``by a third party, despite the fact that they were 
nominative. Then various amounts of the cash in dollars were 
changed to cash in Chilean pesos on the informal market so that 
said transaction would not be reported to the Central Bank.'' 
\114\ By cashing these 36 Riggs cashiers checks over 3 years at 
its branch offices in Chile, Banco de Chile enabled Mr. 
Pinochet to move $1.8 million from the United States to Chile.
---------------------------------------------------------------------------
    \114\ Case No. 1649-2004, Court of Appeals of Santiago, 12/10/04, 
at 7.

    --Military Officer Transfers. The third category of 
transactions involves transfers that moved funds from the 
military officer accounts at Riggs Bank in Miami to Banco de 
Chile accounts in Chile. Bank records show that, on nine 
occasions from 1990 until 1996, checks or wire transfers moved 
a total of about $650,000 from the military officer accounts at 
Riggs Bank in Miami to Pinochet-related accounts in Chile at 
Banco de Chile. All but one of the documents transferring these 
funds to Chile used a disguised variant of Mr. Pinochet's name 
or the name of his personal assistant, Monica Ananias Kuncar, 
as the designated recipient of the funds. The transactions are 
---------------------------------------------------------------------------
as follows.

    --On November 26, 1990, a $17,823 check cleared which had 
sent the funds from Miami Riggs Account No. 451666 opened in 
the name of Chilean military officer Jose Miguel Latorre 
Pinochet to ``J.P. Ugarte'' at Banco de Chile in Chile.

    --On November 26, 1990, a $10,261 check cleared which had 
sent the funds from Miami Riggs Account No. 451666 opened in 
the name of Chilean military officer Jose Miguel Latorre 
Pinochet to ``J.P. Ugarte'' at Banco de Chile in Chile.

    --On September 19, 1994, a $65,000 wire transfer sent the 
funds from Miami Riggs Account No. 709345 opened in the name of 
Chilean military officer Gabriel Vergara Cifuentes, to ``Jose 
Ugarte'' at Banco de Chile Account No. 500006257104 in Chile.

    --On March 2, 1995, a $117,000 check cleared which had 
sent the funds from Miami Riggs Account No. 710467 opened in 
the name of Chilean military officer Juan Ricardo Mac-Lean 
Vergara, to ``J. Ugarte'' at Banco de Chile Account No. 
500006257104 in Chile.

    --On March 10, 1995, a $87,000 check cleared which had 
sent the funds from Miami Riggs Account No. 710467 opened in 
the name of Chilean military officer Juan Ricardo Mac-Lean 
Vergara, to ``J. Ugarte'' at Banco de Chile Account No. 
500006257104 in Chile.

    --On November 16, 1995, a $26,056 check cleared which had 
sent the funds from Miami Riggs Account No. 710467 opened in 
the name of Chilean military officer Juan Ricardo Mac-Lean 
Vergara, to an unspecified account at Banco de Chile in Chile.

    --On March 1, 1996, a $36,000 wire transfer sent the funds 
from Miami Riggs Account No. 710467 opened in the name of 
Chilean military officer Juan Ricardo Mac-Lean Vergara, to 
``Monica Anania'' at Banco de Chile Account No. 500006257104 in 
Chile.

    --On March 1, 1996, a $287,000 wire transfer sent the 
funds from Miami Riggs Account No. 710467 opened in the name of 
Chilean military officer Juan Ricardo Mac-Lean Vergara, to 
``Monica Anania'' at Banco de Chile Account No. 60069158 in 
Chile.

    --On April 2, 1996, a $6,227 wire transfer sent the funds 
from Miami Riggs Account No. 710467 opened in the name of 
Chilean military officer Juan Ricardo Mac-Lean Vergara, to 
``Monica Anania'' at Banco de Chile Account No. 60069158 in 
Chile.

    --Aitken Offshore Corporations. The fourth and final 
category of transactions involves Pinochet-related transactions 
that utilized the offshore corporate accounts opened by Mr. 
Aitken at Banco de Chile-United States. Three specific 
transactions involving these U.S. accounts illuminate how they 
were used as conduits for Pinochet funds and how, in some 
instances, a Banco de Chile-United States employee facilitated 
transactions for Mr. Aitken and Mr. Pinochet.

    --2002 Riggs Transfer of $6 Million. The most troubling 
incident involving Mr. Aitken, his offshore corporations, and 
Banco de Chile-United States took place in July 2002, when 
Riggs Bank transferred $6 million to a newly opened account at 
the Banco de Chile New York branch for Sociedad de Inversiones 
Belview S.A. (hereinafter ``Sociedad de Belview''), a Chilean 
corporation controlled by Mr. Aitken.
    On July 17, 2002, after an OCC review of its Pinochet 
accounts prompted Riggs Bank to end its relationship with Mr. 
Pinochet, Riggs Bank sent three wire transfers to Banco de 
Chile's New York branch depositing a total of about $6 million 
into the new Sociedad de Belview account.\115\ These wire 
transfers included about $5 million from Ashburton Co. Ltd.; 
about $950,000 from Althorp Investment Co. Ltd.; and $23,666.73 
from Maria Lucia Hiriart Rodriguez, Mr. Pinochet's wife. Mr. 
Aitken has apparently claimed that he informed Banco de Chile-
United States at the time that these funds were associated with 
Mr. Pinochet, but Banco de Chile employees disagree, insisting 
that at the time they were unaware of any connection between 
these funds and Mr. Pinochet. The bank also indicated to the 
Subcommittee that it did not question Mr. Aitken at the time 
about the source of the $6 million, even though the funds 
represented an amount significantly greater than any other 
transaction Mr. Aitken had brought to the bank, significantly 
exceeded the bank's estimate of his net worth, and took place 
the same month the Patriot Act had required the bank to tighten 
its U.S. AML controls.
---------------------------------------------------------------------------
    \115\ See account statement for Sociedad de Inversiones Belview 
Int. S.A., Bates PSI01460. Mr. Aitken had apparently asked for this new 
account to be opened on an ``urgent'' basis, making this request on the 
day of or the day before the wire transfer. Bank records indicate that 
the account was opened and allowed to accept funds on July 17, 2002, 
even though the ``Customer Application Form'' for the account is dated 
July 23, 2002, and the required Head Office approval to open the 
account is dated July 19, 2002.
---------------------------------------------------------------------------
    A week after the funds were deposited, Mr. Aitken opened 
another new account at the New York branch for Belview 
International Inc., a BVI corporation he controlled, and 
transferred $5.9 million from the Sociedad de Belview account 
to the new Belview International account. About a month later, 
Mr. Aitken transferred $5.9 million from the Belview 
International account, plus $100,000 from the Sociedad de 
Belview account, to a newly established brokerage account at 
Lehman Brothers in the name of Belview International.
    In November 2002, he transferred most of the funds in the 
Belview Lehman account to another Lehman account he had opened 
in the name of G.L.P. Ltd., a BVI corporation under his 
control. For the next 18 months, Banchile managed the assets in 
the G.L.P. account, buying and selling various securities.\116\ 
On occasion, Mr. Aitken withdrew funds from the G.L.P. Lehman 
account, depositing them into a newly opened G.L.P. checking 
account at Banco de Chile's New York branch or to other Banco 
de Chile accounts he controlled. In December 2002, Mr. Aitken 
withdrew $300,000 from the G.L.P. Lehman account and deposited 
the funds into a Lehman account he had opened for another BVI 
corporation he controlled. Six months later, he transferred 
$750,000 from the G.L.P. Lehman account to a related corporate 
account at Lehman Brothers. In July 2003, Mr. Aitken 
transferred about $1.1 million from these corporate accounts 
through a series of accounts he controlled. The funds ended up 
at a new Miami Banco de Chile account he had opened for Tasker 
Investments Ltd., still another BVI corporation he had formed. 
The next day, Mr. Aitken transferred about $1.1 million from 
the Tasker Miami account to a new Tasker brokerage account he 
had opened at Lehman Brothers. Despite multiple transfers 
through multiple accounts, apparently neither the bank nor the 
security firm required Mr. Aitken to explain the $1.1 million 
transfers.
---------------------------------------------------------------------------
    \116\ In February 2004, Banchile switched the G.L.P. securities 
account from Lehman Brothers to Pershing Securities, but continued to 
manage the account. Information from Banchile, Lehman Brothers, and 
Pershing Securities.
---------------------------------------------------------------------------
    In 2004, Mr. Aitken was interviewed by a Chilean Judge 
investigating the Riggs accounts opened by Mr. Pinochet. When 
asked whether he had possession of any Pinochet funds in the 
United States, Mr. Aitken apparently identified the funds in 
the G.L.P. and Tasker accounts as belonging to Mr. Pinochet. On 
August 12, 2004, pursuant to the Judge's direction, Mr. Aitken 
transferred these funds, then totaling about $6.8 million, from 
the United States to a bank account in Chile under the control 
of the Chilean court.\117\
---------------------------------------------------------------------------
    \117\ At that time, the funds were in accounts at Pershing 
Securities, because in February 2004, Banchile switched both the G.L.P. 
and Tasker securities accounts from Lehman Brothers to Pershing 
Securities. Pursuant to the Judge's direction, Mr. Aitken transferred 
about $5.5 million from the G.L.P. account and about $1.3 million from 
the Tasker account at Pershing Securities. These amounts apparently 
included the funds originally transferred by Riggs Bank plus interest 
and stock gains, less various withdrawals since 2002. See Bates 
PSI01008, PSI02423, PSI02397, PSI02421, PSI02414.

    --1997 Loan for $500,000. In 1997, Augusto Pinochet applied 
to Banco de Chile-United States for a $500,000 loan. On 
November 10, 1997, the New York branch of Banco de Chile issued 
the loan to Mr. Pinochet personally, but accepted loan 
collateral from Eastview Finance, S.A., (``Eastview'') an 
offshore corporation controlled by Mr. Aitken. This transaction 
provided the bank with clear evidence of a Pinochet-Aitken 
relationship. The loan transaction also had unusual features 
which should have elicited questions by the bank, but did not.
    The loan proceeds were deposited into Mr. Pinochet's New 
York account at Banco de Chile.\118\ On the same day they were 
deposited, the funds were withdrawn from that account, using a 
$500,000 personal check made payable to Coutts & Co. (USA) 
International (``Coutts'') and signed personally by Mr. 
Pinochet. That check was then delivered to the Coutts office in 
Miami. On the same day, Mr. Aitken asked Coutts to use the 
check to purchase four CDs in the name of Eastview Finance, to 
be picked up later by the Miami branch of Banco de Chile. 
Coutts declined, however, to complete the transaction before 
the personal check had time to clear. Coutts instead delivered 
the personal check to the Miami branch. On the same day, the 
Miami branch sent Coutts a Banco de Chile cashiers check for 
$500,000. Coutts accepted the cashiers check and, in return, 
issued a Coutts cashiers check in the same amount. Coutts then 
delivered its cashiers check to the Miami branch of Banco de 
Chile.\119\
---------------------------------------------------------------------------
    \118\ Pinochet Joint New York MMA account statement for November 
1997, Bates PSI02447.
    \119\ See, e.g., Pinochet personal check to Coutts. Bates PSI02448; 
Banco de Chile cashiers check, Bates PSI02445; Coutts cashiers check, 
Bates PSI02449.
---------------------------------------------------------------------------
    Following instructions provided by Mr. Aitken, the Miami 
branch used the $500,000 to establish four CDs, each in the 
amount of $125,000, and each in the name of Eastview Finance. 
Acting on behalf of Eastview, Mr. Aitken then pledged all four 
CDs as collateral for the $500,000 loan to Mr. Pinochet.
    The odd nature of this transaction derives from the fact 
that all of the $500,000 in loan proceeds were immediately 
pledged as collateral for the loan itself and not used for any 
business purpose. In addition, it is unclear why the loan was 
issued in New York, and the collateral held in Miami. It is 
also unclear why Mr. Aitken and Eastview Finance became 
involved in a loan issued solely to Mr. Pinochet. Some bank 
personnel apparently viewed Mr. Aitken's actions as consistent 
with his acting as a legal adviser to Mr. Pinochet on the loan, 
or as a guarantor of the loan amount. Another speculation was 
that the transaction was designed to make it appear that the 
funding for the Eastview CDs came from Coutts rather than Banco 
de Chile, but it is unclear why that would have been 
significant. The reason for Coutts' participation in the 
transaction is also unexplained.
    In March 1999, Mr. Pinochet repaid the New York loan in 
full, with interest. Mr. Pinochet had already made several 
payments to reduce the principal. He made the final payment 
with $250,000 supplied by Mr. Aitken who, the day before, had 
cashed in two of the Eastview CDs in Miami and transferred the 
$250,000 plus earned interest to Mr. Pinochet's New York 
account.\120\ The day after repaying the loan, Mr. Pinochet 
closed his New York account at Banco de Chile.
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    \120\ Five months earlier, in November 1998, Mr. Aitken had cashed 
the other two Eastview CDs and transferred the funds, totaling 
$250,000, to an Eastview account he had opened at the Banco de Chile 
branch in New York. Mr. Aitken did not supply the funds from these two 
CDs to Mr. Pinochet, instead retaining the funds in the new Eastview 
account. See Bates PSI01283.
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    The significance of the 1997 loan transaction is threefold. 
First, it provided the bank with clear evidence of a 
relationship between Mr. Pinochet and Mr. Aitken. This 
relationship necessarily came to the attention of bank 
officials involved with issuing the 1997 loan to Mr. Pinochet, 
arranging its collateral, and monitoring its repayment. Second, 
the loan set a precedent for later transactions in which Mr. 
Aitken used an offshore corporation he controlled to take 
custody of funds belonging to Mr. Pinochet and to transact 
business on behalf of Mr. Pinochet. Third, the transaction 
succeeded in part because of the bank's willingness to 
facilitate the transaction with few or no questions about its 
purpose, Mr. Aitken's role, or its unusual features.

    --1999 Real Estate Transaction. In 1999, Mr. Pinochet 
engaged in another transaction in the United States, that again 
involved odd circumstances, the participation of an Aitken 
offshore corporation, and reliance on Banco de Chile-United 
States to facilitate the transaction.
    On November 16, 1999, while Mr. Pinochet was under house 
arrest in London and the subject of a Spanish court order 
directing financial institutions to freeze his assets, he 
purported to transfer real property he owned in Chile, an 
apartment in Vina del Mar, to Abanda Finance Ltd., a BVI 
company controlled by Mr. Aitken. Documentation indicates that 
Mr. Pinochet purported to ``sell'' the property to Abanda 
Finance for 214.8 million Chilean pesos, or about $400,000. 
Banco de Chile investigators indicate that the actual purpose 
of this transfer was to disguise Mr. Pinochet's ownership of 
the property while allowing him to continue as the property's 
beneficial owner. The apartment is currently subject to a 
freeze order issued by a Chilean court.
    To complete the ``sale,'' Mr. Aitken opened an account for 
Abanda Finance at Banco de Chile in New York on November 15, 
1999, the day before the transaction. To give the appearance 
that a sale was actually consummated, over the course of 2 
days, November 15 and 16, Mr. Aitken initiated a series of 
transfers that sent $400,000 on a round trip through multiple 
bank accounts he controlled, including New York accounts opened 
for Eastview Finance and Abanda Finance. The intended result of 
this round trip was to provide Abanda Finance with a bank 
statement showing that it had withdrawn $400,000 from its 
account on November 15, 1999, presumably to pay for the 
apartment. In fact, it appears no funds were ever paid for the 
real estate supposedly purchased by Abanda Finance.
    Banco de Chile documentation indicates that, to carry out 
the round trip transaction, Mr. Aitken provided multiple 
letters of instruction to the New York branch. The branch then 
issued wire transfers moving the funds through six different 
accounts in the United States over 2 days, often in the names 
of offshore corporations. The transaction involved a hefty sum, 
$400,000, and moved the funds in a pattern that was explained 
beforehand to the New York branch so that it would facilitate 
the circuit of funds. Again, the bank appears to have asked 
few, if any, questions about the nature of this transaction, 
the role of Mr. Aitken, or the role of his offshore 
corporations.
    Together, the 2002 Riggs transfer, 1997 loan, and 1999 wire 
transfers, show that Mr. Aitken readily and deliberately 
allowed his offshore corporate accounts to be used as conduits 
for Pinochet funds.

    Pinochet Foundation. Still another U.S. account at Banco de 
Chile-United States, which was opened in the name of the 
Pinochet Foundation, may have served as a conduit for Pinochet 
funds. Banco de Chile closed this account in 2004.
    The Pinochet Foundation was first established in Chile in 
1995. The Foundation's website states that it is dedicated to 
promoting and preserving the values and the historic and 
cultural identity of Chile.\121\ News media reports indicate 
that the Foundation has also provided substantial financial 
assistance to Mr. Pinochet, including by paying his legal bills 
in the United Kingdom, paying rent on a luxury mansion during 
his detention in London from 1998 until 2000, and paying travel 
expenses to and from London for Pinochet aides and 
relatives.\122\ The Subcommittee has been told that the 
Foundation also provided an office for Mr. Pinochet for a 
period of time in Chile, and may have paid his office expenses.
---------------------------------------------------------------------------
    \121\ See Foundation website at www/fundacionpinochet.cl.
    \122\ See, e.g., ``The Pinochet case: now for the bill,'' Agence 
France Presse, 1/14/00; ``Pinochet followers scrounge for cash for his 
legal bills in Britain,'' Agence France Presse, 7/9/99; ``Friends 
establish fund for Pinochet,'' Austin American-Statesman (Texas), 3/14/
99.
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    The Pinochet Foundation opened a Banco de Chile account in 
New York on January 8, 1999.\123\ Persons with signatory 
authority for the New York account and, in some cases, power of 
attorney to direct transactions involving the account include 
members of Mr. Pinochet's immediate family and former members 
of the Pinochet regime. These persons are listed in the account 
opening documentation and include: Lucia Hiriart de Pinochet, 
Mr. Pinochet's wife and a member of the Foundation's board of 
directors; his daughter, Lucia Pinochet Hiriart; Hernan Briones 
Gorostiaga, the Foundation Chairman and a Chilean businessman; 
Carlos Caceres Contreras, a Foundation board member and former 
Minister of Finance during the Pinochet regime; Luis Cortes 
Villa, the Foundation's spokesperson and former head of the 
Santiago Military Guard during the Pinochet regime; Hernan 
Guiloff Izikson, Foundation Vice Chairman and Chilean 
businessman; Alberto Kassis Sabag, a Foundation board member 
and Chilean businessman; Alfonso Marquez de la Plata 
Irarrazabal, a Foundation board member and former Secretary-
General of Government during the Pinochet regime; and Jorge 
Prado Aranguiz, a Foundation board member and former Minister 
of Agriculture during the Pinochet regime.
---------------------------------------------------------------------------
    \123\ The Foundation has also had accounts at Banco de Chile in 
Chile and at other financial institutions.
---------------------------------------------------------------------------
    Altogether, deposits to the Foundation's New York account, 
from its opening in 1999 until its closing in 2004, exceeded 
$2.2 million. These deposits came from multiple sources and 
ranged in size from small to large amounts. The largest single 
deposit was $811,000, which was deposited into the account in 
August 2000, by the law firm, Kingsley Napley, that represented 
Mr. Pinochet in the United Kingdom and which was possibly 
forwarding U.K. government funds reimbursing Mr. Pinochet for 
certain legal expenses. In some cases, substantial deposits to 
the Foundation account were made by persons about whom the bank 
has little information. Examples include $200,000 in deposits 
from ``American Engineering,'' an entity about which nothing 
further is known, and a deposit of $250,000 on April 26, 2002, 
by ``Ivoryseas Marine Co. Ltd.'' from an account in Germany. 
Questions remain about who these entities are, the source of 
their funds, and the reasons for their substantial transfers to 
the Foundation.
    Major transfers of funds out of the Foundation's account 
went primarily to two recipients. The first was Kingsley 
Napley, Mr. Pinochet's U.K. legal counsel, which received a 
total of about $459,000 from the New York account. The second 
major recipient of funds was ``Chile Market Investments Ltd.,'' 
a BVI securities broker affiliated with Chile Markets S.A. 
Corredores de Bolsa, a securities broker in Chile. Repeated 
outgoing transfers of funds went from the Foundation's New York 
account to a Chile Market Investments Ltd. account at Merrill 
Lynch. There is no explanation in the account documentation 
regarding the purpose of these transfers, or what happened to 
the funds after they went into the Chile Market Investments 
account. It is possible that funds from this account were used 
for some of Mr. Pinochet's living expenses described earlier, 
such as rent during his extended detention in London, or for 
travel expenses. Due to the lack of information about the 
account's outgoing transfers, it is difficult to assess either 
the nature of these transfers or the extent to which the 
Foundation account may have served as a conduit for Pinochet 
funds.

    Regulatory Oversight. Banco de Chile-United States is 
regulated by both the OCC and the Federal Reserve Bank of 
Atlanta. The OCC oversees the bank as a whole and its New York 
branch, while the Federal Reserve Bank oversees its Miami 
branch.
    Until recently, both regulators routinely examined the 
bank's AML controls and routinely gave the bank satisfactory 
ratings. In 2004, however, after learning of the bank's 
Pinochet-related accounts, the OCC initiated an extensive 
review of the bank's AML policies and procedures and identified 
a host of major deficiencies. In February 2005, Banco de Chile 
and its New York branch entered into a 33-page consent decree 
with the OCC requiring the bank to revamp and strengthen its 
AML policies and procedures, particularly with respect to 
identifying and monitoring high risk accounts, reviewing 
accounts opened for public figures and offshore corporations, 
providing complete information in wire transfers, prohibiting 
accounts from being held under the name of someone other than 
the true owner, hiring additional compliance personnel, and 
improving bank systems for conducting audits, monitoring high 
risk accounts, and reporting suspicious activity. The same 
month, the Miami branch of Banco de Chile entered into a cease 
and desist order with the Federal Reserve Bank of Atlanta 
requiring many of the same AML reforms. The U.S. Treasury 
Financial Crimes Enforcement Network is currently considering 
whether to impose a civil monetary penalty on the bank for 
failure to comply with its U.S. AML obligations.
    Two incidents related to the Pinochet accounts merit 
additional consideration. In late June 2002, as part of its 
review of Pinochet accounts at Riggs Bank, the OCC asked Banco 
de Chile-United States whether it had any U.S. accounts for Mr. 
Pinochet. The bank disclosed that Mr. Pinochet and his wife had 
a few U.S. accounts during the late 1990s, and that Mr. 
Pinochet had been a longstanding client of the bank in Chile 
for more than 30 years.
    Banco de Chile-United States did not disclose at that time 
that there was any relationship between Mr. Aitken and Mr. 
Pinochet or that some accounts controlled by Mr. Aitken had 
been used by Mr. Pinochet to hold or transfer funds. About 2 
weeks after the OCC inquiry, on July 17, 2002, Banco de Chile-
United States received the $6 million transfer from Riggs, but 
did not contact the OCC to alert it to the transfer. Nor did 
the bank mention the $6 million transfer when an OCC examiner 
arrived at the New York branch on July 19-20 to review records 
from the closed Pinochet accounts.
    Mr. Aitken has apparently claimed that he orally informed 
the New York branch at the time that the $6 million transfer 
was associated with Mr. Pinochet, but the bank insists that 
none of its personnel was aware of a Pinochet connection to the 
$6 million at the time of the transfer. The bank points out 
that the funds came primarily from two offshore corporations, 
Ashburton and Althorp, that it did not know were associated 
with Mr. Pinochet; the funds were directed to the account of 
another offshore corporation, Sociedad de Belview, controlled 
by Mr. Aitken; and bank officials did not then notice a related 
transfer of $23,700 from Mr. Pinochet's wife, Maria Lucia 
Hiriart Rodriguez.
    Banco de Chile-United States maintains that the OCC never 
mentioned Riggs when it made its initial inquiry about Pinochet 
accounts or when its examiner researched the Pinochet accounts 
in July, and never cautioned the bank to be on the lookout for 
a Riggs transfer. The bank also points out that Riggs itself 
failed to provide any notice under Section 314(b) of the 
Patriot Act that the $6 million transfer was the result of an 
account closure, the funds were of interest to regulators, and 
the funds were associated with Mr. Pinochet. The bank maintains 
that had it received any warning in 2002 about Mr. Pinochet, 
from the OCC, the Federal Reserve Bank, or Riggs Bank, it could 
have protected the reputation of Banco de Chile by refusing the 
funds transfer.
    Two years later, on July 15, 2004, this Subcommittee 
disclosed its investigation into the Pinochet funds at Riggs 
Bank, which was widely reported on the same day by the Chilean 
news media. According to Banco de Chile, during the evening of 
July 15, 2004, Mr. Aitken contacted his account executive at 
Banchile in Chile, and asked whether it would be possible to 
move his investments out of the United States ``without a 
trace.'' The Banchile account executive informed him that such 
a transfer was not possible, and made an appointment to discuss 
the matter further in the morning. Mr. Aitken also asked the 
account executive if he had seen the articles published that 
day about Mr. Pinochet's accounts at Riggs Bank. The next 
morning, Mr. Aitken met with his account executive and told him 
that he had been managing funds for Mr. Pinochet since 1999, 
and had deposited Pinochet funds into accounts he had opened at 
Banco de Chile-United States and Pershing Securities in the 
name of certain offshore corporations. According to the bank, 
the Banchile account executive again indicated that he could 
not help Mr. Aitken move the Pinochet funds out of those 
accounts without detection.
    The same day, Banchile personnel informed senior Banco de 
Chile officials in Chile and the United States about the 
conversation with Mr. Aitken, including the head of the entire 
bank and the head of the bank's U.S. operations (who formerly 
served as the New York branch head and helped administer the 
Aitken offshore corporate accounts). Over the next 2 weeks, the 
head of Banco de Chile held several telephone conversations 
with the U.S. operations head about whether the bank was 
holding Pinochet funds in Aitken-controlled accounts and 
ordered the U.S. operations head to analyze all transfers from 
Riggs Bank into the New York branch. According to the bank, it 
was not until late in July 2004, that Banco de Chile-United 
States identified as possibly suspicious the July 2002 $6 
million transfer from Riggs Bank to the Sociedad de Belview 
account controlled by Mr. Aitken.
    On July 27, 2004, the Federal Reserve Bank of Atlanta made 
a routine annual visit to Banco de Chile in Santiago. Near the 
end of a meeting with top Banco de Chile officials, the Federal 
Reserve Bank asked whether the bank had any Pinochet accounts 
at the branches in the United States. The bank indicated that 
Mr. Pinochet was no longer a customer in the United States, and 
the bank had an ongoing investigation to gather additional 
information. The bank also disclosed that Mr. Pinochet was a 
longstanding client in Chile. The bank did not then disclose 
the $6 million transfer from Riggs Bank in 2002, or the 
likelihood that certain Aitken-controlled accounts held 
Pinochet funds. The bank has apparently since indicated that it 
should have disclosed the Aitken-Pinochet relationship and the 
Aitken offshore corporate accounts during that meeting with the 
Federal Reserve Bank.
    On August 2, 2004, Mr. Aitken apparently contacted Banco de 
Chile and informed the bank that Chilean Judge Sergio Munoz had 
directed him to transfer all Pinochet-related funds in his U.S. 
accounts to an account in Chile under court control. On August 
6, Mr. Aitken apparently told the bank that the securities in 
the G.L.P. Pershing account and the Tasker Pershing account 
were being liquidated and the proceeds would soon be ready for 
transfer. In the meantime, the bank requested and received a 
written court order to establish a court-controlled account and 
deposit the funds being transferred by Mr. Aitken. On August 
12, Mr. Aitken transferred about $5.5 million from the G.L.P. 
accounts and about $1.3 million from the Tasker accounts to the 
bank in Chile, and, on August 13, 2004, the bank deposited 
these funds into an account under the control of the Santiago 
Court of Appeals.
    In September 2004, Banco de Chile conducted a review of the 
Pinochet and Aitken accounts and, in mid-September, informed 
U.S. regulators about what the bank had found. In late 
September, the bank decided to hire outside legal counsel to 
conduct a more thorough review of both the accounts and actions 
taken by various bank officials. That internal review resulted 
in a report in December 2004.

  C. Espirito Santo Bank

    Espirito Santo Bank is a state-chartered bank with about 85 
employees in Miami, Florida.\124\ According to its website, 
Espirito Santo Bank offers ``private banking services to 
domestic and foreign clients'' and commercial and institutional 
banking services to domestic clients. It describes itself as a 
member of the ``Espirito Santo Group'' which has worldwide 
assets of 45 billion euros. It is a subsidiary of Banco 
Espirito Santo, a publicly traded bank headquartered in Lisbon, 
Portugal. The Portuguese bank has affiliates in various 
countries including Brazil, Panama, Spain, Switzerland, Uruguay 
and Venezuela. Another affiliate, Banco Espirito Santo 
(International) td. (``BESIL''), is licensed and operates in 
the Cayman Islands. Banco Espirito Santo also has a New York 
affiliate which, in response to Subcommittee inquiries, has 
stated that it has no record of any account related to Mr. 
Pinochet or his family.
---------------------------------------------------------------------------
    \124\ Information about Espirito Santo Bank is taken from its 
website, public filings, subpoenaed documents, interviews with bank 
representatives and employees, and information supplied by other 
financial institutions. The relevant documents are maintained in 
Subcommittee files.
---------------------------------------------------------------------------
    The Subcommittee investigation has determined that Espirito 
Santo Bank in Miami maintained an 8-year relationship with 
Augusto Pinochet and his family, which began in October 1991 
and ended in January 2000. Espirito Santo Bank opened at least 
six accounts and CDs in Miami for Mr. Pinochet, members of his 
immediate family, or for offshore entities controlled by Mr. 
Pinochet.\125\ Based upon available records, from 1991 until 
2000, funds totaling at least $3.9 million were deposited into 
these U.S. accounts and CDs. The bank ended the relationship at 
the request of Mr. Pinochet in 2000, and apparently has not 
done any business with the Pinochet family since then.
---------------------------------------------------------------------------
    \125\ Documentation obtained by the Subcommittee shows that, in 
addition to these U.S. accounts, BESIL provided an account in the 
Cayman Islands for the offshore trust controlled by Mr. Pinochet, the 
Santa Lucia Trust. See, e.g., fax from Linda V. DeBayle to I. Singh re: 
Santa Lucia Trust, 12/10/99.
---------------------------------------------------------------------------
    Mr. Pinochet's accounts at Espirito Santo Bank were opened 
by a former Riggs employee who had worked at Riggs 
International Banking Corporation (RIBC) in Miami and 
administered Mr. Pinochet's Miami accounts from the early 1980s 
to the early 1990s. While at RIBC, he also administered some of 
the military officer accounts opened there. In September 1991, 
he was recruited to join Espirito Santo Bank by the head of the 
bank, who was formerly the head of RIBC from 1981 until 1990, 
before assuming the top position at Espirito Santo Bank. While 
head of RIBC, he had become acquainted with Mr. Pinochet and on 
several occasions corresponded with him about his RIBC 
accounts.\126\ He also helped to open the first Chilean 
military officer account at RIBC.
---------------------------------------------------------------------------
    \126\ He told the Subcommittee that he does not recall engaging in 
any correspondence with Mr. Pinochet.
---------------------------------------------------------------------------
    Espirito Santo Bank has fully cooperated with all 
Subcommittee inquiries, producing all requested documentation 
and related information in the United States. Because the 
Pinochet accounts were established in 1991 and banks are only 
required to retain records for 5 to 7 years, however, the bank 
had not retained account statements for the period 1991 to 
1993. Other records from that period were also limited. Some of 
what the Subcommittee has learned about Espirito Santo accounts 
during those years has been reconstructed from documentation 
supplied by other financial institutions. In addition, citing 
bank secrecy laws, Espirito Santo Bank did not produce any 
information regarding Pinochet-related accounts at its Cayman 
affiliate, BESIL.

    Pinochet Accounts. The Espirito Santo accounts opened for 
Mr. Pinochet or his family in the United States are the 
following.

    (1) Account No. 115391494 was opened in the name of A.P. 
Ugarte or M. Lucia Hiriart in Miami on October 8, 1991, and 
closed on December 23, 1999.

    (2) Account No. 116150253 was opened in the name of 
Trilateral International Trading Ltd. in Miami on October 17, 
1991, and closed on January 31, 2000.

    (3) Multiple accounts issuing CDs in the name of 
Trilateral International Trading Ltd. were opened in Miami from 
at least April 1993, and with the last CD continuing until 
December 1999. Multiple account numbers were assigned to these 
CDs, including 5111, 5444, 5521, 5522, 5990, 6332, 8269, 8466, 
434104, and 492901. Individual CDs varied in amounts from 
$53,500 to $1.8 million. Several were combined, reconfigured, 
or partially redeemed upon maturity.

    (4) Account No. 116152530 was opened in the name of Banco 
Espirito Santo (International) td. as Trustee of the Santa 
Lucia Trust, in Miami, on August 24, 1993, and closed on 
January 31, 2000.

    (5) Account No. 5613, a CD, was opened in the name of the 
Santa Lucia Trust in Miami in August 1993 and transferred to a 
BESIL account for the trust in the Cayman Islands. This CD was 
cashed in December 1999.

    (6) Account No. 115399095 was opened in the name of Mr. 
Pinochet's daughter, Jacqueline Pinochet, in trust for Maria 
Jose Martinez Pinochet, Mr. Pinochet's granddaughter, in Miami 
on August 10, 1993, and closed on April 1, 1994.

    Account Secrecy. Espirito Santo Bank took a number of steps 
that helped to keep the existence of the Pinochet accounts 
secret. For example, the account opened for Mr. Pinochet and 
his wife used disguised variants of their names, ``A.P. 
Ugarte'' and ``M. Lucia Hiriart.'' Most of the accounts and CDs 
were opened in the name of offshore entities, Trilateral 
International Trading and the Santa Lucia Trust. Only one 
account, opened for Mr. Pinochet's daughter, Jacqueline 
Pinochet, actually used her given name. When asked about the 
names used on the accounts, Espirito Santo Bank officials 
stated that persons in South America frequently used disguised 
names and opened accounts in the names of offshore entities to 
protect their privacy and foil attempts at kidnapping, theft, 
or other misconduct.
    The two offshore entities holding Espirito Santo Bank 
accounts were established at different times and in different 
ways. Trilateral International Trading is a Bahamas corporation 
that was established on January 11, 1991, at Mr. Pinochet's 
request by United Management Services Ltd., a company formation 
agent in the Bahamas which also provided Trilateral with 
directors, officers, a registered office, and a registered 
agent.\127\ The account documentation plainly names Mr. 
Pinochet as the beneficial owner, although the official account 
opening form is silent as to Trilateral's true owner.\128\
---------------------------------------------------------------------------
    \127\ See letter dated 3/4/05, from Alexiou, Knowles & Co. 
representing United Management Services, Ltd. to the Subcommittee 
regarding Trilateral International Trading Ltd.
    \128\ See Espirito Santo Bank account opening form for Account No. 
116150253 in the name of Trilateral International Trading Ltd. (10/17/
91); letter dated 9/9/98, from Mr. Pinochet to Espirito Santo Bank 
(``This is to inform you to please to debit my investments accounts in 
the name of Trilateral International Trading Ltd. Acc. no. 116150253 
and Santa Lucia Trust Acc. no. 1161525230.''); Espirito Santo Bank 
account opening form for Account No. 0115391494 in the name of A. P. 
Ugarte or M. Lucia Hiriart, (10/7/91)(``Has Corp A/C N/O Trilateral 
Int'l Trading Inc.'').
---------------------------------------------------------------------------
    Two years later, in 1993, the Santa Lucia Trust was 
established in the Cayman Islands by the Cayman International 
Bank & Trust Company (``CIBATCO''). CIBATCO had an ongoing 
relationship with Banco Espirito Santo International Ltd. 
(BESIL), which then functioned as a shell bank in the Cayman 
Islands, without any employees. Upon request, CIBATCO routinely 
established and administered offshore corporations and trusts 
for Espirito Santo clients.\129\ Account documentation shows 
that Espirito Santo Bank knew that the Santa Lucia Trust was 
associated with Mr. Pinochet. For example, a CIBATCO facsimile 
to Espirito Santo regarding the Santa Lucia Trust requests 
confirmation of Mr. Pinochet's signature.\130\ In addition, an 
Amendment signed by Augusto Pinochet on March 14, 1995, 
established his wife as the trust's sole beneficiary.\131\
---------------------------------------------------------------------------
    \129\ Subcommittee interview with Espirito Santo Bank 
representatives. BESIL, which still operates in the Cayman Islands, now 
has two full time employees at that location. It still works with the 
Cayman International Bank & Trust Co. which has since been acquired and 
renamed Ansbacher (Cayman) Bank.
    \130\ Telefax from Indy Singh to Espirito Santo Bank of Florida 
``RE: Santa Lucia Trust,'' (12/13/99).
    \131\ Letter dated 4/13/95, from Edgar W. Tatman of Espirito Santo 
Bank, the account manager for the Santa Lucia Trust account in Miami, 
to CIBATCO's Managing Director, regarding the Santa Lucia Trust; and 
letter dated 9/9/98, from Mr. Pinochet to Espirito Santo Bank of 
Florida.

    Due Diligence. There is no indication in available bank 
records that Espirito Santo Bank performed any due diligence 
review, source of funds analysis, or transaction monitoring for 
the Pinochet-related accounts. The bank clearly knew who the 
client was, because the account manager had handled the 
Pinochet accounts at RIBC, and his superior, the head of 
Espirito Santo Bank, had communicated with Mr. Pinochet while 
the head of RIBC. Espirito Santo Bank pointed out that, at the 
time the Pinochet-related accounts were opened in 1991, it was 
not the bank's normal practice to evaluate the source of funds 
deposited into a client's accounts, or to monitor account 
activity, although both procedures are required by the bank's 
AML controls today.
    From 1998 until March 2000, Augusto Pinochet was the 
subject of civil and criminal proceedings in Spain, the United 
Kingdom, and Chile, including issuance of a 1998 Spanish court 
order directing financial institutions to freeze Mr. Pinochet's 
assets on a worldwide basis. These proceedings and the issuance 
of the freeze order were repeatedly described in international 
and United States news media reports. Throughout this period, 
Espirito Santo Bank failed to alert any court or law 
enforcement entity to the accounts it then held for Mr. 
Pinochet, containing millions of dollars.
    When asked why the bank closed the last of the Pinochet-
related accounts in January 2000, bank officials explained 
that, in every case where it closed a Pinochet-related account, 
the bank had acted at the request of Mr. Pinochet.

    Transactions of Interest. Virtually all of the Espirito 
Santo accounts saw multiple transfers of funds to and from 
other Pinochet-related accounts.
    Consider, for example, the first two accounts that were 
opened within a week of each other in 1991, one for Mr. 
``Ugarte'' and Ms. ``Hiriart'' and one for Trilateral 
International Trading. Over the course of the next 8 years, the 
Ugarte/Hiriart account received deposits totaling about $2.1 
million. Half this amount, about $1.1 million, came from the 
Trilateral account, in multiple transfers over time varying 
from $18,000 to $500,000 per transfer. Between August 1992 and 
August 1994, the account also received multiple transfers of 
funds totaling about $525,000 from one of the military officer 
accounts at Riggs, opened in the name of Gabriel Vergara 
Cifuentes. Another $410,000 or so came from checks drawn on 
accounts at Banco de Chile and Citigroup, where Mr. Pinochet 
and his family had numerous accounts, and from checks drawn on 
accounts at American Express International Bank and Swiss Bank 
Corporation in New York.
    Available records show withdrawals from the Ugarte/Hiriart 
account totaling about $1.8 million. They include about 
$440,000 withdrawn in various amounts for ``Daniel Lopez,'' an 
alias used by Mr. Pinochet; Mr. Pinochet's assistant, Monica 
Ananias Kuncar; his son, Marco Pinochet; a Chilean military 
official, Eugenio Castillst Cadiz, who maintained an account at 
Riggs; and his daughters, Ines Lucia and Maria Veronica 
Pinochet. Another $500,000 was wire transferred in September 
1997, to Levant Management, a Chilean company and Espirito 
Santo bank client since 1996.\132\ Another $550,000 was 
transferred to the Trilateral account, and about $350,000 went 
to various, other unknown parties. This account closed in 
December 1999.
---------------------------------------------------------------------------
    \132\ Espirito Santo Bank indicated that, in 2000, the name of 
Levant Management had changed to Rio Investment Corporation, and that 
it was related to a money exchange business in Chile called Intercam 
Turismo.
---------------------------------------------------------------------------
    Available records show that the 1991 Trilateral account 
received deposits over 8 years totaling about $3.5 million. It 
appears that the account's initial funding, about $1.19 
million, came from a Pinochet account at Riggs in 1991.\133\ 
Records indicate that another $1.4 million was deposited into 
the account in July 1993, via a credit memo. The source of 
those funds is not identified. About $550,000 was transferred 
over time from the Ugarte/Hiriart account at Espirito Santo 
Bank, together with about $195,000 from the Santa Lucia trust 
account. Another $175,000 appears to have been interest 
generated from the account and various CDs established for 
Trilateral. One account statement dated July 31, 1993, 
identifies multiple CDs whose value then totaled about $2.6 
million.\134\
---------------------------------------------------------------------------
    \133\ In January 1991, Miami Riggs Account No. 70754-7, opened for 
Mr. Pinochet and his wife, sent a $1.15 million wire transfer to the 
Bank of Bahamas for further credit to Deloitte & Touche. At the time, 
Deloitte & Touche had an agreement with Riggs to provide it with a 
variety of services, including management of Riggs Bank & Trust Co. 
(Bahamas), which was then a shell bank. Ten months later, in October 
1991, Deloitte & Touche sent a $1.19 million wire transfer to Espirito 
Santo Bank for deposit into the newly opened Trilateral account.
    \134\ See Espirito Santo Bank account statement for Account No. 
0116150253 for July 1993.
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    Despite these CDs, the Trilateral account did not function 
as a savings account; rather it distributed most of the money 
it received. On August 24, 1993, for example, about $1.9 
million was withdrawn from the Trilateral account and 
transferred to a newly established account for the Santa Lucia 
Trust, providing that trust's initial funding. From 1992 until 
1999, another $1.1 million was transferred over time in varying 
amounts to the Ugarte/Hiriart account at Espirito Santo Bank, 
as described above. On September 9, 1998, an Espirito Santo 
cashiers check for $400,000, drawn on the Trilateral account 
and made payable to Augusto Pinochet Ugarte, appears to have 
been cashed at Banco de Chile in Chile.\135\ The purpose and 
ultimate use of this $400,000 cashiers check is not currently 
known. The Trilateral account closed in January 2000.
---------------------------------------------------------------------------
    \135\ A letter to the bank dated the same day discloses that Mr. 
Pinochet instructed Espirito Santo Bank to debit both the Trilateral 
and Santa Lucia Trust accounts to finance this $400,000 check. Bank 
records show that the Trust had deposited $70,000 into the Trilateral 
account on September 11, 1998, just after the cashiers check was drawn 
on that account.
---------------------------------------------------------------------------
    The Santa Lucia Trust account was first opened in August 
1993, just after the Trust was established. Shortly after the 
account was opened, the Trust received a $1.9 million deposit 
from the Trilateral account and established a $1.9 million CD 
in Miami, which was then transferred to a trust account at 
BESIL in the Cayman Islands. During the 6 years the trust 
account was open, account records show that it accumulated 
deposits totaling about $2.3 million, most of which came from 
the $1.9 million transfer from the Trilateral account and 
interest earned on that amount. The vast majority of these 
funds was kept in the trust's BESIL account in the Cayman 
Islands, while the Miami account usually showed modest 
balances. This account closed in January 2000.
    The final Espirito Santo account, opened for Mr. Pinochet's 
daughter in trust for his granddaughter, was active for only 8 
months. The account was opened in August 1993, with $15,000 
from an unidentified source. Within 1 month, half the total, 
about $7,200 was withdrawn in multiple checks of various 
amounts payable to Mr. Pinochet's assistant, Monica Ananias 
Kuncar. The account was closed in April 1994.
    In December 1999, Espirito Santo Bank transferred all of 
the funds in the Pinochet-related accounts that were then open, 
including the Ugarte/Hiriart joint account, the Trilateral 
account, and the Santa Lucia Trust account, to the Miami office 
of Coutts & Co. (USA) International. The bank wire transferred 
about $2,000 from the joint account and about $12,000 from the 
Trilateral account. In the case of the Trust, the bank wire 
transferred about $12,700 from the Trust's Miami account, and 
over $2.3 million from the Trust's Cayman account to its Miami 
account and from there to an account at Coutts. All of the 
funds wire transferred by Espirito Santo Bank were deposited at 
Coutts into an account in the name of Eastview Finance, S.A. 
Each of the wire transfer records also referenced Oscar Aitken 
in connection with the Eastview account. As explained earlier 
with respect to Banco de Chile, Mr. Aitken is a Chilean 
attorney who had close ties to Mr. Pinochet and who allowed 
Eastview Finance, a BVI corporation he controlled, to act as a 
conduit for Pinochet funds.

    Regulatory Oversight. Espirito Santo Bank told the 
Subcommittee that neither its state nor federal regulators ever 
inquired about any of the Pinochet-related accounts, and it had 
never provided information about them to any regulator or law 
enforcement authority.

  D. Other Financial Institutions

    In addition to the Riggs, Citigroup, Banco de Chile-United 
States, and Espirito Santo Bank accounts described above, the 
Subcommittee saw evidence of Pinochet-related accounts and 
transactions involving a host of other financial institutions 
operating in the United States, including Banco Atlantico which 
is now part of Banco de Sabadell; Bank of America; Coutts & Co. 
(USA) International which is now part of Banco Santander; Ocean 
Bank; and PineBank N.A.

    Banco Atlantico. In September 2004, Banco Atlantico merged 
with Banco de Sabadell to become the fourth largest bank in 
Spain, offering a wide range of financial services, including 
retail and private banking.\136\ Although no Pinochet-related 
accounts have been identified at any U.S. branch or affiliate 
of Banco Atlantico or Banco de Sabadell, records indicate that, 
from 1981 until 2000, foreign affiliates of Banco Atlantico in 
Gibraltar; Madrid, Spain; and Zurich, Switzerland repeatedly 
transferred substantial sums of money to Pinochet accounts at 
Riggs Bank in the United States, totaling in excess of $5.8 
million.
---------------------------------------------------------------------------
    \136\ Information about Banco Atlantico is taken from its website, 
public filings, subpoenaed documents, interviews with bank 
representatives, and information supplied by other financial 
institutions. The relevant documents are maintained in Subcommittee 
files.
---------------------------------------------------------------------------
    Banco Atlantico and Banco de Sabadell fully cooperated with 
Subcommittee requests for documents and related information, 
providing all requested U.S. documentation. Citing bank secrecy 
laws, however, neither bank supplied any records from Banco 
Atlantico's overseas affiliates in Gibraltar, Madrid, and 
Zurich.\137\ Information about transactions involving these 
foreign affiliates were reconstructed from Banco Atlantico wire 
transfer records and from records produced by other financial 
institutions. In addition, the Subcommittee obtained 
information suggesting that the Banco Atlantico affiliate in 
Gibraltar may have had a single account opened in the name of 
Mr. Pinochet and his son, Marco Pinochet.
---------------------------------------------------------------------------
    \137\ In addition, records related to Banco Atlantico Gibraltar 
Ltd. were unavailable because, in November 2004, Banco Atlantico sold 
its Gibraltar branch to the European Financial Group (EFG) of 
Switzerland, and transferred all of its Gibraltar records to EFG. Banco 
Atlantico indicated that all of its Gibraltar staff switched employment 
to EFG as well, which meant that none of Banco Atlantico's current 
staff had personal knowledge of the Pinochet accounts in Gibraltar.
---------------------------------------------------------------------------
    While limited documentation prevents a complete analysis of 
the Pinochet transactions involving Banco Atlantico, the 
evidence available to the Subcommittee indicates that, between 
1981 and 2000, more than $5.8 million was transferred from 
Banco Atlantico's overseas affiliates to Pinochet-related 
accounts at Riggs Bank through 13 wire transfers and one check. 
The 13 wire transfers were routed through a Banco Atlantico 
branch in New York before being transmitted to Riggs.\138\ The 
paperwork associated with these transactions reference Augusto 
Pinochet; ``Ramon Pinochet'' and ``A.P. Ugarte'' disguised 
variants of his name; ``Daniel Lopez,'' a Pinochet alias; 
``M.L. Hiriart'' or ``M. Hiriart,'' believed to be Mr. 
Pinochet's son (but possibly his wife); ``Marco P. Hiriart'' 
and ``Mario P. Hiriart,'' believed to be Mr. Pinochet's son; 
and various Chilean military officers with Riggs accounts in 
Miami.
---------------------------------------------------------------------------
    \138\ The Banco Atlantico office in New York office has since 
closed.
---------------------------------------------------------------------------
    According to the available records, one check originated in 
Madrid, one wire transfer originated in Zurich, and eight wire 
transfers originated in Gibraltar. Due to incomplete records, 
the origins of four other transfers cannot be determined, but 
they likely originated overseas since there were no Pinochet 
accounts at Banco Atlantico in the United States. The key 
transactions are the following.

    --On November 23, 1981, a Banco Atlantico account in 
Madrid sent a $400,000 check payable to ``El Portador,'' the 
bearer of the check. This check was deposited into Miami Riggs 
Account No. 350413, which had been opened that same day in the 
name of Jorge Ballerino Sanford and/or Ramon Castro Ivanovic. 
This account was the first of the military officer accounts at 
Riggs Bank in Miami, as described earlier.

    --On July 19, 1994, ``M. Hiriart'' sent a $250,000 wire 
transfer through the Banco Atlantico New York correspondent 
account to Miami Riggs Account No. 710053, opened in the name 
of Daniel Lopez in trust for Augusto J. Pinochet.

    --On July 25, 1994, a Banco Atlantico account in Zurich 
sent a $147,000 wire transfer to Miami Riggs Account No. 709345 
opened in the name of Gabril Vergara Cifuentes, a Chilean 
military officer. No originator's name was provided on the wire 
transfer.

    --In November 1994, ``M. Hiriart'' sent a $627,000 wire 
transfer through the Banco Atlantico New York correspondent 
account to Miami Riggs Account No. 710053, opened in the name 
of Daniel Lopez in trust for Augusto J. Pinochet.

    --On February 3, 1995, ``RAPI'' sent a $217,000 wire 
transfer through the Banco Atlantico New York correspondent 
account to Miami Riggs Account No. 710467 opened in the name of 
Juan Ricardo Mac-Lean Vergara, a Chilean military officer.

    --On September 25, 1995, ``Mario P. Hiriart'' sent a 
$417,000 wire transfer from a Banco Atlantico account in 
Gibraltar to Miami Riggs Account No. 710467 opened in the name 
of Juan Ricardo Mac-Lean Vergara, a Chilean military officer.

    --On February 22, 1996, ``Marco P. Hiriart'' sent a 
$226,000 wire transfer from a Banco Atlantico account in 
Gibraltar to Miami Riggs Account No. 710467 opened in the name 
of Juan Ricardo Mac-Lean Vergara, a Chilean military officer.

    --On September 26, 1996, ``M. Hiriart'' sent a $365,167 
wire transfer for ``M.L. Hiriart'' from a Banco Atlantico 
account in Gibraltar to Washington Riggs Account No. 76750393 
opened in the name of Augusto Pinochet Ugarte and/or Lucia 
Hiriart Rodriguez.

    --On May 28, 1996, ``Marco Hiriart'' sent a $427,344 wire 
transfer from a Banco Atlantico account to Washington Riggs 
Account No. 76750393 opened in the name of Augusto Pinochet 
Ugarte and/or Lucia Hiriart Rodriguez.

    --On February 25, 1997, ``M. Hiriart'' sent a $805,442 
wire transfer for ``M.L. Hiriart'' from a Banco Atlantico 
account in Gibraltar to Washington Riggs Account No. 76750393 
opened in the name of Augusto Pinochet Ugarte and/or Lucia 
Hiriart Rodriguez.

    --On May 27, 1997, ``M. Hiriart'' sent a $843,397 wire 
transfer for ``M.L. Hiriart'' from a Banco Atlantico account in 
Gibraltar to Washington Riggs Account No. 76750393 opened in 
the name of Augusto Pinochet Ugarte and/or Lucia Hiriart 
Rodriguez.

    --On March 10, 1998, ``Marco P. Hiriart'' sent a $143,110 
wire transfer for ``Sr. AP Ugarte'' from a Banco Atlantico 
account in Gibraltar to London Riggs Account No. 74041013, an 
account which is unknown to the Subcommittee.

    --On January 29, 1999, ``Ramon Pinochet'' sent a $499,985 
wire transfer for ``Transamerica Merchant International'' from 
a Banco Atlantico account in Gibraltar to Account No. 449700000 
at Refeo Capital Market International bank, an account which is 
unknown to the Subcommittee.

    --On July 24, 2000, ``M.L. Hiriart'' sent a $487,111 wire 
transfer for ``M.L. Hiriart'' from a Banco Atlantico account in 
Gibraltar to Washington Riggs Account No. 76835282 opened in 
the name of Augusto Pinochet Ugarte and/or Lucia Hiriart de 
Pinochet.

    These transfers and other information available to the 
Subcommittee indicate that Mr. Pinochet and his family had at 
least one account at the Zurich branch of Banco Atlantico. When 
the Zurich branch closed in 1994, the evidence indicates that 
the Pinochet account or accounts were transferred to the Banco 
Atlantico branch in Gibraltar. The number of Pinochet-related 
accounts located in the Gibraltar branch remains unclear; some 
information obtained by the Subcommittee suggests there may 
have been just one joint account for Mr. Pinochet and his son, 
but the wire transfer documentation indicates it is also 
possible there were three accounts for Mr. Pinochet, his wife, 
and his son Marco. In November 2004, the Gibraltar affiliate 
was sold to the European Financial Group of Switzerland; 
information provided to the Subcommittee indicates that, at the 
time of the sale, one or more of the Pinochet accounts was 
apparently still in existence and allegedly disclosed to the 
buyer as part of the due diligence process associated with that 
sale.

    Bank of America. Bank of America is one of the largest 
financial institutions in the United States, managing assets in 
excess of $470 billion and reporting net income in 2004 of 
about $14 billion.\139\ It offers clients a wide range of 
financial services, including retail banking, private banking, 
credit cards, brokerage services, and investment advice. 
According to the bank's website, it employs over 175,000 
individuals worldwide, maintains offices in 35 countries, and 
supports clients in 150 countries.
---------------------------------------------------------------------------
    \139\ Information about Bank of America is taken from its website, 
public filings, subpoenaed documents, interviews with bank 
representatives, and information supplied by other financial 
institutions. The relevant documents are maintained in Subcommittee 
files.
---------------------------------------------------------------------------
    Bank of America fully cooperated with Subcommittee requests 
for documents and related information, providing all requested 
U.S. documentation. Citing bank secrecy laws, however, the bank 
did not supply any records from foreign affiliates which, the 
bank disclosed, ``may maintain or may have maintained accounts 
in Chile and Spain'' for Mr. Pinochet or his family.\140\ 
Information about a few transactions involving BankBoston and 
Mr. Pinochet have been reconstructed from records produced by 
other financial institutions.
---------------------------------------------------------------------------
    \140\ Letter dated 12/20/04, from Bank of America to the 
Subcommittee. In 2004, Bank of America completed its acquisition of 
FleetBoston, and all of its affiliates, including BankBoston in Chile 
which is known to have maintained accounts for Mr. Pinochet and other 
family members.
---------------------------------------------------------------------------
    Account records indicate that, from 1993 until 2004, Bank 
of America maintained three U.S. accounts and as many as six 
CDs at a time for Mr. Pinochet's daughter, Ines Lucia Pinochet. 
At least three of these CDs, in the amount of $100,000 or more, 
were purchased in 2002; the other CDs, which ranged in value 
from $10,000 to $125,000, were purchased between 1996 and 2002, 
and some were held in trust for one or more of her sons. The 
maximum amount of funds in Ms. Pinochet's Bank of America 
accounts at one time totaled about $420,000, in December 2002.
    One source for the funds in the accounts was a $300,000 
Riggs cashiers check issued in September 2002, which withdrew 
funds from Ms. Pinochet's account at Riggs in London. The 
cashiers check was deposited into Ms. Pinochet's Bank of 
America account on September 30, 2002. Nine days later, on 
October 9, Ms. Pinochet purchased three $35,000 Bank of America 
cashiers checks and later deposited two of them into an account 
she held at PineBank in Miami. Also, on October 9, 2002, she 
wrote a $60,000 personal check from her Bank of America account 
to her PineBank account, for a total transfer from her Bank of 
America account to her PineBank account of $130,000. Bank of 
America closed her U.S. accounts in 2004.
    In addition, documents obtained by the Subcommittee from 
Riggs Bank show that BankBoston in Chile, cashed two cashiers 
checks for Mr. Pinochet in 2001, that together provided him 
with $100,000.

    --On January 3, 2001, BankBoston cashed a Riggs cashiers 
check dated August 18, 2000, for $50,000, made payable to 
``Augusto Pinochet.''

    --On October 1, 2001, BankBoston cashed a Riggs cashiers 
check dated May 15, 2001, for $50,000, made payable to ``Maria 
Hiriart and/or Augusto P. Ugarte.''

Because bank secrecy laws in Chile preclude Bank of America 
from producing documentation related to these transactions, the 
Subcommittee does not know who presented the Riggs cashiers 
checks to BankBoston. According to a Chilean appeals court 
finding, the checks were cashed at BankBoston ``by a third 
party, despite the fact that they were nominative. Then various 
amounts of the cash in dollars were changed to cash in Chilean 
pesos on the informal market so that said transaction would not 
be reported to the Central Bank.'' \141\
---------------------------------------------------------------------------
    \141\ Case No. 1649-2004, Court of Appeals of Santiago, 12/10/04, 
at 7.

    Coutts & Co. (USA) International. Coutts & Co. (USA) 
International is an Edge Act corporation that was once part of 
the Miami-based Coutts Group, which is the international 
private banking arm of The Royal Bank of Scotland Group.\142\ 
In May 2003, the Coutts Group sold Coutts & Co. (USA) 
International and its Latin American private banking division 
to Banco Santander Central Hispano (``Banco Santander''). Banco 
Santander is one of the largest banks in Chile and in Europe. 
Coutts & Co. (USA) International became part of Banco 
Santander's International Private Banking Unit, which manages 
about $25 billion globally. Coutts & Co. (USA) International is 
headquartered in Miami.
---------------------------------------------------------------------------
    \142\ Information about Coutts & Co. (USA) International and its 
parent Banco Santander is taken from their websites, public filings, 
subpoenaed documents, interviews with bank representatives, and 
information supplied by other financial institutions. The relevant 
documents are maintained in Subcommittee files.
---------------------------------------------------------------------------
    Banco Santander has cooperated with Subcommittee requests 
for documents and related information pertaining to Coutts & 
Co. (USA) International. Because Banco Santander purchased 
Coutts & Co. (USA) International in 2003, and the Coutts 
accounts were not transferred to Banco Santander until January 
2004, its personnel is not familiar with many of the 
transactions involving Mr. Pinochet, which took place years 
earlier. The bank also no longer employs the Coutts personnel 
who had knowledge of these transactions. Information about some 
of the transactions involving Coutts & Co. (USA) International 
has been supplemented from records produced by other financial 
institutions.
    The evidence available to the Subcommittee indicates that, 
beginning in 1993, Coutts & Co. (USA) International opened 
multiple accounts for Eastview Finance S.A. and Tasker 
Investments Ltd., offshore corporations controlled by Oscar 
Aitken, the Chilean lawyer with ties to Mr. Pinochet.\143\ 
Acting as an introducing broker, Coutts also helped Eastview 
Finance open a brokerage account at Pershing Securities in June 
2001.
---------------------------------------------------------------------------
    \143\ Eastview Finance had Account Nos. 763802 and 763810, as well 
as a custody account, while Tasker Investments Ltd. had Account Nos. 
56297511 and 56297521. Coutts also maintained other accounts for Mr. 
Aitken.
---------------------------------------------------------------------------
    In December 1999, as part of its process for closing its 
Pinochet-related accounts, Espirito Santo Bank wire transferred 
all of the funds in the Pinochet joint account, the Trilateral 
account, and the Santa Lucia account, totaling about $2.3 
million, to Coutts & Co. (USA) International for further credit 
to Eastview Finance. One of the four wire transfers used to 
transfer the funds to Coutts referenced ``A.P. Ugarte,'' the 
name of the account at Espirito Santo Bank that was the source 
of the funds. The account documentation indicates that, as part 
of the process of accepting the Espirito Santo wire transfers 
totaling about $2.3 million, the Coutts account manager 
assigned to the Eastview account was required to explain the 
source of the incoming funds. The account manager indicated 
that the source of the funds was Mr. Aitken's business 
investments and rental properties. According to Banco 
Santander, Mr. Aitken never informed the bank that the Eastview 
account or the incoming funds were associated with Mr. 
Pinochet.
    Once the $2.3 million was deposited into the Eastview 
account at Coutts, the funds were invested in short term CDs. 
In March 2000, some of the CDs matured and $400,000 was 
transferred out of Coutts to an account at a Chilean financial 
services firm, called Monex. In October 2000, other CDs with a 
value of about $1.9 million matured, and Eastview Finance 
invested part of the funds, about $1.49 million, in a fixed 
income financial instrument offered by Pulsar Internacional, a 
Mexican holding company. The remaining $500,000 was transferred 
to Monex in November 2000.
    Over the 11 years it was open, from 1993 until 2004, the 
Eastview account at Coutts experienced significant activity and 
substantial funds transfers. While the nature of many of these 
transactions cannot be determined, some of the transactions 
involve financial institutions with Pinochet-related accounts 
and the source of much of the funds in the account after 
December 1999, can be traced to Pinochet funds transferred from 
Espirito Santo Bank. For example, in November 1997, the 
Eastview account at Coutts sent a $394,000 wire transfer to a 
Tasker account at Morgan Stanley. In April 2002, an Eastview 
account at Banco de Chile-United States, Account No. 105033261, 
sent a $26,156 wire transfer to the Eastview account at Coutts. 
In April 2002, the Eastview account at Coutts sent a $200,000 
wire transfer to a Monex account at Banco de Chile New York, 
and the wire instructions referenced ``Abanada Finance Ltd.'' A 
similar transfer for $35,000 took place in October 2002. In 
March 2002, the Eastview account at Coutts sent a $1,500 wire 
transfer to Bank Leumi in Miami for ``Aleman, Cordero, Galindo 
and Lee `re: GLP'.'' A similar transfer of $1,200 occurred in 
September 2002. In November 2003, the Eastview account at 
Coutts sent a $132,000 wire transfer to the Tasker account at 
Lehman Brothers, Account No. 74315017, that had been set up by 
Banco de Chile. It is clear that the Eastview account at Coutts 
functioned as a conduit for Pinochet funds. Whether the Tasker 
account also received Pinochet funds is currently unclear.
    In addition to maintaining the Aitken-related corporate 
accounts, Coutts also played a role in the November 1997 loan 
issued by the New York branch of Banco de Chile-United States 
to Augusto Pinochet for $500,000. When the loan was issued, Mr. 
Pinochet immediately withdrew the loan proceeds using a 
personal check drawn on his New York Banco de Chile account and 
made the check payable to Coutts & Co. (USA) International. The 
check was delivered on the same day to the Miami office of 
Coutts. At the same time, Mr. Aitken asked Coutts to use the 
check to purchase four CDs in the name of Eastview Finance, 
each in the amount of $125,000, which would be picked up later 
by representatives of Banco de Chile in Miami. Coutts declined 
to complete the transaction, however, before the personal check 
had time to clear. Instead, Coutts delivered the check to the 
Miami branch of Banco de Chile. On the same day, the Miami 
branch sent Coutts a Banco de Chile cashiers check for 
$500,000. Coutts accepted the cashiers check and, in return, 
issued a Coutts cashiers check in the same amount. The Coutts 
cashiers check was then delivered to the Miami branch of Banco 
de Chile, where it was used to buy four CDs in the name of 
Eastview Finance. In response to questions, Banco Santander has 
indicated that it does not know why Coutts was involved in this 
transaction nor what role it played.
    In 2003, Coutts was sold to Banco Santander. According to 
Banco Santander, the Aitken accounts were not identified by 
Coutts during the due diligence process. In the late fall of 
2004, the Aitken offshore corporate accounts were brought to 
the attention of Banco Santander, and the bank closed all of 
its accounts related to Mr. Aitken, except for one. The only 
account now open is the Eastview account holding the Pulsar 
financial instrument. According to Banco Santander, Pulsar 
Internacional declared bankruptcy and the Pulsar financial 
instrument is currently tied up in bankruptcy proceedings. 
Banco Santander has allowed the account to remain open pending 
the identification of a purchaser or resolution of the 
bankruptcy matter, but has frozen all activity in the account.

    Ocean Bank. Ocean Bank is a state-chartered bank which 
offers a range of financial services, including private 
banking, consumer lending, corporate lending, and merchant card 
processing.\144\ According to its website, Ocean Bank managed 
over $4.6 billion in assets last year and increased its income 
by more than 50 percent from 2003 to 2004. It is headquartered 
in Miami and operates 23 branches in Florida.
---------------------------------------------------------------------------
    \144\ Information about Ocean Bank is taken from its websites, 
public filings, interviews with bank representatives, and information 
supplied by other financial institutions. The relevant documents are 
maintained in Subcommittee files.
---------------------------------------------------------------------------
    Ocean Bank fully cooperated with Subcommittee requests for 
information. Information about some of the accounts and 
transactions involving Ocean Bank has been reconstructed from 
records produced by other financial institutions.
    Ocean Bank currently maintains at least four accounts and 
CDs for Mr. Pinochet's son, known to the bank as Marco Antonio 
Hiriart. A checking account, first opened in December 1998, 
currently holds a modest balance. Three CDs have a total value 
in excess of $325,000, two of which were established in 2003, 
and one in 2004.
    The source of funds for the three CDs appears to have been 
Cititrust Account No. 10328149, a Bahamas account opened in the 
name of Meritor Investments Ltd., the Bahamian offshore 
corporation controlled by Marco Pinochet. Between October 2003 
and June 2004, at least five wire transfers, totaling $349,326, 
moved funds from the Meritor account in the Bahamas to the 
Ocean Bank checking account in Miami. In addition, Cititrust 
records show that, on June 8, 1995, Meritor Investments Ltd. 
sent a $81,300 wire transfer to an Ocean Bank account for 
Sociedad de Inversiones Fermar Limitada, a Chilean real estate 
company owned by Marco Pinochet. This wire transfer indicates 
that Mr. Hiriart had a fifth account at Ocean Bank, opened as 
early as 1995, in the name of his Chilean corporation. The 
current status of the Sociedad de Inversiones Fermar Limitada 
account is unknown.

    PineBank. PineBank N.A. is a small, nationally chartered 
bank located in Miami, Florida.\145\ According to its website, 
it specializes in global trade finance and international 
private banking focused on Latin America, the Caribbean, and 
emerging markets.\146\ Bank records indicate that Augusto 
Pinochet's grandson, Rodrigo Andres Garcia, the son of Ines 
Lucia Pinochet, is employed by the bank.
---------------------------------------------------------------------------
    \145\ Information about PineBank N.A. is taken from its website, 
public filings, subpoenaed documents, and information supplied by other 
financial institutions. The relevant documents are maintained in 
Subcommittee files.
    \146\ Among other countries in Latin America, PineBank conducts 
business related to Chile. In 2003, PineBank as well as the Bank of New 
York, and Banco de Chile's New York branch, were accused of accepting 
stolen certificates of deposit from a Chilean government business 
development agency, the Corporation for the Promotion of Production 
(``Corfo''), in a $100 million major fraud carried out by insiders at 
Corfo and a brokerage firm Inverlink. Legal proceedings related to this 
matter are ongoing. See, e.g., ``Chile `` Shaken But Not Broken,'' The 
Banker, 5/1/03; ``Chilean financial scandal hits US shores,'' UPI, 11/
7/03.
---------------------------------------------------------------------------
    PineBank fully cooperated with Subcommittee requests for 
documents and related information. Information about some of 
the accounts and transactions involving PineBank has been 
reconstructed from records produced by other financial 
institutions.
    The bank maintained several accounts and CDs for Ms. 
Pinochet from 2001 until 2004. The first account was opened on 
August 15, 2001, in the name of ``Ines L. Hiriart.'' Over time, 
the bank established three CDs for her, with a total value of 
about $170,000. Bank of America records show that between 
October and December 2002, Ms. Pinochet transferred $130,000 
from an account at that bank to a PineBank account, using funds 
traceable to her Riggs account in London. In December 2002, 
PineBank issued her a loan to purchase real estate in Chile. In 
2003, her account received deposits totaling about $150,000 
from Sun Trust Bank, which Ms. Pinochet explained were related 
to a sale of real estate in Florida. According to the bank's 
due diligence records, the source of funds in Ms. Pinochet's 
accounts came primarily from real estate sales and marital 
assets, and her parents did not play any apparent role in the 
banking relationship. In 2004, PineBank closed all of her 
accounts.

    Other Financial Institutions. In addition to the financial 
institutions named above, the Subcommittee investigation saw 
evidence of transactions involving Mr. Pinochet, his immediate 
family, offshore entities he controls, or third parties willing 
to act as conduits for Pinochet funds at a number of other 
financial institutions operating in the United States, 
including American Express; Bank Atlantic in Miami; First 
National Bank and Trust Company in Stuart, Florida; Kislam 
National Bank in Miami; Morgan Stanley; and Swiss Bank 
Corporation which is now part of UBS AG. Limited Subcommittee 
resources have precluded an analysis of each of these 
transactions and related financial accounts.

  E. A Secret Web of Accounts

    Because Mr. Pinochet was able to open or utilize accounts 
at so many financial institutions operating in the United 
States, often under disguised names, he was able to construct a 
secret web of U.S. accounts that he could use to move funds and 
transact business with little or no notice from U.S. regulators 
or law enforcement. He used these accounts to complete 
transactions, not only within the United States, but also 
across international lines.
    One of the ways he kept this web of accounts secret was his 
use of multiple account names, as described throughout this 
Report. The Subcommittee also located at least three different 
Chilean passports that Mr. Pinochet used when opening accounts 
at U.S. financial institutions.\147\ One is an official 
diplomatic passport issued in the name of ``Augusto Pinochet 
Ugarte.'' \148\ Another is a non-diplomatic passport issued in 
the name of ``Augusto P. Ugarte.'' \149\ The third is a non-
diplomatic passport issued in the name of ``Jose Ramon 
Ugarte.'' \150\ The three passports have different 
identification numbers, different photographs, and different 
signatures. It is possible that his use of these different 
passports made it more difficult for financial institutions, 
regulators, and law enforcement to track his various accounts.
---------------------------------------------------------------------------
    \147\ The Chilean government informed the Subcommittee that a 
Chilean judge has taken possession of four different passports for Mr. 
Pinochet, removed from one of Mr. Pinochet's offices in Chile. It is 
not known whether those passports match one or more of the passport 
copies on file with U.S. financial institutions.
    \148\ See Riggs document, copy of Passport No. D002569, from 
documentation associated with Miami Account No. 707547, Bates 
RNB032201.
    \149\ See Riggs document, copy of Passport No. A029627, from 
documentation associated with London Account No. 25005393, Bates 
RNB033779.
    \150\ See Citigroup document, copy of Passport No. A010625, from 
documentation associated with New York Account No. 10040217, Bates 
C000071.
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    The following examples help illuminate how Mr. Pinochet 
used his various accounts to manipulate the U.S. financial 
system, move funds, and transact business.

    Moving Money from Gibraltar to Washington to Santiago. On 
July 17, 2000, ``M. L. Hiriart,'' believed to be Mr. Pinochet's 
son Marco (but possibly Mr. Pinochet's wife), attempted to wire 
$487,111 from Banco Atlantico in Gibraltar to Riggs Bank 
Account No. 76750393, a joint account for Mr. Pinochet and his 
wife in Washington. Because that Riggs account had been closed 
in 1999, the transfer was not completed. One week later, on 
July 24, $487,111 was successfully transferred from Banco 
Atlantico in Gibraltar to Washington Riggs Bank Account No. 
76835282, a successor joint account opened in the name of 
Augusto Pinochet Ugarte and/or Lucia Hiriart de Pinochet.\151\ 
The monthly statement for this joint account, covering the 
month of July 2000, shows an opening balance of $82,447.49, and 
a new balance of $569,964.82 on July 24, the final day of the 
statement period. At that point, the funds transferred from 
Gibraltar comprised the vast majority of the funds in the Riggs 
joint account.\152\
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    \151\ Letter dated 12/15/04, from Banco de Sabadell, S.A., Miami 
Agency to the Subcommittee; Riggs Bank monthly statement for Account 
No. 76835282, 6/22/00 through 7/24/00, Bates RNB 033008. The funds also 
went through the New York correspondent account of Banco Atlantico.
    \152\ See Riggs Bank monthly statement for Account No. 76835282, 6/
22/00 through 7/24/00, Bates RNB033009.
---------------------------------------------------------------------------
    On August 18, 2000, the first significant activity in the 
joint account since the July 24 wire transfer was a debit of 
$400,056. These debited funds were used to finance eight 
cashiers checks issued by Riggs in the amount of $50,000 
each.\153\ Each of these cashiers checks was made payable to 
Augusto Pinochet. A Riggs private banker then flew to Santiago, 
Chile and hand-delivered the cashiers checks to Mr. 
Pinochet.\154\ By September 1, 2000, the checks began to be 
cashed at BankBoston and Banco de Chile branches in 
Santiago.\155\ Over the following 4 months, according to an 
appeals court in Chile, the checks ``were cashed at Banco de 
Chile and Bank Boston by a third party, despite the fact that 
they were nominative. Then various amounts of the cash in 
dollars were changed to cash in Chilean pesos on the informal 
market so that said transaction would not be reported to the 
Central Bank.'' \156\
---------------------------------------------------------------------------
    \153\ See Riggs Bank monthly statement for Account No. 76835282, 7/
25/00 through 8/21/00, Bates RNB033009; Riggs Negotiable Instrument 
Issuance Log, 8/18/00, Bates OCC0000045748. Reprinted in 2004 Hearing 
Record at 1091. Riggs charged a $7 fee for each of the cashiers checks.
    \154\ See 2004 Hearing Record at 151.
    \155\ See, e.g., Riggs Cashiers Check No. 1674316, payable to 
Augusto Pinochet, Bates OCC0000045749, reprinted in 2004 Hearing Record 
at 1092-3.
    \156\ Case No. 1649-2004, Court of Appeals of Santiago, 12/10/04, 
at 7.
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    In this example, then, funds went from a Banco Atlantico 
account in Gibraltar, to a Riggs account in Washington, were 
converted into cashiers checks that were physically carried to 
Mr. Pinochet in Santiago, were then converted into dollars as 
the checks were cashed, and were ultimately converted into 
pesos on the Chilean black market. How the funds were used 
subsequently is currently unknown to the Subcommittee.

    Moving Money from New York, the Bahamas and Gibraltar to 
Washington. On April 22, 1996, Mr. Pinochet's son, Marco 
Pinochet Hiriart, faxed a letter to Carol Thompson, the Senior 
Vice President of Latin America in Riggs Embassy Banking 
Division, requesting specific information to wire transfer 
funds to an account in his mother's name at Riggs Bank in 
Washington.\157\ The following day Ms. Thompson replied with a 
letter providing the requested information.\158\ Two days 
later, on April 25, Marco Pinochet sent a $403,000 wire 
transfer from New York Citigroup Account No. 10328149, opened 
in the name of Meritor Investments, to a Cititrust clearing 
account in the Bahamas. Meritor Investments Ltd. is a Bahamian 
offshore corporation controlled by Marco Pinochet and 
administered by Cititrust, a Citigroup affiliate located in the 
Bahamas. It is not clear why the funds from the New York 
account went to the Cititrust clearing account in the Bahamas 
instead of the normal Citibank Private Bank clearing account in 
New York; it is possible that this routing was done to remove 
the name of Meritor Investments, the true originator of the 
funds, from the wire transfer documentation. On April 25, the 
$403,000 was deposited into Riggs Bank Account No. 76750393, a 
joint account for Mr. Pinochet and his wife in Washington, 
D.C.\159\
---------------------------------------------------------------------------
    \157\ See letter from Marco P. Hiriart to M. Carol Thompson, 4/22/
96, Bates RNB029549.
    \158\ See letter from Maria Carol Thompson to Marco P. Hiriart, 4/
23/96, Bates RNB029547.
    \159\ See Riggs money transfer documents, 4/25/96, Bates RNB029114-
16. See also Cititrust monthly statement for Meritor Investments Ltd., 
Account No. 10328149, 4/1/96 through 4/30/96, Bates C008265-66. At the 
time of the transfer, the Meritor account had a balance of $5,057. 
After the transfer was completed, the account had an overdraft of 
$397,942. On April 30, $403,000 was deposited into the Meritor account, 
covering the overdraft. The source of funds for this deposit has not 
been established.
---------------------------------------------------------------------------
    In Washington, the monthly statement for the Riggs joint 
account, covering the month of April 1996, shows an opening 
balance of $374,701.97. A new balance of 779,410.03, which 
includes the transferred sum, appears on April 30, the final 
day of the statement period. At that point, the funds 
transferred from the Meritor account comprised the majority of 
the funds in the Riggs joint account.\160\
---------------------------------------------------------------------------
    \160\ See Riggs Bank monthly statement for Account No. 76750393, 4/
1/96 through 4/20/96, Bates RNB032144.
---------------------------------------------------------------------------
    Two weeks later, on May 13, 1996, the Pinochet joint 
account received a deposit of $1 million, plus interest, from a 
CD which had matured. Two days later the CD was renewed, and $1 
million was debited from the account to finance the new 
CD.\161\ Two weeks after that, on May 28, ``Marco Hiriart'' 
sent a $427,344 wire transfer from Banco Atlantico in Gibraltar 
to the same joint account of his parents at Riggs Bank in 
Washington, increasing the account balance to more than $1.2 
million.\162\
---------------------------------------------------------------------------
    \161\ See Riggs Bank monthly statement for Account No. 76750393, 5/
1/96 through 5/31/96, Bates RNB033148.
    \162\ Id.
---------------------------------------------------------------------------
    Three days later, on May 31, 1996, a series of transactions 
moved $1 million from the Pinochet joint account in Washington 
to an investment account opened in the name of Ashburton Co. 
Ltd., a Bahamian offshore corporation controlled by Mr. 
Pinochet. First, $1.1 million was transferred from Mr. and Mrs. 
Pinochet's joint account into a Riggs International Private 
Banking Division clearing account.\163\ From the clearing 
account, the funds were transferred to Washington Riggs Account 
No. 76715547, a money market account that had been opened in 
the name of Ashburton. At the time of the transfer, the 
Ashburton money market account in Washington had a zero 
balance.\164\ On the same day, May 31, $1 million was 
transferred from the Ashburton money market account in 
Washington to Riggs Account No. 2121401/640041018, an 
investment account which was then managed by Riggs Bank & Trust 
Co. (Bahamas) td. for Ashburton.\165\
---------------------------------------------------------------------------
    \163\ Id.
    \164\ See Riggs Bank monthly statement for Account No. 76715547, 5/
31/96 through 6/30/96, Bates RNB032148.
    \165\ Interview with Riggs Bank representative. See also Riggs Bank 
monthly statement for Account No. 76715547, 5/31/96 through 6/30/96, 
Bates RNB032148.
---------------------------------------------------------------------------
    In this example, the funds originated at Marco Pinochet's 
offshore corporation. The funds moved from the corporation's 
New York account through a Cititrust account in the Bahamas, 
joined funds sent from a Banco Atlantico account in Gibraltar, 
and ended up in a Riggs account in Washington, D.C. for Augusto 
Pinochet and his wife. From there, the funds went to Augusto 
Pinochet's offshore corporation's money market account, and 
finally to his offshore corporation's investment account.
    These two examples show how Augusto Pinochet used accounts 
opened in his name, the name of his immediate family members, 
and in the name of offshore entities controlled by him or his 
family members to move funds quickly and quietly across three 
continents, with no questions asked. Countless other examples 
are possible.

    Uncovering the Web. Despite the decades-long existence of 
multiple Pinochet-related accounts at multiple financial 
institutions operating in the United States, until 2004, U.S. 
financial regulators and law enforcement apparently were 
unaware that Augusto Pinochet had constructed an extensive 
network of U.S. accounts and was using them on a regular basis 
to move funds and transact business. The OCC came closest to 
uncovering this secret web of accounts in mid-2002, but its 
inquiries at that time to three banks apparently generated 
insufficient information about Pinochet-related accounts to 
sustain a larger investigation.
    In June 2002, two OCC examiners were in the midst of 
conducting the agency's targeted review of the Pinochet 
accounts at Riggs Bank. As part of that review, the OCC 
examiners noted a number of transactions involving other 
financial institutions, and contacted Citigroup, Banco de 
Chile-United States, and Bank of America to determine whether 
they, too, had Pinochet accounts in the United States.
    OCC documentation indicates that, in response, Citigroup 
told the OCC that it did not have any accounts for Mr. Pinochet 
or his wife, without mentioning the dozens of accounts it 
maintained for Marco, Ines Lucia, and Maria Veronica Pinochet 
or the fact that the bank had previously provided multiple 
accounts to Mr. Pinochet. Citigroup has indicated that none of 
its personnel recall conveying this information to the OCC and 
cannot explain why the bank would not have followed its normal 
practice of disclosing related and closed accounts. Banco de 
Chile-United States told the OCC about the U.S. accounts it had 
provided Mr. Pinochet from 1995 to 1999, and about the bank's 
longstanding relationship with the Pinochet family in Chile, 
but reported no existing U.S. Pinochet accounts in 2002. The 
bank did not then disclose that certain Aitken-related accounts 
in the United States had served as conduits for Pinochet funds 
in the past nor did it later contact the OCC when it received 
the $6 million transfer from Riggs Bank in mid-July. Banco de 
Chile has said that it was not then aware that the $6 million 
was associated with Mr. Pinochet. Bank of America told the OCC 
that its only U.S. accounts were for Mr. Pinochet's daughter, 
Ines Lucia Pinochet. The bank had not then acquired any foreign 
affiliates, such as BankBoston, with Pinochet accounts outside 
of the United States.
    After receiving this information from the three banks, the 
OCC examiners reviewed the closed Banco de Chile accounts for 
Mr. Pinochet and the current Bank of America accounts for Mr. 
Pinochet's daughter. The examiners made no further inquiry to 
Citigroup about transactions indicating it had handled Pinochet 
funds. After reviewing the account documentation, the OCC 
examiners took no action to determine what happened to the 
Pinochet funds at Riggs Bank once that bank closed its Pinochet 
accounts in July and August 2002.
    Part of the reason for the examiners' inaction may have 
been that, around the same time in mid-July, the longstanding 
OCC Examiner-in-Charge at Riggs Bank announced that he planned 
to retire from the OCC, was offered a position at Riggs Bank, 
and then recused himself from all matters involving the bank 
until he left the agency, which occurred in October 2002. As 
indicated in the Subcommittee's 2004 Minority Staff Report, the 
Examiner-in-Charge also instructed the two OCC examiners who 
had completed the Pinochet review not to include their 
examination memorandum in the OCC's electronic files for Riggs 
Bank. He apparently gave them no further instructions about the 
Pinochet accounts at Riggs. When a new Examiner-in-Charge began 
work, he was immediately confronted with other issues involving 
Riggs Bank and apparently did not perform any additional 
analysis related to the Pinochet accounts nor did he inquire as 
to the destination of the Pinochet funds that left Riggs.
    By failing to trace what happened to the $6 million in 
Pinochet funds that left Riggs, both the OCC and the Federal 
Reserve failed to learn that these funds went to another 
financial institution operating in the United States. They also 
failed to learn that Mr. Pinochet was using accounts belonging 
to offshore corporations at that financial institution to move 
funds and transact business, and that he opened related 
accounts at a U.S. securities firm. Mr. Pinochet was able to 
make use of these accounts for an additional 2 years.
    Banco de Chile-United States has pointed out that if the 
OCC, Federal Reserve Bank, or Riggs Bank had alerted it in 2002 
to the money laundering concerns related to the $6 million in 
Pinochet funds, it could have protected the bank's reputation 
by refusing the funds transfer. Timely notice would also have 
helped the bank to prevent Mr. Pinochet from adding to his 
secret web of accounts in the United States.
    It was not until 2004, that the OCC and Federal Reserve 
renewed their efforts to locate Pinochet-related accounts at 
other financial institutions operating in the United States. 
After the Subcommittee hearing on July 15, 2004, a number of 
banks filed Suspicious Activity Reports describing transactions 
or accounts involving Mr. Pinochet. Citigroup contacted both of 
its regulators in July with information about its past and 
current relationship with the Pinochet family. In September, 
Banco de Chile disclosed the Pinochet funds deposited into U.S. 
accounts opened for the offshore corporations controlled by Mr. 
Aitken. As regulators worked with these and other banks, the 
web of U.S. accounts constructed by Mr. Pinochet was gradually 
revealed.

    Section 314(b) Inquiries. Significant work tracing Pinochet 
funds and accounts at other financial institutions was also 
performed by Riggs Bank. Once Riggs established its Security & 
Investigations Group in the summer of 2003, that office began 
to trace certain Pinochet-related transactions to learn more 
about the source of the funds in the Riggs accounts. As part of 
this effort, Riggs contacted a number of financial institutions 
to obtain more information about specific transactions and 
accounts. In most cases, Riggs sent an inquiry under Section 
314(b) of the Patriot Act which allows financial institutions 
to share information about ``individuals, entities, 
organizations and countries suspected of possible terrorist or 
money laundering activities,'' without incurring legal 
liability for disclosing information.
    Most of the contacted financial institutions provided Riggs 
with the requested information and worked with Riggs to 
understand the underlying transactions, but a few financial 
institutions did not. One bank, Citigroup, declined to provide 
any information in response to Riggs' Section 314(b) requests. 
When the Subcommittee asked why, Citigroup pointed out that, at 
the time the requests were made, Riggs was under civil and 
criminal investigations raising questions about the bank's 
management and operations. Another bank, Banco Atlantico, 
expressed a willingness to cooperate but asserted it was unable 
to assist, because the requested information involved 
transactions handled by its foreign affiliates and those 
affiliates operated under bank secrecy laws prohibiting client-
specific disclosures, even to an affiliate.\166\
---------------------------------------------------------------------------
    \166\ This same intrabank disclosure problem was discussed at the 
Subcommittee's 2004 hearing in connection with Riggs accounts opened 
for Equatorial Guinea. See, e.g., 2004 Hearing Record at 168-69 
(``[B]anks in the United States attempting to do due diligence on large 
wire transfers to protect against money laundering are unable to find 
out from their own foreign affiliates key account information. This bar 
on disclosure across international lines, even within the same 
financial institution, present a significant obstacle to U.S. anti-
money laundering efforts.'') aws that prevent U.S. and foreign 
affiliates of the same financial institution from exchanging client-
specific information remain a substantial impediment to anti-money 
laundering efforts.
---------------------------------------------------------------------------
    Still another bank, Espirito Santo Bank in Miami, 
interpreted the legal protections afforded by Section 314(b) so 
narrowly, that it failed to provide highly relevant 
information. In response to a Riggs request letter dated 
December 8, 2004, Espirito Santo Bank responded on February 14, 
2005, that it had opened an account for ``A.P. Ugarte or M. 
Lucia Hiriart.'' At the same time, the bank failed to disclose 
additional accounts which had been opened by Mr. Pinochet in 
the name of offshore entities he controlled. Espirito Santo 
Bank wrote:

    ``The request also referenced possible personal investment 
companies or trusts established in the names of Augusto Jose 
Ramon Pinochet Ugarte or Maria Lucia Hiriart Pinochet through 
Deloitte & Touche, Bahamas. Espirito Santo Bank has no 
knowledge of the existence of any such personal investment 
company or trust. Because the request was specific as to the 
information requested, we are responding only to those specific 
requests. A broader inquiry on your part may result in our 
sharing additional information with regard to accounts or 
trusts maintained by the named or related individuals.''

    Espirito Santo Bank had, in fact, several accounts that had 
been opened in the name of an offshore corporation and an 
offshore trust controlled by Mr. Pinochet. The bank did not 
disclose them in its February letter, presumably because 
neither entity had been opened ``through Deloitte & Touche, 
Bahamas,'' and the bank interpreted Section 314(b)'s legal 
protections so narrowly that it apparently felt it could not 
offer any relevant information that had not been specifically 
requested. Instead, Espirito Santo Bank essentially invited 
Riggs to send a broader request, and is awaiting a response 
from Riggs.
    Section 314(b) of the Patriot Act provides financial 
institutions with a powerful tool to share information and 
resolve questions about particular transactions and accounts to 
guard against money laundering and terrorist financing. The 
evidence in the Riggs case study suggests, however, that issues 
of interpretation as well as bank secrecy laws in foreign 
jurisdictions limit its usefulness and should be addressed. To 
increase the usefulness of Section 314(b), U.S. financial 
regulators should consider issuing guidance clarifying that the 
legal protections afforded by Section 314(b) are broad and 
clearly permit financial institutions to respond to requests 
for information, including by offering information about 
specific accounts and transactions that may help expose or 
prevent money laundering or terrorist activities. This guidance 
could be issued as a separate document or by expanding 31 
C.F.R. Sec. 103.110, the regulation implementing Section 
314(b). To address the problem of bank secrecy laws that 
restrict the information that an institution's affiliates can 
provide, the United States should continue to work with other 
countries and international bodies, particularly the European 
Union, to enable a financial institution's U.S. and foreign 
affiliates to exchange client information across international 
lines to safeguard against money laundering and foreign 
corruption.
    In addition, to prevent the types of problems identified in 
this Report, steps need to be taken to stop funds that have 
been identified as suspicious under U.S. anti-money laundering 
laws from freely traversing the U.S. financial system. These 
steps can and should be taken by both financial institutions 
and U.S. financial regulators. For example, a financial 
institution that closes or asks a client to close an account 
due to money laundering concerns, including concerns about 
foreign corruption, should, before transferring the funds to 
another financial institution, warn that financial institution 
under Section 314(b) of the Patriot Act that the funding 
transfer is the result of an account closure due to possible 
money laundering or foreign corruption concerns. With that type 
of warning, financial institutions can protect themselves from 
accepting suspect funds and clients. U.S. regulators can and 
should do their part as well. Once U.S. financial regulators 
identify a suspect account, they should take reasonable steps 
to prevent the suspect funds from being sent to another U.S. 
financial institution without an appropriate warning, identify 
related accounts at other financial institutions operating in 
the United States, and, if necessary, dismantle any network of 
suspect U.S. accounts.

                            A P P E N D I X

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