[Federal Register Volume 80, Number 49 (Friday, March 13, 2015)]
[Notices]
[Pages 13464-13466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-05911]
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DEPARTMENT OF THE TREASURY
Notice of Finding That Banca Privada d'Andorra Is a Financial
Institution of Primary Money Laundering Concern
AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.
ACTION: Notice of Finding.
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SUMMARY: This document provides notice that, pursuant to the authority
contained in the USA PATRIOT Act, the Director of FinCEN found on March
6, 2015 that reasonable grounds exist for concluding that Banca Privada
d'Andorra (``BPA'') is a financial institution operating outside of the
United States of primary money laundering concern.
DATES: The finding referred to in this notice was effective as March 6,
2015.
FOR FURTHER INFORMATION CONTACT: FinCEN, (800) 949-2732.
SUPPLEMENTARY INFORMATION:
I. Statutory Provisions
On October 26, 2001, the President signed into law the Uniting and
Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (the ``USA PATRIOT Act''),
Public Law 107-56. Title III of the USA PATRIOT Act amends the anti-
money laundering provisions of the Bank Secrecy Act (``BSA''), codified
at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5314, 5316-
5332, to promote the prevention, detection, and prosecution of
international money laundering and the financing of terrorism.
Regulations implementing the BSA appear at 31 CFR Chapter X.
Section 311 of the USA PATRIOT Act (``Section 311''), codified at
31 U.S.C. 5318A, grants the Secretary of the Treasury (``the
Secretary'') the authority, upon finding that reasonable grounds exist
for concluding that a foreign jurisdiction, financial institution,
class of transaction, or type of account is of ``primary money
laundering concern,'' to require domestic financial institutions and
financial agencies to take certain ``special measures'' to address the
primary money laundering concern. The Secretary has delegated this
authority under Section 311 to the Director of FinCEN.
On March 6, 2015, the Director of FinCEN found that reasonable
grounds exist for concluding that Banca Privada d'Andorra (``BPA'') is
a financial institution operating outside of the United States of
primary money laundering concern. The Director considered the factors
listed below in making this determination.
II. The History of BPA and Jurisdictions of Operation
BPA is one of five Andorran banks and is a subsidiary of the BPA
Group, a privately-held entity. Founded in 1962, BPA is the fourth
largest bank of the five banks in Andorra and has 1.79 billion euro in
assets. The bank has seven domestic branches in Andorra and five
foreign branches that operate in Spain, Switzerland, Luxembourg,
Panama, and Uruguay. BPA has fewer domestic and foreign branches than
the other major banking groups in Andorra. BPA's Panama branch (``BPA
Panama'') is licensed as an offshore bank by the Superintendecia de
Bancos de Panama, which is the bank regulator for the Panamanian
government. BPA has correspondent banking relationships in the major
North American, European, and Asian financial centers. At the time of
this Finding, BPA has four U.S. correspondent accounts.
III. The Extent to Which BPA Has Been Used To Facilitate or Promote
Money Laundering
FinCEN has found that reasonable grounds exist for concluding that
several officials of BPA's high-level management in Andorra have
facilitated financial transactions on behalf of Third-Party Money
Launderers (``TPMLs'') providing services for individuals and
organizations involved in organized crime, corruption, smuggling, and
fraud. Criminal organizations launder their proceeds through the
international financial system. These organizations often encounter
obstacles in achieving direct access to financial institutions
internationally and in the United States because of their illicit
activities. To obtain access to financial institutions, some criminal
organizations use the services of TPMLs, including professional
gatekeepers such as attorneys and accountants. TPMLs engage in the
business of transferring funds on behalf of a third party, knowing that
the funds are involved in illicit activity. These TPMLs provide access
to financial institutions and lend an aura of legitimacy to criminal
actors who use the TPMLs' services. Some TPMLs explicitly market their
services as a method for criminal organizations
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to reduce transparency and circumvent financial institutions' anti-
money laundering (``AML'')/countering the financing of terrorism
(``CFT'') controls. TPMLs provide access to the international financial
system for criminal organizations through the TPMLs' relationships with
financial institutions.
Financial institutions that facilitate third-party money laundering
activity allow criminals to circumvent AML/CFT controls both in the
United States and internationally, and, thus, provide a gateway for
undermining financial integrity. TPMLs use a wide variety of schemes
and methods to infiltrate financial institutions. These schemes and
methods include using illicit shell and shelf corporations, layering
financial transactions, creating and using false documentation, and
exerting improper influence on employees in financial institutions or
on government officials. A shell company is an entity that is formed
for the purpose of holding property or funds and does not itself engage
in any significant business activity. A shelf corporation is an entity
that is formed and then placed aside for years. The length of time that
a shelf corporation has been in existence adds legitimacy to the entity
and makes it a prime vehicle for money laundering.
A. BPA Facilitated Financial Transactions for TPMLs Involving the
Proceeds of Organized Crime, Corruption, Human Trafficking, and Fraud
FinCEN has found that reasonable grounds exist to support the
following points: Several of BPA's high-level management have
facilitated financial transactions on behalf of TPMLs providing
services for individuals and organizations involved in organized crime,
corruption, human trafficking, trade-based money laundering, and fraud.
High-level management at BPA maintained close relationships with these
TPMLs. Based on those relationships, TPMLs promoted their services to
other illicit actors and relied on BPA to provide access to the
financial system for criminal organizations. TPMLs successfully used
BPA to facilitate money laundering activity because the Bank's weak
AML/CFT controls allowed TPMLs to conduct this high-risk banking
activity without detection, and the TPMLs were able to establish close
relationships with complicit bank personnel who facilitated illicit
transactions.
From 2011 to February 2013, High-Level Manager A at BPA in Andorra
provided substantial assistance to Andrey Petrov, a TPML (``TPML 1'')
working for Russian criminal organizations engaged in corruption.
Petrov facilitated several projects on behalf of transnational criminal
organizations. Petrov used the proceeds of transnational organized
crime to bribe local officials in Spain. Petrov secured beneficial
zoning rights and contracts from a local official. After Petrov's
application for a line of credit at a Spanish bank was rejected, High-
Level Manager A ensured that Petrov could obtain a line of credit from
another Spanish bank and that the application would not be perceived as
suspicious. Petrov arranged for High-Level Manager A to fly to Russia
to meet with transnational organized crime figures.
High-Level Manager A created accounts at BPA that facilitated false
invoicing to disguise the origin of illicit funds. In addition, a
Russian businessman known to be connected to transnational criminal
organizations worked with BPA, including High-level Manager A, to
establish front companies and foundations used to move funds believed
to be affiliated with organized crime. Both Petrov and the Russian
businessman relied on BPA to facilitate the laundering of the organized
crime proceeds and maintained large bank accounts with BPA. In February
2013, Spanish law enforcement arrested Petrov and several associates
for laundering approximately 56 million euro. Petrov is suspected to
have links to Semion Mogilevich, one of the FBI's ten ``most wanted''
fugitives.
In addition to BPA's facilitation of illicit financial transactions
by Petrov, in a separate scheme, a Venezuelan TPML (``TPML 2'') and his
network relied on BPA to deposit the proceeds of public corruption.
This money laundering network worked closely with high-ranking
government officials in Venezuela, resident agents in Panama, and an
Andorran lawyer to establish Panamanian shell companies. The money
laundering network owned hundreds of shell companies and engaged in a
wide variety of business for illicit profit. This network was well
connected to Venezuelan government officials and relied on various
methods to move funds, including false contracts, mischaracterized
loans, over- and under-invoicing, and other trade-based money
laundering schemes.
TPML 2 had a relationship with High-Level Manager B at BPA. TPML 2
gave High-Level Manager B false contracts to support transactions
purported to be on behalf of Venezuelan public institutions including
Petroleos de Venezuela S.A. (``PDVSA''), the public oil company of
Venezuela. In some instances, these contracts did not list a customer
for the services. High-Level Manager B's reliance on these contracts
demonstrated transaction monitoring and due diligence failures. Also,
High-Level Manager B coordinated the opening of a shell company on
behalf of the Venezuelan TPML. High-Level Manager B worked with High-
Level Manager A on the illicit Venezuelan transactions. BPA facilitated
the movement of approximately $2 billion through these shell company
accounts maintained at BPA. Between January 2011 and March 2013, BPA
facilitated the movement of at least $50 million in send and receive
transactions that were processed through the United States in support
of this money laundering network. In 2014, BPA continued to facilitate
the movement of funds related to this scheme through the U.S. financial
system. Overall, BPA facilitated the movement of $4.2 billion in
transfers related to Venezuelan money laundering.
In addition to BPA's facilitation of illicit financial transactions
by Petrov and Venezuelan money launderers, from 2011 to October 2012,
High-Level Manager C at BPA accepted bribes to process bulk cash
transfers for TPML Gao Ping (``TPML 3''). Ping acted on behalf of a
transnational criminal organization engaged in trade-based money
laundering and human trafficking and established relationships with
Andorran banks to launder money on behalf of his organization and
numerous Spanish businesspersons. Through his associate, Ping bribed
Andorran bank officials to accept cash deposits into less scrutinized
accounts and transfer the funds to suspected shell companies in China.
One of Ping's key bank executives was High-Level Manager C. High-Level
Manager C and another bank manager at BPA processed approximately 20
million euro in cash used to fund wire transfers sent to Ping's
accounts in China. Spanish law enforcement arrested Ping in September
2012 for his involvement in money laundering.
B. BPA's Weak AML Controls Attract TPMLs and Allow Its Customers To
Conduct Transactions Through the U.S. Financial System That Disguise
the Origin and Ownership of the Funds
BPA's failure to conduct adequate due diligence on customer
accounts and its provision of high-risk services to shell companies
make it highly attractive and well known to TPMLs. TPMLs worked on
behalf of transnational criminal organizations to facilitate the
criminal organizations' financial transactions through BPA. In
addition, TPMLs reportedly coordinated multi-million
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dollar deals related to Venezuelan corruption and represented that
connections with BPA would facilitate these transactions.
For example, a TPML (``TPML 4''), who has worked with the Sinaloa
cartel, facilitated the transfer of bulk cash derived from narcotics
trafficking in the United States and facilitated financial transactions
involving the proceeds of other crimes. TPML 4 intentionally bolstered
connections with BPA to attract money laundering clients and requested
that clients send smaller transfers through accounts at other
institutions and to only use accounts at BPA for large transactions. In
communications with co-conspirators, TPML 4 advertised a relationship
with BPA in attempts to attract potential money laundering deals. TPML
4 told clients that this relationship with BPA and other government
officials would ensure that their transactions would not be scrutinized
by the financial community. In addition, TPML 4 also marketed services
to potential clients by providing specific wire transfer instructions
for accounts at BPA.
TPML 4 used many methods to avoid detection by law enforcement,
including planning to increase operations during the U.S. government
shutdown in 2013. TPML 4 used many Panamanian, Spanish, and Swiss shelf
corporations to attract clients. Several of these shelf corporations
had bank accounts, including at BPA.
BPA's failure to monitor transactions for apparent red flag
activity attracts TPMLs. Many third-party money laundering transactions
conducted through BPA lack an apparent business purpose and would be
identified as high risk by a bank with sufficient AML/CFT controls. For
example, BPA processed millions of U.S. dollar transactions that listed
BPA's Andorran address for the originator's or beneficiary's address.
Although there may be rare occasions when use of the bank's address as
a bank customer's address of record is legitimate, the processing of a
high percentage of transactions not containing accurate customer
address information indicates failure to conduct sufficient due
diligence on a customer, failure to adequately monitor transactions, or
possible complicity in money laundering by disguising the origin of
funds. BPA also attracts TPMLs by knowingly providing services to shell
and shelf companies and unlicensed money transmitters. As noted above,
TPMLs rely on shell and shelf companies to shield the identities of
their clients engaged in criminal activity. BPA's facilitation of this
high-risk business allows TPMLs to obscure the beneficial ownership of
these accounts.
BPA accesses the U.S. financial system through direct correspondent
accounts held at four U.S. banks. Between approximately 2009 through
2014, BPA processed hundreds of millions of dollars through its U.S.
correspondents. These transactions contained numerous indicators of
high-risk money laundering typologies, including widespread shell
company activity, unlicensed money transmitters, and other high-risk
business customers. For example, BPA processed tens of millions of
dollars on behalf of unlicensed money transmitters through one U.S.
correspondent. The U.S. correspondent requested that BPA sign an
agreement to discontinue processing these transactions through its
account. After these concerns arose, the U.S. correspondent closed
BPA's account.
In addition, 62 percent of BPA's outgoing transactions through one
U.S. correspondent bank involved only four high-risk customers. These
customers, deemed high-risk by the U.S. correspondent bank, included a
shell company, an Internet business, and two non-bank financial
institutions. Between approximately 2007 and 2012, BPA also used its
U.S. correspondents to send or receive wire transfers totaling more
than $50 million for Panamanian shell companies that share directors,
agents, and the same address. These transfers involved large, round
dollar amounts and did not specify a purpose for the transactions. When
U.S. correspondents requested additional information, BPA either failed
to respond or provided extremely limited information.
IV. The Extent to Which BPA Is Used for Legitimate Business Purposes
It is difficult to assess on the information available the extent
to which BPA is used for legitimate business purposes. BPA provides
services in private banking, personal banking, and corporate banking.
These services include typical bank products such as savings accounts,
corporate accounts, credit cards, and financing. BPA provides services
to high-risk customers including international foreign operated shell
companies, businesses likely engaged in unlicensed money transmission,
and senior foreign political officials. Because of the demonstrated
cooperation of high level management at BPA with TPMLs, BPA's
legitimate business activity is at high risk of being abused by money
launderers.
V. The Extent to Which This Action Is Sufficient To Guard Against
International Money Laundering and Other Financial Crimes
FinCEN's March 13, 2015 proposed imposition of the fifth special
measure, pursuant to 31 U.S.C. 5318A(b)(5), would guard against the
international money laundering and other financial crimes described
above directly by restricting the ability of BPA to access the U.S.
financial system to process transactions, and indirectly by public
notification to the international financial community of the risks
posed by dealing with BPA and TPMLs.
Dated: March 6, 2015.
Jennifer Shasky Calvery,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2015-05911 Filed 3-12-15; 8:45 am]
BILLING CODE 4810-02-P