On March 10, 2015, FinCEN designated Banca Privada d'Andorra, based in the Principality of Andorra, as a foreign financial institution of primary money-laundering concern pursuant to Section 311 of the USA PATRIOT Act (Section 311). FinCEN also issued a Notice of Proposed Rulemaking under which U.S. banks would be prohibited from providing correspondent banking services to Banca Privada d'Andorra or any bank that processes transactions for Banca Privada d'Andorra. FinCEN's announcement discussed three examples of money-laundering activity that the bank allegedly facilitated.
- A high-level manager provided substantial assistance to Andrei Petrov, a third-party money launderer working for Russian criminal organizations engaged in corruption. In February 2013, Spanish law enforcement arrested Petrov for money laundering. Petrov is also suspected of having links to Semion Mogilevich, one of the FBI's "Ten Most Wanted" fugitives.
- A high-level manager accepted exorbitant commissions to process transactions related to Venezuelan third-party money launderers. This activity involved the development of shell companies and complex financial products to siphon off funds from Venezuela's public oil company, Petroleos de Venezuela. BPA processed approximately $2 billion in transactions related to this money-laundering scheme.
- A high-level manager accepted bribes in exchange for processing bulk cash transfers for another third-party money launderer, Gao Ping. Ping acted on behalf of a transnational criminal organization engaged in trade-based money laundering and human trafficking and established a relationship with BPA to launder money on behalf of this organization and numerous Spanish businesspersons. Through his associate, Ping paid exorbitant commissions to BPA bank officials to accept cash deposits into less-scrutinized accounts and transfer the funds to suspected shell companies in China. Spanish law enforcement arrested Ping in September 2012 for his involvement in money laundering.
FinCEN's proposed rule barring Banca Privada d'Andorra from U.S. correspondent banking would effectively shut the bank out of the dollar-based international banking system.
"FinCEN's action against Banca Privada d'Andorra comes on the heels of its $20 million penalty against Oppenheimer and Co. for failure to conduct proper anti-money-laundering due diligence," said Jim Mastracchio, co-leader of BakerHostetler's Tax Controversy practice and leader of the firm's Criminal Tax Defense team. "This shows that financial institutions worldwide face potential penalties if their tax and anti-money-laundering practices fail to comport with the U.S. government's requirements," he pointed out. From the perspective of a former prosecutor at the Department of Justice Tax Division, I would add, exclusion from U.S. dollar-clearing facilities can often be a fatal blow to even non-U.S. financial institutions.
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