Riggs Bank agreed to pay a $16 million fine yesterday after pleading guilty to violating the Bank Secrecy Act by hiding transfers of millions...
WASHINGTON — Riggs Bank agreed to pay a $16 million fine yesterday after pleading guilty to violating the Bank Secrecy Act by hiding transfers of millions of dollars in accounts controlled by Chilean despot Augusto Pinochet and top officials of Equatorial Guinea.
The bank, one of the oldest and most prestigious in the nation’s capital, set up accounts under deceptive or phony names, ignored requirements to file federal reports on transfers of significant sums and helped establish dummy corporations in the Bahamas, where banking laws are notoriously lax, federal investigators said.
U.S Attorney Kenneth Wainstein described Riggs’ failings as “long-term and systemic misconduct,” at a news conference after the court hearing.
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In addition to the fine, Riggs agreed to five years of probation and to cooperate in ongoing investigations of former Riggs officers.
The fine is subject to the approval of U.S. District Judge Ricardo Urbina, who is scheduled to issue a sentence March 29.
The felony guilty plea is an especially rude knock for an institution that once advertised itself as the “most important bank in the most important city in the world,” one that catered for generations to Washington’s diplomatic, military and political elite.
Founded in 1836, Riggs counted Abraham Lincoln and Jefferson Davis as well as Ulysses Grant, Douglas MacArthur and Dwight Eisenhower as customers.
A Riggs subsidiary, J. Bush & Co., a money-management firm, is run by Jonathan Bush, President Bush’s uncle.
The criminal penalties come on top of an earlier $25 million civil fine levied by the Office of the Comptroller of the Currency for Riggs’ handling of accounts held by diplomats and government officials of Equatorial Guinea and Saudi Arabia.
Despite Pinochet’s well-known record of brutality as Chile’s leader from 1973 to 1990, warrants against him alleging human-rights abuses and a court order in Spain to freeze his assets, Riggs accepted more than $10 million in deposits from him between 1994 and 2002, Wainstein, the U.S. attorney, said.
The bank maintained the accounts in Pinochet’s wife’s maiden name and in Pinochet’s maternal family name to avoid detection, according to court documents. To mask the source of funds, Riggs moved money from a Pinochet account into an internal Riggs account before sending it to a destination outside the bank, the documents show.
The bank also helped Pinochet set up shell corporations in the Bahamas in 1996 and 1998, Wainstein said.