Notice of Finding That Banca Privada d'Andorra Is a Financial Institution of Primary Money Laundering Concern, 13464-13466 [2015-05911]
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13464
Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Notices
Issued in Washington, DC, on March 10,
2015.
Ron Hynes,
Director of Technical Oversight.
Estimated Annual Burden Hours:
64,971.
Dawn D. Wolfgang,
Treasury PRA Clearance Officer.
[FR Doc. 2015–05750 Filed 3–12–15; 8:45 am]
[FR Doc. 2015–05739 Filed 3–12–15; 8:45 am]
BILLING CODE 4910–06–P
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
DEPARTMENT OF THE TREASURY
Submission for OMB Review;
Comment Request
Notice of Finding That Banca Privada
d’Andorra Is a Financial Institution of
Primary Money Laundering Concern
March 10, 2015.
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The Department of the Treasury will
submit the following information
collection request to the Office of
Management and Budget (OMB) for
review and clearance in accordance
with the Paperwork Reduction Act of
1995, Public Law 104–13, on or after the
date of publication of this notice.
DATES: Comments should be received on
or before April 13, 2015 to be assured
of consideration.
ADDRESSES: Send comments regarding
the burden estimate, or any other aspect
of the information collection, including
suggestions for reducing the burden, to
(1) Office of Information and Regulatory
Affairs, Office of Management and
Budget, Attention: Desk Officer for
Treasury, New Executive Office
Building, Room 10235, Washington, DC
20503, or email at OIRA_Submission@
OMB.EOP.gov and (2) Treasury PRA
Clearance Officer, 1750 Pennsylvania
Ave. NW., Suite 8140, Washington, DC
20220, or email at PRA@treasury.gov.
FOR FURTHER INFORMATION CONTACT:
Copies of the submission(s) may be
obtained by calling (202) 927–5331,
email at PRA@treasury.gov, or the entire
information collection request may be
found at www.reginfo.gov.
Internal Revenue Service (IRS)
OMB Number: 1545–1002.
Type of Review: Reinstatement with
change of a previously approved
collection.
Title: Return by a Shareholder of a
Passive Foreign Investment Company or
Qualified Electing Fund.
Form: 8621.
Abstract: Form 8621 is filed by a U.S.
shareholder who owns stock in a foreign
investment company. The form is used
to report income, make an election to
extend the time for payment of tax, and
to pay an additional tax and interest
amount. The IRS uses Form 8621 to
determine if these shareholders have
correctly reported amounts of income,
made the election correctly, and have
correctly computed the additional tax
and interest amount.
Affected Public: Private Sector:
Businesses or other for-profits.
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Financial Crimes Enforcement
Network (‘‘FinCEN’’), Treasury.
ACTION: Notice of Finding.
AGENCY:
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:
SUMMARY:
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.
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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, HighLevel Manager A at BPA in Andorra
provided substantial assistance to
Andrey Petrov, a TPML (‘‘TPML 1’’)
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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 HighLevel 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
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13465
services. High-Level Manager B’s
reliance on these contracts
demonstrated transaction monitoring
and due diligence failures. Also, HighLevel 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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13466
Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Notices
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 highrisk business allows TPMLs to obscure
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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 highrisk 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.
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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
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Proposed Collection; Comment
Request for Forms 9779, 9783, 9787,
and 9789
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice and request for
comments.
AGENCY:
The Department of the
Treasury, as part of its continuing effort
to reduce paperwork and respondent
burden, invites the general public and
other Federal agencies to take this
opportunity to comment on proposed
and/or continuing information
collections, as required by the
Paperwork Reduction Act of 1995, Pub.
L. 104–13 (44 U.S.C. 3506(c)(2)(A)).
Currently, the IRS is soliciting
comments concerning Forms 9779,
9783, 9787, and 9789, Electronic
Federal Tax Payment System (EFTPS).
DATES: Written comments should be
received on or before May 12, 2015 to
be assured of consideration.
ADDRESSES: Direct all written comments
to Christie Preston, Internal Revenue
Service, Room 6129, 1111 Constitution
Avenue NW., Washington, DC 20224.
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or
copies of the forms and instructions
should be directed to LaNita Van Dyke,
Internal Revenue Service, Room 6517,
1111 Constitution Avenue NW.,
Washington, DC 20224, or through the
internet at Lanita.VanDyke@irs.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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]]>Agencies
[Federal Register Volume 80, Number 49 (Friday, March 13, 2015)]
[Notices]
[Pages 13464-13466]
From the Federal Register Online via the Government Printing 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.
-----------------------------------------------------------------------
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
[[Page 13465]]
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
[[Page 13466]]
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
