Institutions such as TD should look to the downfall of Riggs Bank as a reminder of how money laundering can quickly morph into an existential crisis
More than just a bank, Riggs was an American cultural institution. It sold itself to PNC Financial Services Group Inc. in 2005.The Washington, D.C.-based lender – which traced its origins to a note-brokerage house founded in 1836 – proudly counted more than 20 U.S. presidents as customers, including Thomas Jefferson, Abraham Lincoln and Theodore Roosevelt. In addition to being “the bank of presidents,” Riggs served the U.S.
The tale of Riggs is a reminder of how money laundering – which is often dismissed as a “non-financial risk” – can quickly morph into an existential crisis for lenders when senior executives and corporate directors fail to grasp the gravity of financial crime.after it set aside another large provision to pay anticipated U.S. regulatory fines over anti-money- laundering failures. TD has now reserved more than US$3-billion for fines and continues to brace for other non-financial penalties.
“Keep in mind that the failures of Riggs to properly identify its risk and manage them is not unique,” Mr. Caruso wrote in the foreword of aSuch questions must be asked of Canadian banks, too, because C-suite executives and corporate directors still need to be pushed by regulators to directly engage themselves with anti-money-laundering and anti-terrorist-financing efforts.
Riggs made that same mistake when it doubled down on serving PEPs during the 1980s. By giving anti-money-laundering compliance short shrift, it failed to appreciate the risks. Suspicious transactions involving accounts for the government of Equatorial Guinea also went unreported by Riggs. There were more than 30 accounts in all between 1996 and 2004. Riggs also opened multiple personal accounts and helped establish offshore shell corporations for President Teodoro Obiang Nguema, who has ruled the country since 1979, and his relatives. By 2003, the balances and outstanding loans on the various accounts totalled US$700-million.
Riggs Bank United States Accounts Account History Superintendent Risk City National Bank PNC Financial Services Group Inc. Augusto Pinochet
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