3 Min Read
MADRID, March 10 (Reuters) - The financial authority of tax haven Andorra has taken control of private bank Banca Privada D'Andorra (BPA) after the United States declared the lender as under suspicion for money laundering, the Andorran government said on Tuesday.
Andorra, a small principality located in the Pyrenees mountains bordered by Spain and France, said in a statement the state intervention in the bank was not related to a solvency risk or balance sheet problems but alleged bad practice.
The state guaranteed the lender, one of Andorra's five banks, would continue to function normally. BPA said in a statement it would immediately open an internal investigation and that it was closely co-operating with the authorities.
The U.S Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) named BPA on Tuesday as a foreign financial institution of primary money laundering concern.
Activity involved the proceeds of organized criminals in Russia and China, $2 billion in laundered funds from Venezuelan state oil company PDVSA, foreign corruption, and other criminal activity, FinCEN said.
A high-level manager at BPA took "exorbitant commissions to process transactions related to Venezuelan third-party money launderers," FinCEN detailed.
"This activity involved the development of shell companies and complex financial products to siphon off funds from (PDVSA). BPA processed approximately $2 billion in transactions related to this money laundering scheme," it added.
The news follows two days after the United States declared Venezuela a national security threat and ordered sanctions against seven officials from the oil-rich country.
Calls to PDVSA in Venezuela's capital Caracas went unanswered.
The Bank of Spain said later on Tuesday it would take over Banco de Madrid, BPA's wholly-owned Spanish unit, in the interests of the lender's continuity following the events at BPA.
Andorra has made efforts to improve collaborations with other countries on fraud investigations in recent years and improve transparency in its banking system.
In June, Andorra committed to the automatic exchange of information in tax matters by signing a declaration that obliges countries to obtain all financial information from their banks and exchange that information with other countries on an annual basis. (Reporting By Carlos Ruano and Sonya Dowsett; Additional reporting by Brian Ellsworth and Alexandra Ulmer in Caracas; Writing by Sonya Dowsett; editing by Susan Thomas and Andrew Hay)