The 168-year-old Riggs Bank is the oldest Washington-based bank and one of America's most respected institutions. In 2003, the US Senate Permanent Subcommittee on Investigations initiated an investigation of private banking and Embassy accounts at Riggs Bank for the effectiveness of key anti-money laundering provisions in the US Patriot Act. The Subcommittee concluded that Riggs executives, even after the events of September 11, 2001, have failed to monitor suspicious financial transactions involving hundreds of millions of dollars. The article looks into the fall of this once-eminent bank.
The 168 year-old Riggs Bank (Riggs) is the oldest Washington-based bank and one of America's most respected institutions. It has held presidential accounts (Abraham Lincoln, John Tyler, Ulysses S Grant, and Dwight D Eisenhower) since the Civil War1. Riggs has been the bank of choice for an estimated 85% of the city's embassies and consulates, in some cases for more than 30 years. But in 2004, Riggs found itself as the most scrutinized bank in Washington.2 The US Treasury Office of the Comptroller of Currency charged Riggs for not complying with a July 2003 consent order under which it has agreed to strengthen its anti-money-laundering controls.
In 2003, the US Senate Permanent Subcommittee on Investigations initiated an investigation of private banking and Embassy accounts at Riggs Bank for the effectiveness of key anti-money laundering provisions in the US Patriot Act3. The Subcommittee concluded that Riggs executives, even after the events of September 11, 2001, have failed to monitor suspicious financial transactions involving hundreds of millions of dollars. Riggs has not informed US banking regulators that Augusto Pinochet, the former Chilean dictator, top government officials of Equatorial Guinea and many Saudi Arabians held millions of dollars in suspicious accounts with the bank. On May 13, 2004, Federal regulators fined Riggs $25 mn for failing to investigate suspicious banking transactions. This is the largest ever civil fine imposed on a financial institution for such violations.4 The Federal Reserve Board issued a cease-and-desist order against Riggs and ordered it to stop its deficient anti-money laundering practices.5 |
