Published On: Mon, May 16th, 2016

Panama regulators deny loss of US correspondent banking services

Panama-MainMIAMI - Panamanian regulators have disputed the accuracy of a recent article detailing the imminent loss of correspondent accounts in the US by Panamanian financial institutions, notwithstanding that customers of Banco General have been told by their account representatives that there will be problems with the processing of inbound wire transfers, and on checks they deposit drawn on foreign banks.

However, the reasons why an American or Canadian bank would choose to close a Banco General correspondent account all point to money laundering:

(1) Banco General accepted deposits of funds corruptly obtained from Panama's National Assistance program, commonly known as PAN, which have resulted in the filing of related criminal charges.

(2) Banco General is under investigation by the organized crime prosecutor for laundering the proceeds of corruption obtained by the administration of the former president, Ricardo Martinelli, who faces multiple criminal charges, and a number of his close associates, and former government officials.

(3) Convicted former Supreme Court of Justice president, Judge Alejandro Moncada Luna, moved criminal proceeds through Banco General. The bank's failure to interdict large payments made to or on behalf of senior, yet underpaid, government officials amounts to gross negligence. This case is also under investigation by the organized crime prosecutor. Moncada Luna is serving a five-year sentence for accepting bribes and kickbacks.

(4) Links between Banco General and the Financial Pacific/Petaquilla Mine insider trading scandal have been established, and this connection is now part of a pending investigation being conducted by a foreign law enforcement agency.

Any one of these is enough of a reason for any North American bank to terminate a correspondent relationship with Banco General; taken as a group, even though these matters are pending, any risk-based compliance program would prudently act to reduce its risk level by closing correspondent accounts forthwith.

One money laundering investigation is sufficient to consider the termination of ties, several constitutes grounds for immediate closure of correspondent accounts.

Kenneth Rijock

Kenneth Rijock is a banking lawyer turned-career money launderer (10 years), turned-compliance officer specialising in enhanced due diligence, and a financial crime consultant who publishes a Financial Crime Blog. The Laundry Man, his autobiography, was published in the UK on 5 July 2012.

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