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After a Puerto Rican lender was fined $15m for allegedly facilitating drug trafficking, money laundering, and crypto scams, the US regulatory authorities pledged to prevent the financial ecosystem from monetary crimes by clamping down on offshore institutes and organisations. The FinCEN also eliminated the operations of a San Juan-based bank, Bancrédito, accused of failing to comply with the AML requirements and the due diligence in the transactional reporting between October 2015 to December 2022.
The investigation authority, FinCEN, claimed that the bank approved a $100m transaction of the AllBank Corporation, a Panama-based lender that shut down in 2019, through the correspondent banks. These included payments made on behalf of a person whose yacht and aircraft were seized by the Drug Enforcement Agency, wire transfers made by a Venezuelan national who was found guilty of bribing government officials in Argentina, and multiple transactions from a business associated with the OneCoin cryptocurrency scam.
The FinCEN director stated the authority “is sending the message that the era of easy money laundering through Puerto Rican IBEs is over. Correspondent accounts held in the US by foreign financial institutions serve as an important gateway to the US economy but have long been recognised to present unique risks that the US financial institutions need to manage appropriately. Bancrédito’s failure allowed nearly an unfettered flow of funds by these international correspondent accounts through the US financial system, jeopardising the integrity of the United States financial system. ”
Before 2021, International Banking Entities (IBEs) were not required to comply with the due diligence verification regulations, although they must report suspicious transactions under the Bank Secrecy Act (BSA). According to US Law, IBEs can only provide loans and deposits to foreign customer’s offshore businesses and are not allowed to deal with the local residents of Puerto Rica. However, based on current data available, as of April 2022, there were 27 IBEs, including local offices of multinational lenders Citi and UBS, operating in Puerto Rico and holding assets worth more than $49bn.