Puerto Rico bank linked to bribery scandal hit with $15 million BSA fine

Bancrédito International Bank and Trust Corp. “processed millions of dollars in suspicious transactions throughout the United States on behalf of high-risk customers,” the Financial Crimes Enforcement Network says.

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A Puerto Rico bank seized earlier this year by regulators will pay a $15 million fine in the first enforcement action under a two-year-old federal rule aimed at closing gaps in anti-money-laundering enforcement.

Bancrédito International Bank and Trust Corp. — which was placed in receivership this year by banking regulators in the U.S. territory amid a political bribery scandal — agreed to the fine after failing to properly monitor the flow of international funds through it into the U.S. financial system, according to a consent order issued by the Financial Crimes Enforcement Network.

Bancrédito “willfully violated” the Bank Secrecy Act and its implementing regulations, according to the order, which was made public Friday. The order was signed by Ryan Marín, who became receiver of the bank after it was shut down by the Office of the Commissioner of Financial Institutions of Puerto Rico in January.

Marín did not respond to a request for comment.

Under the order, Bancrédito must surrender its license to operate in the U.S. as an international banking entity and preserve all business records related to BSA compliance.

Bancrédito violated a BSA regulation known as the “gap rule,” which took effect in March 2021 as part of a regulatory effort to force banks that service international financial institutions to comply with anti-money-laundering rules, according to Fincen.

Under the rule, international banking entities in Puerto Rico are now required to maintain anti-money-laundering programs similar to the broader banking industry, Candice Basso, a Fincen spokesperson, said in an emailed statement.

Bancrédito “shirked this obligation,” Basso said in the statement.

Between 2015 and 2022, Bancrédito inadequately monitored the transfer of funds from accounts linked to a Panamanian bank servicing companies and individuals in Panama and Venezuela, according to the order.

During this period, the bank also failed to file suspicious activity reports or implement an “adequate” anti-money-laundering program, even after coming under scrutiny from regulators in Puerto Rico, the order states.

Bancrédito provided “correspondent accounts to foreign financial institutions without the required due diligence and reporting” mandated by the BSA, Fincen Director Andrea Gacki said in a press release announcing the fine.

“Bancrédito processed millions of dollars in suspicious transactions throughout the United States on behalf of high-risk customers,” Gacki said.

Bancrédito was founded as an international banking entity in 2008 by Julio Herrera Velutini, who is a citizen of Venezuela and Italy. It provided banking services to foreign financial institutions primarily located in Central America and the Caribbean.

In August of 2022, Velutini pleaded not guilty to charges of honest services wire fraud and bribery of former Puerto Rico Gov. Wanda Vázquez as part of an attempt to undermine an investigation into Bancrédito that began in 2019 amid Vázquez’s election campaign, according to a U.S. Department of Justice news release at the time and news reports.

Around the same time, Vázquez was arrested on charges accusing the former governor of accepting campaign bribes.

Enforcement of the BSA’s gap rule is “a long time coming” for entities such as Bancrédito, which can serve as a “first-line stop for where money gets into the United States,” according to Andrew Bernstein, a white-collar criminal defense lawyer at Armstrong Teasdale who wasn’t involved in the matter.

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