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Riggs Bank pleaded guilty Thursday to failing to report suspicious transactions in the accounts of foreigners, including former Chilean dictator Augusto Pinochet, and agreed to a $16 million fine. In its aggressive courtship of foreign political figures to win their banking business, the old-line Washington bank failed to exercise oversight and aided their illegitimate use of the bank, the prosecutors said. It would be the largest criminal penalty ever imposed on a bank of Riggs’ size, according to prosecutors, and comes atop a record $25 million civil fine levied on the bank by a Treasury Department agency last May. The plea agreement still needs the approval of U.S. District Judge Ricardo Urbina, who expressed some skepticism about the penalty’s adequacy at a hearing Thursday. The plea could throw into question Riggs’ deal, announced in July, to be acquired for $779 million by regional bank PNC Financial Services Group of Pittsburgh. However, shares of parent Riggs National Corp. rose 32 cents, or 1.5 percent, to close at $22.44 in Thursday trading on the Nasdaq Stock Market, suggesting that investors expect the merger to go through now that Riggs has resolved the case and avoided prosecution with the plea agreement. Riggs also agreed, in a separate order with federal banking regulators, not to pay dividends to shareholders until it puts in place a new capital plan, which must be developed in 30 days and include growth projections. Riggs, which drew prestige from its near-exclusive franchise on business with the capital’s diplomatic community, is a midsize institution with some $6.4 billion in assets. The Justice Department has been investigating bank executives’ handling of some foreigners’ accounts, including those held by Pinochet, Saudi diplomats in Washington and officials of Teodoro Obiang’s regime in Equatorial Guinea. The poor West African country, which has been cited by the State Department for human rights abuses, corruption and diversion of oil revenues to government officials, became Riggs’ biggest single customer with nearly $700 million in accounts and certificates of deposit. “Despite numerous warnings from regulators, Riggs courted customers who were a high risk for money laundering and helped them shield their financial transactions from scrutiny,” Kenneth Wainstein, the U.S. Attorney for the District of Columbia, said at a news conference. “This long-term and systemic misconduct was more than simply blind neglect; it was a criminal breach of the banking laws that protect our financial system from exploitation by terrorists, narcotics dealers and other criminals,” Wainstein said. Earlier, at the hearing before Urbina, prosecutors detailed a lengthy list of deceptions they said were used by Riggs managers to conceal Pinochet’s ownership of the assets, including setting up dummy offshore companies and altering his name on some of his accounts. This occurred as prosecutors in several countries were trying to freeze Pinochet’s assets and bring him to justice for alleged crimes against humanity. Riggs managers also helped Obiang set up an offshore shell corporation that took in deposits of more than $11 million over a two-year period of questionable transactions, the prosecutors said. “The bank deeply regrets the conduct and has cooperated fully with the investigation,” Mark Hulkower, an attorney representing the bank, told the judge. If Urbina rejects the fine, Riggs and the prosecutors may have to renegotiate it or take the case to trial. The judge set a March 29 sentencing hearing. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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