In May, Riggs Bank of Washington DC, the US capital’s oldest locally-based financial institution, agreed to pay a $25m (£13.7m) civil money penalty for violating the Bank Secrecy Act. This is the largest fine assessed to date for violating that Act, which requires banks to adopt a comprehensive anti-money laundering (AML) compliance programme. The alleged violations identified at 168-year-old Riggs Bank included numerous transactions involving accounts related to the Embassy of Saudi Arabia and the Government of Equatorial Guinea. Riggs had previously been cited in 2002 for violations involving transactions for former Chilean dictator Augusto Pinochet.
The civil money penalty was the result of what regulators termed a wilful and systemic failure to report suspicious transactions. The examiners, who began to question transactions as early as 1997, also found that the bank lacked adequate policies, systems and controls to identify suspicious transactions. As a result of these findings and the increasingly negative publicity that followed, Riggs decided to terminate its embassy banking business. The bank also hired an investment bank to assist in exploring its “strategic alternatives”, including a sale of the company. Not long after, PNC Financial Services Group of Pittsburg announced that it was acquiring the embattled bank.
