Jonathan Bush (poppy's brother) is in deep deep shit!
Fed Orders Riggs Bank Over Laundering
Fri May 14, 5:12 PM ET
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By MARCY GORDON, AP Business Writer
WASHINGTON - The Federal Reserve (news - web sites) ordered Riggs Bank's parent company Friday to take steps to prevent money laundering after the bank was fined $25 million in connection with a probe into possible links to terrorism financing.
The action came a day after Treasury Department regulators levied the record-setting fine against Riggs for its handling of millions of dollars in foreign-held accounts.
In a cease-and-desist order issued by the central bank, Riggs will have to take actions such as hiring an independent consultant to conduct a review. Its operation in Miami — which Riggs plans to close — will be required to retain an outside consultant to review previous account transactions for suspicious activity.
The Federal Reserve has jurisdiction over bank holding companies. The Atlanta Fed had previously advised Riggs's Miami-based subsidiary of deficiencies in its compliance with laws to prevent money laundering, the order noted.
Riggs is a midsize Washington bank with a near-exclusive franchise on business with the capital's diplomatic community.
Credit-rating agency Standard & Poor's said that the fine, combined with anticipated restructuring charges of $15 million to $21 million in the April-June quarter, "should result in a large loss in the second quarter and prevent Riggs from being profitable for the year."
Standard & Poor's and other agencies have recently downgraded their ratings of Riggs, reflecting what S&P on Friday called "continued profitability pressures and regulatory uncertainty."
Treasury's Office of the Comptroller of the Currency issued the fine in an order made public late Thursday, after weeks of negotiations between Riggs officials and banking regulators.
In addition to the now-closed accounts that diplomats from Saudi Arabia controlled, the order by the comptroller's office mentioned accounts held by officials of Equatorial Guinea.
The order requires Riggs to make special reviews of its operations and account transactions and gives regulators advance notice of any dividend payments to shareholders.
In agreeing to the fine and the orders, Riggs did not admit to or deny wrongdoing.
The FBI and regulators have investigated, for possible connections to terrorism financing, large cash transactions in Riggs accounts controlled by Saudi diplomats.
Senate Finance Committee Chairman Charles Grassley, R-Iowa, recently asked the panel investigating the Sept. 11 attacks to examine Saudi transactions at Riggs and FleetBoston Financial Corp.
The Treasury regulators had earlier accused Riggs of failing to comply with a law requiring banks to notify the government of suspicious transactions. The bank also had been classified by the comptroller's office as a "troubled institution" for not complying fully with a July 2003 consent order under which it agreed to strengthen its anti-money laundering controls.
The designation means the bank must get regulators' approval for changes in top management and for severance payments to executives.
The bank, with some $7 billion in assets, earned $3.9 million in the first quarter, compared with $5.9 million a year earlier. Annual earnings have not exceeded $25 million since 1999.
Riggs said last month it is pulling back from its foreign operations and the head of the family that controls the bank was resigning from the board of its parent company.
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