U.S. Ready To Fine Riggs Bank
The SAR contains no explanation for the January 2003 transaction. A source close to the Saudi embassy said the money was reimbursement for expenses related to a summer 2003 visit here by World Muslim League officials from around the world. The travel and lodging for the visit was arranged by the embassy's Office of Islamic Affairs, the source said.
Another SAR concerns a $6 million check drawn on the Saudi embassy's Riggs account and deposited into the personal account of Ahmed A. Kattan, the No. 2 official at the embassy, on Oct. 19, 2001. In transactions on Oct. 22 and Oct. 24, Kattan had $5.5 million wired out of his account to two men operating a private school in Cairo. The transfers triggered an SAR because Egypt at the time of the transfer was viewed by the U.S. government as lacking anti-money-laundering safeguards.
An embassy source said the $6 million transfer was of personal funds for private purposes.
Riggs internal investigators also found a $50,000 payment in October 2001 from the embassy to the American Muslim Council, whose founder, Abdurahman Alamoudi, was charged last September with accepting hundreds of thousands of dollars from Libya, which then was designed by the United States as a sponsor of terrorism. The check was deposited in a Morgan Stanley account after being endorsed by Alamoudi without reference to the council, according to an SAR filed by Riggs. An embassy source said the payment was part of the embassy's long-standing practice of donating money to charities and nonprofit organizations.
Another SAR details more than $17 million in payments last August from the account of the Saudi Arabian Ministry of Defense and Aviation to Ibrahim Shorbatli in Saudi Arabia. Riggs determined that the ministry had been paying Shorbatli $4 million each quarter. Saudi officials told Riggs that the money was for building palaces in Saudi Arabia and that Shorbatli coordinates construction projects for Bandar, but in the SAR Riggs said it could not determine the ultimate use of the funds. The transaction was previously reported in Newsweek.
An embassy source said the money was for a government construction project in Saudi Arabia.
Bandar and his staff were out of the country yesterday and could not be reached, nor could a spokesman for the embassy. An embassy source who asked not to be identified because he is not the official spokesman said diplomats there continue to cooperate with every aspect of the FBI investigation. The source said that as recently as two weeks ago the FBI met with embassy officials and expressed no concern that Saudi officials had done anything wrong or illegal.
But a law enforcement official said that few of the transactions have been adequately explained and that the matter remains under investigation.
Riggs began filing its suspicious-activity reports about the Saudi accounts after examiners from the Office of the Comptroller of the Currency (OCC) -- the Treasury Department unit that oversees banks -- began to crack down a year ago on what it considered to be the bank's weak procedures for catching money laundering. Riggs filed about a dozen SARs in the spring of 2003, and 20 more after November when Riggs began an audit of past Saudi transactions.
Because of its questions about the rigor of the bank's supervision, the OCC recently designated Riggs a "troubled institution," which gives the unit sweeping powers to order changes that could include replacing senior executives.
Riggs also faces a probe into its business with another embassy. A federal grand jury is investigating possible money laundering in accounts held by officials of Equatorial Guinea, and an official at Riggs who managed the West African nation's accounts has been fired and is under investigation for possible embezzlement. The grand jury also is looking into whether bribes were paid by U.S. oil companies through Riggs accounts to the dictator of Equatorial Guinea, according to people who have been briefed on the matter.
A source close to the Equatorial Guinean Embassy said embassy officials have not been notified of any grand jury investigation.
FBI scrutiny of Riggs's international business began soon after the Sept. 11, 2001, terrorist attacks and widened to include parallel probes by the OCC and Riggs itself after a Newsweek report in November 2002 suggesting that the Saudi ambassador's wife, Princess Haifa al-Faisal , may have used a Riggs account to donate money to a charity that then gave some of it to the Sept. 11 terrorists. In the course of the inquiries, bank and federal investigators found tens of millions of dollars in questionable transactions that had not previously been reported by Riggs, as the law requires. That led to the flurry of suspicious-activity reports filed by the bank last November.
Riggs's failure to file suspicious-activity reports had been noted by regulators years ago but no action was taken. In annual bank exam reports for 1999, 2000 and 2001, OCC officials outlined problems in Riggs's procedures to guard against money laundering or other illicit activities by bank customers, sources familiar with the reports say. But the OCC never fined or sanctioned the bank, sources familiar with the examinations said.
© 2004 The Washington Post Company