A major bank in Chile reported yesterday that U.S. regulators are investigating whether its two branches in the United States have complied with anti-money-laundering laws.
The focus of the inquiry couldn't be learned. The name of the bank, Santiago-based Banco de Chile, surfaced recently in an inquiry by bank regulators and the Justice Department into possible money laundering by former Chilean dictator Augusto Pinochet. The inquiry began as part of a criminal investigation of Pinochet's accounts at Riggs Bank in Washington.
In a Securities and Exchange Commission filing, the Chilean bank said the Office of the Comptroller of the Currency and the Federal Reserve Bank of Atlanta were conducting a targeted examination of "certain accounts" at its New York and Miami branches to determine if the bank complied with anti-money-laundering regulations. The rules generally require banks to have complete and accurate customer information files and to notify law enforcement of any suspicious activities by customers.
The filing said the bank was cooperating and that the investigation will "likely" result in additional supervisory actions by regulators, including monetary penalties. A phone message and e-mail to a spokesman for Banco de Chile were not returned. Spokesmen for the OCC and the Fed declined comment.
Sources familiar with the Riggs investigation, who spoke only on condition of anonymity, said Banco de Chile was one of several U.S. and Latin American banks that Pinochet, his family, and several high-level Chilean military officers used to transfer money to and from Pinochet's Riggs accounts in the past 20 years. Several large-denomination withdrawals from and deposits to Pinochet's Riggs accounts involved accounts at Banco de Chile's branches in New York. The transfers involved accounts in the names of what investigators have determined were aliases for Pinochet.
According to an investigation by the Senate Permanent Subcommittee on Investigations, when Riggs closed its Pinochet accounts between 2000 and 2002, it sent more than $3 million in the form of difficult-to-trace cashiers checks to Pinochet in Chile. Most of those checks were cashed at Banco de Chile in Santiago.