Ramon and Higini Cierco ("the Cierco Brothers") Seek FinCEN Withdrawal of its Flawed Notice on Grupo Banca Privada d'Andorra ("BPA Group")

Recent action by U.S. Federal Court calls into question FinCEN's powers, and BPA rulemaking underway.

Sep 04, 2015, 14:19 ET from Sphere Consulting

WASHINGTON, Sept. 4, 2015 /PRNewswire/ -- Ramon and Higini Cierco the non-executive co-chairmen of the Grupo Banca Privada d'Andorra and controlling shareholders in the BPA Group, request FinCEN withdraw its March 6, 2015 Notice of Finding and reconsider whether any action, or different action, is required in view of intervening developments that have wholly transformed the context and evidentiary basis of the earlier Notice, based on the ruling by Judge Cooper of the United States District Court for the District of Columbia on August 27, 2015 in the case of FBME Bank Ltd. v Lew, Case No. 15-cv 01270 (CRC).

Eric Lewis, global legal coordinator for the Cierco Brothers said, "This notice should be rescinded as FinCEN has been found by a US court to have failed to comply with the requirements of the Administrative Procedure Act, ("APA") in two material respects.  The same legal principles dictate withdrawal of the Notice here."   Judge Cooper found that FinCEN failed to provide all the public information on which it relied in issuing its final ruleholding that FBME was an institution of "primary money laundering concern," and second, FinCEN failed to explain why potentially viable but less drastic alternative penalties were not imposed rather than the fifth special measure, which prohibited domestic financial institutions from maintaining correspondent bank accounts with FBME.  The application of the fifth special measure effectively shuts down an international bank.

FBME's Notice of Finding against FBME contained specific findings of money laundering activity that was far more widespread and raised far more grave national security concerns than the specific findings made in the Notice with respect to BPA, including support of funders of Hezbollah and Syrian proliferators of weapons of mass destruction. And it appears from the record in the FBME matter that these violations were not self-reported by FBME, but were discovered by government officials through classified investigations.

Mr. Lewis said, "BPA's position is quite different as the three principal cases cited by FinCEN in the Notice of Proposed Rulemaking were reported by BPA to the Andorran regulator a year before the issuance of the Notice."  BPA wrote to the chief regulator (the same person who earlier as chief auditor certified BPA compliance policies) about these "reputation risk accounts" and referred them for investigation. These matters were all the subject of governmental action in which BPA was fully cooperative.

Andorran regulators either failed to inform FinCEN that BPA had reported these matters voluntarily long before the issuance of the Notice of Proposed Rulemaking This was part of a pattern of reckless misfeasance and non-responsiveness by the Andorran regulators, which, as noted by Mr. Anton Smith of the United States Embassy in Spain, led FinCEN to "use the hammer" of a Section 311 Notice and proposed imposition of the most severe sanctions, the Fifth measure, against BPA.

Mr. Lewis said, "BPA remains an expropriated bank which Andorran authorities appear poised to dispose of in a manner that is devoid of transparency, will waste hundreds of millions of euros of value, impose losses on thousands of innocent depositors  and put hundreds of people out of work. Therefore, it is essential that FinCEN take responsible steps to stop the chain of injustice that Andorra put in motion with its misfeasance and for which the Ciercos are paying the price, both financially and with respect to their reputation."

The imposition of the most severe sanction, the fifth measure, is entirely unexplained and appears to be wholly unjustified by evidence or precedent.  As noted in the Ciercos' comments, the actions of the Directors of the Board of BPA, in voluntarily seeking out a EU regulatory regime through expansion into Spain, in its employment of and responsiveness to its auditors, and its steady growth into the asset management business primarily through Spain, are indicative of a responsible and transparent institution, not an institution seeking opaque or improper business.  The Andorran regulators were unambiguous in noting BPA's proactive approach and The Head of the Andorran Financial Intelligence Unit, Carles Fiñana Pifarré confirmed this in his most recent certification, which states "[BPA] strictly complies with the legal precepts contained in the [Andorran AML] Law, having furthermore been subjected to successive external audits, that certify not only the foregoing, but also that it has the necessary mechanisms for training and prevention. I can furthermore confirm that in the last three years BANCA PRIVADA D'ANDORRA S.A. has not been object of any corrective action or penalizing measures on money laundering and terrorism financing."

Mr. Lewis concluded, "Rather than spending time and effort trying to move forward on a Notice based upon flawed and inaccurate premises, at the very least FinCEN should withdraw the Notice and issue a revised Notice which meets the requirements set forth by Judge Cooper under the APA."

Andorra's lack of responsiveness has precipitated a state of affairs that is as awkward for FinCEN as it is unjust for the Ciercos and other stakeholders in BPA.  The situation can and should be corrected before any further time or resources are expended on a rulemaking that is fatally flawed.  

Sphere Consulting is representing the Cierco Brothers in this matter.

SOURCE Sphere Consulting