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In the interests of accuracy, the summaries of cases referred to under each Red Flag are based wherever possible on the available court documents or other public legal sources.

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3. Handling questionable assets

Receiving funds which may have been associated with criminal activities exposes companies and individuals to legal risks. Holding, managing or hiding such funds, including funneling suspicious funds into legitimate financial channels, may result in prosecution and lawsuits.

Illicit Asset Due Diligence

Case 3.1 United States of America v. Riggs Bank

In 2005, Riggs Bank pled guilty in a US court and paid a $16 million fine to clear up criminal charges laid in relation to hiding and laundering the assets of Chilean dictator Augusto Pinochet.

The case against Riggs bank proceeded in both U.S. and Spanish criminal courts focused on the bank’s role in hiding and laundering Pinochet’s assets. The bank also faced allegations of similar practices with respect to the assets of government officials from the oil rich West Africa state of Equatorial Guinea (United States of America v. Riggs Bank N.A., Cr. 05-35(RMU).

Specifically, Riggs was accused of violating the Bank Secrecy Act (BSA), under which it was required to file a Suspicious Activity Report (SAR) with the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) whenever it detected suspicious financial transactions. The bank was initially assessed a $25 million civil money penalty in 2004 for violations of US anti-money laundering laws by FinCEN.

In March 2005, a U.S. federal court accepted the Riggs Bank guilty plea for a failure to report suspicious transactions worth hundreds of millions of dollars. Under the plea agreement, money laundering charges were dropped and the bank agreed to pay $16 million in fines and a five-year period of corporate probation.

In Spain, the case against the bank proceeded on the grounds that Riggs violated a freeze on Pinochet’s assets while he was under investigation in connection with charges of genocide, terrorism and torture relating to his time in power, by transferring at least $8 million from Pinochet's frozen accounts, to a new Washington, D.C. account.

Riggs and its principal owners undertook negotiations with the Spanish Court and agreed to pay $8 million to a foundation established for victims of the former Chilean dictator Augusto Pinochet. In return, a Spanish court dismissed the criminal charges against bank officials..


The case against Riggs Bank closed under agreements entered into described above. Subsequently, Riggs was sold to a financial services group in the same year.

More recently, a civil case has been brought in the U.S. against Banco de Chile for its role in laundering Pinochet’s assets. The suit alleged fraudulent conveyance of assets in violation of the Spanish court’s 1998 freeze order and RICO violations based on allegations of money laundering and wire fraud. The lawsuit was dismissed on May 29, 2006. In October 2007, Pinochet’s widow and other members of the family were arrested in Chile on charges of money laundering in connection with the Riggs case.

On October 12, 2005, Banco de Chile entered into a Consent to the Assessment of Civil Money Penalty agreement with the U.S. Department of the Treasury, paying a $3 million fine without admitting to wrongdoing. Previously, the Federal Reserve had issued cease and desist orders against Banco de Chile, relating to the bank's association with former Chilean dictator Augusto Pinochet.

Sources for this summary

Department of JusticeU.S. Press Release announcing Riggs Guilty Plea, Thursday, January 27, 2005

U.S. Treasury Department press releases announcing $25 million civil fine against Riggs Bank (May 2004) and a 2005 press release announcing a $3 million civil fine against Banco de Chile.

Professor Anita Ramasastry's FindLaw aricle on the Riggs case, "Stopping Banks from Hiding Human Rights Abusers Money"

Links to additional documentation , including U.S. Congressional Reports, and documents from the Spanish investigation into Riggs Bank, including English translations of the proceedings in Spain in the Riggs case in 2004 and in 2005.

For new coverage see, e.g.,The Washington Post

Other Relevant Cases

Ossaily and Nassour in Sierra Leone

Samih Ossaily and Aziz Nassour were sentenced to 3 and six years respectivley in Belgium for laundering money raised through selling illegal diamonds he bought in Sierra Leone.

Samih Ossaily and Aziz Nassour and others in their network were accused of numerous offences under Belgian criminal law relating to allegations that they smuggled diamonds out of Sierra Leone and illicit weapons into Liberia, in contravention of UN sanctions. They were also accused of laundering the proceeds of their alleged crimes. Evidence was proffered of Nassour’s close association with Charles Taylor, that Ossaily purchased diamonds directly from the Revolutionary United Front (RUF), and that two shipments of weapons were delivered to Liberia. The court in Antwerp convicted Nassour on eight counts and Ossaily on four counts of money-laundering, arms trafficking, dealing in conflict diamonds and belonging to a criminal organization, all of which are offences under the Belgian criminal code.

The Antwerp case number was AN.27.97.1393/01. The news report of the decision is available online but court documents are not made public in criminal cases in Belgium. Samih Ossaily's web site includes a discussion of the case and links to some Belgium government reports relevant to the terrorist financing aspects of the case.
Corruption Case Against African Leaders Moves Ahead in France
France's Supreme Court (Cour de Cassation) has ruled that an investigation into corruption by three African leaders can proceed. The case involves the alleged acquisition of properties, cars, and bank accounts by three foreign heads of state. "The inquiry should also shed light on the role played by various intermediaries...including banking institutions".
Conflict Minerals Law Passed in U.S.
A new U.S. law requires publicly traded companies to disclose to the SEC whether their products contain gold, tin, tungsten or tantalum from Congo or adjacent countries. If so, they have to describe what measures they are taking to trace the minerals' origin. The State and Treasury departments are examining the possibility of future sanctions against U.S. companies that use "conflict minerals."
Governments Must Remove Barriers to Corporate Accountability says new report
A report out this week from Fafo, Amnesty International, and the Norwegian Peacebuilding Centre identifies obstacles to judicial remedies for business involvement in human rights abuses and sets out a series of reforms. The report argues governments need to take urgent action.
Wood Products Multinational in Court over allegations of Funding Liberia's War
Campaigning organizations have lodged a complaint in France against leading international timber company Dalhoff, Larsen and Horneman (DLH) alleging that "during the civil war in Liberia from 2000-2003, DLH brought timber from Liberian companies that provided support to Charles Taylor's brutal regime."
Kabuga's assets frozen
A Kenyan judge has upheld an appeal against Kenya's decision to freez the assets of a Rwandan businessman wanted by the ICTR on charges of having helped to finance the Rwandan genocide. Felicien Kabuga was indicted by the tribunal but is still at large.
French Court to Investigate Assets of African Presidents
A French court has decided to open a judicial investigation into assets held in France by three African presidents. The NGOs who launched the case under anti-corruption laws in France say an investigation will have to determine how the assets were acquired and where the funds came from: "The investigation will also throw light on the various intermediaries involved in the transactions under scrutiny, namely the banks identified by the police investigation whose compliance with anti- money laundering regulations is in question."
Yukos Shareholders to go before European Court of Human Rights
The European Court of Human Rights has announced it will allow a claim for £29.5 billion from shareholders in the collapsed Russian oil comapny Yukos.
EU adds Companies to Zimbabwe Sanctions List
"More than 60 individuals and firms with links to Mr Mugabe have been added to a list of those banned from travelling to the EU or doing business there. Those on the sanctions list are suspected of having links to human rights abuses in Zimbabwe." The BBC reports

New UK corruption law likely in wake of OECD criticism
The OECD says it is "seriously concerned about the UK's continued failure to address deficiencies in its laws on bribery of foreign public officials and on corporate liability for foreign bribery". New legislation toughening anti-bribery laws would be introduced in the next Parliament, Justice Minister Jack Straw said.
Conflict is good for the piracy business
Even though the number of pirates who actually take part in a hijacking off the coast of Somalia is relatively small, the whole modern industry of piracy involves many more people. The BBC meets a pirate accountant on a visit to the port of Eyl.
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