Action Taken to Protect the U.S. Financial System from
Risk Stemming From Belarusian Bank
WASHINGTON – The U.S. Department of the
Treasury today announced the identification of Belarus-based JSC CredexBank
(Credex) as a financial institution of primary money laundering concern under
Section 311 of the USA PATRIOT Act (Section 311). Treasury took this action
because it has reason to believe that Credex has engaged in high volumes of
transactions that are indicative of money laundering on behalf of shell
corporations, and has a history of ownership by shell corporations whose own
lack of transparency contributes to considerable uncertainty surrounding
Credex’s true beneficial ownership.
“This
action seeks to protect the U.S. financial system from a foreign financial
institution whose highly suspicious transaction patterns and pervasive lack of
transparency make it virtually impossible to discern whether the bank is engaged
in any legitimate business. Credex’s apparent lack of even basic anti-money
laundering practices and procedures puts U.S. financial institutions at risk,”
said Under Secretary for Terrorism and Financial Intelligence David S.
Cohen.
Treasury’s Financial Crimes Enforcement Network (FinCEN)
also today filed a Notice of Proposed Rule Making (NPRM) in which it proposes
requirements with respect to recordkeeping and reporting of certain financial
transactions involving Credex, including attempted transactions, and proposes to
prohibit U.S. financial institutions from opening or maintaining correspondent
or payable-through accounts for Credex. These measures are subject to a 60-day
comment period, beginning the day the NPRM is published in the Federal Register.
The Notice of Finding is effective immediately. U.S. financial institutions
should take this information into account as part of their overall risk
management programs.
Ownership by Shell
Corporation
Since
its founding in September 2001, Credex’s ownership has passed from one shell
corporation to another. Credex’s original registered owner, Ximex, in London,
United Kingdom, shares the same mailing address as another firm whose primary
activities are formation and servicing of international business companies, as
well as tax and financial planning. Since October 2009, Credex has been owned by
Vicpart Holding SA (Vicpart), based in Fribourg, Switzerland. The significant
inconsistencies and gaps in publicly available information about Vicpart raise
concerns about the true nature and purpose of Credex’s owner. Vicpart shares the
same address as more than 200 other companies, a fact that is troubling given
that international banking standards identify the sharing of an address by
multiple businesses as a red flag for shell corporation activity. Although
Vicpart’s website is no longer accessible to the public, it once stated that the
company is purportedly engaged in various businesses, including finance,
commercial and industrial participation, and real estate. Separately, a global
business registry indicates that Vicpart is registered as a joint stock company
whose primary line of business is investment management. However, Credex is
listed as its only holding. In addition to being a shell corporation, Vicpart
bears the hallmark of a classic “shelf company,” demonstrated by the fact that
it remained dormant for several years after its creation and became active only
months prior to acquiring Credex in 2009. These suspicious characteristics
surrounding the company are even more concerning in light of allegations that
two former Vicpart directors may have been involved in financial crimes.
Patterns of Suspicious Transactions Indicative of Money
Laundering
Since
at least 2006, Credex has engaged in patterns of highly questionable financial
transactions that are indicative of money laundering, including: high volume
transactions involving foreign shell corporations incorporated and operating in
high risk jurisdictions, disproportionate and evasive transactional behavior,
and nested account activity in the U.S. financial system. The facts surrounding
these transactions are consistent with typical “red flags” regarding shell
company activity set forth in international banking standards, including wire
transfer volumes that are disproportionately high relative to the total assets
held by the bank; multiple transacting businesses sharing the same address; and
frequent involvement of multiple jurisdictions or beneficiaries located in
higher-risk jurisdictions.
For example,
in a two-month period in 2010,
information made available to the USG shows that Credex transferred more than $1
billion to hundreds of shell corporations in multiple jurisdictions—a
substantial amount of wire activity for a bank of Credex’s size. Although Credex wire transaction customers during this period were mostly
parties sending money from Credex accounts, there were no observable
corresponding inflows, which one would expect at a legitimate commercial bank.
While it does not have direct correspondent relationships with U.S. financial
institutions, Credex has gained indirect access to the U.S. financial system
through “nested accounts” via European banks and money service businesses. In
particular, information available to the USG indicates that in a span of over a
year Credex was able to transact approximately $10 million, including
transactions that were sent by or for the benefit of shell-like entities.
Background on Credex
Credex
is located in the Republic of Belarus and primarily services corporate entities.
Originally established on September 27, 2001, as Nordic Investment Bank
Corporation, the bank changed its name to Northern Investment Bank on April 5,
2006, and then to the current name of JSC CredexBank on February 12, 2007. With
169 employees and a total capitalization of approximately $19 million, the bank
currently ranks as the 22nd largest in total assets among 31 commercial banks in
Belarus. Credex has six domestic branches and one representative office in the
Czech Republic. While the majority of its correspondent banking relationships
are with other Belarusian banks, Credex also maintains correspondent
relationships with Russian, Latvian, German, and Austrian banks.
To view
the complete Finding against Credex, visit link.
To view
the NPRM, visit link.
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