Saturday, July 5, 2014


I am still waiting for the Royal Bank of Canada to explain to the public how it accepted twenty boxes of American money orders at its Montreal office. Repeated media queries for comments, over a period of months, have either been ignored, or met with excuses of unavailability of public relations staff. If there ever was a case where a bank should be charged with money laundering by the US Department of Justice, this is it.

If you are not familiar with the details, let me briefly detail the case:

(1) An organization of Cuban fraudsters, having stolen hundreds of millions of dollars through massive Medicare fraud, desired to hide their ill-gotten gains in Cuba, where it would be safe from American law enforcement seizure and forfeiture actions.

(2) Inasmuch as direct transfers of funds are illegal under US law, they opened fifteen bank accounts in a number of countries, including accounts opened at Royal Bank of Canada, in its Havana offices.

(3) They enlisted the services of a US citizen who operated a check-cashing business in Florida; Oscar Sánchez.

(4) The relevant portion of this case involved the purchase of literally hundreds of  money orders, from various sources in the United States; all were for amounts under $10,000, so as not to trigger any reporting requirement under US law.

(5) The money orders, contained in twenty boxes, were shipped to the Royal Bank of Canada office in Montreal, where they were accepted, and deposited in the shell company accounts of the fraudsters.

(6) Some of the money orders were consecutively numbered, and many bore the names of obvious aliases. One glaring example was listed as having been purchased by "Bill Clinton."  All were accepted by the Royal Bank of Canada.

(7) Pursuant to standing orders placed at account opening, all funds deposited were immediately wire transferred to Royal Bank of Canada accounts in the Caribbean, and then onward to accounts within the Republic of Cuba.

(8) Over $31 million was laundered, and transferred into Cuba in this manner by, RBC. There is no evidence that any due diligence was performed on the Source of Funds, which were, in this case, the proceeds of crime, or that the background of the account owners were checked; There was zero compliance.

(9) All this information was later disclosed by the money launderer himself, who entered a plea of guilty in US District Court in Miami, rendered Substantial Assistance, and is presently serving a sentence of four and one-half years. The leader of the fraudsters skipped out to Cuba, where he cannot be extradited, nor the money attached.

I find this case to be one of the most egregious examples of compliance malpractice that I have ever seen, in over thirty-five years of money laundering, and AML, experience. Was the profit picture so lucrative, that it blinded bank management to the truth ? There should be consequences for the bank.

One final observation: American money launderers will continue to exploit the fact that RBC has branches in a large number of tax havens, and in Cuba, so long as it fails to discharge its compliance responsibilities. For US-based compliance officers, perhaps it is now high time to raise Country Risk for Canada.


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