Saturday, May 14, 2016


My recent article, detailing the imminent loss of correspondent accounts in he US, by Panamanian financial institutions, appears to have hit a nerve. Panamanian regulators have disputed its accuracy, notwithstanding that customers of Banco General have been told, by their BG account representatives, that there will be problems with the processing of inbound wire transfers, and on checks they deposit, when drawn on foreign banks. Some of those readers commenting have even threatened to bring civil and criminal action.

Let's look for a minute at why an American or Canadian bank would choose to close BGs correspondent account. I can think of several reasons, and they all spell money laundering:

(1) Banco General accepted deposits of funds corruptly obtained from Panama's National Assistance program, commonly known as PAN. We have previously written in details abut this matter, and the criminal charges filed therein.

(2) Banco General is under investigation, by the Organized Crime Prosecutor, for laundering the proceeds of corruption obtained by the administration of the former president, Ricardo Martinelli, who faces multiple criminal charges, and a number of his close associates, and former government officials.

(3) Convicted former Supreme Court of Justice President, Judge Alejandro Moncada Luna, moved criminal proceeds through Banco General. The bank's failure to interdict large payments, made to or on behalf of senior, yet underpaid, government officials, amount to gross negligence. This case is also under investigation by the Organized Crime Prosecutor. Moncada Luna is serving a 5-year sentence, for accepting bribes and kickbacks.

(4) Links between Banco General and the Financial Pacific/Petaquilla Mine insider trading scandal, have been established, and this connection is now part of the pending investigation, being conducted by a foreign law enforcement agency.

Any one of these is enough of a reason for any North American bank to terminate a correspondent relationship with Banco General; taken as a group, even though these matters as pending, any risk-based compliance program would prudently act to reduce its risk level, by closing correspondent accounts forthwith. One money laundering investigation is sufficient to consider the termination of ties, several constitutes grounds for immediate closure of correspondent accounts.

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