US BANKS THAT CONTINUED TO MAINTAIN CORRESPONDENT ACCOUNTS FOR EAST CARIBBEAN FINANCIAL INSTITUTIONS ENGAGED IN ILLEGAL CBI FUNDING ACTIVITIES FACE INCREASED EXPOSURE TO BEING DRAWN IN THEMSELVES, FOR FAILURE TO TIMELY DE-RISK

The recent filing of MSR Media SKN Ltd. vs. Leslie Khan, 24-CV-01248 (MD FL), which alleges that party defendant St. Kitts-Nevis-Anguilla National Bank has engaged in racketeering activities, including money laundering and fraud, has put a spotlight upon all Caribbean financial institutions that bank Citizenship by Investment (CBI) payments to the five East Caribbean states that offer such programs. The case, filed in US District Court in Florida, asserts that the bank knew or should have known that illegal activities were occurring; inasmuch as the bank maintains, in the US, correspondent accounts, to process the US Dollar-denominated payments, which are tainted by illegality under Kittitian law, American banks that have failed to exercise De-Risking, meaning closing those accounts, could be liable for Willful Blindness, and other serious money laundering offenses. The funds involved exceeded one billion dollars; the Prayer for Relief in the Complaint is for treble damages in the amount of $450m.

Given that it has long become public knowledge that illegal discounting of CBI passports have long existed, and that the St. Kitts National Bank, which has reportedly failed to rein in the illegal activity transiting its accounts, much of which end up in its correspondent accounts in US banks, the exposure of American financial institutions themselves to litigation has now increased exponentially since the MRS Media case was filed. Whether US banks take immediate action to reduce that risk, in advance of litigation, byDe-Risking forthwith, as well as examining accounts of other CBI funds processing banks, we will be closely monitoring. The RICO litigation has raised awareness of illegal activity in the CBI industry, and whether American banks now respond, as a part of their risk-based compliance program, and disengage from the bad actors moving finds through their correspondent accounts, is the question, but we will be watching.