A subsidiary of Bank Leu of Switzerland has become the third foreign bank, and the first since 1991, to plead guilty to a U.S. money-laundering charge.
Banque Leu (Luxembourg) pleaded guilty last Friday of laundering $2.3 million in cashier's checks for a Colombian drug smuggling operation, according to Michael J. Yamaguchi, U.S. attorney for the Northern District of California in San Francisco.
The bank agreed to forfeit $2.3 million to the United States, pay a $60,000 fine, submit special audit reports to the U.S. for the next three years, and conduct an anti-money-laundering education project with European financial institutions.
Property Seized
The government has also seized $1.75 million in property and other proceeds of the narcotics-trafficking ring.
The fine was less than in the two other cases - the first of which was $14 million paid by Bank of Credit and Commerce International - but sends a signal that the U.S. government is attempting to broaden its jurisdiction over money-laundering offenses, said Edward P. Davids Jr., the San Jose, Calif.-based attorney for Banque Leu.
"The lesson to be learned is that U.S. laws are not only extensive but very broad in terms of criminal liability," Mr. Davids said.
But he noted that the accounts involved were handled exclusively by a single account officer who failed to follow existing policies and procedures.
Plea Bargain
Mr. Davids added that the guilty plea represents Banque Leu's acceptance under U.S. law of legal responsibility for the actions of the officer, rather than any acknowledgment of wrongdoing by the bank as a whole or by its management.
According to information released by the U.S. attorney's office, the government waived grand jury indictment of the bank and filed the charge in exchange for a guilty plea.
The Internal Revenue Service and Drug Enforcement Administration investigation of the bank began with a tip from the Pleasant Hill, Calif., branch of Bank of America. Government officials linked suspicious cashier's checks routed through Colombia to accounts with Banque Leu (Luxembourg).
Many of the checks were obtained at branches of Bank of America or the former Security Pacific Corp. The checks were subsequently transported to Colombia and then shipped to Luxembourg for deposit at Banque Leu. The Luxembourg institution, in turn, transferred much of the money back to the United States through a correspondent account at Harris Trust and Savings Bank of Chicago.
Banque Leu admitted in its plea agreement that two Colombians, Martha Salamanca and Victor Castiblanco, opened two accounts at the bank in 1989 and deposited cashier's checks worth $2.3 million over the next year.
Ms. Salamanca recently pleaded guilty in Los Angeles to conspiracy to hide drug profits.
|Smurfing' Operation
The Luxembourg government also confiscated $1 million that was in the Colombians' accounts in October 1991.
The cashier's checks were part of a "smurfing" operation, in which money made from narcotics trafficking in Southern California was used to purchase cashier's checks each with a face value of less than $10,000 at U.S. banks.
The checks were transported to Colombia, collected, and deposited to Banque Leu accounts. Money was then withdrawn from the bank and transferred back to the United States.
Banque Leu bank admitted the officer handling the accounts either knew about or was willfully blind to the laundering.
Charles Intriago, a Miami-based lawyer and publisher of a weekly newsletter on money laundering, said the case will help bring home the growing reach of U.S. law officials.
|Cavalier Attitude'
"Some banks have had a rather cavalier attitude about what their customers want and haven't taken U.S. regulations on money laundering seriously," Mr. Intriago said.
In January 1990, officials of the Tampa, Fla., agency of Bank of Credit and Commerce International pleaded guilty pf laundering some $32 million on behalf of Colombian drug dealers. BCCI was seized by regulators the following year.
A Colombian bank, Banco de Occidente, also pleaded guilty and paid a $5 million fine in 1991 after U.S. authorities froze the bank's assets in the U.S.
All activities giving rise to the violation at Banque Leu occurred before March 1990. Banque Leu and its parent, Bank Leu of Zurich, were subsequently acquired by Credit Suisse. Bank Leu had $9 billion of assets at the end of 1992.
