February 2, 2005
OCC Issues Cease and Desist Order Against New York Branch of Banco de Chile
WASHINGTON – The Office of the Comptroller of the Currency (the “OCC”) announced today that Banco de Chile and its New York Branch have consented to a Cease and Desist Order requiring the restructuring of the management and compliance operations at the New York Branch.
The OCC took the action following discovery that former branch personnel had concealed accounts of Augusto Pinochet, former Chilean dictator, under the names of nominees and others acting under Pinochet’s direction.
The OCC also identified serious deficiencies in the branch’s compliance with the Bank Secrecy Act and Anti-Money Laundering laws and regulations. The branch improperly opened and maintained accounts in contravention of internal policies and procedures and failed to classify and monitor high risk accounts and accounts of Politically Exposed Persons.
The OCC discovered that the branch opened accounts without determining the source of funds and failed to scrutinize the purpose of the transactions. Former representatives of the branch allowed millions of dollars in deposits and credits from internal and external transfers to accounts controlled by persons acting under Pinochet’s direction or authorization. These often included circular transactions with no disclosed or apparent legitimate business purpose and without suspicious activity reporting by the branch.
The Cease and Desist Order requires Banco de Chile to completely revamp its United States operations conducted at the New York Branch and includes provisions designed to address the OCC’s concerns about former branch management integrity and Bank Secrecy Act compliance. Under OCC policy, the branch has an opportunity to respond to OCC allegations before any Civil Money Penalty may be assessed.