Sun, Mar 15, 2015

MADRID (AP) — Spain's central bank has taken over a bank that caters to the rich following accusations by the United States that its Andorran owner was involved in laundering money for criminal groups from China, Russia and Venezuela.

The Bank of Spain has put two employees in charge of Banco de Madrid SA, which has 23 branches around the country and is owned by Banca Privada d'Andorra. On Tuesday, the U.S. Treasury Department's financial crimes enforcement network deemed BPA to be a foreign financial institution "of primary money-laundering concern."

BPA sought to downplay the allegations, insisting that it "has always respected financial activity regulations." In a statement Wednesday, BPA also said it had worked with Andorran authorities to discover possible wrongdoing and was confident that "any shadow of a doubt about the proper performance of our organization will quickly disappear."

Separately, the bank's Spanish unit, Banco de Madrid, said in a statement that it operates independently from BPA and that it was confident that Spanish bank regulators will find it "in compliance with laws and regulations."

Following the U.S. declaration, Andorra's government intervened in BPA, putting two controllers in charge of the bank while insisting that the bank's deposits and solvency were not at risk.

The Treasury Department said one unnamed high-level BPA manager accepted "exorbitant commissions" to develop shell companies that helped Venezuelan money launderers siphon about $2 billion from Venezuela's national oil company, Petroleos de Venezuela SA.

Two other BPA managers helped alleged Russian and Chinese money launderers who were previously arrested in Spain, the department said in a statement. Money laundering was also said to have been performed for "numerous" Spanish business owners.

The unnamed BPA managers are said to have accessed the U.S. financial system via four U.S. banks that were — again unnamed — processing hundreds of millions of dollars.

The BPA statement said an investigation has been underway for years. It said Andorran authorities have investigated bank clients who may have been involved in money laundering but made no mention of possible wrongdoing by bank employees.

Tiny Andorra, which has a population of 85,000, is wedged between Spain and France in the Pyrenees mountains. It is known mainly as a destination for skiing, shopping and banking.