How Murky Politics Destroyed a European Bank

On March 10, 2015, the U.S. Department of FinCEN delivered a devastating blow to the Banca Privada d’Andorra by labeling it a “primary money laundering concern” under U.S. law, writes Dick Roche, former Irish Minister for European Affairs.

BPA was never warned that it was under investigation. The bank was given no chance to address FinCEN’s accusations or review the evidence against it.

When BPA attempted to challenge FinCEN’s action in U.S. courts, its effort was blocked. The agency reversed its own designation, reasoning that because BPA had been shuttered, it was “no longer a primary money laundering concern.” With the designation removed, FinCEN claimed there was no longer a legal issue to contest. U.S. courts accepted this rationale.

What remained of BPA was sold by Andorran authorities in 2016 to J.C. Flowers for just €29 million—a mere fraction of the institution’s former value.

However, the case didn’t end there. Growing evidence indicates that the dismantling of BPA involved more than just anti-money laundering motives. It now appears that FinCEN was manipulated by a covert policing operation and served as a pawn in a murky political scheme—an unsettling example of U.S. extraterritorial influence, writes Roche.

Contested Allegations

At the heart of FinCEN’s case was the claim that BPA failed to meet anti-money laundering and counter-financing of terrorism (AML-CFT) standards, allowing third-party money launderers (TPMLs) to access the U.S. financial system.

Former BPA shareholders strongly dispute these claims. They assert that BPA adhered strictly to AML-CFT regulations, submitting detailed annual reports and independent external assessments to Andorra’s financial regulators. They also highlight that no court rulings since 2015 have found BPA guilty of money laundering.

Further, they note that Andorra’s principal financial regulator was led by a former auditor who had previously reviewed BPA’s internal reports, giving authorities a comprehensive understanding of the bank’s operations.

FinCEN based its action on four striking allegations—all of which are disputed by the shareholders.

The first case involved Andrei Petrov, identified as a TPML “suspected” of ties to Semion Mogilevich, one of the FBI’s most wanted criminals.

Petrov, a Russian citizen residing in Spain, acted as an agent for Victor Kanaykin, a former member of the Russian Duma. In 2003, Kanaykin opened an account at BPA with funds transferred from a Latvian bank. Petrov had limited access to this account and processed €2.5 million through it—€1.5 million from U.K. bank accounts and the rest from other Andorran banks.

Two years before BPA’s designation, Spanish authorities arrested Petrov on suspicion of laundering €56 million—a sum implicating multiple banks beyond BPA.

In the subsequent court proceedings, BPA was not found guilty of any misconduct. Shareholders also question why FinCEN ignored the involvement of the U.K., Latvian, and other Andorran banks in the same transactions.

The second allegation targeted accounts held by Venezuelan nationals. FinCEN claimed that $2 billion misappropriated from Petroleos de Venezuela was routed through these BPA accounts.

Again, shareholders challenge this version of events. They note that the funds entered BPA only after due diligence and via U.S. and Andorran banks, none of which reported irregularities. Additionally, these accounts, after legal scrutiny, were eventually unblocked. No wrongdoing was attributed to BPA.

The third case revolved around Gao Ping, a Chinese national accused by FinCEN of representing a transnational criminal organization involved in money laundering and human trafficking.

Spanish authorities arrested Gao Ping in 2012. Reuters described him then as “the highest profile Chinese in Spain.” He and over 100 associates were charged with tax fraud, money laundering, smuggling, and other serious crimes committed between 2010 and 2012.

FinCEN alleged that Gao Ping paid BPA officials hefty commissions to move funds through less-regulated accounts and tried to bribe the bank to retain the account of his associate, Rafael Pallardo.

Shareholders refute this entirely. They emphasize that Gao Ping never held accounts at BPA nor had direct dealings with the bank. They also reject the bribery claim. In fact, in 2010, due to increased activity in Pallardo’s account, BPA requested a review from KPMG. The audit found no illegal conduct but noted links to Spanish tax evasion. While tax evasion in Spain was not a crime in Andorra, BPA voluntarily ceased its relationship with Pallardo in 2011—well before Gao Ping’s arrest and four years prior to the FinCEN action.

All three of these cases—Petrov, Venezuela, and Gao Ping—were detailed in an independent external report submitted in 2014 to INAF, Andorra’s regulatory body.

FinCEN’s fourth case alleged a connection between BPA and an unnamed individual, “TPML 4,” said to be associated with the Sinaloa drug cartel, the most powerful narcotics organization in the Americas. BPA shareholders categorically deny any such link and note that FinCEN offered no evidence to support the claim.