Fri May 14, 5:12 PM ET
By MARCY GORDON, AP Business Writer
WASHINGTON – The Federal Reserve (news – web sites) ordered Riggs Bank’s parent company Friday to take steps to prevent money laundering after the bank was fined $25 million in connection with a probe into possible links to terrorism financing.
The action came a day after Treasury Department (news – web sites) regulators levied the record-setting fine against Riggs for its handling of millions of dollars in foreign-held accounts.
In a cease-and-desist order issued by the central bank, Riggs will have to take actions such as hiring an independent consultant to conduct a review. Its operation in Miami which Riggs plans to close will be required to retain an outside consultant to review previous account transactions for suspicious activity.
The Federal Reserve has jurisdiction over bank holding companies. The Atlanta Fed had previously advised Riggs’s Miami-based subsidiary of deficiencies in its compliance with laws to prevent money laundering, the order noted.
Riggs is a midsize Washington bank with a near-exclusive franchise on business with the capital’s diplomatic community.
Credit-rating agency Standard & Poor’s said that the fine, combined with anticipated restructuring charges of $15 million to $21 million in the April-June quarter, “should result in a large loss in the second quarter and prevent Riggs from being profitable for the year.”
Standard & Poor’s and other agencies have recently downgraded their ratings of Riggs, reflecting what S&P on Friday called “continued profitability pressures and regulatory uncertainty.”
Treasury’s Office of the Comptroller of the Currency issued the fine in an order made public late Thursday, after weeks of negotiations between Riggs officials and banking regulators.
Dudley Elected Chairman of Riggs Investment Management Subsidiary; Bush to Serve as President & CEO
Washington, D.C., May 31, 2000 – Riggs Bank N.A. today announced that the Board of Directors of RIMCO, a wholly owned investment management subsidiary, has elected Jonathan J. Bush President & Chief Executive Officer and a Director, replacing Philip Tasho who resigned. In addition, Henry A. Dudley, Jr. was elected Chairman.
Mr. Bush will continue as Chairman and Chief Executive Officer of J. Bush & Co., an investment management company he founded in 1970, which Riggs acquired in 1997. Mr. Dudley, a 24-year veteran of Riggs, will continue to be responsible for all of Riggs Bank’s investment management, trust and private banking business.
Located in the nation’s capital, Riggs Bank has 53 branches in the Washington, DC metropolitan area, as well as banking offices in Miami, London and Berlin.
Jonathan J. Bush (Jonathan James Bush) (1931- ) is an uncle to President George Walker Bush.
A Wall Street financier, Jonathan Bush pulled together two dozen investors to raise $3 million to help launch Arbusto. Among the investors was Dorothy Bush, George W.s grandmother. At the same time, Jonathan Bush was lining up investors for Arbusto, he also was raising money for George H.W. Bushs presidential explorations. Many of the funders were the same.
Bush is a Trustee of the George Bush Presidential Library Foundation.
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