WASHINGTON — The Riggs National Bank scandal has led to unexpected fallout, including “suspicious activity reports” on former Senate Majority Leader Bob Dole and former Defense Secretary Frank Carlucci, Friday’s Wall Street Journal reported.
As often as once a week, Mr. Dole’s assistant walks around the corner from his Pennsylvania Avenue office in Washington to a branch of Riggs Bank, where she withdraws as much as $8,000 in cash. For walking-around money, Mr. Dole keeps a wad of $100 bills in the breast pocket of his shirt. “I probably use a credit card four or five times a year,” Mr. Dole confesses. “I don’t even have a wallet.”
Mr. Dole’s affinity for cash was of no concern to anyone until recently, when federal regulators pawing through the books of scandal-tarred Riggs spotted the large withdrawals and called them to the attention of management. In short order, the bank filed “suspicious activity reports” on Mr. Dole and another prominent Washington figure, Mr. Carlucci, questioning whether the two men might have violated federal laws against money laundering.
The two aren’t actually suspected by Riggs of wrongdoing, people familiar with the filings say. But the bank, a unit of Riggs National Corp. (RIGS), felt it had no choice but to file these reports because of the strict wording of the Bank Secrecy Act.
The reports are the latest strange fallout from the Riggs affair, which has reverberated through Washington in unexpected ways since the bank got into trouble with regulators this year for overlooking signs of suspicious activity by Saudi diplomats and foreign despots. The scandal has provoked a minor diplomatic crisis for the State and Treasury departments as Riggs, which has long had a lock on the diplomatic market in Washington, starts to shed all of its embassy accounts to get out from under a regulatory cloud and sell itself to PNC Financial Services Group Inc. (PNC).
To some observers, these headaches suggest flaws in the government’s system for monitoring suspicious activity, which generates more than 200,000 filings annually — many of which go unread. Many banks dislike the process for suspicious activity reports, or SARs, and avoid customers who may force the banks to get more involved with it even if the customers aren’t suspicious characters.
The case of Messrs. Dole and Carlucci illustrates what can happen, as Riggs had to file the reports whether it wanted to or not.
Wall Street Journal Staff Reporter Glenn R. Simpson contributed to this report.