Banca Privada Gets Money-Laundering Designation Dropped
Small overseas firms often feel helpless against American regulators, some of which render edicts after opaque and secretive processes.
But Banca Privada d’Andorra fought back against a United States Treasury watchdog, and just succeeded in getting its money-laundering designation withdrawn. And last year, the Chinese-backed owner of an American wind-farm project won a settlement over the block on its activities by the secretive Committee on Foreign Investment in the United States.
The Financial Crimes Enforcement Network, known as FinCEN, said last March that the bank was helping organized criminals and should be cut off from the United States financial system. The Andorran government subsequently fired the bank’s board, and its Spanish unit filed for bankruptcy.
While the cleanup may have helped achieve FinCEN’s reversal last week, B.P.A. also took to the courts. The bank wasn’t warned or allowed to make its case before FinCEN took action last year. Banks have that chance only after a proposed money-laundering notice is issued. Unusually, Banca Privada d’Andorra sued the regulator, asserting it had used inaccurate information when it sounded the “death knell” for the bank.
The lawsuit came after action by FBME Bank of Tanzania, which won a rare temporary court injunction stopping FinCEN from issuing a money-laundering notice. Last year, the watchdog decided to redo its FBME proposal, and a final rule is pending.
Meanwhile, Cfius, which focuses on national security, is looming large for foreign acquirers of assets. The committee recently blocked the sale of Philips’s Lumileds lighting unit to a Chinese buyer based on “unspecified concerns.” And on Tuesday, the Chinese buyers of a 15 percent stake in Western Digital pulled out of the deal because of a Cfius investigation, prompting a change in the terms of Western Digital’s agreed acquisition of SanDisk.
In 2012, the wind-farm operator the Ralls Corporation became the first company to file a lawsuit against Cfius. A federal appeals court said the committee, whose proceedings are secret, had to disclose how it came to the recommendation that led President Obama to block the deal. The two sides reached an undisclosed settlement in November 2015.
The United States government still has the upper hand. But recent lawsuits show that overseas Davids can occasionally slay Washington Goliaths.