- The Washington Times - Thursday, June 3, 2004


A top banking regulator didn’t rule out the possibility of criminal charges in the case of Riggs Bank as he accepted blame yesterday for failed oversight that allowed deficiencies in monitoring suspicious transactions to continue at the bank for seven years.

Comptroller of the Currency John Hawke repeatedly acknowledged in testimony to the Senate Banking, Housing and Urban Affairs Committee that his Treasury Department agency failed to act quickly or forcefully enough in the face of repeated lapses and allowed bank officials leeway for years because they appeared to be cooperative.

“It is clear to me that there was a failure of supervision,” Mr. Hawke said. “We did not probe as soon or as deeply as we should have. … We gave them too much latitude over too long a period of time.”

The banking agency fined Riggs a record $25 million last month for violations of laws to prevent money laundering in its handling of millions of dollars in foreign-held accounts.

Asked by Sen. Jack Reed, Rhode Island Democrat, why criminal charges had not been brought, Mr. Hawke replied: “Riggs is a matter of ongoing investigation and I think I need to be rather circumspect in talking about what may be coming out of the ongoing discussions relating to Riggs.”

Mr. Hawke’s agency has only civil powers, but it has been working with the FBI on the Riggs investigation.

The midsize Washington bank with a nearly a franchise on business with the capital’s diplomatic community was accused of failing to report to the government suspicious transactions in accounts controlled by diplomats from Saudi Arabia and officials of Equatorial Guinea. The FBI and Treasury regulators have investigated the Saudi transactions — which included cash withdrawals of as much as $1 million — for connections to terrorism financing.

Riggs did not admit to or deny wrongdoing in agreeing to the civil fine.

Lawmakers of both parties have criticized the handling of the Riggs case by Mr. Hawke’s agency, framing the importance of enforcing laws against money laundering as a matter of national security.

The regulators’ handling of Riggs “showed a deference toward the … financial institution that undermined the integrity of the oversight process,” Sen. Richard C. Shelby, Alabama Republican and the committee’s chairman, said at the start of the hearing. “The war against terrorism cannot be won without serious efforts at impeding the very types of criminal activity seen in the Riggs case.”

Other federal banking regulators who appeared at the hearing with Mr. Hawke — including Federal Reserve Gov. Susan Bies — scrambled under questioning by senators to list the steps their agencies had taken to tighten oversight of banks.

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