01/07/22

GLOBAL REGULATION: Puerto Rico suspends operations of bank amid global probe.

As published on abcnews.go.com, Friday 1 July, 2022.

Authorities announced Thursday they have suspended the operations of Puerto Rico-based Euro Pacific International Bank, which officials previously said was under suspicion of facilitating money laundering and offshore tax evasion.

The bank was founded by Peter Schiff, a U.S. stock broker and financial analyst, and had 15,000 accounts by the end of 2019, according to online documents.

The investigation was launched by Puerto Rico’s Office of the Commissioner of Financial Institutions, which said the bank that obtained a license to operate in the U.S. territory in 2017 came under scrutiny following a lack of internal controls, a lack of compliance and a level of insolvency.

Commissioner Natalia Zequeira said that despite “numerous opportunities,” the bank “has not wanted to comply.”

The bank, located in the capital of San Juan, did not return a message asking for comment.

Jim Lee, chief of the International Revenue Service Criminal Investigation, said he could neither confirm nor deny whether Schiff was under investigation.

Zequeira declined to say how many clients the bank has and its total assets, saying that is confidential information. However, she said creditors would be paid in a certain order.

The bank was formed in the eastern Caribbean island of St. Vincent and the Grenadines in 2011, then later moved to Puerto Rico. In a 2020 presentation, the bank said 70% of its clients were corporations and small- and medium-size businesses. The other 30% was divided equally between individual investors and retail banking.

The bank does not provide loans or credit cards, but rather mutual funds and precious metals accounts, among other things.

Lee, with the IRS, said that the “Puerto Rico financial industry will not be a haven for tax evaders or illegal conduct.”

The announcement of the suspension came after the Joint Chiefs of Global Tax Enforcement launched an operation two years ago to scrutinize financial institutions in their member countries: the U.S., Canada, United Kingdom, Australia and the Netherlands.

Officials with the agency said their investigations into the Euro Pacific International Bank are independent from the one conducted by Puerto Rico’s government and are still underway. Overall, the organization said, it is overseeing some 100 civil and criminal investigations worldwide.

“Our message is that the game is up for offshore tax evaders and that any UK citizens involved with this bank should come and talk to us,” said Simon York, the United Kingdom's chief in the international group.