Tuesday 27 September 2022

Court confirms sanction against Scotiabank in Costa Rica for breaching anti-money laundering rule

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24 September 2022 - At The Banks - BCCR

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(QCOSTARICA) The Administrative Court (Tribunal Contencioso Administrativo) upheld the sanction imposed on Scotiabank, by the General Superintendence of Financial Entities (Sugef), for failing to comply with the anti-money laundering regulations in Costa Rica.

The judges declared without merit, on May 11, the request of the bank to declare the expiration of the administrative procedure, the prescription of the investigation, the nullity of the fine of ¢1.171 billion colones and compensation of ¢30 million colones  for damages.

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“When the claims of the lawsuit are dismissed, the claim for compensation is also inadmissible and must be so declared,” details resolution No. 38-2020-V.

The judges supported the reasons that led the Sugef and the National Council of Supervision of the Financial System (Conassif) to impose sanctions against Scotiabank for allowing the entry of US$6.5 million dollars for alleged bribes to the former president of Peru, Alejandro Toledo, from the Brazilian company, Odebrecht.

“The banking entity incurred a failure of Law 7,786 and its reforms, due to non-compliance with the obligations contained in (…) it is clear that the operations described can be classified as suspicious,” reads the sentence signed by the judges Marianella Álvarez, Ileana Isabel Sánchez and Sergio Mena.

The violated law is the “Ley sobre estupefacientes, sustancias psicotrópicas, drogas de uso no autorizado, actividades conexas, legitimación de capitales y financiamiento al terrorismo” (Law on Narcotic Drugs, Psychotropic Substances, Unauthorized Drugs, Related Activities, Money Laundering and Terrorist Financing).

Luis Enrique Gómez, deputy general manager of Scotiabank in Costa Rica, argued in writing that they cannot refer to the case, respecting the due process of the judicial authorities.

“Scotiabank is committed to complying with all the laws and regulations in force in the countries where it has a presence and as a proof of this, on June 13, 2019, the bank paid, voluntarily and under protest, to the State, the sum of ¢1.171 billion colones as indicated by the Sugef for the Ecoteva investigation case,” said the bank’s spokesperson.

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The bank went to court after Conassif rejected its arguments against the Sugef’s investigation against it.

In November 2014, the Superintendency opened an administrative proceeding against the bank for accepting the apparently irregular entry of funds in various accounts in the country.

The fine was imposed in April 2018 and was equivalent to 0.5% of the assets reported by the bank in March 2013, as recorded in the court ruling.

The Court questioned Scotiabank’s position that the fine was disproportionate, as the lowest percentage (0.5%) was applied since the law allows up to the equivalent of 2% of the assets, the judges said.

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Among the Sugef’s arguments, supported by the Administrative Court, were that Scotibank did not carry out due diligence on suspicious transaction reports (ROS).

“It is not reasonable that the plaintiff bank took three months to carry out an investigation to send the four ROS (…),” highlights the Court.

Finally, the judges ordered Scotiabank to pay the cost of the judicial process.

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