French Continue Controversial Investigation of Money Laundering & Correspondent Accounts

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Friday, March 1, 2002
Bruce Zagaris
In the middle of January 2002, as the criminal money laundering investigation of French banks involved in handling correspondent bank accounts has extended to more banks and bank executives, banking and trade associations have protested about the need to clarify the law and potential disruption of normal international financial transactions. On January 11, 2002, the media reported that Jean-Paul Leblanc, head of international banking services at Societe Generale, one ofFrance’s largest banks, has become the third person at the bank to be placed under formal investigating for “aggravated money laundering”. Interestingly the French investigations come at the very time the U.S. Government has focused on money laundering problems caused by foreign correspondent banking and, as a result of the provisions in the U.S. Patriot Act. The provisions of the Act and proposed regulations call for an enhanced due diligence vis-a-vis foreign correspondent accounts, including reporting, the need to appoint agents for service of process for foreign banks with a correspondent banking relationship. The new law, for instance, enables the U.S. authorities to require U.S. financial institutions with such relationships to respond to summons and/or subpoenas within 120 hours or face various penalties.