U.S. authorities aggressively apply money anti-laundering and anti-corruption laws on persons and companies beyond the U.S. borders.
In a recent case, the U.S. authorities investigated the commercial activities of Jaime Rosenthal (Honduras Vice President in 1986-1990) and his family. The Rosenthals are a well-known Honduran family with substantial economic and political power. They own Grupo Continental – a group comprising 50 companies involved in banking activities, other financial services, real estate, agriculture, tourism, and telecommunications.
On October 7, 2015, Jaime Rosenthal-Oliva, his son Yani Rosenthal-Hidalgo (Minister for the Presidency of Honduras from 2006 to 2009), his nephew Yankel Rosenthal-Coello, and seven of their companies were designated by the Office of Foreign Assets Control of the U.S. Department of the Treasury ("OFAC") as drug traffickers under the Foreign Narcotics Kingpin Designation Act, also known as the Kingpin Act. OFAC's designation came about after having determined that the Rosenthal family members involved as well as several companies had provided "money laundering and other services to support international drug trafficking by many Central American drug traffickers and their criminal organizations." Banco Continental S.A. is included among the companies and subsidiaries designated by OFAC. Banco Continental S.A. is an important Honduran bank and, according to OFAC, it was an integral part of and an enabler for money laundering operations deriving from drug trafficking.
A drug trafficker designation brings about serious consequences, including assets freeze involving all designated persons as well as a prohibition to U.S. citizens and companies to enter into any transaction or to do business with them. Besides, the U.S. Department of Justice filed criminal charges against three Rosenthal family members on grounds of money laundering – a criminal offense that is penalized with 20-year imprisonment.
Yankel Rosenthal-Coello was imprisoned when entering the United States and Yani Rosenthal-Hildalgo voluntarily surrendered before the U.S. authorities. Both were released on bail while waiting to be criminally sentenced. The U.S. authorities have asked Honduras to extradite Jaime Rosenthal who is being indicted on grounds of tax fraud and falsification of public documents by the Honduran authorities.
As a result of those legal actions in the United States, the National Banking and Insurance Commission of Honduras conducted its own investigations and determined that by reason of the asset freeze affecting Banco Continental in the United States the bank has incurred a cause for dissolution and, therefore, it breached local financial laws.
As a result of those violations and due to the sanctions imposed in the United States, the National Banking and Insurance Commission of Honduras declared the forced liquidation of Banco Continental.
This case demonstrates the aggressiveness of U.S. authorities when their anti-laundering laws are applied upon individuals and corporations outside of the U.S. borders.
Besides, the case demonstrates the importance for financial companies and entities to have sound anti-laundering and corporate compliance programs to prevent the perpetration of illicit activities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.