Madeira Bank Suspected In Spanish Money Laundering Probe

by Ulrika Lomas, Tax-News.com, Brussels

08 November 2006

The Madeira branch of Portuguese private bank Banco Espirito Santo is at the centre of a money laundering and tax fraud investigation by the Spanish authorities, it has been reported.

Quoting a statement by Spanish investigators, an AFP report revealed that the Madeira bank is suspected of setting up "companies aimed at hiding the origin and ownership of large sums of money deposited in Spain in non-resident accounts".

Spanish branches of Portuguese and French banks, including BES and Paris-based BNP Paribas, were raided last week as part of the investigation. An insurance company linked to BES was also searched, as was stockbroking firm Catera Meridional.

Spanish police said that EUR1.8 billion (US$2.3 billion) had been frozen in bank accounts as investigations continued.

The precise reason behind the probe, ordered by the Treasury Department, remains unclear. A statement by Spanish National Court Judge Baltasar Garzon, who issued the search warrants, simply explained that the raids were related to money-laundering.

A BNP-Paribas spokesman later revealed that the search at the bank's Madrid headquarters was concerned with the account of one non-resident account holder, according to an Associated Press report.

Meanwhile, BES, Portugal's third-largest bank, has said that it is cooperating fully with the Spanish authorities in the investigation.

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