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Spectre of Abacha comes back to haunt UK banks as dictator's son seeks court order

A staff reporter, 30 January 2005


Leading UK banks have once again been confronted with the worst case of money laundering ever to haunt the City after the High Court ordered...

Leading UK banks have once again been confronted with the worst case of money laundering ever to haunt the City after the High Court ordered 19 firms to freeze accounts linked to General Sani Abacha, the late Nigerian dictator. The Abacha case has brought to light severe past compliance failings at a large number of banks, including household names, and this latest development comes at a time when banks are trying to help government efforts to track down terrorist funds. David Blunkett, home secretary, is determined to make it an offence for financial institutions not to report transactions that they knew or suspected to be involved in terrorist activity. Ironically, the Home Office has been chided by MPs for dragging its heels in the Abacha affair. Nigerian authorities have appealed for the blocking of Abacha's UK assets for more than nine months but the Home Office has been procrastinating. The pressure is on and the banks ordered to freeze accounts have been reluctant to comment when contacted by Complinet. A Barclays spokeswoman said the bank always cooperated fully with the appropriate authorities on money laundering issues. She declined to comment further on legal grounds. HSBC said it could not comment on anything related to client confidentiality. "We do have comprehensive anti-money laundering controls in place. These have been in place for many years and we would regularly review them and update them when necessary," a spokeswoman said. She added that the bank had introduced special procedures for accounts held by public officials and other high-risk category clients in October 2000. Goldman Sachs said that its private banking arm has no existing or past relationship with the Abacha family and has asked to be removed from the action. A spokesman declined to divulge further detail. Merrill Lynch and Citigroup declined to comment and Credit Suisse First Boston did not return calls by yesterday evening. Other banks named in the order include NatWest Bank, and the UK offices of Germany's Deutsche Bank and Commerzbank; France's BNP Paribas, Credit Agricole Indosuez, Banque Française de L'Orient; Australia's ANZ Banking Group, and Switzerland's Union Bancaire Privée, and the First Bank of Nigeria. They either declined to comment or did not return calls yesterday. The court action comes six months after the Financial Services Authority found links between 23 London banks and the Abacha family or close associates. In total, turnover on the accounts amounted to $1.3bn for the four years between 1996 and 2000. The regulator identified severe weaknesses at 15 of the banks involved. “The extent of the weaknesses identified is frankly disappointing," said Phillip Thorpe, FSA managing director at the time. Eight banks have already taken corrective actions. The deadline for the remaining seven is not set in stone, although the FSA has said it would expect that remedies are put in place by year-end at the latest. Mohammed Abacha, the late general's son, has meanwhile launched an appeal against the Home Office's actions regarding the family's assets. His case opened yesterday at the High Court, Queen's Bench Division, and is expected to conclude tomorrow. More than $2bn was allegedly looted by Abacha, who died in 1998.

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