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Tuesday, 26 February 2019

Scotiabank offices raided by prosecutors in Costa Rica

On February 21, the Prosecutor in the Central American country of Costa Rica raided the offices of the Canadian multinational Scotiabank, claiming that the bank had failed to provide the government with information on accounts and deposits that could allegedly implicate Alejandro Toledo, the former president of Peru, with money laundering.
Scotiabank's offices in the Sabana Norte district,
in San Jose,  Costa Rica, were raided on February 21

During his presidency, Toledo is believed to have received C$26 million in bribes from the Brazilian construction giant Odebrecht S.A. as payment to secure infrastructure contracts.

Toledo was last reported to be in the United States, with Peru having requested extradition. Interpol has had a red notice out for the former politician since May, 2017.

Bribery allegations against Odebrecht broke in Brazil in 2015. Since then, the company has been connected to corruption in at least ten countries in Latin America and the Caribbean, with some of the allegations dating back many years.

The government of Costa Rica claims that it made four requests to Scotiabank in 2018 for information on accounts allegedly connected to Toledo – in May, June, July, and December.  The Prosecutor in Costa Rica lost patience with the bank when, after the fifth request for information early in 2019, Scotiabank provided documentation that the government claims "did not correspond to what had been repeatedly requested."

This led to the raid on February 21st in the Sabana Norte district of the Costa Rican capital, San Jose. In Costa Rica, financial institutions are required to determine the identity of an account’s beneficial owner.
Alejandro Toledo, the former president of Peru

The first transaction by Toledo in Costa Rica was revealed in 2013, when the Peruvian press uncovered a real estate purchase valued at more than C$4 million. After this revelation, prosecutors investigated further, and now allege that Toledo used his mother-in-law, Eva Fernenbug, and a businessman named Josef Maiman, to help him launder bribes from Odebrecht through Scotiabank.

Prosecutors claim that Odebrecht deposited the bribes in Scotiabank accounts controlled by Maiman, who in turn moved the money to a Costa Rican company called Ecoteva, which was owned by Fernenbug. Specifically, the Prosecutor’s Office in Costa Rica claims that between 2006 and 2010 Ecoteva received more than C$23 million in illicit payments.

This money was also allegedly used to secure a loan for the C$4 million purchase of property by Fernenbug in Peru. The authorities in Costa Rica are specifically interested in those banking procedures related to the conversion of the deposits into certificates, which were then used as collateral as part of the “Scotiaflex” loan approval process.

In a written response to a query in Spanish from the Associated Press, Scotiabank claimed that as a bank it had "an important role in helping to protect the integrity of the entire financial system." The bank further stated that "we have collaborated with the judicial authorities at all times, and will continue to do so."

On April 18, 2018, the General Superintendency of Financial Institutions of Costa Rica (Sugef) imposed a fine of approximately C$2.6 million on Scotiabank for breaching anti-money laundering regulations. This is specifically related to the money coming from Odebrecht to Toledo, and the fact that Scotiabank’s compliance unit failed to issue an alert.
Keiko Fujimori was arrested on October 31, 2018

Scotiabank was also sanctioned for violating anti-money laundering regulations in 2018 by Peru’s Superintendency of Banking and Insurance (SBS). This was connected to a scandal involving Keiko Fujimori, the daughter of former Peruvian President Alberto Fujimori, who allegedly used a series of frontmen to deposit C$1.3 million from Odebrecht in Scotiabank accounts, with the money allegedly being laundered as part of her 2011 presidential campaign.

On October 31, 2018, Fujimori was sentenced in Peru to pretrial detention for three years.

With regard to the Keiko Fujimori scandal, Peru’s SBS claims that Scotiabank failed in delivering a mandatory alert to the Financial Intelligence Unit (UIF) for a flood of fractional deposits by numerous people – a known strategy to avoid triggering suspicion – which at that time was required within 30 days from detection. The law was tightened further in 2017, with mandatory reporting now required within 24 hours.

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