Global Policy Forum

By Kathleen Day

Congress's newly passed intelligence bill contains a provision adopted in response to the Riggs Bank scandal: It requires senior federal bank examiners to wait a year before accepting private-sector jobs with financial institutions they regulated as government employees.

The provision was prompted by revelations that R. Ashley Lee, the top examiner of Riggs when he worked at the Office of the Comptroller of the Currency, took a job as an executive at the bank upon his departure from the federal agency in 2002. Lawmakers expect President Bush to sign the intelligence bill, which passed the Senate yesterday after approval by the House of Representatives on Tuesday, by the end of next week. Riggs, which was fined a record $25 million earlier this year for widespread violations of rules meant to deter money laundering, is at the center of investigations by the Justice Department and bank regulators for possible money laundering for former Chilean dictator Augusto Pinochet and the ruling family of Equatorial Guinea.

In August, Riggs officials placed Lee, an executive vice president and Riggs Bank's former chief bank examiner, on paid leave until the resolution of a Justice Department investigation into whether he violated government ethics rules. Among the questions is whether Lee, while working at the bank, improperly attended and participated in meetings between the bank and OCC examiners.

Lee, who headed examinations of Riggs for four years before he retired, became a subject of intense scrutiny this summer by congressional investigators and the Treasury Department over whether he played a role in the decision while he worked at the OCC not to include results of an OCC investigation of Riggs and Pinochet in the Riggs official electronic federal case file.

An internal Riggs probe, begun in August following a Senate report on possible wrongdoing at the bank, found that it had been banking for Pinochet under "front" accounts that hid his identity from regulators, including those at the Federal Reserve Board, as far back as 1985. The Riggs probe also uncovered a number of suspicious transactions involving Pinochet, his family and other associates over a 20-year period. In addition, the internal probe uncovered a suspicious withdrawal of $3.8 million in cash by the Argentine naval mission in Washington in April 2003. Sens. Carl M. Levin (D-Mich.) and Norm Coleman (R-Minn.), who sponsored the provision, say it would make it harder for terrorists, drug dealers and other criminals to use the nation's financial institutions to fund illegal activities.

Levin said Lee "appeared to function at times as more of an advocate for the bank than an arms-length regulator." Levin said the provision will eliminate the kinds of "conflict of interest" that arose when Lee, "who oversaw Riggs and allowed the bank to continue operating for years with a deficient anti-money-laundering program, retired from the government and immediately took a job at the bank." An attorney for Lee declined comment yesterday.

The provision, in addition to requiring senior bank examiners to take a year "cooling off" period before taking a job at a firm they regulated, would require the Treasury secretary to review current anti-money-laundering efforts and report within nine months ways to improve detection and interruption of terrorist financing. "It is far from clear . . . when it comes to combating terrorist financing, what U.S. agency official, if any, has primary responsibility," Levin said.