London-based Barclays bank is under the microscope for alleged involvement in an international money-laundering scheme. Bank officials, including the head of the French office Henri-Paul Pellegrino, are reportedly cooperating with the French authorities, the Wall Street Journal reports.
The bank today pointed a finger at unnamed "philanthropic, cultural and social associations" through which the money-laundering ring operated.
Certain Barclays officials are suspected of illegally cashing checks in Israel, The French authorities are investigating whether Barclays imposed satisfactory internal controls to avert illegal financial deals. No comments could be obtained from French Finance Ministry or Israeli Justice Ministry officials, or from Pellegrino, the WSJ reports.
The Associated Press reports that French judicial officials led by Judge Isabelle Prevost-Desprez are investigating nearly 80 people, including several rabbis, and that six are in custody.
"The facts of the case pertain to funds which have passed through accounts opened by philanthropic, cultural and social associations," Barclats said in a statement.
The alleged involvement of Israeli entities is bad news for Israel, which has been struggling to be removed from the Organization for Economic Cooperation and Development black-list of countries that fail to fight money-laundering. In 2000 the Knesset passed a law to establish a unit by February 2002 that would monitor Israel's banks and financial institutions for financial improprieties.
Meanwhile, the September 11 terror attacks on the U.S. have intensified the pressure on financial institutions the world wide to abolish illegal financial transactions, which are also used to fund terrorism. Yesterday the European Union adopted reinforced rules to fight money laundering, but the new rules only come into force in 18 months.
Currently EU law forces bankers to report suspected money-laundering in cases of drug trafficking. The new legislation extends the rules to other professions, including lawyers and accountants, and covers all serious criminal activities.