Commissioner of Financial Institutions suspends Euro Pacific Bank operations in PR
By The Star Staff
Puerto Rico’s Commissioner of Financial Institutions has suspended the operations of a boutique online bank that has been the focus of an international tax-evasion investigation and is owned by Peter Schiff, the outspoken libertarian economist and money manager, according to a New York Times report Thursday.
The office issued a cease-and-desist order against Euro Pacific Bank for having inadequate capital levels and compliance controls.
Two years earlier, an international group of tax authorities known as the J5 opened an investigation into activities that allowed the bank to serve as a vehicle for suspected tax evasion and money laundering, the Times reported.
“Euro Pacific has a long history of noncompliance,” the office’s commissioner, Natalia Zequeira Díaz, said in a statement.
The office will “not allow or tolerate any financial entity with a license issued by the government of Puerto Rico to operate outside the law or ignore the clear mandates of applicable laws and regulations,” she said.
The investigation by the J5 into Euro Pacific and some of its offshore customers was first reported in fall 2020 by The New York Times and two Australian media organizations. At the time, Schiff acknowledged that Internal Revenue Service agents had interviewed him, but he said neither he nor the bank was the subject of the inquiry. In an emailed comment on Thursday, Schiff, who said he was now the full owner of the privately held bank, expressed surprise at the decision by the bank regulator and said there was “no advance warning.”
He added that it “makes no sense” because “the bank has done nothing wrong.”
Schiff said he may challenge the decision.
“Doing what I can. I have no idea what’s driving this,” he told the Times.
He said later that the order referred to “insufficient capital” and that there was nothing about money laundering or tax evasion, the Times said.
The J5, or the Joint Chiefs of Global Tax Enforcement, was formed in 2018 by tax authorities from the United States, Australia, Britain, Canada and the Netherlands. The group came together in response to some of the disclosures in the so-called Panama Papers, the leaked documents of a Panamanian law firm that detailed the shell companies and tax gimmicks the rich use to hide their wealth.The J5 investigation into Euro Pacific — known as Operation Atlantis — was one of the first big inquiries by the multijurisdiction task force, which has been led by tax authorities from Australia and the United States.
Euro Pacific had about 8,000 depositors from around the world and held $140 million in deposits before the investigation was reported by The Times; The Age, an Australian newspaper; and the Australian version of “60 Minutes.” The reports noted that a former employee had said Euro Pacific did not do much vetting of its customers’ backgrounds, the Times said.