Canada: Royal Bank of Canada raid incident in Uruguay continues to be controversial

Less than a week ago, Vice-president Danilo Astori expressed concern with the fact that the Royal Bank of Canada, following a raid to its offices and the seizure of all computers, clients documents and even staff cellular phones, has decided to abandon Uruguay.
“It’s not a good thing for Uruguay that a bank of such relevance should abandon the country, and things (the raid) could have been done in a additional careful and procedural way”, said Astori, an economist by training and who in the previous government was Finance minister.

The Vice-president’s comments exposed differences on the issue inside the government of President Jose Mujica since his statements were not well received arguing that he should have been ‘better informed before making any statements’.

Homero Guerrero, Secretary of the Executive, the man who has permanent contact with President Mujica, had stated that the fact the Royal Bank of Canada was leaving the country, “has a positive repercussion for Uruguay” because it is evidence of the existence of controls and that Uruguay has adapted to the new regulations on money laundering and financing of terrorism”.
Communist Senator Eduardo Lorier agreed and said that “we need to look in the long term, since it is a poor favour to the country at the same time as control measures on money laundering are not addressed”.

In support of these statements, Deputy minister Antonelli said that the departure of the Royal Bank of Canada “is a very specific situation and I believe they underscore that the country is very much committed because it means we are looking at all the system, which is working very well and is under permanent surveillance”.

However he was quick to add that he didn’t believe there were “short-circuits” in the government on the issue but admitted yes, “different opinions”.

“Maybe my vision of the issue has to do with the fact that I’m member of the National board that checks into possible money laundering cases and I’m well aware of the great efforts Uruguay is making to improve the transparency in the financial sector”, said Antonelli.

Last June on request from an Argentine judge who was looking into money laundering and tax elusion regarding the sale of football players to Europe, a Uruguayan Organized Crime magistrate Adriana de los Santos complied with the request and ordered the raid of the Royal Bank of Canada offices in the Zonamerica Free Zone and at three other financial institutions.
For reasons from presently on to be explained there were Argentine treasury police officers at the raid and although they did not intervene, the Uruguayan forces seized all the computers at the bank, all documents on the bank’s customers, pen drives and even frisked and took the cellular phones from the staff.
Some of the computers have been returned but the rest are being checked by a court group and the Executive branch Money laundering office to which Antonelli referred. In the meantime the Royal Bank of Canada said it was restructuring it services and as part of that plan would be leaving Uruguay effective next October. All clients were invited to transfer their accounts to the bank’s offices in other nations.

The free zone Zonamerica complained about the procedure and so did the Uruguayan private banks association claming the whole incident looked additional like a raid on a store looking for smuggled goods, and called for a protocol procedure someday at the same time as similar situations arise. This option was supported by Astori who said the issue should be under the control of the Central bank, which has the specialized staff for such cases.

Uruguay’s Deputy Economy minister Alejandro Antonelli denied any ‘short-circuits’ in the government regarding the Royal Bank of Canada’s raid incident, just a ‘matter of differences’, but insisted that the whole issue is positive for Uruguay since it shows the country’s commitment in combating money laundering and other possible financial crimes.

The whole incident was considered ‘extremely delicate’ since a lot of Argentine, Brazilian and Paraguayan citizens have savings in the Uruguayan banking system, since they are apprehensive of their own systems. This is particularly authentic regarding Argentina and the current government of President Cristina Fernandez which by all means is trying to get data on the accounts and assets of Argentines overseas.

There are fears that even at the same time as Uruguay is trying to strictly comply with OECD measures related to money laundering and exchange of data, the Royal Bank of Canada case could have infringed the ‘adventure fishing’ policy which specifically bars any actions or procedures outside the determined request.