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16 October 2007

Lloyds TSB charged in US money-laundering probe




Lloyds TSB found itself at the centre of an alleged money-laundering scandal yesterday as prosecutors in the US filed civil charges against Lloyds and Bank of Cyprus. The banks are said to have facilitated money-laundering by a Cypriot businessman, Lycourgos Kyprianou, the former chairman of AremisSoft, a Nasdaq-listed software company that filed for bankruptcy amid allegations made by US authorities of insider trading on a massive scale.

 

The US government is seeking civil penalties of at least $130m from Lloyds TSB Bank, a unit of Lloyds TSB Group, and at least $162m from Bank of Cyprus, the US Attorney's office in Manhattan said.

 

A spokeswoman for Lloyds TSB said: "We do not believe that there is any basis for this action, so we are disappointed that the US government has commenced proceedings in this case. "We intend to defend the action vigorously and are confident that the bank's stance will be vindicated."

 

Bank of Cyprus said: "The bank denies the allegations contained in both civil actions, and regards them as totally unfounded."

 

In 2002, a federal grand jury indicted Kyprianou and others on securities fraud, money-laundering and conspiracy charges. Kyprianou was charged with inflating the price of AremisSoft's stock, using nominee companies to hold and sell the stock and misleading the investing public, prosecutors said.

 

The two banks are said to have allowed Kyprianou, now described as a fugitive and living in Cyprus, to bank the proceeds of the alleged fraud through numerous accounts he owned or controlled. Lloyds TSB Bank also allegedly confirmed non-existent AremisSoft cash holdings, prosecutors said.

 

They accuse Lloyds TSB of disregarding its obliga- tions under Swiss federal law and claim that several of the bank's senior management were involved in suspicious transactions.



© Graham Bishop


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