Bank of Ireland accounts were used to handle at least €273 million which the US government alleges were the proceeds of a multibillion dollar cryptocurrency fraud.
Documents lodged in a New York court reveal how prosecutors believe the bank was deceived by US lawyer Mark S Scott while it was being used to funnel money from the Cayman Islands, the British Virgin Islands and onwards to the United Arab Emirates.
In 2016, Mr Scott made contact with Bank of Ireland (BoI), allegedly on the premise he was acting for an investment vehicle to be called the Fenero Funds. It is claimed he told the bank the money for the funds was sourced from wealthy European families.
The documents, which detail the evidence that is expected from the BoI employees, state Mr Scott told the bank the money would be invested in financial services and telecoms sectors.
The Irish accounts were needed because Fenero wanted to invest in European businesses with European money, he is alleged to have told the bank.
However, it is the US prosecutors’ case that it was in fact the product of a massive scam, which fraudulently convinced people to buy into a cryptocurrency scheme.
The US department of justice alleges that the cryptocurrency – called OneCoin by the accused – was effectively a multibillion dollar pyramid scheme, which it says was based “completely on lies and deceit”. The prosecutors allege the money flowing through the BoI accounts was in fact the proceeds of this fraudulent activity.
High risk
From the first point of contact, the Irish lender designated the Fenero accounts as high risk because they were based in the British Virgin Islands. Because of this, the bank told Mr Scott he had to notify them of changes to the fund’s ownership structures in order to be compliant with the lender’s anti-money laundering and Know Your Customer rules.
Specifically, he was obliged to tell the bank if more than 10 per cent of the fund’s ownership changed hands. However, it is the US government’s case, based on interviews with the bank officials, that these disclosures were never made.
While it was a high-risk account, the bank was led to believe it could also be a lucrative one, held by a serious investor. US prosecutors have told the court that one BoI employee, who worked in the bank’s Foreign Direct Investment unit, was told Fenero Funds “intended to set up a physical office in Ireland and that the Ireland office would employ 100 employees within five years, but would have a physical presence and 10 employees to manage the company in Ireland initially”.
In 2016, a payment to a bank account in the United Arab Emirates caught the attention of another bank involved in the trade. When the second bank, which is not named, contacted Bank of Ireland, the Irish lender asked Mr Scott to provide more detail about the transaction. However, this request was resisted and he instead asked that the transfer be retracted and the money returned to his Bank of Ireland account, the documents claim.
The documents also show four BoI employees, one of whom now has left the company, have through the bank’s lawyers rejected repeated requests to give evidence in person in a US court.
Travel and accommodation
“For over two and a half years, the government has diligently sought evidence from the Bank of Ireland,” prosecutors state. This summer, the US government told the bank it would arrange for travel and accommodation for the witnesses. However, the witnesses and the bank have insisted they will only give evidence from Ireland.
The trial is expected to proceed before the end of the year.
Asked to comment, Bank of Ireland said: “In line with the Mutual Legal Assistance Treaty between the US and Ireland, we continue to liaise closely and co-operate with the US authorities in relation to this case. This has included the provision of relevant documentation and facilitation of extensive interviews with former and current Bank of Ireland representatives. The provision of testimony from Ireland is standard procedure in international trials.”
