Citizens defends AML controls amid questions about ties to Manafort, Russian meddling

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Citizens Financial on Monday defended its anti-money-laundering controls, after its share price plunged amid questions about the company’s exposure to the federal investigation over Russian meddling in the 2016 election.

The Associated Press reported over the weekend that the Providence, R.I., company may face serious legal and regulatory risks in connection with federal charges recently filed against Paul Manafort, the former campaign manager for President Trump. Those charges include money laundering and bank fraud.

Citizens, identified as “Lender B” in court filings, employed a “conspirator” in a scheme to help Manafort obtain a loan he couldn’t afford, according to The Associated Press. The bank lent Manafort $3.4 million based on fraudulent documents and, in a separate incident, falsified a financial statement on Manafort’s behalf, the report said. Experts quoted in the story said the company’s behavior could draw scrutiny from the Office of the Comptroller of the Currency.

Citizens’ share price tumbled 4% on Monday, closing at just over $44. The KBW Nasdaq Bank Index, meanwhile, rose just over 1%.

In a press release issued after the market close, Citizens denied speculation about its exposure to the case. While the company does not typically comment on government investigations, it said the decline in its share price warranted a response.

“We are not aware that we are the subject of any active investigation associated with the matter in the press article,” Citizens said in the release.

The $152.3 billion-asset company also defended its anti-money-laundering controls and track record of compliance with the Bank Secrecy Act.

“We have a robust system of controls and procedures around AML/BSA and credit application,” Citizens said, noting that it has no outstanding enforcement actions on the matter. “We do not believe any matters under speculation in the article will have a negative impact on our regulatory standing, the conduct of our business or the execution of our strategic plan.”

In the charges filed Thursday by special prosecutor Robert Mueller, a separate bank, referred to as “Lender D,” was also referenced for its role in lending $16 million in mortgages to Manafort. According to the indictment, Manafort provided Lender D with doctored profit-and-loss statements for his political consulting business and lied about an overdue credit card balance of $300,000.

The description of Lender D fits with publicly available information about loans made by The Federal Savings Bank, a small bank in Chicago. That bank’s CEO, Stephen Calk, was an economic adviser for the Trump campaign.

Calk last week denied a report that he engaged in a quid pro quo arrangement in which Manafort purportedly received $16 million in mortgages in return for a job in the White House.

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Money laundering AML Compliance Citizens Financial