Pinochets 125 Secret Bank Accounts in USA-Norm Coleman

Norm Coleman on Augusto Pinochet’s Secret Bank Accounts in the United States: A Comprehensive Analysis

The revelation of Augusto Pinochet’s clandestine financial network in the United States marked a watershed moment in exposing the intersection of authoritarian corruption, global banking complicity, and U.S. political oversight. Central to this scandal was Senator Norm Coleman, whose Senate investigations unearthed a sprawling web of secret accounts, pseudonyms, and financial malfeasance that implicated major U.S. institutions. This post explores Coleman’s role, the mechanics of Pinochet’s hidden wealth, the systemic failures in banking regulation, and the broader implications for international accountability. Drawing on declassified documents, congressional reports, and journalistic investigations, it also provides a curated list of further reading resources.

I. Norm Coleman’s Role in Uncovering Pinochet’s Financial Network

No werm Coleman, a Republican senator from Minnesota and chair of the Senate Permanent Subcommittee on Investigations (PSI), spearheaded the probe into Pinochet’s U.S.-based financial activities. Launched in 2004, the investigation sought to address gaps in anti-money laundering enforcement post-9/11 but quickly expanded to include Riggs Bank’s dealings with foreign dictators, including Pinochet. Coleman’s team uncovered over 125 secret accounts across eight U.S. financial institutions, including Riggs, Citibank, and Bank of America, which Pinochet used to launder millions under aliases like “Daniel López” and “José Ramón Ugarte”.

Coleman’s 2005 Senate report condemned Riggs Bank for “ignoring rudimentary compliance” with anti-money laundering laws, enabling Pinochet to move funds even while under international asset freezes. The report highlighted how Riggs executives cultivated personal relationships with Pinochet, exchanging gifts and letters praising his “service to Chile” while facilitating transactions designed to evade scrutiny. Coleman’s work underscored the U.S. financial system’s vulnerability to exploitation by authoritarian regimes and spurred calls for stricter oversight.

II. The Mechanics of Pinochet’s Secret Accounts

1. Pseudonyms and False Documentation

Pinochet’s accounts relied on forged passports and aliases to bypass banking regulations. For instance, Riggs Bank accepted documents under the name “Augusto Ugarte” to open accounts, despite knowing his true identity. Between 1994 and 2002, Pinochet deposited over $10 million into Riggs accounts, with funds often transferred from offshore entities in Gibraltar and the Cayman Islands.

2. Structuring Transactions to Avoid Detection

Riggs employed tactics like “smurfing,” breaking large sums into smaller increments below reporting thresholds. In 2000–2003, Riggs converted $1.9 million from Pinochet’s accounts into $50,000 cashier’s checks to avoid triggering Suspicious Activity Reports (SARs). Similar methods were used by Citibank, which managed 63 accounts for Pinochet and his family, often through offshore shell companies.

3. International Complicity

Beyond U.S. banks, Pinochet utilized institutions like Coutts (a UK-based bank) to funnel money through Miami and London. Coutts accepted accounts linked to Pinochet’s financial adviser, Oscar Aitkin, despite red flags about the funds’ origins. The Senate investigation also identified accounts in Spain, Switzerland, and the Cayman Islands, illustrating the global scale of the scheme.

III. Legal Repercussions and Institutional Failures

1. Riggs Bank’s Guilty Plea

In 2005, Riggs pleaded guilty to violating the Bank Secrecy Act and paid a $16 million fine, then the largest penalty for a bank of its size. The Justice Department noted Riggs’ “systemic failure” to report suspicious transactions, including $26.4 million in wire transfers tied to Equatorial Guinea’s oil revenues. The case exposed how banks prioritized profit over due diligence, even for clients with notorious human rights records.

2. Pinochet’s Legal Downfall in Chile

Coleman’s findings reignited legal efforts in Chile, where Pinochet faced charges for embezzling $15–26 million in state funds. Judge Sergio Muñoz used U.S. banking records to indict Pinochet’s family, leading to the arrest of his wife and son in 2004. These efforts mirrored the “Al Capone strategy” of targeting financial crimes when human rights prosecutions stalled.

3. Regulatory Lapses

The Office of the Comptroller of the Currency (OCC) was criticized for ignoring Riggs’ misconduct despite repeated warnings. Coleman’s report accused regulators of acting “too slowly,” allowing Pinochet’s accounts to operate for nearly a decade without scrutiny.

IV. Broader Implications: Authoritarian Corruption and Global Finance

1. The Role of “Politically Exposed Persons” (PEPs)

Pinochet’s case exemplifies how PEPs—foreign officials at high risk of corruption—exploit weak banking controls. Riggs’ lax policies toward Pinochet and Equatorial Guinea’s dictator, Teodoro Obiang, revealed systemic flaws in monitoring high-risk clients.

2. U.S. Foreign Policy and Complicity

Declassified records show that U.S. administrations, while publicly condemning Pinochet’s human rights abuses, tacitly enabled his financial maneuvers. Banks like Riggs maintained ties to Pinochet even after his 1998 arrest in London, suggesting implicit approval of his regime.

3. Legacy of the Investigations

Coleman’s work prompted reforms, including the closure of Riggs’ embassy banking division and stricter SAR requirements. However, the case also highlighted the limitations of U.S. jurisdiction, as non-American accounts (e.g., Coutts in the UK) remained beyond Senate oversight.

V. Further Reading References

1. Primary Documents and Reports
   - The Secret Pinochet Portfolio (National Security Archive, 2005) : Details Senate findings on Pinochet’s accounts, including correspondence between Riggs executives and Pinochet.
   - U.S. Senate Permanent Subcommittee on Investigations Report (2005) : Comprehensive analysis of Pinochet’s financial network and regulatory failures.
   - Department of Justice Press Release on Riggs Bank (2005) : Summarizes Riggs’ guilty plea and fines.
2. Books
   - The Pinochet File: A Declassified Dossier on Atrocity and Accountability by Peter Kornbluh : Explores U.S. complicity in Pinochet’s regime, updated with details on the Riggs scandal.
   - All the Presidents’ Bankers by Nomi Prins: Contextualizes the relationship between U.S. banks and authoritarian regimes.
3. Journalistic Investigations
   - “Deposited by a Dictator” (The Guardian, 2005) : Examines Pinochet’s use of Coutts and other banks.
   - “Detective Story That Linked £1m Pinochet Cash to BAE” (The Guardian, 2005) : Reveals BAE Systems’ covert payments to Pinochet-linked shell companies.
4. Archival Resources
   - National Security Archive’s Chile Documentation Project : Hosts declassified CIA records on U.S. intervention in Chile.
   - Financial Crimes Enforcement Network (FinCEN) Reports: For regulatory perspectives on anti-money laundering failures.

Conclusion

Norm Coleman’s investigation into Pinochet’s secret accounts underscored the fragility of financial systems in the face of authoritarian corruption. By exposing Riggs Bank’s complicity and prompting legal action in Chile, the case became a landmark in the fight for transnational accountability. Yet, as subsequent scandals (e.g., the Panama Papers) reveal, systemic vulnerabilities persist. Coleman’s work remains a critical reference for understanding how illicit wealth infiltrates democracies—and the vigilance required to counter it.