By NEIL HARTNELL
Tribune Business Editor
Royal Bank of Canada’s (RBC) Bahamian trust subsidiary is fighting a French prosecutor’s recommendation that it be charged with tax fraud “complicity” and “aggravated money laundering”.
The disclosure, made in a Wednesday results filing by RBC’s Canadian parent, reveals that the case centres on Royal Bank of Canada Trust Company (Bahamas) and one of its trust clients.
The regulatory filing says French prosecutors have recommended to a judge that the Bahamian trust company and others face these charges.
But Royal Bank of Canada Trust Company (Bahamas) made a counter-submission on February 13 to the French judge, arguing that it should not be charged, and that they should reject the prosecutor’s case.
The RBC filing said: “In January 2015, a French investigating judge notified Royal Bank of Canada Trust Company (Bahamas), an indirect subsidiary of RBC, that the French Public Prosecutor’s Office had issued a recommendation to the French investigating judge that RBC Bahamas and other unrelated persons be referred to the French tribunal correctional to face criminal charges for complicity in tax fraud, and for aggravated money laundering, relating to actions taken relating to a trust for which RBC Bahamas currently serves as trustee.
“On February 13, 2015, RBC Bahamas made a submission to the investigating judge stating why it believed it should not be charged as recommended by the French Public Prosecutor’s Office.”
The RBC filing added: “RBC Bahamas is currently awaiting the decision of the investigating judge, who may either take no action or issue an ordonnance de renvoi, which would result in RBC Bahamas being referred to the French tribunal correctionnel to face one or both of the criminal charges recommended by the French Public Prosecutor’s Office.
“RBC Bahamas believes that its actions did not violate French law. If charges are brought, it intends to contest them in the French court.”
RBC is in the process of exiting its Caribbean wealth management business, and there is nothing to suggest that this matter involving Royal Bank of Canada Trust Company (Bahamas) had anything to do with the decision, given that it was taken before the French prosecutor made their recommendations.
Still, the matter will be more unwelcome publicity for the Canadian institution’s Bahamian operations, which were caught up in the “massive wash trading scheme” that saw RBC pay a $35 million civil fine to US regulators.
While RBC “neither admits nor denies” the allegations levied against it by the US Commodity Futures Trading Commission (CFTC) lawsuit, both parties agreed that the bank’s Bahamas branch was one of the counterparties involved in the block trades of derivatives contracts.
The consent order reveals that between June 1, 2007, and May 31, 2010, RBC entities executed 1,026 such transactions, which featured derivative products based on futures contracts involving shares in US and UK companies.
The 1,026 transactions were executed through RBC’s branches in the Bahamas and Cayman Islands, and routed through its internal trading accounts, with the Caribbean entities trading with the bank’s UK and Luxembourg entities.