What was to evolve into Riggs National Bank started its commercial existence as a small brokerage business in Washington DC, founded by William Wilson Corcoran in 1836. Four years later Corcoran partnered with George Washington Riggs whose family took control of the bank after Corcoran retired. Riggs Bank was prominent in US affairs from the 1840s onwards, bankrolling several of the federal government’s gigantic territorial acquisitions in the 19th Century as the US expanded westwards, southwards, northwards…>$US16 M to fight the Mexican-American War, $US7.2 M for the purchase of Alaska. The bank famously established a relationship with the incumbent in the White House…at least 20 US presidents⓵ and their families held accounts with the bank. Banks are not adverse to indulging in hyperbole and in its erstwhile vain glory Riggs was no exception, being fond of describing itself as “the most important bank in the most important city in the world”.
Riggs Bank’s “glamorous” but risky business model: In the 20th century Riggs Bank gained the reputation of being the “diplomat’s bank” (or the “embassies’ bank”), due to its tendency to court the personal business of diplomatic staff and foreign potentates from all around the world…at one point 95% of the foreign embassies in Washington DC banked with Riggs. The obsession with securing embassy business proved an expensive undertaking which returned little profit, and was a factor in the banking corporation’s eventual undoing (‘Riggs Bank’, Elliot Carter, Atlas Obscura, 15-Dec-2016, www.atlas.obscura.com).
Three scandals: This preoccupation with foreign VIP customers helped to sow the seeds of Riggs Banks’ ultimate downfall. Its cosy dealings with embassies particularly that of Saudi Arabia brought the bank’s disreputable practices to light. The boys at RB were guilty, indefensibly so, of failing in its duty to report the Saudi embassy’s suspicious transactions of hundreds of millions of dollars. Riggs’ lax controls also (unknowingly) enabled the Middle East hijackers responsible for the 9/11 attacks on the Twin Towers to transfer money through its bank (‘Riggs Bank – A History of Compliance Failures’, Chris Hamblin, Wealth Briefing, 14-Feb-2005, www.wealthbriefing.com).
Cornering the pariah banking market: A second international scandal involved Riggs and the controversial Chilean general and dictator Augusto Pinochet. Fawning bank officials visited Senator Pinochet and invited him to open an account with Riggs. Pinochet proceeded to open more than 125 accounts, many under false names (not just with Riggs but also with Citigroup, Bank of America, etc). Riggs Bank and Citigroup helped the reviled dictator set up offshore holding companies from where the money (US$15 M) could be secretly transferred to personal (ie, Pinochet family) accounts in the US and elsewhere. Riggs Bank’s action was in violation of international court rulings freezing the assets of the former dictator, who was facing charges of corruption, tax evasion and illegal arms sales, not to mention, human rights violations against the Chilean people.
RB’s sticky fingers on more dirty money: The third of the bank’s scandals at this time followed similar lines to the Pinochet imbroglio. In 1995 newly oil-rich Equatorial Guinea opened its first account at Riggs. Eventually, it would become the bank’s biggest depositor…at its peak, under an obliging George W Bush administration, the EG accounts would total US$700 M, much of it in the private accounts of tyrannical President Obiang, his family and senior government officials. Again, off-shore shell companies were created in Obiang family’s names, reportedly with the assistance of Riggs. The US Senate in 2004 found that Riggs had serviced the tiny West African country’s accounts “with little or no attention to its anti-money laundering obligations”. The bank vice president responsible for the Equatorial Guinea accounts was sacked and faced federal embezzlement charges (‘Reputation Damage: The Price Riggs Paid’, World Check, (2008), www.world-check.com).
(source: Getty Images | 2019 Anadolu Agency)
Fallout and repercussions: Found culpable for various breaches of financial propriety including its complicity in money laundering schemes with foreign clients, Riggs initially agreed to pay US$41 M in fines to the US government, plus US$9 M to go towards the Chilean victims of the Pinochet regime.These crippling financial penalties helped tip the weakened Riggs Bank over the edge of no return. In 2005, faced with the twin burdens of having to fork out a grand total of US$59 M in fines and settlements and the threat of relentless regulatory remediation, the bank was swiftly swallowed up in a merger with the PNC Financial Services Group (‘Canadian banks need a history lesson on the perils of money laundering in the United States’, Rita Trichur, The Globe and Mail, 29-Aug-2024, www.theglobeandmail.com). After nearly 169 years of banking in the deep end, Riggs Bank, once a American cultural institution, was unceremoniously but justly turfed into the dustbin of financial history.
Endnote: The CIA/Riggs Bank/Saudi nexus Riggs Bank in the 1980s even established a grubby, secret relationship with the CIA. The CIA co-opted the ever-obliging bank in a covert operation whereby the ubiquitous spy agency used the Saudi royal family’s accounts at Riggs to provide funds for the Nicaraguan Contra rebels and the Afghan Mujahideen in their war against the Soviet Union (Carter).
⓵ starting with Martin Van Buren, president 1837–1841, through to (appropriately) Richard Nixon, 1969–74
⓶ Riggs Bank during the period of the scandals was owned by the Allbritton family whose scion (Joe Allbritton) was good friends with George W Bush and the Bush family
