The Federal Reserve Bank of New York on Wednesday defended its plan to cut off a Puerto Rican lender's access to the U.S. central banking system following a federal crackdown on banks with links to Venezuela, Reuters reported. In July, Banco San Juan Internacional (BSJI) sued the New York Fed to halt the looming termination of its "master account," which lets banks access the Fed's electronic payment system, because of concerns about its compliance with U.S. sanctions and anti-money-laundering rules. BSJI said that it had improved compliance during a previous 22-month suspension of its master account between 2019 and 2020. That followed a federal probe into credit agreements it had with state oil company Petroleos de Venezuela, which is subject to U.S. sanctions. The bank said the suspension "decimated" its customer relationships. In court papers on Wednesday, the New York Fed said BSJI processed transactions that had "multiple red flags for money laundering or other illicit activity." It said that as of June, BSJI served only 13 customers, most based in Curacao and including close family members of the bank's owner, Marcelino Bellosta. The New York Fed also said BSJI could still seek to access the U.S. financial system through a third-party correspondent bank.
