Federal Authorities Crack Down On Deltec Bank In Major Money Laundering

Key Points:

• U.S. authorities executed seizure warrants on Deltec Bank’s accounts linked to digital asset firms.
• The seizures were part of an investigation into international money laundering and fraud involving cryptocurrency investment scams.
• Victims were tricked into transferring funds to shell companies, with the money being concealed through transfers to avoid detection.

Deltec Bank, a Bahamian financial institution with connections to digital asset firms, has come under scrutiny as U.S. federal authorities executed multiple seizure warrants on its accounts. Documents unsealed in federal court reveal that the U.S. Secret Service conducted these seizures last month, citing probable cause for wire fraud, bank fraud, and money laundering.

The seizures, which occurred on June 13 and June 15, were part of an investigation into international criminal money laundering syndicates involved in cryptocurrency investment and wire fraud scams. According to the unsealed documents, victims were deceived into transferring money into shell companies, with the funds then undergoing a series of transfers to conceal their source, nature, ownership, and control.

Deltec Bank had its U.S. bank accounts targeted in the seizures, with the U.S. Secret Service receiving authorization to confiscate up to approximately $105 million from custodial accounts held with Mitsubishi UFJ Trust in New York on behalf of Deltec’s corporate clients. The total amount of funds seized has not been disclosed, and both the Secret Service and Deltec Bank have yet to respond to requests for comment.

The investigation focuses on fraudulent schemes perpetrated by organized international criminal groups. Victims were induced to transfer funds to shell companies, believing they were making investments. The scheme involved the creation of fake cryptocurrency websites that displayed false account balances to deceive victims into depositing more funds. However, victims were unable to make withdrawals from these accounts.

The Secret Service’s scrutiny of Deltec Bank was prompted by Mitsubishi Bank UFJ Trust, which flagged the accounts associated with shell companies Axis DigitalLimited and GTAL due to a lack of information provided by Deltec. It is alleged that at least 74 shell companies received proceeds from wire fraud and transferred the funds to one of the custodial accounts held by Deltec. From there, the funds were transmitted to other accounts in the Bahamas, structuring the transfers to avoid scrutiny typically applied to international wire transfers.

As of Monday, the U.S. government’s attorneys no longer had concerns about making the seizure warrants public, shedding light on the actions taken against Deltec Bank in connection with the investigation into international money laundering, wire, and bank fraud.

The affidavit also highlights the legal requirement for banks operating in the United States to maintain Know-Your-Customer information. However, law enforcement has been unable to identify the registered agents, business locations, or business purposes of Axis DigitalLimited and GTAL.

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